Category: Economy

  • MIL-OSI USA: Senator Baldwin Leads Senate Resolution Designating October 23 National Marine Sanctuary Day

    US Senate News:

    Source: United States Senator for Wisconsin Tammy Baldwin

    WASHINGTON, D.C. – Today, U.S. Senator Tammy Baldwin (D-WI) introduced a Senate Resolution designating October 23, 2024 as “National Marine Sanctuary Day.” The resolution highlights the role of national marine sanctuaries in increasing access to nature, protecting biodiversity, and boosting economic activity for coastal communities.

    “Wisconsin Shipwreck Coast National Marine Sanctuary is an engine for tourism and world-class research along Lake Michigan, stimulating our local economies and pioneering breakthroughs for our Great Lakes,” said Senator Baldwin. “I’m proud to have fought for and delivered a national marine sanctuary for Wisconsin, and will continue to fight to protect our nation’s natural resources and ensure generations to come can enjoy our coastlines.”

    Senator Baldwin has fought to support national marine sanctuaries, successfully leading the charge to bring a National Marine Sanctuary to Wisconsin in 2021. In October 2013, Senator Baldwin urged the National Oceanic and Atmospheric Administration (NOAA) to re-open the public nomination process for marine sanctuaries for the first time in 20 years. After the Administration announced in June 2014 that Americans would be given the opportunity to nominate nationally significant marine and Great Lakes areas as national marine sanctuaries, Wisconsin’s Lake Michigan proposal was submitted and Senator Baldwin called on NOAA to support their efforts. The Wisconsin Shipwreck Coast National Marine Sanctuary was officially designated in 2021.

    As a member of the Senate Appropriations Committee, Senator Baldwin has continued to advocate for Wisconsin’s Great Lakes by supporting robust funding for the National Marine Sanctuaries Program and by requesting federal funding for the Wisconsin Shipwreck Coast National Marine Sanctuary Foundation.

    The resolution is co-sponsored by Senators Richard Blumenthal (D-CT), Maria Cantwell (D-WA), Ben Cardin (D-MD), Martin Heinrich (D-NM), Mazie Hirono (D-HI), Patty Murray (D-WA), Alex Padilla (D-CA), Brian Schatz (D-HI), Chris Van Hollen (D-MD), Raphael Warnock (D-GA), Peter Welch (D-VT), Cory Booker (D-NJ), and Gary Peters (D-MI).

    The resolution is supported by Alabama Coastal Foundation, Azul, California Academy of Sciences, Carolina Ocean Alliance, Creation Justice Ministries, EarthEcho International, The Florida Aquarium, Friends of the Mariana Trench, Global Rewilding Alliance, Greater Farallones Association, GreenLatinos, Guy Harvey Foundation, Healthy Ocean Coalition, Inland Ocean Coalition, Minorities in Shark Sciences, Monterey Bay Aquarium, National Aquarium, National Ocean Protection Coalition, National Wildlife Federation, Next 100 Coalition, Ocean Defense Initiative, Point Defiance Zoo & Aquarium + Northwest Trek Wildlife Park, Shark Stewards, Shedd Aquarium, South Carolina Aquarium, Surfrider Foundation, Sustainable Ocean Alliance, The Ocean Project, WILDCOAST, Wildlife Conservation Society, and World Ocean Day.

    “National marine sanctuaries are special places in America’s waters where people show up as part of the solution to steward our blue planet,” said Joel R. Johnson, President and CEO of the National Marine Sanctuary Foundation. “From the Great Lakes to the Gulf of Mexico, the Chesapeake Bay to Pacific Islands, national marine sanctuaries connect us with wildlife and our shared history making us feel like we are part of something much greater than ourselves. Our continued support for these treasured waters is more essential than ever and makes a positive impact for present and future generations.”

    “The conservation of our special ocean and Great Lakes places is vital for the species that depend on them, the communities that rely on them, and the future generations that dream about them,” said Ayana Melvan, Director of Conservation Action of the Aquarium Conservation Partnership.

    “The ACP and its members strive to celebrate the science and stories of our National Marine Sanctuary System at every opportunity. We’re proud to stand behind the Senator’s resolution to recognize the 600,000 sq. miles and growing of marine and Great Lake waters that truly make America beautiful,” said Kim McIntyre, Executive Director of the Aquarium Conservation Partnership.

    A full version of this resolution is available here and below.

    Designating October 23, 2024, as “National Marine Sanctuary Day”.

    Whereas, on October 23, 1972, the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1401 et seq.) became law and ushered in a new era of ocean conservation;

    Whereas the National Marine Sanctuary System is a nationwide network that conserves spectacular oceans, coasts, and Great Lakes;

    Whereas communities across the United States can nominate their most treasured marine and Great Lakes waters for consideration as national marine sanctuaries;

    Whereas national marine sanctuaries protect biodiversity, safeguard extraordinary seascapes, historic shipwrecks, and sacred cultural places, and provide abundant recreational opportunities;

    Whereas national marine sanctuaries seek opportunities to partner with indigenous governments and communities to achieve shared conservation goals and to support the care-taking of ecological resources and cultural sites of indigenous peoples;

    Whereas national marine sanctuaries protect vital habitats for countless species of fish and wildlife, including many species that are listed as threatened or endangered;

    Whereas the conservation of marine ecosystems is vital for healthy oceans, coasts, and Great Lakes, for addressing climate change, and for sustaining productive coastal economies;

    Whereas the National Marine Sanctuary Foundation and its partners work to protect and nurture the growth of the National Marine Sanctuary System;

    Whereas national marine sanctuaries increase access to nature for all, support coastal communities, and generate billions of dollars annually in local communities by providing jobs in the United States, supporting commercial, Tribal, and recreational fisheries, bolstering tourism and recreation, engaging businesses in stewardship, and driving the growth of the blue economy;

    Whereas national marine sanctuaries connect people and communities through science, education, United States history, recreation, and stewardship and inspire community-based solutions that help individuals understand and protect the spectacular underwater habitats, wildlife, archaeological resources, and cultural seascapes of the United States;

    Whereas national marine sanctuaries are living laboratories that enable cooperative science and research that improves resource management and advances innovative public-private partnerships;

    Whereas national marine sanctuaries can help make oceans, coasts, and Great Lakes more resilient by protecting ecosystems that sequester carbon, by safeguarding coastal communities from flooding and storms, and by protecting biodiversity;

    Whereas the United States is a historic maritime Nation, and oceans, coasts, and Great Lakes are central to the way of life of the people of the United States;

    Whereas engaging communities as stewards of these protected waters makes national marine sanctuaries unique and provides a comprehensive, ecosystem-based, highly participatory approach to managing and conserving marine and Great Lakes environments for current and future generations; and

    Whereas October 23, 2024, is recognized as “National Marine Sanctuary Day” to increase awareness about the importance of the National Marine Sanctuary System and healthy oceans, coasts, and Great Lakes and to celebrate the many recreational opportunities available for the enjoyment of this network of protected waters: Now, therefore, be it

    Resolved, That the Senate—

    (1) designates October 23, 2024, as “National Marine Sanctuary Day”;

    (2) encourages the people of the United States and the world to responsibly visit, experience, recreate in, and support the treasured national marine sanctuaries of the United States;

    (3) acknowledges the importance of national marine sanctuaries in supporting community resilience, protecting biodiversity, and increasing access to nature;

    (4) recognizes the importance of national marine sanctuaries for their recreational opportunities and contributions to local and national economies across the United States;

    (5) celebrates the ability of the National Marine Sanctuary System to protect nationally significant places in oceans, coasts, and Great Lakes;

    (6) calls on the National Oceanic and Atmospheric Administration to partner with communities and to complete designations of new national marine sanctuaries; and

    (7) encourages Federal agencies to balance priorities and work together to support the priorities of the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1401 et seq.).

    MIL OSI USA News

  • MIL-OSI USA: Baldwin Calls on Biden Administration to Investigate China’s Role in Fueling the Fentanyl Crisis

    US Senate News:

    Source: United States Senator for Wisconsin Tammy Baldwin

    WASHINGTON, D.C. – Today, U.S. Senator Tammy Baldwin (D-WI) called on the Biden Administration to hold the People’s Republic of China (PRC) accountable for its role in actively supporting the production and export of fentanyl into the United States. Baldwin urged the Biden administration to heed the call from a group of families whose loved ones died of fentanyl overdoses and launch a formal probe into China’s role in fueling the U.S. synthetic opioid crisis.

    “I have heard from parents who have lost children, law enforcement fighting on the front lines, and advocates urging for change – all demanding we do more to stop the scourge of fentanyl. There is no doubt that the actions of the PRC have left hundreds of thousands of Americans dead and countless families in mourning,” wrote Senator Baldwin in a letter to USTR Representative Tai.

    Last week, a group of families impacted by the fentanyl crisis filed a petition under Section 301 of the Trade Act of 1974 to call on United States Trade Representative (USTR) Katherine Tai to initiate a full investigation into China’s  role in the fentanyl crisis. Over the past two decades, the PRC has become one of the most significant global centers for the manufacture, purchase, and exportation of illicit drugs and precursor chemicals. According to the petition filed by the families impacted by fentanyl, over 97 percent of all illicit fentanyl present in the U.S. originates from the PRC. The petition recommends a variety of trade countermeasures, including imposing tariffs on at least $50 billion on Chinese goods and services, and banning Chinese shipments from entering the U.S. via the de minimis loophole.

    “Despite the U.S. government’s best efforts through diplomatic channels, it has become obvious that the PRC will not voluntarily crack down on its fentanyl producers and exports. Until the PRC takes serious action to hold its own companies accountable, I urge you to seek redress for the harm inflicted upon American families. I therefore urge you to expeditiously initiate a full Section 301 investigation and consider the relief measures identified in the petition to address the injury that the PRC’s policies and actions have had on the American people and our economy,” wrote Senator Baldwin.

    Senator Baldwin has long been fighting to combat the fentanyl and opioid crisis, disrupting supply chains and bolstering support for prevention and recovery services. Senator Baldwin introduced the bipartisan Ensure Accountability in the De Minimis Act to hold countries like China accountable for sending hundreds of billions of dollars’ worth of products into the U.S. market, undermining U.S. manufacturers and letting illicit substances into our communities. Last year, Senators Baldwin and Bill Cassidy, M.D. (R-LA) introduced the De Minimis Reciprocity Act to close the de minimis loophole by excluding untrustworthy countries like China from using the de minimis channel.

    A full version of the letter is available here and below.

    Dear Ambassador Tai,

    I write to express support for a petition filed under Section 301 of the Trade Act of 1974 on behalf of families who have lost loved ones to illicit fentanyl. I ask that you review the petition and initiate a full investigation into the role of the People’s Republic of China (PRC) in the fentanyl crisis, which is devastating families and the U.S. economy.

    While Congress and the Administration have worked to hold China accountable and secure commitments from the PRC, the petition alleges that the PRC continues to actively support the production and export of illicit fentanyl to the United States and has failed to implement sufficient measures to prevent these exports. We have a responsibility to use every tool available to halt the flow of fentanyl into the United States. For that reason, I urge you to take up an investigation to examine the PRC’s acts, policies, and practices that have caused severe economic harm to the United States—to say nothing of the tragic deaths of hundreds of thousands of Americans—and consider appropriate countermeasures. As described in the petition, the economic impacts of the fentanyl crisis include undermining U.S. employment and the labor market. The need for supportive services and criminal justice expenditures also put increased pressure on state and local government budgets.

    Over the past two decades, the PRC has become one of the most significant global centers for the manufacture, purchase, and exportation of illicit drugs and precursor chemicals. According to the petition filed by Facing Fentanyl, Inc., over 97 percent of all illicit fentanyl present in the U.S. originates in the PRC. Illicit synthetic fentanyl can be produced incredibly cheaply; one kilogram can be produced for less than $1,000 and sold for $80,000. Despite its low production cost, it is 50 times stronger than heroin.

    Illicit synthetic fentanyl has been the deadliest of drugs exported by the PRC, leading to the deaths of over 70,000 Americans in 2022. In Wisconsin, synthetic opioids were identified in 91 percent of opioid overdose deaths and 73 percent of all overdose deaths in the past year. Early data indicates that the number of fentanyl deaths grew by 97 percent between 2019 and 2021. In 2022, more than 1,400 Wisconsinites died from an opioid overdose.

    While the U.S. government is actively engaging with the PRC on this issue, it is imperative that we hold China accountable for its commitment to cracking down on the flow of illicit fentanyl and precursor chemicals that are fueling this crisis. Despite productive steps, the PRC has continued to provide tax incentives and other financial support for businesses – often state-owned – that export fentanyl and the illicit chemicals necessary to produce fentanyl to the U.S and countries in the Western hemisphere. The PRC has impeded investigations and prosecutions that seek to stop illicit drug manufacturers while willfully failing to identify and prosecute companies from manufacturing, selling, and exporting fentanyl to the U.S. Furthermore, the PRC conceals business operations involved in fentanyl trade and ignores money laundering schemes by companies that profit from illicit activities.

    I have heard from parents who have lost children, law enforcement fighting on the front lines, and advocates urging for change – all demanding we do more to stop the scourge of fentanyl. There is no doubt that the actions of the PRC have left hundreds of thousands of Americans dead and countless families in mourning. Despite the U.S. government’s best efforts through diplomatic channels, it has become obvious that the PRC will not voluntarily crack down on its fentanyl producers and exports. Until the PRC takes serious action to hold its own companies accountable, I urge you to seek redress for the harm inflicted upon American. I therefore urge you to expeditiously initiate a full Section 301 investigation and consider the relief measures identified in the petition to address the injury that the PRC’s policies and actions have had on the American people and our economy.

    Thank you for your attention to this serious matter, and I look forward to continuing to work with you to halt the flow of deadly fentanyl into the United States.

    Sincerely,

    MIL OSI USA News

  • MIL-OSI Europe: Immobilised assets: Council greenlights up to €35 billion in macro-financial assistance to Ukraine and new loan mechanism implementing G7 commitment

    Source: Council of the European Union

    The Council today adopted a financial assistance package to Ukraine, including an exceptional macro-financial assistance (MFA) loan of up to €35 billion and a loan cooperation mechanism that will support Ukraine in repaying loans for up to €45 billion provided by the EU and G7 partners.

    The financial assistance package aims at supporting Ukraine in covering its urgent financing needs that have increased due to Russia’s intensified aggression against Ukraine. The exceptional MFA will contribute to covering Ukraine´s financing gap, thereby supporting macro-financial stability in Ukraine and easing Ukraine´s external financial constraints.

    The exceptional MFA loan and eligible bilateral loans from G7 partners under the ‘Extraordinary Revenue Acceleration (ERA) Loans for Ukraine’ initiative will be repaid by future flows of extraordinary profits accruing to central securities depositories in the EU as a result of the implementation of the immobilisation of Russian sovereign assets.

    The Ukraine loan cooperation mechanism will disburse these funds – as well as possible amounts received as voluntary contributions from Member States and third countries or other sources – in the form of financial support to Ukraine, to assist it in servicing and repaying all G7 loans.

    The up to €35 billion MFA loan is the EU’s contribution to the G7 loan of up to €45 billion. The new MFA operation will be linked to policy conditions that are consistent with the Ukraine Facility, in particular the Ukraine Plan. The management and control systems proposed under the Ukraine Plan and specific provisions on the prevention of fraud and other irregularities will also apply to the MFA loan.

    EU borrowing to fund the extraordinary MFA loan to Ukraine will be guaranteed by the EU budget headroom.

    The MFA loan is expected to be made available to Ukraine before the end of 2024 and have a maximum duration of 45 years.

    According to new rules also adopted today, 95% of the proceeds that have been generated by central securities depositories (CSDs) in the EU as a result of their implementation of the immobilisation of Russian sovereign assets and that have been transferred to the Union will be allocated to the EU budget and will now be used for the Ukraine Loan Cooperation Mechanism (ULCM), which will disburse these funds in the form of financial support to Ukraine, to assist it in servicing and repaying the loans. The remaining 5% will continue to be allocated to the European Peace Facility.

    The new allocation will start applying from the second half of 2025 (to the second biannual payment of the financial contribution made in 2025 and to all payments thereafter).

    Next steps

    The legal acts adopted today will enter into force on the day after its publication in the Official Journal of the EU.

    Background

    On 19 September 2024 the Commission presented a proposal for a regulation on an exceptional macro-financial assistance (MFA) loan and a Ukraine loan cooperation mechanism. At the same time, the High representative presented a proposal for a Council implementing decision on restrictive measures in view of Russia’s actions destabilising the situation in Ukraine and, together with the Commission, a joint proposal for a Council implementing regulation concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.

    Subject to EU law, Russia’s assets should remain immobilised until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by this war.

    In view of a speedy adoption and ensuring that the macro-financial assistance reaches Ukraine as soon as possible, the European Parliament and the Council adopted the Commission’s proposal for a regulation without changes. The European Parliament voted on the text in first reading on 22 October 2024 and the Council by written procedure, which ended today. The two implementing acts were also adopted by the Council by written procedure today.

    G7 Leaders announced in June 2024 the launch of the “Extraordinary Revenue Acceleration” loans for Ukraine, to make available approximately $ 50 billion (€45 billion) for Ukraine that will be serviced and repaid by future flows of extraordinary revenues stemming from the immobilisation of Russian sovereign assets held in the European Union and other relevant jurisdictions.  In its conclusions, the European Council on 27 June 2024 invited the Commission, the High Representative and the Council to take work forward. The financial package adopted today implements these commitments.

    Until now, extraordinary profits stemming from the immobilisation of Russian sovereign assets and available to the EU have been channelled principally through the European Peace Facility to support Ukraine’s military capabilities, and to a lesser extent through the Ukraine Facility to support the country’s reconstruction and modernisation. On 26 July 2024, a first instalment of €1.5 billion was made available by the EU in support of Ukraine.

    MIL OSI Europe News

  • MIL-OSI USA: QUIGLEY, SORENSEN, DURBIN, DUCKWORTH, ANNOUNCE $33.5 MILLION IN FEDERAL FUNDING FOR PEORIA AND CHICAGO AIRPORTS

    Source: United States House of Representatives – Representative Mike Quigley (IL-05)

    Today, U.S. Representatives Mike Quigley (D-IL-05), Eric Sorensen (D-IL-17) and U.S. Senators Dick Durbin (D-IL), and Tammy Duckworth (D-IL) announced $33,510,000 in federal funding from the Department of Transportation’s Airport Terminal Program.

    With today’s announced funding, General Wayne A. Downing Peoria International Airport will receive $13,510,000 for the replacement of their air traffic control tower, and Chicago O’Hare International Airport will receive $20,000,000 for an expansion to Terminal 5.

    “Throughout my career, I have worked tirelessly to ensure that travelers receive the best and most efficient service possible at O’Hare. Today’s funding announcement will build on the progress we have already made. This expansion will benefit not only our constituents but also travelers across the country, while boosting our economy. When I voted for the Bipartisan Infrastructure Law, I did so knowing it would bring vital investments like these and create lasting benefits across our state. Together, we are paving the way for a brighter future and a stronger transportation network for everyone,” said Quigley.

    “By improving and modernizing airport infrastructure, we are laying the foundation for increased connectivity and reliability,” said Durbin. “Today’s announced federal funding for upgrading our airports across Illinois will enhance the travel experience for passengers and promote economic growth. I will continue working with Senator Duckworth and our Congressional colleagues to ensure Illinois airports have the necessary federal resources to keep passengers safe and connected.”

    “Illinois’s airports are critical economic engines for our state,” Duckworth said. “This funding will help improve and modernize O’Hare and Downing International Airports and, after years of neglecting our nation’s infrastructure, I’m proud every day to see the Bipartisan Infrastructure Law at work rebuilding infrastructure all across our country. I will continue to work alongside Senator Durbin and the Illinois delegation to make traveling safer and more reliable for all passengers while ensuring that our communities are receiving the much-needed federal resources they deserve.”

    “This important funding coming to Peoria International Airport is about connecting my neighbors in Central Illinois to the world. The new air traffic control tower will allow controllers to see the end points of both runways and all taxiways, making it safer for travelers and airport staff. I am grateful to Senators Durbin and Duckworth for their support of this project as we continue our work to keep air travel safe and open Peoria to new destinations,” said Sorensen.

    Durbin and Duckworth previously worked to secure a provision in the Bipartisan Infrastructure Law (BIL) to make Peoria’s airport-owned air traffic control tower (ATCT) eligible for federal funding. Following the enactment of the Bipartisan Infrastructure Law, the ATCT has received $29 million in federal funding across two previous grants.

    Durbin and Duckworth helped secure two previous BIL Airport Terminal Program grants for Chicago O’Hare International Airport for the Terminal 3 Project totaling $90 million, a 2023 grant of $50 million and a 2024 grant of $40 million.

    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: SOLOWIN HOLDINGS Announces New Equity Research Report from Diamond Equity Research

    Source: GlobeNewswire (MIL-OSI)

    HONG KONG, Oct. 23, 2024 (GLOBE NEWSWIRE) — SOLOWIN HOLDINGS (Nasdaq: SWIN) (“SOLOWIN” or the “Company”), a securities brokerage company that offers comprehensive financial services primarily to Chinese investors globally, today announced the release of a new research report from Diamond Equity Research, an issuer sponsored equity research firm focused on small capitalization companies, covering the Company’s ordinary shares.

    The Company has worked with Diamond Equity Research to perform independent research that will create greater awareness and exposure in the investment community for the Company’s comprehensive financial services. The new report is available at https://ml.globenewswire.com/Resource/Download/e6dc93a4-4889-4bb6-a8e2-97c15cafd474.

    This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the Company’s securities, nor shall there be any sale of such securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

    About SOLOWIN HOLDINGS

    Solowin Holdings (NASDAQ: SWIN) is a Hong Kong based financial services firm providing a comprehensive one-stop solution for high-net-worth and institutional investors worldwide. Spanning both traditional and virtual assets, Solowin’s offerings include investment banking, wealth management, asset management, and Web3 solutions, tailored to support the next generation of investors. Solowin’s wholly owned subsidiary, Solomon JFZ (Asia) Holdings Limited (“Solomon JFZ”), is one of Hong Kong’s first batch regulated virtual asset service providers. Its advanced electronic platform, Solomon VA+, is Hong Kong’s first app to integrate traditional and virtual asset trading with wealth management services.

    For more information, visit the Company’s website at https://solowin.io

    Or investor relationship website at http://ir.solomonwin.com.hk

    About Diamond Equity Research

    Diamond Equity Research is an equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms. For more information, please visit www.diamondequityresearch.com.

    Forward-Looking Statements

    Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and other factors discussed in the “Risk Factors” section of the Company’s most recent annual report on Form 20-F as well as in other reports filed or furnished from time to time with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s filings with the SEC, which are available for review at www.sec.gov.

    For investor and media inquiries please contact:

    SOLOWIN HOLDINGS
    Investor Relations Department
    Email: ir@solomonwin.com.hk

    Ascent Investor Relations LLC
    Tina Xiao
    Phone: +1-646-932-7242
    Email: investors@ascent-ir.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: Lake Shore Bancorp, Inc. Announces Third Quarter 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    DUNKIRK, N.Y., Oct. 23, 2024 (GLOBE NEWSWIRE) — Lake Shore Bancorp, Inc. (the “Company”) (NASDAQ: LSBK), the holding company for Lake Shore Savings Bank (the “Bank”), reported unaudited net income of $1.3 million, or $0.24 per diluted share, for the third quarter of 2024 compared to net income of $1.1 million, or $0.19 per diluted share, for the second quarter of 2024, and $1.6 million, or $0.27 per diluted share, for the third quarter of 2023. The increase in net income during the third quarter of 2024 was primarily driven by an increase in net interest income and a reduction in non-interest expenses when compared to the previous quarter. For the first nine months of 2024, the Company reported unaudited net income of $3.5 million, or $0.62 per diluted share, as compared to $4.1 million, or $0.69 per diluted share, for the first nine months of 2023. During the first nine months of 2024, the Company repaid Federal Home Loan Bank of New York (“FHLBNY”) borrowings of $25.0 million and did not renew $16.0 million of brokered certificates of deposit (“CDs”) while growing organic deposits by 2.2%.

    “I am pleased to report a solid quarter of financial results, marked by quarterly earnings growth and an uptick in the net interest margin for the first time in well over a year,” stated Kim C. Liddell, President, CEO, and Director. “These earnings reflect the Company’s ongoing focus on managing its financial performance amid challenging market conditions.”

    Third Quarter 2024 and Year-to-Date Financial Highlights:

    • Net income increased to $1.3 million during the third quarter of 2024, an increase of $216,000, or 19.4%, when compared to the second quarter of 2024. Net income was positively impacted by an increase in net interest income of $177,000, or 3.4%, and a decrease in non-interest expenses of $84,000, or 1.7%;
    • Net interest margin increased to 3.28% during the third quarter of 2024, an increase of 14 basis points when compared to a net interest margin of 3.14% during the second quarter of 2024;
    • Efficiency ratio improved to 77.96% for the third quarter of 2024 when compared to 82.39% for the second quarter of 2024;
    • Did not renew $16.0 million of brokered CDs and $25.0 million of FHLBNY borrowings through organic deposit growth of 2.2% during the first nine months of 2024;
    • At September 30, 2024 and December 31, 2023, the Company’s percentage of uninsured deposits to total deposits was 13.4% and 12.8%, respectively; and
    • The Bank’s capital position remains “well capitalized” with a Tier 1 Leverage ratio of 13.37% and a Total Risk-Based capital ratio of 18.85% at September 30, 2024.

    Net Interest Income

    Net interest income for the third quarter of 2024 increased $177,000, or 3.4%, to $5.4 million as compared to $5.2 million for the second quarter of 2024 and decreased $912,000, or 14.5%, as compared to $6.3 million for the third quarter of 2023. Net interest margin and interest rate spread were 3.28% and 2.67%, respectively, for the third quarter of 2024 as compared to 3.14% and 2.56%, respectively, for the second quarter of 2024 and 3.74% and 3.32%, respectively, for the third quarter of 2023.

    Net interest income for the first nine months of 2024 decreased $3.1 million, or 16.4%, to $15.7 million as compared to $18.8 million for the first nine months of 2023. Net interest margin and interest rate spread were 3.17% and 2.59%, respectively, for the first nine months of 2024 as compared to 3.72% and 3.36%, respectively, for the first nine months of 2023.

    Interest income for the third quarter of 2024 was $8.9 million, an increase of $97,000, or 1.1%, compared to $8.8 million for the second quarter of 2024, and an increase of $130,000, or 1.5%, compared to $8.7 million for the third quarter of 2023. The increase from the prior quarter was primarily due to an 11 basis points increase in the average yield on interest-earning assets, partially offset by a decrease in the average balance of interest-earning assets of $6.0 million, or 0.9%. The increase from the prior year quarter was primarily due to a 21 basis points increase in the average yield on interest-earning assets, partially offset by a decrease in the average balance of interest-earning assets of $16.7 million, or 2.5%.

    Interest income for the first nine months of 2024 was $26.2 million, an increase of $1.1 million, or 4.3%, compared to $25.1 million for the first nine months of 2023. The increase was primarily due to a 32 basis point increase in the average yield on interest-earning assets, partially offset by a decrease in the average balance of interest-earning assets of $14.0 million, or 2.1%.

    Interest expense for the third quarter of 2024 was $3.5 million, a decrease of $80,000, or 2.3%, from the second quarter of 2024, and an increase of $1.0 million, or 43.0%, from $2.4 million for the third quarter of 2023. 

    The decrease in interest expense when compared to the previous quarter was primarily due to a decrease in the average balance of interest-bearing liabilities of $12.0 million, or 2.3%. During the third quarter of 2024, there was a $52,000 decrease in interest expense on total deposit accounts when compared to the second quarter of 2024, due to a decrease in the average balance of total deposit accounts of $7.2 million, or 1.4% and a one basis point decrease in the average interest rate paid on total deposits. Additionally, interest expense on borrowed funds and other interest-bearing liabilities decreased by $28,000, or 15.8% during the third quarter of 2024 when compared to the second quarter of 2024, due to a decrease in the average balance of borrowed funds and other interest-bearing liabilities of $4.8 million, or 19.1%, as we reduced our FHLB borrowings.

    The increase in interest expense when compared to the third quarter of 2023 was primarily due to an 86 basis points increase in the average interest rate paid on interest-bearing liabilities, partially offset by a decrease in the average balance of interest-bearing liabilities of $10.9 million, or 2.1%. During the third quarter of 2024, there was a $1.2 million increase in interest expense on total deposit accounts when compared to the third quarter of 2023 due to a 97 basis points increase in the average interest rate paid on total deposits along with an increase in average total deposit balances of $5.5 million, or 1.1%. The increase in the average interest rate paid on deposit accounts was primarily due to the increase in market interest rates and deposit competition. This increase was partially offset by a decrease in interest expense on borrowed funds and other interest-bearing liabilities of $173,000, or 53.7%, in the third quarter of 2024 when compared to the third quarter of 2023, primarily due to a $16.5 million decrease in the average balance of borrowed funds and other interest-bearing liabilities outstanding as we reduced our FHLBNY borrowings, and the average rate paid declined by 58 basis points.

    Interest expense for the first nine months of 2024 was $10.5 million, an increase of $4.2 million, or 65.4%, from $6.3 million for the first nine months of 2023. The increase in interest expense was primarily due to a 109 basis points increase in average interest rate paid on interest-bearing liabilities, partially offset by a decrease in the average balance of interest-bearing liabilities of $8.0 million, or 1.5%. During the first nine months of 2024, there was a $4.6 million increase in interest expense on total deposit accounts when compared to the first nine months of 2023 due to a 122 basis points increase in the average interest rate paid on total deposits along with an increase in average total deposit balances of $6.3 million, or 1.3%. The increase in the average interest rate paid on deposit accounts was primarily due to the increase in market interest rates and deposit competition. This increase was partially offset by a decrease in interest expense on borrowed funds and other interest-bearing liabilities of $452,000, or 44.8%, during the first nine months of 2024 when compared to the first nine months of 2023, primarily due to a $14.4 million decrease in the average balance of borrowed funds and other interest-bearing liabilities outstanding along with a 45 basis points decrease in the average interest rate paid on borrowed funds and other interest bearing liabilities as we reduced our FHLBNY borrowings.

    Non-Interest Income

    Non-interest income was $791,000 for the third quarter of 2024, an increase of $53,000, or 7.2%, as compared to $738,000 for the second quarter of 2024, and an increase of $186,000, or 30.7%, as compared to $605,000 for the third quarter of 2023. The increase from the prior quarter was primarily due to a $67,000 increase in earnings on bank-owned life insurance during the third quarter of 2024 as the result of the recognition of a death benefit. The increase from the prior year quarter was primarily due to a $173,000 increase in earnings on bank-owned life insurance in connection with the restructuring of bank-owned life insurance during the fourth quarter of 2023 as well as an increase in service charges and fees of $28,000, or 10.9%.  

    Non-interest income was $2.2 million for the first nine months of 2024, an increase of $524,000, or 30.6%, as compared to the first nine months of 2023. The increase was primarily due to a $394,000 increase in earnings on bank-owned life insurance in connection with the restructuring of bank-owned life insurance during the fourth quarter of 2023 and the recognition of a death benefit in the third quarter of 2024, a favorable variance of $58,000 related to interest rate swaps during the first nine months of 2024 as a result of unwinding the swaps during 2023, and a $52,000 increase related to the loss on the sale of securities available for sale that occurred during the first nine months of 2023 as part of a balance sheet restructuring.

    Non-Interest Expense

    Non-interest expense was $4.8 million for the third quarter of 2024, a decrease of $84,000, or 1.7%, as compared to $4.9 million for the second quarter of 2024, and a decrease of $383,000, or 7.4%, as compared to $5.2 million for the third quarter of 2023. 

    The decrease from the prior quarter was primarily related to a decrease in FDIC insurance expense of $154,000, or 54.2% and a decrease in professional services expense of $36,000, or 9.1%. These decreases were partially offset by an increase in salaries and employee benefit costs and other expenses.

    The decrease from the prior year quarter was primarily related to a decrease in FDIC insurance expense of $165,000, or 55.9%, and a decrease in advertising expense of $146,000, or 93.0%, as a result of a decrease in marketing spending. As a result of management’s efforts to rationalize staffing and optimize operating expenses, salaries and employee benefits decreased by $31,000, or 1.1%.

    Non-interest expense was $14.7 million for the first nine months of 2024, a decrease of $1.9 million, or 11.5%, as compared to $16.6 million for the first nine months of 2023. The decrease related primarily to a decline in professional services expense of $1.0 million, or 48.0%, as a result of a decrease in the use of external consultants. Additionally, advertising costs decreased by $435,000, or 84.6%, due to a decrease in marketing spending, and FDIC insurance costs decreased by $133,000, or 16.1%. As a result of management’s efforts to rationalize staffing and optimize operating expenses, salaries and employee benefits decreased by $208,000, or 2.5% and occupancy and equipment expenses decreased by $148,000, or 6.7%. These decreases were partially offset by an increase in data processing costs of $51,000, or 4.0%.

    Credit Quality

    The Company’s allowance for credit losses on loans was $5.5 million at September 30, 2024 as compared to $6.5 million at December 31, 2023. The Company’s allowance for credit losses on unfunded commitments was $574,000 at September 30, 2024 as compared to $485,000 at December 31, 2023.

    Non-performing assets as a percentage of total assets increased to 0.57% at September 30, 2024 as compared to 0.47% at December 31, 2023 as a result of a decrease in total assets of $27.5 million and an increase in non-performing assets of $628,000. The Company’s allowance for credit losses on loans as a percent of net loans was 1.01% at September 30, 2024 and 1.16% at December 31, 2023. The decline in the allowance for credit losses to net loans and the corresponding credit to the provision for credit losses recognized was primarily due to a decrease in the quantitative loss factors derived from historical loss rates calculated in the vintage model as well as a decrease in the qualitative loss factor derived from forecasting economic trends.

    Balance Sheet Summary

    Total assets at September 30, 2024 were $697.6 million, a $27.5 million decrease, or 3.8%, as compared to $725.1 million at December 31, 2023. Cash and cash equivalents decreased by $3.7 million, or 7.0%, from $53.7 million at December 31, 2023 to $50.0 million at September 30, 2024. The decrease was primarily due to the repayment of $25.0 million of FHLBNY borrowings and the nonrenewal of $16.0 million of brokered CDs, partially offset by organic deposit growth of $12.6 million, or 2.2%, and loan repayments, net of originations, of $16.8 million, or 3.0%. Securities available for sale were $58.8 million at September 30, 2024 as compared to $60.4 million at December 31, 2023.  Loans receivable, net at September 30, 2024 and December 31, 2023 were $539.0 million and $555.8 million, respectively.  

    Total deposits, excluding brokered CDs, at September 30, 2024 were $587.6 million, an increase of $12.6 million, or 2.2%, compared to $574.9 million at December 31, 2023. Total deposits at September 30, 2024 were $587.6 million, a decrease of $3.4 million, or 0.6%, due to the nonrenewal of $16.0 million in brokered CDs, compared to $590.9 million at December 31, 2023. Total borrowings decreased to $10.3 million at September 30, 2024, a decrease of $25.0 million, or 70.9% as compared to $35.3 million as of December 31, 2023 as we reduced our FHLBNY borrowings. 

    Stockholders’ equity at September 30, 2024 was $89.9 million, a $3.6 million increase, or 4.2%, as compared to $86.3 million at December 31, 2023. The increase in stockholders’ equity was primarily attributed to $3.5 million in net income earned during the first nine months of 2024. 

    About Lake Shore

    Lake Shore Bancorp, Inc. (NASDAQ Global Market: LSBK) is the mid-tier holding company of Lake Shore Savings Bank, a federally chartered, community-oriented financial institution headquartered in Dunkirk, New York. The Bank has ten full-service branch locations in Western New York, including four in Chautauqua County and six in Erie County. The Bank offers a broad range of retail and commercial lending and deposit services. The Company’s common stock is traded on the NASDAQ Global Market as “LSBK”. Additional information about the Company is available at www.lakeshoresavings.com.

    Safe-Harbor

    This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on current expectations, estimates and projections about the Company’s and the Bank’s industry, and management’s beliefs and assumptions. Words such as anticipates, expects, intends, plans, believes, estimates and variations of such words and expressions are intended to identify forward-looking statements. Such statements reflect management’s current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve and are subject to significant risks, contingencies, and uncertainties, many of which are difficult to predict and are generally beyond our control including, but not limited to, compliance with the Bank’s Consent Order and an Individual Minimum Capital Requirement both issued by the Office of the Comptroller of the Currency, compliance with the Written Agreement with the Federal Reserve Bank of Philadelphia, data loss or other security breaches, including a breach of our operational or security systems, policies or procedures, including cyber-attacks on us or on our third party vendors or service providers, economic conditions, the effect of changes in monetary and fiscal policy, inflation, unanticipated changes in our liquidity position, climate change, geopolitical conflicts, public health issues, increased unemployment, deterioration in the credit quality of the loan portfolio and/or the value of the collateral securing repayment of loans, reduction in the value of investment securities, the cost and ability to attract and retain key employees, regulatory or legal developments, tax policy changes, dividend policy changes, and our ability to implement and execute our business plan and strategy and expand our operations. These factors should be considered in evaluating forward looking statements and undue reliance should not be placed on such statements, as our financial performance could differ materially due to various risks or uncertainties. We do not undertake to publicly update or revise our forward-looking statements if future changes make it clear that any projected results expressed or implied therein will not be realized.

    Source: Lake Shore Bancorp, Inc.
    Category: Financial

    Investor Relations/Media Contact
    Taylor M. Gilden
    Chief Financial Officer and Treasurer
    Lake Shore Bancorp, Inc.
    31 East Fourth Street
    Dunkirk, New York 14048
    (716) 366-4070 ext. 1065

    Selected Financial Condition Data   As of       As of  
        September 30,       December 31,  
        2024       2023  
        (Unaudited)  
        (Dollars in thousands)  
                   
    Total assets   $ 697,596       $ 725,118  
    Cash and cash equivalents     49,981         53,730  
    Securities available for sale, at fair value     58,782         60,442  
    Loans receivable, net     539,005         555,828  
    Deposits     587,563         590,924  
    Long-term debt     10,250         35,250  
    Stockholders’ equity     89,877         86,273  
    Condensed Statements of Income                  
        Three Months Ended     Nine Months Ended  
        September 30,     September 30,  
        2024       2023       2024       2023  
      (Unaudited)  
      (Dollars in thousands, except per share amounts)  
                                   
    Interest income $   8,851     $   8,721     $   26,215     $   25,142  
    Interest expense     3,468         2,426         10,492         6,342  
    Net interest income     5,383         6,295         15,723         18,800  
    (Credit) provision for credit losses     (229 )       (199 )       (866 )       (1,011 )
    Net interest income after (credit) provision for credit losses     5,612         6,494         16,589         19,811  
    Total non-interest income     791         605         2,236         1,712  
    Total non-interest expense     4,813         5,196         14,706         16,614  
    Income before income taxes     1,590         1,903         4,119         4,909  
    Income tax expense     258         332         657         838  
    Net income $   1,332     $   1,571     $   3,462     $   4,071  
    Basic and diluted earnings per share $   0.24     $   0.27     $   0.62     $   0.69  
        Three Months Ended     Three Months Ended  
        September 30, 2024     September 30, 2023  
        Average     Interest Income/     Yield/     Average     Interest Income/     Yield/  
        Balance     Expense     Rate(2)     Balance     Expense     Rate(2)  
        (Dollars in thousands)  
    Interest-earning assets:                                            
    Interest-earning deposits & federal funds sold   $   54,527     $   716       5.25 %   $   43,374     $   559       5.16 %
    Securities(1)       59,536         405       2.72 %       65,019         463       2.85 %
    Loans, including fees       542,612         7,730       5.70 %       565,011         7,699       5.45 %
    Total interest-earning assets       656,675         8,851       5.39 %       673,404         8,721       5.18 %
    Other assets       48,797                       45,506                
    Total assets   $   705,472                   $   718,910                
                                                 
    Interest-bearing liabilities                                            
    Demand & NOW accounts   $   66,739     $   15       0.09 %   $   76,171     $   19       0.10 %
    Money market accounts       145,641         986       2.71 %       123,998         405       1.31 %
    Savings accounts       57,772         10       0.07 %       69,327         13       0.08 %
    Time deposits       219,166         2,308       4.21 %       214,282         1,667       3.11 %
    Total deposits       489,318         3,319       2.71 %       483,778         2,104       1.74 %
    Borrowed funds & other interest-bearing liabilities       20,479         149       2.91 %       36,953         322       3.49 %
    Total interest-bearing liabilities       509,797         3,468       2.72 %       520,731         2,426       1.86 %
    Other non-interest bearing liabilities       107,327                       114,152                
    Stockholders’ equity       88,348                       84,027                
    Total liabilities & stockholders’ equity   $   705,472                   $   718,910                
    Net interest income           $   5,383                   $   6,295        
    Interest rate spread                     2.67 %                     3.32 %
    Net interest margin                     3.28 %                     3.74 %

    (1) The tax equivalent adjustment for bank qualified tax exempt municipal securities results in rates of 3.11% and 3.24% for the three months ended September 30, 2024 and 2023, respectively.
    (2) Annualized.

        Nine Months Ended     Nine Months Ended  
        September 30, 2024     September 30, 2023  
        Average     Interest Income/     Yield/     Average     Interest Income/     Yield/  
        Balance     Expense     Rate(2)     Balance     Expense     Rate(2)  
        (Dollars in thousands)  
    Interest-earning assets:                                            
    Interest-earning deposits & federal funds sold   $   50,409     $   1,962       5.19 %   $   34,214     $   1,214       4.73 %
    Securities(1)       60,082         1,243       2.76 %       70,268         1,502       2.85 %
    Loans, including fees       549,925         23,010       5.58 %       569,977         22,426       5.25 %
    Total interest-earning assets       660,416         26,215       5.29 %       674,459         25,142       4.97 %
    Other assets       49,771                       45,690                
    Total assets   $   710,187                   $   720,149                
                                                 
    Interest-bearing liabilities                                            
    Demand & NOW accounts   $   67,882     $   48       0.09 %   $   77,948     $   57       0.10 %
    Money market accounts       142,078         2,899       2.72 %       133,491         1,091       1.09 %
    Savings accounts       60,319         31       0.07 %       72,111         35       0.06 %
    Time deposits       223,108         6,956       4.16 %       203,527         4,149       2.72 %
    Total deposits       493,387         9,934       2.68 %       487,077         5,332       1.46 %
    Borrowed funds & other interest-bearing liabilities       25,099         558       2.96 %       39,451         1,010       3.41 %
    Total interest-bearing liabilities       518,486         10,492       2.70 %       526,528         6,342       1.61 %
    Other non-interest bearing liabilities       104,728                       110,108                
    Stockholders’ equity       86,973                       83,513                
    Total liabilities & stockholders’ equity   $   710,187                   $   720,149                
    Net interest income           $   15,723                   $   18,800        
    Interest rate spread                     2.59 %                     3.36 %
    Net interest margin                     3.17 %                     3.72 %

    (1) The tax equivalent adjustment for bank qualified tax exempt municipal securities results in rates of 3.14% and 3.26% for the nine months ended September 30, 2024 and 2023, respectively.
    (2) Annualized.

                       
      Three Months Ended     Nine Months Ended  
      September 30,     September 30,  
      2024   2023     2024   2023  
      (Unaudited)  
    Selected Financial Ratios:          
    Return on average assets   0.76 %   0.87 %     0.65 %   0.75 %
    Return on average equity   6.03 %   7.48 %     5.31 %   6.50 %
    Average interest-earning assets to average interest-bearing liabilities   128.81 %   129.32 %     127.37 %   128.10 %
    Interest rate spread   2.67 %   3.32 %     2.59 %   3.36 %
    Net interest margin   3.28 %   3.74 %     3.17 %   3.72 %
    Efficiency ratio   77.96 %   75.30 %     81.89 %   81.00 %
      As of   As of  
      September 30,   December 31,  
      2024   2023  
      (Unaudited)  
             
    Asset Quality Ratios:        
    Non-performing loans as a percentage of net loans   0.74 %   0.60 %
    Non-performing assets as a percentage of total assets   0.57 %   0.47 %
    Allowance for credit losses as a percentage of net loans   1.01 %   1.16 %
    Allowance for credit losses as a percentage of non-performing loans   137.03 %   193.09 %
      As of     As of  
      September 30,     December 31,  
      2024     2023  
        (Unaudited)  
                   
    Share and Capital Information:              
    Common stock, number of shares outstanding     5,737,036         5,686,288  
    Treasury stock, number of shares held     1,099,478         1,150,226  
    Book value per share $   15.67     $   15.17  
    Tier 1 leverage ratio     13.37 %       12.68 %
    Total risk-based capital ratio     18.85 %       17.77 %

    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: Update: Eagle Bancorp, Inc. Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    BETHESDA, Md., Oct. 23, 2024 (GLOBE NEWSWIRE) — Eagle Bancorp, Inc. (“Eagle”, the “Company”) (NASDAQ: EGBN), the Bethesda-based holding company for EagleBank, one of the largest community banks in the Washington D.C. area, reported its unaudited results for the third quarter ended September 30, 2024.

    Eagle reported net income of $21.8 million or $0.72 per share for the third quarter 2024, compared to a net loss of $83.8 million during the second quarter in which the Company recorded a $104.2 million impairment in the value of goodwill. Operating net income1 in the second quarter, adjusted to exclude the impairment charge on goodwill, was $20.4 million or $0.67 per share per diluted share. Pre-provision net revenue (“PPNR”)1 in the third quarter was $35.2 million compared to a pre-provision net loss of $69.8 million for the prior quarter, or $34.4 million of PPNR when adjusted to exclude the impairment charge on goodwill1.

    The $1.4 million increase in operating net income1 over the prior quarter is attributed to a positive variance of $2.2 million related to the change in provision for unfunded commitments; $1.6 million increase in non-interest income; and a $490 thousand increase in net interest income, offset by a $1.3 million increase in operating non-interest expense, adjusted to exclude the impairment charge on goodwill, and a $1.1 million increase in provision for credit losses.

    “We continue to strategically position the Company for future growth as evidenced by actions taken during the quarter with the refinancing of our maturing subordinated debt and the recalibration of our common dividend strategy,” said Susan G. Riel, President and Chief Executive Officer of the Company. “We announced the addition of Evelyn Lee to our senior leadership as our Chief Lending Officer for our commercial lending team. As a 25 year banker in the Washington D.C. market, I am excited about accomplishing our strategic goal of continuing to build out our commercial banker group and pursuing diversification of the loan portfolio and growing our relationship deposits,” added Ms. Riel.

    Eric R. Newell, Chief Financial Officer of the Company said, “Raising senior debt in the third quarter demonstrates the confidence debt investors have in our vision and the future of the Company. Operating performance was stable from last quarter evidenced by operating net income1 increasing $1.4 million to $21.8 million in the third quarter. We continued to build our reserve for credit losses, with coverage as a percentage of total held for investment loans at 1.40% increasing 7 basis points from last quarter. Common equity tier one capital increased to 14.5% and our tangible common equity1 ratio exceeds 10%.”

    Ms. Riel added, “I thank all of our employees for their hard work and their commitment to a culture of respect, diversity and inclusion in both the workplace and the communities we serve.”

    Third Quarter 2024 Highlights

    • The Company repaid $70 million of maturing subordinated debt and issued $77.7 million of 10% unsecured senior debt maturing September 30, 2029.
    • During the quarter, the Company announced a recalibration of the common stock dividend to $0.165 per share from $0.45 per share in the second quarter an action estimated to retain an additional $32 million of capital annually to meet growth and investment objectives.
    • The ACL as a percentage of total loans held for investment was 1.40% at quarter-end; up from 1.33% at the prior quarter-end. Performing office coverage2 was 4.55% at quarter-end; as compared to 4.05% at the prior quarter-end.
    • Nonperforming assets increased $38.2 million to $137.1 million as of September 30, 2024 and were 1.22% of total assets compared to 0.88% as of June 30, 2024. Inflows to non-performing loans in the quarter totaled $45.5 million offset by $9 million of outflows, of which $5 million was the loan held for sale at June 30, 2024 and an increase of other real estate owned of $2.0 million. The inflows were predominantly associated with $27.3 million in mixed use land loans and $17.9 million in an assisted living facility loan.
    • Substandard loans declined $17.0 million to $391.3 million and special mention loans increased $57.1 million to $365.0 million at September 30, 2024.
    • Net charge-offs for the third quarter were 0.26% compared to 0.11% for the second quarter 2024. Of the total $5.3 million of net charge offs in the quarter, $3.8 million is associated with a senior living property that has not stabilized.
    • The net interest margin (“NIM”) decreased slightly to 2.37% for the third quarter 2024, compared to 2.40% for the prior quarter, primarily due to continued decline in average non-interest bearing deposits. Net interest income increased $490 thousand from the second quarter to $71.8 million in the third quarter.
    • At quarter-end, the common equity ratio, tangible common equity ratio1, and common equity tier 1 capital (to risk-weighted assets) ratio were 10.86%, 10.86%, and 14.54%, respectively.
    • Total estimated insured deposits at quarter-end were $6.4 billion, or 74.5% of deposits, stable from the second quarter total of 72.5% of deposits.
    • Total on-balance sheet liquidity and available capacity was $4.6 billion at quarter-end compared to $4.0 billion at June 30, 2024.

    Income Statement

    • Net interest income was $71.8 million for the third quarter 2024, compared to $71.4 million for the prior quarter. The increase in net interest income was primarily driven by an increase in the average balances of deposits held with other banks and average loans partially offset by higher average interest-bearing deposits and higher rates paid on those deposits in the third quarter from the prior quarter.
    • Provision for credit losses was $10.1 million for the third quarter 2024, compared to $9.0 million for the prior quarter. The increase in the provision quarter over quarter reflects higher net charge-offs in the third quarter from the prior quarter. Reserve for unfunded commitments was a reversal of $1.6 million due to lower unfunded commitments in our construction portfolio. This compared to a reserve for unfunded commitments in the prior quarter of $0.6 million.
    • Noninterest income was $6.95 million for the third quarter 2024, compared to $5.33 million for the prior quarter. The primary driver for the increase was higher swap fee income.
    • Noninterest expense was $43.6 million for the third quarter 2024, compared to $146.5 million for the prior quarter. The decrease over the comparative quarters was primarily due to a goodwill impairment charge of $104.2 million in the second quarter 2024. When excluding the goodwill impairment charge, the increase quarter over quarter was associated with increased FDIC insurance expense.

    Loans and Funding

    • Total loans were $8.0 billion at September 30, 2024, down 0.4% from the prior quarter-end. The decrease in total loans was driven by a reduction in commercial loans and income producing commercial real estate loans from the prior quarter-end, partially offset by increased fundings of ongoing construction projects for commercial and residential properties.

      At September 30, 2024, income-producing commercial real estate loans secured by office properties other than owner-occupied properties were 10.8% of the total loan portfolio, down from 11.3% at the prior quarter-end.

    • Total deposits at quarter-end were $8.5 billion, up $273.5 million, or 3.3%, from the prior quarter-end. The increase was primarily attributable to an increase in time deposits from the company’s digital acquisition channel. Period end deposits have increased $165 million when compared to prior year comparable period end of September 30, 2023.
    • Other short-term borrowings were $1.2 billion at September 30, 2024, down 25.3% from the prior quarter-end as maturing FHLB borrowings were paid down with increased cash from deposits.

    Asset Quality

    • Allowance for credit losses was 1.40% of total loans held for investment at September 30, 2024, compared to 1.33% at the prior quarter-end. Performing office coverage was 4.55% at quarter-end; as compared to 4.05% at the prior quarter-end.
    • Net charge-offs were $5.3 million for the quarter compared to $2.3 million in the second quarter of 2024.
    • Nonperforming assets were $137.1 million at September 30, 2024.
      • NPAs as a percentage of assets were 1.22% at September 30, 2024, compared to 0.88% at the prior quarter-end. At September 30, 2024, other real estate owned consisted of four properties with an aggregate carrying value of $2.7 million. The increase in NPAs was predominantly associated with $27.3 million in mixed use land loans and $17.9 million in an assisted living facility loan.
      • Loans 30-89 days past due were $56.3 million at September 30, 2024, compared to $8.4 million at the prior quarter-end. Of the total increase, $25 million was brought current subsequent to quarter-end.

    Capital

    • Total shareholders’ equity was $1.2 billion at September 30, 2024, up 4.8% from the prior quarter-end. The increase in shareholders’ equity of $56.0 million was primarily due to increased valuations of available-for-sale securities and an increase in retained earnings.
    • Book value per share and Tangible book value per share3 was $40.61, up $1.86 from the prior quarter-end.

    Additional financial information: The financial information that follows provides more detail on the Company’s financial performance for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 and September 30, 2023, as well as eight quarters of trend data. Persons wishing additional information should refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and other reports filed with the SEC.

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

    Conference call: Eagle Bancorp will host a conference call to discuss its third quarter 2024 financial results on Thursday, October 24, 2024 at 10:00 a.m. Eastern Time.

    The listen-only webcast can be accessed at:

    • https://edge.media-server.com/mmc/p/79xpxyi2
    • For analysts who wish to participate in the conference call, please register at the following URL:

      https://register.vevent.com/register/BI6cdce3c45a9f49219ea94a6f7c9fa083

    • A replay of the conference call will be available on the Company’s website through November 7, 2024: https://www.eaglebankcorp.com/

    Forward-looking statements: This press release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “can,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” “could,” “strive,” “feel” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market (including volatility in interest rates and interest rate policy; the current inflationary environment; competitive factors) and other conditions (such as the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks), which by their nature are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and in other periodic and current reports filed with the SEC. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance, and nothing contained herein is meant to or should be considered and treated as earnings guidance of future quarters’ performance projections. All information is as of the date of this press release. Any forward-looking statements made by or on behalf of the Company speak only as to the date they are made. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.

    Eagle Bancorp, Inc.
    Consolidated Statements of Operations (Unaudited)
    (Dollars in thousands, except per share data)
               
      Three Months Ended
      September 30,   June 30,   September 30,
        2024       2024       2023  
    Interest Income          
    Interest and fees on loans $ 139,836     $ 137,616     $ 132,273  
    Interest and dividends on investment securities   12,578       12,405       13,732  
    Interest on balances with other banks and short-term investments   21,296       19,568       15,067  
    Interest on federal funds sold   103       142       77  
    Total interest income   173,813       169,731       161,149  
    Interest Expense          
    Interest on deposits   81,190       76,846       70,929  
    Interest on customer repurchase agreements   332       330       311  
    Interest on other short-term borrowings   20,448       21,202       18,152  
    Interest on long-term borrowings $             1,038  
    Total interest expense   101,970       98,378       90,430  
    Net Interest Income   71,843       71,353       70,719  
    Provision for Credit Losses   10,094       8,959       5,644  
    Provision (Reversal) for Credit Losses for Unfunded Commitments   (1,593 )     608       (839 )
    Net Interest Income After Provision for Credit Losses   63,342       61,786       65,914  
               
    Noninterest Income          
    Service charges on deposits   1,747       1,653       1,631  
    Gain on sale of loans   20       37       (5 )
    Net gain on sale of investment securities   3       3       5  
    Increase in cash surrender value of bank-owned life insurance   731       709       669  
    Other income   4,450       2,930       4,047  
    Total noninterest income   6,951       5,332       6,347  
    Noninterest Expense          
    Salaries and employee benefits   21,675       21,770       21,549  
    Premises and equipment expenses   2,794       2,894       3,095  
    Marketing and advertising   1,588       1,662       768  
    Data processing   3,435       3,495       3,194  
    Legal, accounting and professional fees   3,433       2,705       2,162  
    FDIC insurance   7,399       5,917       3,342  
    Goodwill impairment         104,168        
    Other expenses   3,290       3,880       3,523  
    Total noninterest expense   43,614       146,491       37,633  
    (Loss) Income Before Income Tax Expense   26,679       (79,373 )     34,628  
    Income Tax Expense   4,864       4,429       7,245  
    Net (Loss) Income $ 21,815     $ (83,802 )   $ 27,383  
               
    (Loss) Earnings Per Common Share          
    Basic $ 0.72     $ (2.78 )   $ 0.91  
    Diluted $ 0.72     $ (2.78 )   $ 0.91  
                           

            

    Eagle Bancorp, Inc.
    Consolidated Balance Sheets (Unaudited)
    (Dollars in thousands, except per share data)
      September 30,   June 30,   September 30,
        2024       2024       2023  
    Assets          
    Cash and due from banks $ 16,383     $ 10,803     $ 8,625  
    Federal funds sold   9,610       5,802       13,611  
    Interest-bearing deposits with banks and other short-term investments   584,491       526,228       235,819  
    Investment securities available-for-sale at fair value (amortized cost of $1,550,038, $1,613,659, and $1,732,722, respectively, and allowance for credit losses of $17, $17 and $17, respectively)   1,433,006       1,584,435       1,474,945  
    Investment securities held-to-maturity at amortized cost, net of allowance for credit losses of $1,237, $2,012 and $2,010, respectively (fair value of $868,425, $856,275 and $923,313, respectively)   961,925       982,955       1,032,485  
    Federal Reserve and Federal Home Loan Bank stock   37,728       54,274       25,689  
    Loans held for sale         5,000        
    Loans   7,970,269       8,001,739       7,916,391  
    Less: allowance for credit losses   (111,867 )     (106,301 )     (83,332 )
    Loans, net   7,858,402       7,895,438       7,833,059  
    Premises and equipment, net   8,291       8,788       11,216  
    Operating lease right-of-use assets   15,167       16,250       20,151  
    Deferred income taxes   74,381       86,236       98,987  
    Bank-owned life insurance   115,064       114,333       112,234  
    Goodwill and intangible assets, net   21       129       105,239  
    Other real estate owned   2,743       773       1,487  
    Other assets   167,840       174,396       190,667  
    Total Assets $ 11,285,052     $ 11,465,840     $ 11,164,214  
    Liabilities and Shareholders’ Equity          
    Liabilities          
    Deposits:          
    Noninterest-bearing demand $ 1,609,823     $ 1,693,955     $ 2,072,665  
    Interest-bearing transaction   903,300       1,123,980       932,779  
    Savings and money market   3,316,819       3,165,314       3,129,773  
    Time deposits   2,710,908       2,284,099       2,241,089  
    Total deposits   8,540,850       8,267,348       8,376,306  
    Customer repurchase agreements   32,040       39,220       25,689  
    Other short-term borrowings   1,240,000       1,659,979       1,300,001  
    Long-term borrowings   75,812             69,887  
    Operating lease liabilities   18,755       20,016       24,422  
    Reserve for unfunded commitments   5,060       6,653       6,183  
    Other liabilities   147,111       139,348       145,842  
    Total Liabilities   10,059,628       10,132,564       9,948,330  
    Shareholders’ Equity          
    Common stock, par value $0.01 per share; shares authorized 100,000,000, shares issued and outstanding 30,173,200 30,180,482, and 30,185,732, respectively   298       297       296  
    Additional paid-in capital   382,284       380,142       372,394  
    Retained earnings   967,019       949,863       1,054,699  
    Accumulated other comprehensive loss   (124,177 )     (160,843 )     (211,505 )
    Total Shareholders’ Equity   1,225,424       1,169,459       1,215,884  
    Total Liabilities and Shareholders’ Equity $ 11,285,052     $ 11,302,023     $ 11,164,214  
                           

     

    Loan Mix and Asset Quality
    (Dollars in thousands)
     
      September 30,   June 30,   September 30,
        2024       2024       2023  
      Amount %   Amount %   Amount %
    Loan Balances – Period End:                
    Commercial $ 1,154,349     14 %   $ 1,238,261     15 %   $ 1,418,760     18 %
    PPP loans   348     %     407     %     588     %
    Income producing – commercial real estate   4,155,120     52 %     4,217,525     53 %     4,147,301     52 %
    Owner occupied – commercial real estate   1,276,240     16 %     1,263,714     16 %     1,182,959     15 %
    Real estate mortgage – residential   57,223     1 %     61,338     1 %     76,511     1 %
    Construction – commercial and residential   1,174,591     15 %     1,063,764     13 %     904,282     11 %
    Construction – C&I (owner occupied)   100,662     1 %     99,526     1 %     129,616     2 %
    Home equity   51,567     1 %     52,773     1 %     53,917     1 %
    Other consumer   169     %     4,431     %     2,457     %
    Total loans $ 7,970,269     100 %   $ 8,001,739     100 %   $ 7,916,391     100 %
                                             
      Three Months Ended or As Of
      September 30,   June 30,   September 30,
        2024       2024       2023  
    Asset Quality:          
    Net charge-offs $ 5,303     $ 2,285     $ 340  
    Nonperforming loans $ 134,371     $ 98,169     $ 70,148  
    Other real estate owned $ 2,743     $ 773     $ 1,757  
    Nonperforming assets $ 137,114     $ 98,942     $ 71,905  
    Special mention $ 364,983     $ 307,906     $ 158,182  
    Substandard $ 391,301     $ 408,311     $ 219,001  
                           
    Eagle Bancorp, Inc.
    Consolidated Average Balances, Interest Yields And Rates vs. Prior Quarter (Unaudited)
    (Dollars in thousands)
                           
      Three Months Ended
      September 30, 2024   June 30, 2024
      Average Balance   Interest   Average
    Yield/Rate
      Average Balance   Interest   Average
    Yield/Rate
    ASSETS                      
    Interest earning assets:                      
    Interest-bearing deposits with other banks and other short-term investments $ 1,577,464     $ 21,296       5.37 %   $ 1,455,007     $ 19,568       5.41 %
    Loans held for sale (1)   4,936       1       0.08 %     8,045       100       5.00 %
    Loans (1) (2) $ 8,026,524       139,835       6.93 %     8,003,206       137,516       6.91 %
    Investment securities available-for-sale (2)   1,479,598       7,336       1.97 %     1,478,856       7,048       1.92 %
    Investment securities held-to-maturity (2)   974,366       5,242       2.14 %     995,274       5,357       2.16 %
    Federal funds sold   10,003       103       4.10 %     13,058       142       4.37 %
    Total interest earning assets   12,072,891     $ 173,813       5.73 %     11,953,446     $ 169,731       5.71 %
    Total noninterest earning assets   397,006               510,725          
    Less: allowance for credit losses   (108,998 )             (102,671 )        
    Total noninterest earning assets   288,008               408,054          
    TOTAL ASSETS $ 12,360,899             $ 12,361,500          
                           
    LIABILITIES AND SHAREHOLDERS’ EQUITY                    
    Interest bearing liabilities:                      
    Interest-bearing transaction $ 1,656,676     $ 14,596       3.51 %   $ 1,636,795     $ 16,100       3.96 %
    Savings and money market   3,254,128       34,896       4.27 %     3,321,001       33,451       4.05 %
    Time deposits   2,517,944       31,698       5.01 %     2,215,693       27,295       4.95 %
    Total interest bearing deposits   7,428,748       81,190       4.35 %     7,173,489       76,846       4.31 %
    Customer repurchase agreements   38,045       332       3.47 %     38,599       330       3.44 %
    Other short-term borrowings   1,615,867       20,448       5.03 %     1,682,684       21,202       5.07 %
    Long-term borrowings   824             %                 %
    Total interest bearing liabilities   9,083,484     $ 101,970       4.47 %     8,894,772     $ 98,378       4.45 %
    Noninterest bearing liabilities:                      
    Noninterest bearing demand   1,915,666               2,051,777          
    Other liabilities   160,272               151,324          
    Total noninterest bearing liabilities   2,075,938               2,203,101          
    Shareholders’ equity   1,201,477               1,263,627          
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 12,360,899             $ 12,361,500          
    Net interest income     $ 71,843             $ 71,353      
    Net interest spread           1.26 %             1.26 %
    Net interest margin           2.37 %             2.40 %
    Cost of funds           3.69 %             3.61 %

    (1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.9 million and $4.8 million for the three months ended September 30, 2024 and June 30, 2024, respectively.
    (2) Interest and fees on loans and investments exclude tax equivalent adjustments.

    Eagle Bancorp, Inc.
    Consolidated Average Balances, Interest Yields And Rates vs. Year Ago Quarter (Unaudited)
    (Dollars in thousands)
                           
      Three Months Ended September 30,
        2024       2023  
      Average Balance   Interest   Average
    Yield/Rate
      Average Balance   Interest   Average
    Yield/Rate
    ASSETS                      
    Interest earning assets:                      
    Interest bearing deposits with other banks and other short-term investments $ 1,577,464     $ 21,296       5.37 %   $ 1,127,451     $ 15,067       5.30 %
    Loans held for sale (1)   4,936       1       0.08 %                 %
    Loans (1) (2)   8,026,524       139,835       6.93 %     7,795,144       132,273       6.73 %
    Investment securities available-for-sale (2)   1,479,598       7,336       1.97 %     1,554,348       8,126       2.07 %
    Investment securities held-to-maturity (2)   974,366       5,242       2.14 %     1,047,515       5,606       2.12 %
    Federal funds sold   10,003       103       4.10 %     7,728       77       3.95 %
    Total interest earning assets   12,072,891     $ 173,813       5.73 %     11,532,186     $ 161,149       5.54 %
    Total noninterest earning assets   397,006               489,683          
    Less: allowance for credit losses   (108,998 )             (78,964 )        
    Total noninterest earning assets   288,008               410,719          
    TOTAL ASSETS $ 12,360,899             $ 11,942,905          
                           
    LIABILITIES AND SHAREHOLDERS’ EQUITY                    
    Interest bearing liabilities:                      
    Interest bearing transaction $ 1,656,676     $ 14,596       3.51 %   $ 1,421,522     $ 12,785       3.57 %
    Savings and money market   3,254,128       34,896       4.27 %     3,113,755       32,855       4.19 %
    Time deposits   2,517,944       31,698       5.01 %     2,162,582       25,289       4.64 %
    Total interest bearing deposits   7,428,748       81,190       4.35 %     6,697,859       70,929       4.20 %
    Customer repurchase agreements   38,045       332       3.47 %     36,082       311       3.42 %
    Other short-term borrowings   1,615,867       20,448       5.03 %     1,610,097       19,190       4.73 %
    Long-term borrowings   824             %                 %
    Total interest bearing liabilities   9,083,484     $ 101,970       4.47 %     8,344,038     $ 90,430       4.30 %
    Noninterest bearing liabilities:                      
    Noninterest bearing demand   1,915,666               2,248,782          
    Other liabilities   160,272               114,923          
    Total noninterest bearing liabilities   2,075,938               2,363,705          
    Shareholders’ equity   1,201,477               1,235,162          
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 12,360,899             $ 11,942,905          
    Net interest income     $ 71,843             $ 70,719      
    Net interest spread           1.26 %             1.24 %
    Net interest margin           2.37 %             2.43 %
    Cost of funds           3.69 %             3.39 %

    (1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.9 million and $4.1 million for the three months ended September 30, 2024 and 2023, respectively.
    (2) Interest and fees on loans and investments exclude tax equivalent adjustments.

    Eagle Bancorp, Inc.
    Statements of Operations and Highlights Quarterly Trends (Unaudited)
    (Dollars in thousands, except per share data)
                                   
      Three Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   June 30,   March 31,   December 31,
    Income Statements:   2024       2024       2024       2023       2023       2023       2023       2022  
    Total interest income $ 173,813     $ 169,731     $ 175,602     $ 167,421     $ 161,149     $ 156,510     $ 140,247     $ 129,130  
    Total interest expense   101,970       98,378       100,904       94,429       90,430       84,699       65,223       43,530  
    Net interest income   71,843       71,353       74,698       72,992       70,719       71,811       75,024       85,600  
    Provision (reversal) for credit losses   10,094       8,959       35,175       14,490       5,644       5,238       6,164       (464 )
    Provision (reversal) for credit losses for unfunded commitments   (1,593 )     608       456       (594 )     (839 )     318       848       161  
    Net interest income after provision for (reversal of) credit losses   63,342       61,786       39,067       59,096       65,914       66,255       68,012       85,903  
    Noninterest income before investment gain (loss)   6,948       5,329       3,585       2,891       6,342       8,593       3,721       5,326  
    Net gain (loss) on sale of investment securities   3       3       4       3       5       2       (21 )     3  
    Total noninterest income   6,951       5,332       3,589       2,894       6,347       8,595       3,700       5,329  
    Salaries and employee benefits   21,675       21,770       21,726       18,416       21,549       21,957       24,174       23,691  
    Premises and equipment expenses   2,794       2,894       3,059       2,967       3,095       3,227       3,317       3,292  
    Marketing and advertising   1,588       1,662       859       1,071       768       884       636       1,290  
    Goodwill impairment         104,168                                      
    Other expenses   17,557       15,997       14,353       14,644       12,221       11,910       12,457       10,645  
    Total noninterest expense   43,614       146,491       39,997       37,098       37,633       37,978       40,584       38,918  
    (Loss) income before income tax expense   26,679       (79,373 )     2,659       24,892       34,628       36,872       31,128       52,314  
    Income tax expense   4,864       4,429       2,997       4,667       7,245       8,180       6,894       10,121  
    Net (loss) income $ 21,815     $ (83,802 )   $ (338 )   $ 20,225     $ 27,383     $ 28,692     $ 24,234     $ 42,193  
    Per Share Data:                              
    (Loss) earnings per weighted average common share, basic $ 0.72     $ (2.78 )   $ (0.01 )   $ 0.68     $ 0.91     $ 0.94     $ 0.78     $ 1.32  
    (Loss) earnings per weighted average common share, diluted $ 0.72     $ (2.78 )   $ (0.01 )   $ 0.67     $ 0.91     $ 0.94     $ 0.78     $ 1.32  
    Weighted average common shares outstanding, basic   30,173,852       30,185,609       30,068,173       29,925,557       29,910,218       30,454,766       31,109,267       31,819,631  
    Weighted average common shares outstanding, diluted   30,241,699       30,185,609       30,068,173       29,966,962       29,944,692       30,505,468       31,180,346       31,898,619  
    Actual shares outstanding at period end   30,173,200       30,180,482       30,185,732       29,925,612       29,917,982       29,912,082       31,111,647       31,346,903  
    Book value per common share at period end $ 40.61     $ 38.75     $ 41.72     $ 42.58     $ 40.64     $ 40.78     $ 39.92     $ 39.18  
    Tangible book value per common share at period end (1) $ 40.61     $ 38.74     $ 38.26     $ 39.08     $ 37.12     $ 37.29     $ 36.57     $ 35.86  
    Dividend per common share $ 0.165     $ 0.45     $ 0.45     $ 0.45     $ 0.45     $ 0.45     $ 0.45     $ 0.45  
    Performance Ratios (annualized):                              
    Return on average assets   0.70 %     (2.73 )%     (0.01 )%     0.65 %     0.91 %     0.96 %     0.86 %     1.49 %
    Return on average common equity   7.22 %     (26.67 )%     (0.11 )%     6.48 %     8.80 %     9.24 %     7.92 %     13.57 %
    Return on average tangible common equity (1)   7.22 %     (28.96 )%     (0.11 )%     7.08 %     9.61 %     10.08 %     8.65 %     14.82 %
    Net interest margin   2.37 %     2.40 %     2.43 %     2.45 %     2.43 %     2.49 %     2.77 %     3.14 %
    Efficiency ratio (2)   55.4 %     191.0 %     51.1 %     48.9 %     48.8 %     47.2 %     51.6 %     42.8 %
    Other Ratios:                              
    Allowance for credit losses to total loans (3)   1.40 %     1.33 %     1.25 %     1.08 %     1.05 %     1.00 %     1.01 %     0.97 %
    Allowance for credit losses to total nonperforming loans   83 %     110 %     109 %     131 %     119 %     268 %     1,160 %     1,151 %
    Nonperforming assets to total assets   1.22 %     0.88 %     0.79 %     0.57 %     0.64 %     0.28 %     0.08 %     0.08 %
    Net charge-offs (recoveries) (annualized) to average total loans (3)   0.26 %     0.11 %     1.07 %     0.60 %     0.02 %     0.29 %     0.05 %     0.05 %
    Tier 1 capital (to average assets)   10.94 %     10.58 %     10.26 %     10.73 %     10.96 %     10.84 %     11.42 %     11.63 %
    Total capital (to risk weighted assets)   15.74 %     15.07 %     14.87 %     14.79 %     14.54 %     14.51 %     14.74 %     14.94 %
    Common equity tier 1 capital (to risk weighted assets)   14.54 %     13.92 %     13.80 %     13.90 %     13.68 %     13.55 %     13.75 %     14.03 %
    Tangible common equity ratio (1)   10.86 %     10.35 %     10.03 %     10.12 %     10.04 %     10.21 %     10.36 %     10.18 %
    Average Balances (in thousands):                              
    Total assets $ 12,360,899     $ 12,361,500     $ 12,784,470     $ 12,283,303     $ 11,942,905     $ 11,960,111     $ 11,426,056     $ 11,255,956  
    Total earning assets $ 12,072,891     $ 11,953,446     $ 12,365,497     $ 11,837,722     $ 11,532,186     $ 11,546,050     $ 11,004,817     $ 10,829,703  
    Total loans (3) $ 8,026,524     $ 8,003,206     $ 7,988,941     $ 7,963,074     $ 7,795,144     $ 7,790,555     $ 7,712,023     $ 7,379,198  
    Total deposits $ 9,344,414     $ 9,225,266     $ 9,501,661     $ 9,471,369     $ 8,946,641     $ 8,514,938     $ 8,734,125     $ 9,524,139  
    Total borrowings $ 1,654,736     $ 1,721,283     $ 1,832,947     $ 1,401,917     $ 1,646,179     $ 2,102,507     $ 1,359,463     $ 411,060  
    Total shareholders’ equity $ 1,201,477     $ 1,263,627     $ 1,289,656     $ 1,238,763     $ 1,235,162     $ 1,245,647     $ 1,240,978     $ 1,233,705  

    (1) A reconciliation of non-GAAP financial measures to the nearest GAAP measure is provided in the tables that accompany this document.
    (2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income.
    (3) Excludes loans held for sale.

    GAAP Reconciliation to Non-GAAP Financial Measures (unaudited)
    (dollars in thousands, except per share data)
               
      September 30,   June 30,   September 30,
        2024       2024       2023  
    Tangible common equity          
    Common shareholders’ equity $ 1,225,424     $ 1,169,459     $ 1,215,884  
    Less: Intangible assets   (21 )     (129 )     (105,239 )
    Tangible common equity $ 1,225,403     $ 1,169,330     $ 1,110,645  
               
    Tangible common equity ratio          
    Total assets $ 11,285,052     $ 11,302,023     $ 11,164,214  
    Less: Intangible assets   (21 )     (129 )     (105,239 )
    Tangible assets $ 11,285,031     $ 11,301,894     $ 11,058,975  
               
    Tangible common equity ratio   10.86 %     10.35 %     10.04 %
               
    Per share calculations          
    Book value per common share $ 40.61     $ 38.75     $ 40.64  
    Less: Intangible book value per common share         (0.01 )     (3.52 )
    Tangible book value per common share $ 40.61     $ 38.74     $ 37.12  
               
    Shares outstanding at period end   30,173,200       30,180,482       29,917,982  
                           
        Three Months Ended
        September 30,   June 30,   September 30,
          2024       2024       2023  
    Average tangible common equity            
    Average common shareholders’ equity   $ 1,201,477     $ 1,263,627     $ 1,235,162  
    Less: Average intangible assets     (24 )     (99,827 )     (104,639 )
    Average tangible common equity   $ 1,201,453     $ 1,163,800     $ 1,130,523  
                 
    Return on average tangible common equity            
    Net (loss) income   $ 21,815     $ (83,802 )   $ 27,383  
    Return on average tangible common equity     7.22 %   (28.96)%     9.61 %
                 
    Net (loss) income   $ 21,815     $ (83,802 )   $ 27,383  
    Add back of goodwill impairment   $       104,168        
    Operating net (loss) income (Non-GAAP)     21,815       20,366       27,383  
    Operating Return on average tangible common equity (Non-GAAP)     7.22 %     7.04 %     9.61 %
                 
    Efficiency ratio            
    Net interest income   $ 71,843     $ 71,353     $ 70,719  
    Noninterest income     6,951       5,332       6,347  
    Operating revenue   $ 78,794     $ 76,685     $ 77,066  
    Noninterest expense   $ 43,614     $ 146,491     $ 37,633  
    Add back of goodwill impairment           (104,168 )      
    Operating Noninterest expense (Non-GAAP)     43,614       42,323       37,633  
                 
    Efficiency ratio     55.35 %     191.03 %     48.83 %
    Operating Efficiency ratio (Non-GAAP)     55.35 %     55.19 %     48.83 %
                 
    Pre-provision net revenue            
    Net interest income   $ 71,843     $ 71,353     $ 70,719  
    Noninterest income     6,951       5,332       6,347  
    Less: Noninterest expense     (43,614 )     (146,491 )     (37,633 )
    Pre-provision net revenue   $ 35,180     $ (69,806 )   $ 39,433  
                 
    Pre-provision net revenue   $ 35,180     $ (69,806 )   $ 39,433  
    Add back of goodwill impairment   $     $ 104,168     $  
    Operating Pre-provision net revenue (Non-GAAP)   $ 35,180     $ 34,362     $ 39,433  
                 

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

    The efficiency ratio is a non-GAAP measure calculated by dividing GAAP noninterest expense by the sum of GAAP net interest income and GAAP noninterest income. The efficiency ratio measures a bank’s overhead as a percentage of its revenue. The Company believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling operational activities. Further, the operating efficiency ratio is measured by dividing non-GAAP noninterest expense, which excludes the goodwill impairment, by the sum of GAAP net interest income and GAAP noninterest income. The Company considers this information important to shareholders as the significant impact of the goodwill impairment is a one-time event that obscures the operating performance of the company.

    Pre-provision net revenue is a non-GAAP financial measure calculated by subtracting noninterest expenses from the sum of net interest income and noninterest income. The Company considers this information important to shareholders because it illustrates revenue excluding the impact of provisions and reversals to the allowance for credit losses on loans. Operating pre-provision net revenue is a non-GAAP financial measure calculated by subtracting noninterest expenses with the impact of the goodwill impairment added back from the sum of net interest income and noninterest income. The Company considers this information important to shareholders as the significant impact of the goodwill impairment is a one-time event that obscures the operating performance of the company.

        Three Months Ended
        September 30,   June 30,   September 30,
          2024       2024       2023  
    Net (loss) income   $ 21,815     $ (83,802 )   $ 27,383  
    Add back of goodwill impairment           104,168        
    Operating Net (loss) income (Non-GAAP)   $ 21,815     $ 20,366     $ 27,383  
                 
    (Loss) earnings per share (diluted)4   $ 0.72     $ (2.78 )   $ 0.91  
    Add back of goodwill impairment per share (diluted)           3.45        
    Operating earnings (loss) per share (diluted) (Non-GAAP)   $ 0.72     $ 0.67     $ 0.91  
                 

    Operating net (loss) income and operating (loss) earnings per share (diluted) are non-GAAP financial measures derived from GAAP based amounts. The Company calculates operating net (loss) income by excluding from net (loss) income the one-time goodwill impairment of $104.2 million. During the second quarter of 2024, the Company performed an annual impairment test as a result of management’s evaluation of current economic conditions, and concluded that goodwill had become impaired, which resulted in an impairment charge of $104.2 million to reduce the carrying value of the Company’s goodwill to zero. The Company calculates operating earnings (loss) per share (diluted) by dividing the one-time goodwill impairment of $104.2 million by the weighted average shares outstanding (diluted) for the three and six months ended June 30, 2024. The Company considers this information important to shareholders because operating net (loss) income and operating (loss) earnings per share (diluted) provides investors insight into how Company earnings changed exclusive of the impairment charge to allow investors to better compare the Company’s performance against historical periods. The table above provides a reconciliation of operating net income (loss) and operating earnings (loss) per share (diluted) to the nearest GAAP measure.

    _______________
    1
    A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measure that accompany this document.
    Calculated as the ACL attributable to loans collateralized by performing office properties as a percentage of total loans.
    3 A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measure that accompany this document.
    4 For periods ended with a net loss, anti-dilutive financial instruments have been excluded from the calculation of GAAP diluted EPS. Operating diluted EPS calculations include the impact of outstanding equity-based awards for all periods.

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

    For the September 30, 2024 Earnings Presentation, click http://ml.globenewswire.com/Resource/Download/d55e221f-6ef9-45bd-8784-011bf19dce58

    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: FBI Ignoring Real Threats To Election Integrity

    US Senate News:

    Source: United States Senator for Wisconsin Ron Johnson

    Originally appeared in The Daily Caller

    I entered the Senate SCIF (sensitive compartmented information facility) Sept. 25 to attend an “All Members Classified Briefing on Foreign Threats to U.S. Elections.” I was a little late and arrived during the presentation of Avril Haines, the Director of National Intelligence. Her presentation was followed by FBI Director Christopher Wray and CISA Director Jen Easterly. As Republican Utah Sen. Mike Lee, quoting Yogi Berra, later described the briefing, “It was deja vu all over again.” 

    With straight faces, these directors of federal intelligence and law enforcement were once again warning the U.S. Senate that foreign actors were trying to influence our election. Well, duh! Unfortunately, most of my Senate colleagues seemed to be lapping it up and taking the briefing seriously. After a few minutes of listening to Director Haines, I could only shake my head in disgust. 

    I fully acknowledge that foreign threats are real and serious, but we are well aware they exist and have been persistent for decades. Except for maybe a few specific details, I heard nothing new, and certainly nothing that should be considered or kept classified. And I heard absolutely nothing about the most egregious examples of election interference in our lifetime, or the most significant threats to the integrity of the 2024 election. 

    I was the last senator given the opportunity to ask a question. By this time, there were only four senators left in the briefing. I began my questioning by pointing out that the most egregious act of election interference in our lifetime was the letter solicited by current Secretary of State Antony Blinken, engineered by former Deputy CIA Director Mike Morrell and fast tracked by then-CIA Director Gina Haspel. That letter was written Oct. 19, 2020, less than a month before the November election.  

    A bipartisan group of former U.S. intelligence officials signed the letter, which stated, without evidence, that the Hunter Biden laptop “has all the classic earmarks of a Russian information operation.” Keep in mind, the FBI had seized Hunter’s laptop almost a year earlier and knew full well it was authentic. In the small world and circles of U.S. intelligence and law enforcement, it is inconceivable that those intelligence officials were unaware or unable to ascertain that fact.  

    That letter itself was a “U.S. intelligence information operation.” And it worked exceedingly well. Because of that letter, the Hunter Biden laptop story was effectively suppressed as Russian disinformation, and Joe Biden became president. Subsequent polls show that had the public known about the laptop, Joe Biden would have lost the election. Election interference doesn’t get more egregious or effective than that.

    After making that point, I asked who within the Office of the Director of National Intelligence directed the unsolicited August 2020 FBI briefing given separately to Republican Iowa Sen. Chuck Grassley and me. That briefing, about us being targets of Russian disinformation, also provided no new information and was later leaked to the Washington Post to smear me, thereby interfering in my 2022 reelection. Four years after the briefing, and our relentless efforts to find out who directed it, we still have not been told. I didn’t get the answer Wednesday either.  

    Next, I asked Director Wray what the FBI was doing to investigate smurfing. This clear violation of campaign finance law was first revealed in March 2023 by investigative journalist, James O’Keefe. Using ActBlue, the Democrats’ donation platform, thousands of low-dollar donations are attributed to individuals allegedly without their knowledge — in one instance 5,776 donations totaling $754,124. Director Wray seemed clueless on the issue, and had no idea if the FBI was doing anything to investigate it. 

    At that point, the Democrat senator who chaired the briefing, concluded it. I wasn’t able to ask about my greatest concern regarding the 2024 election — illegal immigrants registering and voting in it. Don’t be under the illusion that just because noncitizens are ineligible to vote, Democrats aren’t willing to overlook that legal technicality to win an election. We already have plenty of evidence that illegal immigrants are registering, sometimes without their knowledge. Ohio just purged 499 illegal immigrants from its voter rolls following a multi-phase audit. Boston officials disclosed that 70 illegal aliens contacted county election officials asking to be  removed from voter registration lists. Virginia recently cancelled 6,303 noncitizen voter registrations. Oregon “mistakenly registered nearly 1,260 possible noncitizens to vote,” its DMV admits.  

    President Biden threw open the borders and directed federal departments to register voters. Does anyone believe that registration effort will be non-partisan, or that some percentage of the millions of illegal immigrants won’t vote in November? Based on last Wednesday’s briefing, I’m confident federal law enforcement won’t have any interest in investigating those crimes either.

    Ron Johnson is a Republican senator from Wisconsin.

    MIL OSI USA News

  • MIL-OSI Security: Sixteenth Defendant Sentenced for Prison Drug Conspiracy

    Source: Office of United States Attorneys

    Gulfport, Miss. – A Long Beach, Mississippi man was sentenced to 99 months in federal prison for conspiracy to possess with intent to distribute a controlled substance.

    Johnson Tran, 47, was sentenced on October 17, 2024, in U.S. District Court in Gulfport.

    According to court documents and information presented to the Court, in 2018, agents with the DEA received information from the Bureau of Prisons (BOP) that drug laced letters and greeting cards were being sent to inmates in the Bureau of Prisons from the Southern District of Mississippi.  The drug laced letters and cards were intercepted at prisons in Illinois, South Carolina, Florida, Indiana, Pennsylvania, and New Jersey.

    DEA and BOP officials were able to determine that inmates were ordering the drug laced letters and cards from Johnson Tran via prison email accounts and jail calls.   The inmates would typically order the drugs using coded language. The letters or greeting cards were laced with FUB-AMB and 5F-MDMB-PICA, which are Schedule I controlled substances and synthetic cannabinoids.  Many of them were sent through the postal service in Gulfport, Mississippi, and Tran’s base of operation was Harrison County, Mississippi.

    Agents were also able to determine through the review of financial records that Tran would ultimately receive payment for the drugs that he sent into prison via U.S. Department of Treasury checks drawn from the inmate’s prison accounts and/or peer-to-peer money transfers from associates or family members of the inmates.  When Tran’s associates would receive funds on Tran’s behalf, Tran would give them a portion of the funds they received as payment for their services.

    In addition to Johnson Tran, fifteen other defendants have been sentenced in the case:  

    Chaze Lowery and William Hernandez previously pled guilty to conspiracy to commit money laundering. Lowery was sentenced to 48 months in prison and Hernandez was sentenced to 87 months in prison.

    Jermaine Jones pled guilty to conspiracy to possess with intent to distribute a controlled substance and was sentenced to 62 months imprisonment.

    Jorge Pena, Trae Short, Bobby Huneycutt, Clarence Plato, Ryan Douglas, Salomon Ayala, Stanley Spriggs, Corderius Trammell, Jonathan Estrada, Marcus Thames, and Allen Butler all pled guilty to conspiring to commit an offense against the United States by conspiring to introduce contraband to a federal correctional facility. Their sentences ranged from time served to 52 months in prison.

    Ryan Schmittaur pled guilty to conspiracy to possess with intent to distribute a controlled substance and was sentenced to 4 years of probation and a $3,000.00.

    A seventeenth defendant, Ashley Magee, pled guilty to engaging in an unlicensed money transmission business by accepting and transferring money on behalf of Johnson Tran and the inmates. She will be sentenced on January 7, 2025, and faces a maximum of 5 years in prison.

    U.S. Attorney Todd Gee of the Southern District of Mississippi and Assistant Special Agent in Charge Anessa Daniels-McCaw of the Drug Enforcement Administration made the announcement.

    The case is being prosecuted by Assistant United States Attorney Jonathan Buckner.

    The case was investigated by the Drug Enforcement Administration and the Bureau of Prisons.

    This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor- led, intelligence driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

    MIL Security OSI

  • MIL-OSI Security: Former Federal Employee Pleads Guilty to Mishandling Classified Materials

    Source: Office of United States Attorneys

    Margaret Anne Ashby, 26, of Henderson, Nevada, pleaded guilty today for mishandling sensitive documents as a former employee of a Department of Defense component agency.

    As described in the plea agreement, starting in March 2020, Ashby was a civilian employee of a Department of Defense component agency located in the Southern District of Georgia, and during this time held a top secret security clearance as required for her employment.

    From February 2022 to May 2022, Ashby, without authority, knowingly removed documents and materials containing classified information “concerning the national defense or foreign relations of the United States . . . with the intent to retain them at unauthorized locations, including her residence in the Southern District of Georgia and in digital files saved via a personal computing device located in the Southern District of Georgia.”

    A sentencing date has not yet been set. Ashby faces a maximum penalty of five years in prison and three years of supervised release for mishandling sensitive documents, along with substantial financial penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

    Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Jill E. Steinberg for the Southern District of Georgia, and Robert Wells of the FBI National Security Branch announced the case.

    The FBI investigated the case.

    Assistant U.S. Attorneys L. Alexander Hamner and Darron J. Hubbard for the Southern District of Georgia and Trial Attorney David J. Ryan of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

    MIL Security OSI

  • MIL-OSI Security: Jury Convicts New Jersey Man of Alien Smuggling

    Source: Office of United States Attorneys

    Albany, NEW YORK – Kenneth Moore, age 41, of New Jersey, was convicted today of two counts of alien smuggling for private financial gain, following a 3-day jury trial.   

    United States Attorney Carla B. Freedman and Chief Patrol Agent Robert N. Garcia, United States Border Patrol, Swanton Sector, made the announcement.

    The evidence at trial established that on June 20, 2023, Moore traveled from New Jersey to an area just south of the Canadian Border in Clinton County, New York, to pick up several people who had illegally crossed into the United States at a place other than a Port of Entry. Moore anticipated being paid $3,000 for his services but was quickly apprehended by agents from the United States Border Patrol.

    Jurors could not reach a verdict on one count of conspiracy to commit alien smuggling.

    Sentencing is scheduled for February 25, 2025, before United States District Judge Mae A. D’Agostino, at which time Moore faces a mandatory term of 3 years in prison and up to 10 years in prison, a fine of up to $250,000, and a term of supervised release of up to 3 years. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.

    United States Border Patrol investigated this case with assistance from the Royal Canadian Mounted Police.  Assistant U.S. Attorney Allen J. Vickey and Joseph S. Hartunian are prosecuting this case.

    MIL Security OSI

  • MIL-OSI Banking: Charting the course: prudential regulation and supervision for smooth sailing

    Source: Bank for International Settlements

    Introduction

    Good afternoon, and thank you for inviting me to speak at this conference today.

    It is a privilege to be speaking today as the Chair of the Basel Committee, following my appointment by the Group of Governors and Heads of Supervision (GHOS) in May of this year.1 This is a position that has been previously enjoyed by only 11 people during the Committee’s 50 years. As a Reserve Officer in the Royal Swedish Navy, I would liken this honour as akin to taking the helm of a well steered vessel by seasoned captains. 

    As you know, the work of the Basel Committee since the Great Financial Crisis (GFC) – under the leadership of Nout Wellink, Stefan Ingves and, more recently, Pablo Hernández de Cos – has fundamentally reshaped the regulatory landscape for internationally active banks. The Basel Framework is the cornerstone of the international community’s response to the GFC. Since 2011, banks’ Common Equity Tier 1 (CET1) risk-based capital ratio has increased by over 70% and now stands at around 13.8%.2 Global banking system leverage has almost halved during this period, with an average Tier 1 leverage ratio of just over 6%.3 And banks’ holdings of high-quality liquid assets have more than doubled to over €12.5 trillion, with a corresponding Liquidity Coverage Ratio of over 135%.4

    The Basel III reforms have brought tangible benefits. In sailing, no matter how skilled you are, you can’t control the weather. However, you can prepare your boat with safety protocols and solid equipment. The Committee helps ensure that the global banking system is prepared for the unexpected. There is now an extensive empirical literature that suggests that the Basel III reforms have had an unambiguously positive net macroeconomic effect.5 The reforms have clearly strengthened bank resilience at both the bank and system-wide level, which in turn will help reduce the likelihood and impact of future banking crises. At the same time, banks, particularly strongly capitalised ones, have continued to meet the demand for lending from households and businesses.6

    Just as important as the effects of Basel III is the process by which the reforms were finalised. The Committee consulted extensively when developing Basel III – we do not operate in a vacuum or opaquely. It published no fewer than 10 consultation papers, which collectively spanned a consultation period of almost three years. It engaged extensively with a wide range of external stakeholders. Each consultation was accompanied by a rigorous quantitative impact study, which was supplemented by a half-yearly public Basel III monitoring exercise. So it is reassuring and appropriate to find that a recent academic study concluded that the Committee’s consultation approach is “one of the most procedurally sophisticated” processes among policymaking bodies.7 Moreover, member jurisdictions have undertaken their own rigorous domestic rule-making processes to transpose these standards.

    But the work to fix the banking system fault lines exposed by the GFC is not done. We need to lock in the financial stability benefits of implementing the outstanding Basel III standards in full and consistently, and as soon as possible. I take comfort in the recent unanimous reaffirmation by the GHOS to achieve such an outcome.8 The Committee has been actively monitoring and assessing the full and consistent implementation of Basel III and will continue to do so.

    As this is my maiden speech as Committee Chair, I will outline some high-level principles that I will be relying upon to help guide how I view the work of the Committee. I will also offer a few personal reflections on some topical issues. As a keen sailor, I should apologise in advance for my continued use of maritime language!

    Principle 1: Sail forward but always glance back

    My starting point is that we cannot afford to ignore, or forget, the lessons of history. This time is not different. There have been no fewer than 150 systemic banking crises since 1970.9 Just last year, we saw the most significant system-wide banking stress since the GFC, including the distress of five banks with total assets exceeding one trillion US dollars. While each banking crisis may have had its unique characteristics, the common thread throughout history is that we simply cannot predict when or from where the next crisis will emerge. We therefore need to ensure robust and durable resilience for the global banking system to withstand a range of potential shocks.    

    Banking crises have a profound impact on our economies and social welfare. In my home country of Sweden, the 1990s banking crisis and the GFC resulted in output losses of over 30% and 25%, respectively.10 These are not just numbers, but reflect economic hardships endured by citizens, including job losses and foregone growth potential. We must always remember this stark reality when regulating and supervising banks.

    And yet, despite the painful effects of banking crises, history suggests that the lessons from such events are often forgotten as part of a “regulatory cycle”.11 Memories fade over time, and a view takes hold that this time really is different. As the cycle turns, policymakers, supervisors and risk managers at banks sometimes become complacent and give in to pressures to dilute regulatory safeguards. Such a journey never ends well: it is only a matter of time until stormy waters reveal banks’ stress points and fractures.

    This is not a course that I intend to chart. The reality is that a banking system built upon leverage and maturity transformation will inevitably face episodes of distress. Misconduct, governance failures and imprudent risk management practices further increase the likelihood and impact of crises.

    To be clear, the first and most important source of resilience comes from banks’ own risk management practices and governance arrangements. The boards and management of banks should be the first port of call in managing and overseeing risks; they cannot outsource these functions to supervisors. Yet history suggests that some banks’ boards and senior management occasionally fail in their most elementary responsibilities. So it is critical that bankers, policymakers and supervisors do not forget the lessons from the past and take a medium-term perspective. Consider, for example, the recent growth in the use of so-called synthetic risk transfers (SRTs) by banks across several regions.12 Such transactions are intended to reduce banks’ capital requirements by “transferring” the risks associated with some exposures to a third party – often a non-bank financial intermediary (NBFI) – which provides credit protection or insurance. The Basel Framework allows for such transactions to take place subject to meeting certain criteria, and they may in instances be an effective risk management technique. However, I personally believe that we should not lose sight of the bigger picture and lessons from the GFC. In particular, we should ask ourselves: are there system-wide risks that warrant closer attention? For example, what are the risks if NBFI investors of SRTs are in turn borrowing from other banks? Is there sufficient transparency about the interconnections and potential spillover of risks between banks and NBFIs in these – and other – markets? A natural starting point to help answer these questions is to remind ourselves of the lessons from the GFC. 

    Just like a sailor needs steady winds, strong sails and safety gear for times of stress to ensure a smooth voyage, a bank requires strong prudential regulation and supervision to ensure stability. And its board and senior management should display the leadership and competency of a veteran captain. In addition, it is critical that the Committee remains vigilant and pursues a forward-looking approach to assessing risks and vulnerabilities to help reduce the risk of the global banking system being blown off course into financial storms.

    The Committee’s work should also continue to be anchored by rigorous empirical analysis and not succumb to short-term or specific interests of some external stakeholders. And the GHOS agreed to mark a clear end to the Basel III policy agenda in 2020 when it noted that any further potential adjustments to Basel III “will be limited in nature and consistent with the Committee’s evaluation work”.13 This is why the Committee is pursuing analytical work based on empirical evidence to assess whether specific features of the Basel Framework performed as intended during the 2023 banking turmoil, such as liquidity risk and interest rate risk in the banking book.14 On this note, we recently provided a progress report to the G20 which outlines the progress we have made in the area of liquidity risk.15 This is a good start, but there is still more work to be done. Structural changes affecting the financial system, such as the ongoing digitalisation of finance and role of social media, require policymakers and supervisors to remain alert and be open-minded as to whether any additional regulatory and supervisory measures are needed.

    Principle 2: All hands on deck

    My second guiding principle is the need for global and transparent engagement with a wide range of stakeholders.

    Financial stability is a global public good that requires cross-border cooperation. An open global financial system requires global prudential standards. Failure on this count could result in regulatory fragmentation, regulatory arbitrage and a potential “race to the bottom” leading to a dilution of banks’ resilience.16

    So I will strive to build on the strong track record of Committee members to cooperate and collaborate in tackling cross-border financial stability challenges and shoring up the resilience of the global banking system. We have witnessed the benefits of global cooperation throughout the Committee’s history, including with the Concordat, Basel I, II and III, and the Basel Core Principles, and of course more recently during the Covid-19 period and last year’s banking turmoil. And in a world facing major geopolitical uncertainty, and where the merits of multilateralism are sometimes questioned, it is even more critical for the Committee to remind all stakeholders of the necessity of cross-border cooperation.

    The need for cooperation is not just among Committee members themselves. Given the increasingly cross-sectoral and cross-cutting nature of developments affecting the global financial system – such as the ongoing digitalisation of finance, the growing role of NBFIs, the increasing nodes of interconnections among banks, central counterparties and NBFIs, or climate-related financial risks – the Committee will need to increasingly liaise with a wide range of authorities. This includes ongoing cooperation with central banks and supervisory authorities outside the Basel Committee’s membership, but also financial sector authorities in charge of overseeing conduct, resolution, deposit insurance, payment systems, securities and other NBFIs. In fact, for certain topics there may also be a need to go beyond the financial sector sphere and liaise with authorities with responsibility for accounting, competition, data privacy and security, just to mention a few.

    To this end, it is critical that the Committee continues to seek the views of a wide range of stakeholders, including academics, civil society, legislators, market participants and the general public. Even if we may have different views on specific elements of the Committee’s work, these engagements unquestionably enhance the Committee’s outputs by bringing in different perspectives.

    Principle 3: Keep your heading steady

    My third principle is the importance for the Committee to act as a lighthouse, cutting through the fog and stormy conditions.

    Bank regulation and financial supervision are an anchor to help prevent banks from drifting into risky waters that could endanger the entire economy. A resilient and healthy banking system is one that can best support households and businesses through the robust provision of key financial services across the financial cycle.17

    Let me give you an example from my home country. Before the pandemic, the initial set of Basel III standards were fully implemented in Sweden. These reforms significantly increased Swedish banks’ resilience to shocks. In addition, the Swedish authorities activated the Basel III countercyclical buffer and set it at 2.5%, with the aim to further enhance Swedish banks’ resilience. Doing so allowed us to release this buffer in response to the Covid-19 crisis, which in turn helped Swedish banks to absorb shocks and to lend to creditworthy households and companies throughout the pandemic. The releasability of this buffer facilitated its drawdown by banks in a way that made it genuinely usable.

    It may be tempting for some to argue that regulations should be watered down and that supervision should be less intrusive, in order to promote lending to specific sectors or to “unlock” economic growth. But, as with other areas of economic policymaking, any perceived short-term gains are usually more than offset by longer-term pain. Shaving off a few basis points of capital will not unlock a wave of new lending, but it will weaken your resilience. More generally, being well capitalised is a competitive advantage for banks and their shareholders, as it ensures that they can continue to grow and invest in profitable projects across the financial cycle. The Committee’s work should therefore continue to be centred around its mandate.

    To be clear, this is entirely compatible with stable and healthy earnings that are fundamental to banking and financial stability. So it is reassuring that the sample of banks for which we regularly collect data – many of which are represented here today – have over time been able to both meet new regulatory requirements, make healthy profits and pay out significant dividends. For example, in 2011 banks faced a CET1 capital shortfall from Basel III of about €485 billion. Since then, their profits have exceeded €4 trillion and banks have paid out over €1.3 trillion of common share dividends, while at the same time building capital and liquidity buffers to meet the new requirements.18

    More generally, the Committee will continue to focus its work on those prudential areas that require a global and coordinated response. Its outputs will continue to take the form of global minimum standards to provide a common financial stability baseline across jurisdictions. Jurisdictions are, of course, free to go beyond this baseline if the size and structure of their banking system and the associated risks warrant additional measures. Such measures only reinforce global financial stability. Just as importantly, we will continue to promote strong supervision, including by sharing supervisory experiences and, when needed, developing additional guidance to assist supervisors worldwide.

    In that regard, I am sure all of us can agree that it is in our collective best interest to have global standards. We may have different opinions about Basel III, but I think we can all agree that having a globally consistent level playing field is preferable to a patchwork of disparate regulations. A global compromise – however imperfect it may appear to some – is preferable to a free-for-all framework. Internationally active banks then have a common minimum regulatory baseline which they can manage their business around. Supervisors are able to better assess the relative resilience of their banks across jurisdictions. The scope for regulatory arbitrage is reduced. Level playing fields are enhanced. Now compare this with a fragmented bank regulatory world, where banks would have to comply with completely different rules across borders with no common minimum baseline. Such a scenario could also trigger a race to the bottom across jurisdictions, resulting in a frail regulatory framework that would threaten global financial stability and banks’ own viability. We would all be worse off in such a situation. It is therefore in your own interest to avoid such a scenario and to promote a common and consistent implementation of Basel III.

    Finally, we should keep the fundamentals of bank regulation and supervision in mind. While it may be tempting to focus on the “newest” trends affecting the banking system, we should not lose sight of the more traditional risks, such as credit risk and liquidity risk. Regarding the former, despite repeated headwinds over the past few years, the feared wave of financial problems for households and corporate defaults has yet to appear. Yet I am personally concerned about some stakeholders’ seeming complacency in assuming that the worst is over and that the seas are calm. It is a universal truth that a calm sea does not make a clever sailor.

    With continued uncertainty about interest rate trajectories and the economic outlook, hidden currents and unseen reefs could still pose a challenge. Banks and supervisors must remain vigilant to such risks.

    Principle 4: Sailing to simplicity

    My last principle is to ensure that the Committee continues to adequately balance risk sensitivity with simplicity and comparability. Finance and banking are complex activities, so there is perhaps an understandable temptation to match that complexity in the regulatory framework.

    Yet one does not always fight fire with fire. Undue complexity in prudential regulation can undermine the ability for a bank’s board and senior management to fully understand the risk profile of their bank. It can also impede supervisors’ ability to effectively assess the resilience of banks and create opaque opportunities for arbitrage. And while complex rules may sound conceptually appealing, they may also prove to be challenging to operationalise in practice.

    Banking is as much about risk as it is about uncertainty.19 In such a world, simpler approaches can sometimes be more robust and outperform more complex ones.20 So I personally think that policymaking initiatives should ensure that sufficient attention is placed at striking the right balance between risk sensitivity, simplicity and comparability.

    Conclusion

    In conclusion, the Committee will continue to be guided by its mandate of strengthening the regulation, supervision and practices of banks worldwide. In the near term, when it comes to Basel III, all GHOS members have unanimously reaffirmed their expectation of implementing all aspects of the framework in full, consistently and as soon as possible.21

    More generally, fulfilling our mandate requires us all to remember that:

    • Banks’ boards and senior management are the captains of their ships. You have both the primary and ultimate responsibility for overseeing and managing risks. Regulation and supervision can provide safeguards, but cannot and should not be a substitute for your role in managing your risks prudently.
    • Global bank prudential standards are a public good. We are collectively all better off in a world with global standards than in an autarkic one. Lobbying for deviations at a national level can perhaps provide short-term (private) gains but will ultimately threaten global financial stability. As internationally active banks, it is not in your interest to sail in such an environment.
    • We cannot forget the lessons from past banking crises to prepare effectively for the future. In a financial system undergoing profound structural transformations, such as the digitalisation of finance, the Committee should keep an open mind as to whether additional adjustments to the Basel Framework are warranted over the medium term. And we will focus on global financial stability issues that require a global response.

    As Chair, I am fully committed to leading the Committee in that direction.

    References

    Aikman, D, M Glaesic, G Gigerenzer, S Kapadia, K Kastikopoulos, A Kothiyal, E Murphy and T Neumann (2021): “Taking uncertainty seriously: simplicity versus complexity in financial regulation”, Industrial and Corporate Change, vol 30, no 2, April.

    Basel Committee on Banking Supervision (BCBS) (2020): “Governors and Heads of Supervision commit to ongoing coordinated approach to mitigate Covid-19 risks to the global banking system and endorse future direction of Basel Committee work”, press release, 30 November.

    — (2022a): Evaluation of the impact and efficacy of the Basel III reforms, December.

    — (2022b): Evaluation of the impact and efficacy of the Basel III reforms – Annex, December.

    — (2023): Report on the 2023 banking turmoil, October.

    — (2024a): “Erik Thedéen appointed as Chair of the Basel Committee on Banking Supervision”, press release, 13 May.

    — (2024b): “Governors and Heads of Supervision reiterate commitment to Basel III implementation and provide update on cryptoasset standard”, press release, 13 May.

    — (2024c): “BCBS dashboards”, September.

    — (2024d): The 2023 banking turmoil and liquidity risk: a progress report, October.

    Carstens, A (2019): “The role of regulation, implementation and research in promoting financial stability”, keynote address at the Bank of Spain and CEMFI Second Conference on Financial Stability, Madrid, 3 June.

    Hernández de Cos, P (2019): “The future path of the Basel Committee: some guiding principles”, keynote speech at the Institute for International Finance Annual Membership Meeting, Washington DC, 17 October.

    — (2022): “A resilient transition to net zero”, remarks at the International Economic Forum of the Americas, 28th edition of the Conference of Montreal, 11 July.

    — (2024): “Building on 50 years of global cooperation”, keynote speech at the 23rd International Conference of Banking Supervisors, Basel, 24 April.

    Knight, F (1921): Risk, uncertainty and profit, Houghton Mifflin.

    Laeven, L and F Valencia (2018): “Systemic banking crises revisited”, IMF Working Paper, no 18/206.

    S&P Global (2024): “Banks ramp up credit risk transfers to optimise regulatory capital”, 22 February.

    Viterbo, A (2019): “The European Union in the transnational financial regulatory arena: the case of the Basel Committee on Banking Supervision”, Journal of International Economic Law, vol 1, no 24, June.


    This speech and the views expressed are those of the individual and do not necessarily reflect the views and/or position of the BIS or CPMI.

    MIL OSI Global Banks

  • MIL-OSI New Zealand: Economy – Navigating monetary policy through the unknown: A speech by RBNZ Governor Adrian Orr

    Source: Reserve Bank of New Zealand

    24 October 2024 – RBNZ Governor Adrian Orr

    Low and stable inflation is again in sight, as we navigate monetary policy. In New Zealand, consumer price inflation is now at 2.2%, converging on the midpoint of our 1 to 3% target range, Governor Adrian Orr says.  

    “That’s something to celebrate,” he says in a speech delivered at the Peterson Institute in Washington DC, while attending the IMF and World Bank Annual Meetings, where policymakers are discussing monetary policy.

    “Navigating monetary policy, with a 1 to 2-year lag between policy action and ultimate outcome, is akin to ocean circumnavigation,” Mr Orr says.  

    “When setting monetary policy, we have a clear – unmovable – destination in mind. However, we only have a reasonable sense of where we are currently located, and only partial knowledge of the sturdiness of the economy and the effectiveness of policy instruments.  

    “We must also be cognisant of unanticipated risks ahead, and at times act swiftly to avoid perils. First, stay afloat. For monetary policy makers, peril includes a long and persistent downturn, with monetary policy stuck at the effective lower bound, or an inflationary spiral. Over recent years, global monetary policy navigators have had to act fast to avoid both perils.”

    “It is now pleasing to be able to ease monetary policy in New Zealand, but it’s still at a level we think is restrictive, so as to work against any remaining inflationary tendencies that may linger.”

    A key question now is how long it will take for any lingering inflationary pressures to dissipate?  “The sooner this happens, the sooner we will be able to claim that the inflation caused by COVID-19 – amongst other severe shocks — is behind us.”

    “We are in a situation where we can provide the perspective of an economy returning to low and stable inflation, interest rates becoming less restrictive, and economic activity being revitalised. But that is just the most recent navigational plot on the ocean chart,” he says.

    More information

    Watch the livestream on the PIIE YouTube channel

    https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=86f4fb4d8a&e=f3c68946f8

    Download the speech (PDF, 1MB) https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=6900311933&e=f3c68946f8

    MIL OSI New Zealand 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 USA: Duckworth, Durbin, Quigley, Sorensen Announce $33.5 Million in Federal Funding for Peoria and Chicago Airports

    US Senate News:

    Source: United States Senator for Illinois Tammy Duckworth
    October 23, 2024
    [CHICAGO, IL] –  U.S. Senator Tammy Duckworth (D-IL), U.S. Senate Majority Whip Dick Durbin (D-IL), U.S. Representatives Mike Quigley (D-IL-05) and Eric Sorensen (D-IL-17) today announced $33,510,000 in federal funding from the Department of Transportation’s Airport Terminal Program. 
    With today’s announced funding, General Wayne A. Downing Peoria International Airport will receive $13,510,000 for the replacement of their air traffic control tower, and Chicago O’Hare International Airport will receive $20,000,000 for an expansion to Terminal 5.
    “Illinois’s airports are critical economic engines for our state,” Duckworth said. “This funding will help improve and modernize O’Hare and Downing International Airports and, after years of neglecting our nation’s infrastructure, I’m proud every day to see the Bipartisan Infrastructure Law at work rebuilding infrastructure all across our country. I will continue to work alongside Senator Durbin and the Illinois delegation to make traveling safer and more reliable for all passengers while ensuring that our communities are receiving the much-needed federal resources they deserve.”
    “By improving and modernizing airport infrastructure, we are laying the foundation for increased connectivity and reliability,” said Durbin. “Today’s announced federal funding for upgrading our airports across Illinois will enhance the travel experience for passengers and promote economic growth. I will continue working with Senator Duckworth and our Congressional colleagues to ensure Illinois airports have the necessary federal resources to keep passengers safe and connected.”
    “This important funding coming to Peoria International Airport is about connecting my neighbors in Central Illinois to the world. The new air traffic control tower will allow controllers to see the end points of both runways and all taxiways, making it safer for travelers and airport staff. I am grateful to Senators Durbin and Duckworth for their support of this project as we continue our work to keep air travel safe and open Peoria to new destinations,” said Sorensen.
    “Throughout my career, I have worked tirelessly to ensure that travelers receive the best and most efficient service possible at O’Hare. Today’s funding announcement will build on the progress we have already made. This expansion will benefit not only our constituents but also travelers across the country, while boosting our economy. When I voted for the Bipartisan Infrastructure Law, I did so knowing it would bring vital investments like these and create lasting benefits across our state. Together, we are paving the way for a brighter future and a stronger transportation network for everyone,” said Quigley.
    Duckworth and Durbin previously worked to secure a provision in the Bipartisan Infrastructure Law (BIL) to make Peoria’s airport-owned air traffic control tower (ATCT) eligible for federal funding. Following the enactment of the Bipartisan Infrastructure Law, the ATCT has received $29 million in federal funding across two previous grants.
    Duckworth and Durbin helped secure two previous BIL Airport Terminal Program grants for Chicago O’Hare International Airport for the Terminal 3 Project totaling $90 million, a 2023 grant of $50 million and a 2024 grant of $40 million.
    -30-

    MIL OSI USA News

  • MIL-OSI USA: Garamendi Honors 42 Women at Annual Women of the Year Awards

    Source: United States House of Representatives – Congressman John Garamendi – Representing California’s 3rd Congressional District

    BENICIA, CA – Today, at his 11th annual Women of the Year event, Congressman John Garamendi (D-CA) honored 42 women from the 8th Congressional District of California who are leaders and visionaries in their communities. These honorees have all made significant contributions to society through public service, business, education, and the local economy.

    “Every year, I have the privilege of celebrating the remarkable achievements and contributions of outstanding women in California’s 8th District,” Garamendi said. “These leaders come from diverse backgrounds, and each has had a profound impact on their communities and those around them. It is a privilege to honor their efforts.”

    “Their commitment and passion for service merit this recognition, and through this award, their contributions will be preserved and documented in the official Congressional Record in Washington, D.C.,” Garamendi said.

    You can view photos and biographies of this year’s honorees here.

    A legislative update that was shared at the event is available here.

    A video of the event can be found here.

    The list of 2024 Women of the Year Honorees is included below:

    Contra Costa County:

    Angel Greer (Pittsburg)

    Barbara Akoro (Bay Point)

    Bisa French (Richmond)

    Blanca Hernandez (Crockett)

    Carole Paterson (Fairfield)

    Claryssa Wilson (Antioch)

    Dr. Myra Altman  (Kensington)

    Genoveva Garcia Calloway (San Pablo)

    Harpreet Sidhu (Hercules)

    LaShonda White (Richmond)

    Linda Whitmore (Richmond)

    Lori Ogorchock (Antioch)

    Maria Theresa Viramontes (Richmond)

    Maureen Toms (Pinole)

    Myrtle Braxton (Richmond)

    Patricia Durham (El Cerrito)

    Ruthie Abelson Olivas (Pinole)

    Tamara Shiloh (Richmond)

     

    Solano County:

    Brigette Hunley (Fairfield)

    Caroline Villarreal (Fairfield)

    Captain Rachel Marron (Travis Air Force Base)

    Chief Master Sergeant Sandrine Hanley (Travis Air Force Base)

    Chief Master Sargeant Laura Hoover (Travis Air Force Base)

    Colonel Lisa Palmer (Travis Air Force Base)

    Daria Bautista (Travis Air Force Base)

    Dinah Villanueva-Ryan (Vallejo)

    Dr. Bonnie Hamilton (Fairfield)

    Dr. Diane Dooley (Benicia)

    Dr. Tiffáni Thomas (Suisun City)

    Dr. Rozzana Verder-Aliga (Vallejo)

    Guillermina Loera-Diaz (Vallejo)

    Gregoria Torres (Vallejo)

    Kathy Kerridge (Benicia)

    Keycha Gallon (Vallejo)

    Kristina Kauzinger (Vacaville)

    Lieutenant Colonel Christie Taylor (Travis Air Force Base)

    Major Ava T. Margerison (Travis Air Force Base)

    Sigrid J. Perkins (Travis Air Force Base)

    Simone Lane (Vallejo)

    Sriha Srinivasen (Fairfield)

    Tonya Robinson (Suisun City)

    Viola Robertson (Vallejo)

     

    ###

    MIL OSI USA News

  • MIL-OSI USA: Pallone Leads Northeast Corridor Tour with Amtrak, NJ Transit, and Federal Officials to Address Ongoing Service Issues

    Source: United States House of Representatives – Congressman Frank Pallone (6th District of New Jersey)

    New Brunswick, NJ – Today, Congressman Frank Pallone (NJ-06) led a tour of the Northeast Corridor (NEC) with key leaders from Amtrak, NJ Transit, and the U.S. Department of Transportation’s Federal Railroad Administration (FRA). Pallone organized the tour to directly address the significant disruptions and delays that have plagued New Jersey commuters throughout the summer. Amtrak CEO Stephen Gardner, NJ Transit President Kevin Corbett, FRA officials, and members of New Jersey’s congressional delegation joined Pallone to assess the status of long-overdue infrastructure improvements, many of them funded through the historic Bipartisan Infrastructure Law.

    “For months, New Jersey commuters have been dealing with unbearable delays and service disruptions on the Northeast Corridor. I’ve been pushing for better service because our residents deserve reliable and efficient transportation. Today’s tour gave us a firsthand look at the status of critical projects that will reduce disruptions and modernize our rail system. I will continue to hold Amtrak and NJ Transit accountable until these long-overdue improvements are fully realized. New Jersey commuters deserve nothing less,” said Pallone.

    The tour began at Moynihan Train Hall in New York City and included stops in Newark and New Brunswick. Key projects showcased during the tour included the Hudson Tunnel Project, Portal North Bridge, Penn Station Capacity Expansion, the Sawtooth Bridges Replacement, and the Harrison Fourth Track.

    Since the summer of 2024, Pallone has been seeking answers and improvements following numerous disruptions on the Northeast Corridor. After a major electrical malfunction in May, Pallone sent a letter demanding that Amtrak prioritize federal funds for modernization and ensure reliable service. In response, Amtrak outlined steps to address the service failures, but Pallone continued to press for immediate solutions as issues persisted. He has since engaged in regular calls with Amtrak CEO Stephen Gardner, emphasizing transparency, accountability, and the need for regular updates on progress. Pallone has also condemned proposed Republican budget cuts to Amtrak, warning they would undermine critical infrastructure improvements.

    Pallone’s months-long efforts culminated in today’s tour of key NEC projects, showcasing the urgent need for continued upgrades. He urged Amtrak and NJ Transit to expedite efforts to fix century-old overhead wires and complete major infrastructure projects.

    The tour concluded with a press gaggle at New Brunswick Station, where Pallone and other members of New Jersey’s congressional delegation reiterated their commitment to improving rail service for the state’s commuters. Pallone emphasized the importance of federal support to ensure these projects are completed and provide long-lasting benefits for the region.

    “We appreciate the New Jersey Congressional Delegation’s keen interest in the century-old infrastructure along Amtrak’s Northeast Corridor that has suffered from decades of disinvestment,” said NJ TRANSIT President & CEO Kevin S. Corbett. “NJ TRANSIT, with support from Governor Murphy and our delegation, will continue to work collaboratively with Amtrak to support accelerating all the necessary infrastructure improvements that will deliver the best possible customer experience for generations to come.”

    “Amtrak and NJ TRANSIT are working hard to fix the range of issues that plagued us in May and June, and while major disruptions have been greatly reduced, our collaboration is not stopping as we continue to inspect, maintain and improve service for all customers and seek to identify and fix root causes,” said Amtrak CEO Stephen Gardner. “We are thankful to have the opportunity to host Congressman Pallone and the rest of the New Jersey Congressional delegation so they can see the infrastructure and our collaborative efforts first-hand. We greatly appreciate the Delegation’s leadership in seeking to secure the federal investments necessary to modernize our infrastructure for improved reliability.”

    “Today’s tour was an important step in our efforts to improve service, efficiency, and safety for NJ Transit and Amtrak customers,” said Congressman Rob Menendez (NJ-08). “Since coming to Congress, I’ve made this a top priority — directly addressing the challenges with Secretary Buttigieg, encouraging continued collaboration with our partners across federal and state government, and working to deliver funding to improve rail service in New Jersey. I’m looking forward to continuing to work with my colleagues in the delegation to bring relief to our constituents.”

     “Fixing and strengthening public transit in New Jersey must be a top priority to help families struggling with affordability and reliability,” said Congressman Kim. “Today’s tour showed that there’s been progress to prevent disruptions and improve service, but there’s more to be done. I’ll continue working with my colleagues to keep investing in public transit so New Jerseyans can get to work and get home safely and on time.”

    “I was pleased to get Amtrak and NJ TRANSIT leadership in the same room with members of the New Jersey Congressional Delegation to discuss how we can work together going forward to address the most pressing concerns for New Jersey commuters while fighting for additional federal funding to make both short and long-term upgrades to infrastructure along the Northeast Corridor. It’s essential for our state: New Jersey families must be able to rely on high quality, affordable, and accessible transportation. That’s why I have been leading efforts with Reps. Pallone, Menendez, and the Jersey delegation to hold Amtrak and NJ TRANSIT accountable for the ongoing delays, maintenance failures, and lack of communication with riders that have created another “Summer of Hell” for New Jersey commuters. Today’s conversations were a step in the right direction,” said Rep. Sherrill.

    “When our trains aren’t functioning properly, it’s not just a headache for commuters, it takes money right out of their pocketbooks. It’s critical that we all sit at the table together to discuss these problems. I’m glad that today, we’re taking steps to do just that and get our trains, our commuters, and our economy back on track as quickly as possible,” said Congressman Josh Gottheimer (NJ-5). “I will always fight to make life more affordable for commuters and ensure they can show up to work, see loved ones, and provide for their families.“

    MIL OSI USA News

  • MIL-OSI New Zealand: Key Council decisions made: cruise ship support, annual report and representation

    Source: Environment Canterbury Regional Council

    Council’s regular meeting took place today (Wednesday 23 October), with several key topics on the agenda.

    Annual Report 2023/24 adopted

    Our Annual Report covering the 2023/24 financial year was adopted at the Council meeting.

    The report highlighted that we achieved 90 per cent of our levels of service, compared to 75 per cent the previous year. Similarly, 95 per cent of targets were achieved compared to 89 per cent in 2022/23.

    Other highlights from the report included:

    • 14.5 million passenger trips on our public transport network – up by nearly 2.9 million on 2022/23 (and the highest patronage levels since the 2011 Christchurch earthquakes)
    • 3,115 labour hours spent controlling sycamore, cotoneaster, wild cherry and wilding conifers in the Rakaia Gorge
    • 63 water and land projects funded by the Canterbury Water Management Strategy zone committees to implement their action plans
    • 1,266 resource consent application decisions
    • As of the end of 2023/24, we have resolved over 50 per cent of legacy applications and expect to clear them all by the end of 2024, meaning we can focus on new applications and processing consents more efficiently for our customers. We are now processing 70 per cent of new applications within the statutory timeframes.

    In adopting the Annual Report, Chair Craig Pauling and the Councillors acknowledged the mahi (work) put in by staff, both during the year and in producing the Annual Report.

    “This reflects all the work that we have done for our community over the last 12 months. It’s been a massive effort on all fronts, and to get an unmodified opinion from Audit New Zealand is a really great result.”

    Representation arrangements stays with status quo

    Following community feedback, the Council agreed to retain a similar representation arrangement to what is currently in place for the 2025 elections.

    The status quo means two Councillors for each of the seven existing constituencies, with some minor boundary adjustments to the Christchurch City constituencies:

    • Aligning the Christchurch constituency boundaries to the current city ward boundaries
    • Altering the boundary of the Christchurch Central/Ōhoko constituency to exclude the Linwood Ward and include the Papanui Ward
    • Altering the boundary of the Christchurch North-East/Ōrei constituency to exclude the Papanui Ward and to include the Linwood Ward.

    This is a change from the initial proposal the Council consulted the community on earlier this year.

    Visit our Have Your Say website for more information on the representation review.

    Support for cruise ships re-introduced

    Councillors have decided to allocate up to $210,000 from the public transport reserves to meet potential demand on the Metro network for the upcoming cruise ship season.

    This will see the extra provision of public transport on Route 8 on eight key days during the cruise ship season to minimise disruption, particularly around school and commuter peaks.

    This would provide on-street ticketing and additional capacity.

    Find out more: Public transport support on its way to help customers this cruise ship season

    Our Waitarakao Strategy adopted

    A strategy to restore the mauri (life force) of Waitarakao Washdyke Lagoon catchment, near Timaru, has been approved by two of its four partners this week, following extensive community feedback and the recent endorsement from the project’s joint steering group.

    Both Timaru District Council and we have this week approved the Our Waitarakao: Waitarakao Washdyke Lagoon Catchment Strategy at their respective Council meetings. The remaining two project partners, Te Rūnanga o Arowhenua and the Department of Conservation, will now consider approval through their processes.

    Find out more about the Our Waitarakao: Waitarakao Washdyke Lagoon Catchment Strategy

    MIL OSI New Zealand News

  • MIL-OSI New Zealand: First RMA Amendment Bill passes third reading

    Source: New Zealand Government

    The coalition Government’s Resource Management (Freshwater and Other Matters) Amendment Bill has passed its third reading in Parliament, delivering on the Government’s commitment to improve resource management laws and give greater certainty to councils and consent applicants, RMA Reform Minister Chris Bishop, Agriculture Minister Todd McClay, Environment Minister Penny Simmonds and Associate Minister for the Environment Andrew Hoggard say.

    “Our RMA Reform programme is happening in three phases. We repealed the previous government’s excessively complicated reforms through Phase One before Christmas last year. Now in Phase Two we’re implementing a one-stop-shop fast-track consenting regime, legislating for a raft of ‘quick fixes’ to the interim RMA through two Amendment Bills and a suite of changes to national direction, and then in Phase Three we’ll fully replace the RMA with a new regime guided by private property rights,” Mr Bishop says.

    “This first Amendment Bill is focused on targeted changes that can take effect quickly and give certainty to councils and consent applicants, while new legislation to replace the RMA is developed,” Ms Simmonds says.

    “Farming, mining and other primary industries are critical to rebuilding the New Zealand economy. This Bill reduces the regulatory burden on resource consent applicants and supports development in these key sectors,” Mr McClay says.

    The Bill makes several changes to the Resource Management Act and national direction.

    The Bill:

    • clarifies that resource consent applicants no longer need to demonstrate their proposed activities follow the Te Mana o te Wai hierarchy of obligations, as set out in the National Policy Statement for Freshwater Management (NPS-FM).
    • amends stock exclusion regulations in relation to sloped land.
    • repeals the permitted and restricted discretionary intensive winter grazing regulations and replaces these with new regulations relating to critical source areas and riparian setbacks
    • aligns the consenting pathway for coal mining with the pathway for other extractive activities across the National Policy Statement for Indigenous Biodiversity (NPS-IB), NPS-FM, and the National Environmental Standards for Freshwater (NES-F).
    • suspends the requirement for councils to identify new Significant Natural Areas (SNAs) in accordance with the NPS-IB for three years, to give enough time for a thorough review of how they operate.
    • streamlines the process for preparing national direction under the RMA
    • clarifies councils’ ability to consent discharges where consent conditions will reduce effects over time
    • pauses the roll out of Freshwater Farm Plans across the country
    • restricts councils’ ability to notify new freshwater plans from 22 October 2024 until the gazettal of the replacement National Policy Statement for Freshwater Management (NPS-FM).

    Agriculture Minister Todd McClay says improving primary sector profitability is key to boosting our largest exporting sector. Regulations need to be fit-for-purpose and not place unnecessary compliance costs on farmers and growers. 

    “By removing the need for resource consent applicants to demonstrate that their activities follow the hierarchy of obligations, we’ve cut an unnecessary compliance burden and are reducing costs faced by farmers and growers,” Mr McClay says.

    “The changes to stock exclusion and winter grazing regulations represent a move to a more risk-based, catchment-focussed approach.

    “We’ve removed the low slope map and will let regional councils and individual farmers determine where stock need to be excluded, based on risk. The focus is on farm-level and regionally suitable solutions. 

    “Regional councils tell us there has been a significant improvement in winter grazing practices, with farmers changing where they plant fodder crops and how they manage winter grazing.

    “Importantly, non-regulatory measures are already in place to support the continued improvement of winter grazing practices going forward.” Mr McClay says.

    Associate Environment Minister Andrew Hoggard says freshwater farm plans are an essential for managing freshwater risks. 

    “The intention is that freshwater farm plans will provide an effective way to manage the impacts of farming activities on freshwater, including winter grazing and stock exclusion, in a risk-based and practical way.

    “These changes will help bring efficiencies to a system that was too complex. The Government has worked at pace to simplify and improve the freshwater farm plan system. We have delivered for farmers and growers.”

    The Resource Management (Freshwater and Other Matters) Amendment Bill will come into force the day after it receives Royal Assent.

    MIL OSI New Zealand News

  • MIL-OSI USA: Celebrating Bioenergy Day 2024 With a Research Retrospective

    Source: US National Renewable Energy Laboratory


    Over the past year NREL researchers made critical advancements for the bioeconomy including recyclable wind turbine blades, converting carbon dioxide to formic acid, biobased and biodegradable polyesters, and wastewater resource recovery using algae. Photos by NREL 

    The U.S. Department of Energy (DOE) National Renewable Energy Laboratory (NREL) bioenergy research empowers the decarbonization of our nation’s industrial and transportation sectors and a circular bioeconomy through development and deployment of sustainable fuel, chemical, and polymer technologies.

    NREL researchers have been uncovering secrets about interesting methods and technologies such as biodegradable plastics, phosphorus-eating algae for resource recovery, sustainable aviation fuel (SAF), and converting carbon dioxide (CO2) to value-added chemicals.

    With National Bioenergy Day 2024 upon us, NREL reflects on some of the team’s scientific discoveries over the past year that have helped strengthen the bioeconomy.

    Bioenergy Research Highlights From Fiscal Year 2024

    Building Bridges Through Relationships and Photosynthesis Research

    How do you bring together long-time research friends and help develop STEM collaboration with historically marginalized institutions and a DOE national laboratory all in a way that ignites passions and furthers bioenergy research? Through the DOE Office of Science Visiting Faculty Program (VFP) of course! Check out how the VFP brought together old friends and new, while mentoring a new generation of STEM students to understand the energy-generating mysteries of blue-green algae.

    An NREL scientist holds small cubes of renewable biomass resin that can be used in wind turbine blades and can be recycled. Photo by Werner Slocum, NREL

    Advancing Methods for Recyclable, Plant-Based Wind Turbine Blades

    Researchers at NREL see a realistic path forward to the manufacture of wind turbine blades derived from renewable biomass. The chemical recycling process allows the components of the blades to be recaptured and reused again and again, allowing the remanufacture of the same product. This method has the potential to end the current practice of old blades winding up in landfills at the end of their useful life.

    Tools To Investigate How Organisms Control Energy at the Electron-Level

    In NREL’s Advanced Spin Resonance Facility there is a special technical capability called electron paramagnetic resonance spectroscopy that provides insight into the most basic energy carrier and unit, the electron. Demystifying the fundamental processes of how organisms control energy at the level of electrons is key to advancing the applied research and development of systems for generating sustainable low-carbon fuels, chemicals, and electricity.

    New Device Architecture Enables Streamlined Production of Formic Acid From CO₂ Using Renewable Electricity

    Formic acid is a potential intermediate chemical with many applications, especially as a raw material for the chemical or biomanufacturing industries and potential input for biological upgrading into SAF. A research team led by NREL developed a conversion pathway to produce formic acid from CO2 with high energy efficiency and durability while using renewable electricity. Analysis confirmed that this pathway is economically viable at scale and with use of commercially available components.

    The novel perforated cation exchange membrane (CEM) architecture in a CO₂ electrolyzer to achieve energy-efficient and durable formic acid production has a patent by K.C. Neyerlin and Leiming Hu pending. Illustration by Elizabeth Stone, NREL

    NREL Biomass Refining Technology a Cornerstone of SAFFiRE Renewables Biofuel Pilot Plant

    SAFFiRE Renewables LLC broke ground in August 2024 on its biofuel pilot plant in Kansas to turn agriculture residue into a scalable biofuel business. The company has licensed an NREL technology that uses an alkaline bath and mechanical shredder to prepare corn stover for ethanol fermentation—essential steps for accessing the energy-dense sugars locked inside. The new plant will not only help DOE with its SAF goals, but using lignocellulosic corn leaves, stalks, and cobs can also reduce greenhouse gas emissions by 88% to 108% on a life-cycle basis compared to conventional jet fuel.  

    WaterPACT Project To Quantify and Reduce Plastic Waste in U.S. Rivers

    With more than a million tons of plastic debris entering ocean-bound rivers, creeks, and sewer drains every year, it is essential to intercept this waste before it enters the ecosystems, communities, and ocean. To help solve this problem, the NREL-led Waterborne Plastics Assessment and Collection Technologies (WaterPACT) project is on a mission to develop renewable-energy-powered technologies that detect, quantify, and collect plastic from U.S. waterways.

    The WaterPACT research team collected plastic and water samples near the mouths of the Columbia, Delaware, Los Angeles, and Mississippi rivers. Each river has a unique watershed (the area of land that drains water to it) and volume of plastics emissions. Illustration by Elizabeth Stone, NREL

    The North Face Taps NREL-Led BOTTLE Consortium To Scale Biodegradable Polyester Alternative

    Polyester-based clothing sheds and disperses tiny microplastic fibers throughout homes, soils, and waterways, taking centuries to degrade. One potential solution is replacing today’s petroleum-derived polyester with a nontoxic, biodegradable alternative made from polyhydroxyalkanoates (PHAs). A team of BOTTLE consortium scientists from NREL and Colorado State University have developed a portfolio of PHAs that behave like conventional polyester but are biobased, biodegradable, and easier to recycle. In conjunction with The North Face, the BOTTLE team is scaling the process to produce several pounds of PHA fiber, which The North Face will test and evaluate for use in its product lines.

    $15 Million Multilaboratory Effort To Advance Commercialization of CO2 Removal

    Carbon dioxide removal technologies have potential to help mitigate climate change by addressing existing carbon emissions and removing them from the atmosphere. To achieve this goal, scientists must first establish robust scientific frameworks and methodologies to account for these efforts—giving governments and private buyers a unified approach to tracking the climate impacts of their investments. In support of this, DOE tapped NREL to support a new $15 million research effort to improve the measurement, reporting, and verification of CO2 removal technologies.

    On the Ground in Colorado, NREL Is Simulating SAF Combustion During Flight

    Public and private investments are helping accelerate production and use of SAF, an energy-dense, renewable fuel seen as essential for decarbonizing flight. Adopting SAF means proving the fuel is as safe and reliable as current fuels while being fully compatible with existing jet engines. NREL has developed computer simulations to predict how SAF performs during flight and provide insights on how to maximize its safety and performance. These simulated SAF combustion tests could determine if new fuels meet requirements before industry invests millions of dollars to produce large volumes for ASTM engine tests.

    The Dynamics of Jet Fuel Combustion—Researchers from NREL’s Computational Science Center look at a detailed simulation of sustainable aviation fuel as it combusts in a “virtual jet engine.” Photo by Joe DelNero, NREL

    NREL Researchers Produce First Macromolecular Model of Plant Secondary Cell Wall

    Lignocellulosic biomass has potential as a feedstock for low-carbon biobased fuels and chemicals. However, this biomass type is difficult to break down during the conversion process due to three layers of biopolymers. NREL scientists quantitatively defined the relative positioning and structure of the three biopolymer layers in Populus wood using solid-state nuclear magnetic resonance and molecular modeling. Having a computer model of the interplay of these three biopolymers will help design more efficient deconstruction approaches to convert renewable lignocellulosic biomass into better biobased materials.

    NREL Research Quantifies Losses From Cardboard, Paper Waste

    Of the estimated 110 million metric tons of paper and cardboard waste tossed out across the United States in 2019, approximately 56% was landfilled and 38% was recycled. This category of waste includes everything from newspapers and magazines to books and napkins, from junk mail and photographs to pizza boxes and milk cartons. New research from NREL showed that the estimated value for recovered postconsumer paper and carboard from landfills is $4 billion. Understanding this value can guide policymakers toward sustainable waste management practices and help researchers study the impact of implementing new waste-management technologies.

    Newly Identified Algal Strains Rich in Phosphorous Could Improve Wastewater Treatment

    Phosphorus in wastewater is a major contributor to harmful algal blooms in water bodies around the globe, with the potential to harm wildlife, livestock, and humans. To prevent this, wastewater treatment plants often rely on chemical- and energy-intensive techniques to remove phosphorus before it can impact downstream water bodies. NREL researchers developed the Revolving Algal Biofilm system for phosphorus removal from wastewater by maximizing the ability of algae to harness solar energy to efficiently accumulate and remove phosphorus from water.

    A close-up of algal biofilm on a RAB system is shown on the left. On the right is a dried algal fertilizer product produced from the system. Photos from Gross-Wen Technologies

    Pick Your Polymer Properties and This NREL Tool Predicts How To Achieve Them With Biomass

    Petroleum-based polymers form the building blocks of plastics. Plastics can be made out of renewable biomass and waste resources, but identifying the right chemistry to make biobased polymers more sustainable and higher performing is the challenge. An NREL machine learning tool, PolyID™: Polymer Inverse Design, makes it easier to identify biobased polymers for use in plastics. Using artificial intelligence, the tool can screen millions of possible biobased polymer designs to create a short list of candidates for a given application.

    Learn more about NREL’s bioenergy research.

    MIL OSI USA News

  • MIL-OSI USA: Press Briefing by Press Secretary Karine Jean-Pierre and National Security Communications Adviser John  Kirby

    US Senate News:

    Source: The White House
    James S. Brady Press Briefing Room
    1:42 P.M. EDT
    MS. JEAN-PIERRE:  All right.  Good afternoon, everyone. 
    Q    Good afternoon.
    MS. JEAN-PIERRE:  I have just one thing at the top, and then I’ll hand it over.
    So, today, as part of the White House Initiative on Women’s Health Research, First Lady Jill Biden announced $110 million in awards from the Advanced Research Projects Agency for Health — for Health, ARPA-H, to accelerate transformative research and development in women’s health care.
    These new ARPA-H awardees will spur innovation and advance bold solutions to diseases and conditions that affect women uniquely, disproportionately, and differently.
    In less than a year since the president and the first lady launched the effort, the White House Initiative on Women’s Health Research has galvanized nearly one — nearly a billion dollars in funding for women’s health research.
    And now, I’m going to turn it over to my NSC colleague, Admiral John Kirby, who will talk to you more about the news of North Korea’s — Korean soldiers traveling to Russia, today’s historic announcement of the — of the use of frozen Russian sov- — sovereign assets to support Ukraine, and other foreign policy matters. 
    Admiral. 
    MR. KIRBY:  Thank you very much, Karine. 
    Good afternoon, everybody. 
    Q    Good afternoon.
    MR. KIRBY:  So, just before I kick off on those issues, I do want to start off by extending our thoughts to the victims of the horrible terrorist attack in Ankara, Turkey, this morning. 
    Our prayers are with all of those affected and their families and, of course, also the people of Turkey during this difficult time.
    Now, Turkish authorities, as they’ve said, are investigating this as a possible terrorist attack.  And while we don’t yet know the motive or who is exactly behind it, we strong — strongly condemn this — this act of violence.
    Now, I think, as you have all heard earlier this morning, we have seen the public reporting indicating that North Korean soldiers are traveling to Russia to fight against Ukraine.  We’re working closely with our allies and partners to gain a full understanding of this situation, but today, I’m prepared to share what we know at this stage.
    We assess that between early- to mid-October, North Korea moved at least 3,000 soldiers into eastern Russia.  We assessed that these soldiers traveled by ship from the Wonsan area in North Korea to Vladivostok, Russia.  These soldiers then traveled onward to multiple Russian military training sites in eastern Russia where they are currently undergoing training.
    We do not yet know whether these soldiers will en- — enter into combat alongside the Russian military, but this is a certain — certainly a highly concerning probability.
    After completing training, these soldiers could travel to western Russia and then engage in combat against the Ukrainian military.  We have briefed the Ukrainian government on our understanding of this situation, and we’re certainly consulting closely with other allies, partners, and countries in the region on the implications of such a dramatic mov- — move and on how we might respond. 
    I expect to have more to share on all of that in the coming days.
    For the time being, we will continue to monitor the situation closely.  But let’s be clear, if North Korean soldiers do enter into combat, this development would demonstrate Russia’s growing desperation in its war against Ukraine. 
    Russia is suffering extraordinary casualties on the battlefield every single day, but President Putin appears intent on continuing this war.  If Russia is indeed forced to turn to North Korea for manpower, this would be a sign of weakness, not strength, on the part of the Kremlin. 
    It would also demonstrate an unprecedented level of direct military cooperation between Russia and North Korea with security implications in Europe as well as the Indo-Pacific.
    As we have said before, Russia’s cooperation with the North Korean military is in violation of multiple U.N. Security Council resolutions which prohibit the procurement of arms from North Korea and military arms training.  This move is likewise a violation.
    At President Biden’s direction, the United States continues to surge security assistance to Ukraine.  In just the past week, which I think you’ve seen, the United States has announced more than $800 million in security assistance to meet Ukraine’s urgent battlefield needs.
    Now, looking ahead, the United States is on track to provide Ukraine with hundreds of additional air defense interceptors, dozens of tactical air defense systems, additional artillery, significant quantities of ammunition, hundreds of armored personnel can- — carriers and infantry fighting vehicles, and thousands of additional armored vehicles, all of which will help keep Ukraine effective on the battlefield.
    And in coming days, the United States will announce a significant sanctions tranche targeting the enablers of Russia’s war in Ukraine located outside of Russia.
    The Ukrainian military continues to fight bravely and effectively, and President Biden is determined to provide Ukraine with the support that it needs to prevail.  To that end, the president announced today that of the $50 billion that the G7 committed to loan Ukraine back in June, the United States will provide a loan of $20 mil- — $20 billion.  The other $30 billion in loans will come from a combination of our G7 partners, including the European Union, the United Kingdom, Canada, and Japan. 
    Now, this is unique.  Never before has a multilateral coalition frozen the assets of an aggressor country and then harnessed the value of those assets to fund the defense of the aggrieved party, all while respecting the rule of law and maintaining solidarity. 
    These loans will support the people of Ukraine as they defend and rebuild their country, and it’s another example of how Mr. Putin’s war of aggression has only unified and strengthened the resolve of G7 countries and our partners to defend shared values.
    And — yep, that’s it.  Thank you.  (Laughter.)  Sorry.  I had an extra page in there, and I wasn’t sure where it was going.  So —
    MS. JEAN-PIERRE:  Go ahead, Aamer.  
    Q    Does the pre- — is the assessment that the presence of North Korean troops can have a meaningful trajectory on thou- — the war?
    And then, secondly, you’ve said earlier even that it shows a sign of desperation on the Russians, but does it also demonstrate North Korea’s commitment to this burgeoning alliance with Russia?  And is that, in of itself, a broadening and discouraging concern for America?
    MR. KIRBY:  So, on your first question, too soon to tell, Aamer, what kind of an impact these troops can have on the battlefield, because we just don’t know enough about what the intention is in terms of using them.  So, I — I think that’s why I said at the top, we’re going to monitor this and watch it closely.
    To your second question: yeah, absolutely.  As we’ve also said, yes, I’ve called this a sign of desperation and a sign of weakness.  It’s not like Mr. Putin is being very honest with the Russian people about what he doing here.  I mean, Mr. Peskov, his spokesman, just the other day dec- — denied knowing anything about it.
    But — but we’ve also talked many, many times about the burgeoning and growing defense relationship between North Korea and Russia and how reckless and dangerous we think that is, not only for the people of Ukraine — and clearly we’ll watch to see what this development means for them — but also for the Indo-Pacific region.
    MS. JEAN-PIERRE:  Go ahead, Nadia.
    Q    Thank you.  With the U.S. diplomats in the region, Mr.  Hochstein in Lebanon and the Secretary of State in Saudi Arabia now before Israel, do you be- — do you believe there is a chance now for the ceasefire to be back on the table? 
    And do you believe that with the demise of Mr. Sinwar and Hassan Nasrallah, you have better chances or worse chances for somebody to negotiate with?
    MR. KIRBY:  The ceasefire you’re talking about, I’m assuming, is with Gaza.
    Q    Well, both.  I mean, you have Lebanon and you have Gaza —
    MR. KIRBY:  Yeah.
    Q    — implementation 1701 and in Gaza.
    MR. KIRBY:  I mean, look, the short answer to your question, Nadia, is — is yes.  And we wouldn’t be s- — we wouldn’t be engaged in this — these diplomatic efforts if we didn’t think there was still an opportunity here to get a ceasefire — a ceasefire for Gaza that brings the hostages home and increases humanitarian assistance, and certainly a ceasefire between Israel and — and Hezbollah. 
    And as for the — the implication that the — the deaths of the two leaders, Nasrallah and Sinwar, as President Biden said last week, that does open up — we believe opens up, should open up an opportunity to try to get there. 
    But I don’t want to sound too sanguine here.  I’ll let Secretary Blinken speak for his travels.  He’s still on the road.  He talked about it a little bit today that, you know, they had good, constructive conversations, specifically with respect to — to Gaza while he was in Israel.  But there’s still a lot of work before us.
    Q    Okay.  And one more, quickly.  The number of civilians killed in Gaza was 779 in the last 20 days, especially in Jabalia, and the total number is 100,000 between the dead and the wounded.  Ninety percent of Gaza is destroyed.  Does the U.S. still believe that Israel’s strategy in Gaza is working, and do you still support it?
    MR. KIRBY:  We still support Israel’s right and responsibility to defend itself against these threats, including the continued threat of Hamas.  And we still urge Israel to be mindful — ever mindful of civilian casualties and the damage to civilian infrastructure, and we’re going to continue to work with them to that end.
    Q    Has the U.S. made an assessment about the type of weapons training or what type of training the North Korean soldiers are undergoing in Russia that could potentially be used in Ukraine? 
    And does this represent a new type of an — an agreement, in terms of an information-sharing agreement between the North Koreans and the Russians?
    MR. KIRBY:  I don’t believe we have a very specific assessment at this time of the exact nature of all the training.  There’s — there’s three sites that we assess right now that the — this first tranche of about 3,000 are being trained. 
    I — I think I could go so far as to say that, at least in general terms, it’s — it’s basic kind of combat training and familiarization.  I think I’ll go — I could go as far as that and no further. 
    But, as I also said, we’re going to monitor this and watch this closely.  And obviously, if we have more information that we can share with you, we certainly will.
    To your second question about information-sharing, as I’ve said before, in answer to — to Aamer, we have been watching this relationship grow and deepen now for many, many months.  And the — the question that we’re asking ourselves — and we don’t have an answer for right now — is: What does Kim Jong Un think he’s getting out of this?
    And so, you talked about information-sharing.  I mean, they’re — maybe that’s part of this.  Maybe it’s technology.  Maybe it’s capabilities. 
    We don’t have a good sense of that.  But that’s what’s so concerning to us, is — is not only the concern for the impact on the war in Ukraine but the impact that this could have in the Indo-Pacific, with Kim Jong Un benefiting to some degree.
    Q    Can you talk about that just briefly?  Like, how significant is this for U.S. allies in the region and the U.S. as a whole?
    MR. KIRBY:  It could be significant.  Again, we don’t know enough right now. 
    So, when you say “region,” I think you mean Indo-Pacific.  Until we have a better sense of what the North Koreans at least believe they’re getting out of this, as opposed to what they actually get, it’s hard to know and to put a metric on exactly what the impact is in the Indo-Pacific.
    But it is concerning.  It’s been concerning.  Certainly, this development — this — this willingness of — of Kim to literally put skin in the game here, soldiers in Russia for the potential deployment — and we haven’t seen them deployed, but for the potential deployment — certainly would connote an expectation that he thinks he’s getting something out of this.
    MS. JEAN-PIERRE:  Go ahead, Selina.
    Q    You mentioned that the U.S. is discussing how we would possibly respond.  What are the possibilities for how the U.S. could respond to this?
    MR. KIRBY:  Well, for one thing, we’re going to continue to surge security assistance, as I just mentioned in my — my topper.  And you’re going to continue to see — the president has made it clear that we’re going to continue to provide security assistance all the way up to the end of his administration, for sure.  So, you’re going to see that continue to flow, and we’re talking to allies and partners about what the right next steps ought to be. 
    I’m not at liberty today to go through any specific options, but — but we’re going to — we’re going to have those conversations, and — and we have been.
    Q    And China is a critical trading partner to North Korea.  What’s the U.S. assessment for how China is looking at all of this?
    MR. KIRBY:  We don’t know how President Xi and the Chinese are looking at this.  One would think that — if you take their comments at face value about desiring stability and security in the region, particularly on the Korean Peninsula, one would think that they’re also deeply concerned by this development.
    But you can expect that we’ll be — we’ll be communicating with the — with the Chinese about this and certainly sharing our perspectives to the degree we can and — and gleaning theirs. 
    Q    And local South Korean press is reporting that, according to intelligence, these troops — North Korean troops lack understanding of modern warfare, such as drone attacks, and it’s anticipated there will be a high number of casualties when deployed to the front lines.
    MR. KIRBY:  I — too soon to know.  I mean, we — we don’t really know what they’re going to be used for or where they’re going to — if they’re going to — if they’re going to deploy, where they’re going to deploy and to what purpose. 
    I can tell you one thing, though.  If they do deploy to fight against Ukraine, they’re fair game.  They’re fair targets.  And the Ukrainian military will defend themselves against North Korean soldiers the same way they’re defending themselves against Russian soldiers. 
    And so, the — the possibility that there could be dead and wounded North Korean soldiers fighting against Ukraine is — is absolutely real if they get deployed. 
    MS. JEAN-PIERRE:  Go ahead, M.J.
    Q    Just to clarify something you said earlier about what Kim Jong Un possibly gets out of this.  As far as you know, has he gotten anything in return?
    MR. KIRBY:  Well, I mean, from this particular move, I can’t speak to that, M.J.  I — I don’t think we have seen any specific, you know, quid — quid pro quo with respect to this provision of troops. 
    But we know that — that he and Mr. Putin have, again, been growing in their defense relationship.  And we know Mr. Putin is — has been able to purchase North Korean artillery.  He’s been able to get North Korean ballistic missiles, which he has used against Ukraine.  And in return, we have seen, at the very least, some technology sharing with North Korea. 
    But what this particular development means going forward, we just don’t know.  We’re going to have to watch that. 
    Q    And do you know if this came about because Putin specifically first asked for help, or whether it’s that Kim Jong Un offered the help first? 
    MR. KIRBY:  Don’t know.  Don’t know what precipitated it, but I think it’s important to remember that in the three-plus years that he’s been fighting in — in and around Ukraine, Mr. Putin and — and his military has suffered 530,000 casualties.  And as we’re speaking today, he’s losing, casualties alone — and that’s killed and wounded — 1,200 — 1,000 to 1,200 per day. 
    Now, 530,000 is a lot.  I mean, there were — in the American Civil War, there were, like, 620,000 killed, just to put this into some perspective.  This is three years fighting in Ukraine.  Five hundred and thirty [thousand] casualties is — is a lot. 
    And he hasn’t been fully transparent with the Russian people about this.  And he hasn’t been transparent at all with the Russian people about this particular move, about br- — bringing in North Korean soldiers.  So, that he has to farm out the fighting to a foreign country, I think, speaks volumes about how much his military is suffering and — and how uncertain he believes, how untenable he believes his — his situation is. 
    Q    And I guess, just if you had to guess, how would the training — what would the training even look like, given the language barrier?  And once these North Korean soldiers are deployed, like, what would the command structure even look like, given —
    MR. KIRBY:  It’s a great question.  I — I wish we had an answer to it.  You’re — you’re not wrong to highlight the language barrier.  I mean, these are — these aren’t even similar languages.  They’re — and they are going to have to overcome that.  It’s not like they have a long, productive history of working together as two militaries, even at all.  So, that’s going to be a challenge. 
    Command and control is going to be a challenge.  And this is not a challenge that the Russians have even solved amongst themselves.  They’re still having command and control challenges: logistics and sustainment, getting things to the battlefield, keeping their troops in the field.  They haven’t solved that for their own soldiers.  So, they’re going to have to figure that out here too, if, in fact, they deploy.  We haven’t seen that. 
    So, there are — there are some pretty big challenges they’re — they’re going to have to overcome. 
    Q    And I have a non-Ukraine question.  Do you think that Donald Trump meets the definition of a fas- — fascist?
    MR. KIRBY:  That — I’m going to —
    MS. JEAN-PIERRE:  We got to move on.  (Laughs.)
    MR. KIRBY:  Yeah, I’m —
    MS. JEAN-PIERRE:  Go ahead, Michael.
    MR. KIRBY:  — I’m not going to talk about that stuff.
    Q    John, there — there’s concern among Democrats on the Hill that Donald Trump’s team has not entered into these critical transition agreements with the White House that could potentially, in their words, endanger national security.  Is that a concern of yours?
    MR. KIRBY:  Well, look, with a caveat that I’ll — I’m going to defer to Karine on anything to do with the election and — and the transition.  That’s really for her. 
    All I’ll say is that no matter how things play out in the election, the National Security Council, under Mr. Sullivan’s leadership, is and will make sure we’re ready for proper transition handover. 
    Q    And there are intelligence officials who have warned that foreign adversaries might be looking to stoke violence in the next 13 days ahead of the election.
    MR. KIRBY:  I saw the DNI assessment, yeah. 
    Q    What are you doing in preparation?
    MR. KIRBY:  Well, we’re working hard across the interagency, as you might expect we would, to share information not only inside the — at the federal level but working very hard to make sure we’ve got good handshakes and — and information sharing at state and local levels as well. 
    That’s the last thing we want, of course, is to see any violence or protest activity that — that leads to intimidation and that kind of thing.  So, we’re working hard, again, with local and state officials.
    MS. JEAN-PIERRE:  Need to start wrapping it up.  Go ahead, sir.  Yeah.
    Q    Thank you.  So, would North Korea’s possible engagement in combat in Ukraine trigger a bolder move from the White House, like decision to lift the restrictions on usage of American weapons?
    MR. KIRBY:  Yeah, again, number one, we’re monitoring this closely, and that’s where we are right now.  I came and gave you a very honest assessment of exactly where we are, and we just don’t know if these troops are going to be deployed against Ukraine in combat and, if so, where, when, and how. 
    So, number one, we’re monitoring this closely.  I don’t have any policy decisions or options to speak to today.  I can tell you the last thing I’ll say is that there’s been no change to the president’s policy when it comes to what we’re providing Ukraine and — and how they’re using it.
    MS. JEAN-PIERRE:  Go ahead, Jacqui.
    Q    Thank you, Karine.  John, why not?  Why not green-light the long-range missiles for Ukraine’s use, which is Zelenskyy’s number one ask, as you’re sounding the alarm about what could have far-reaching implications if North Korean soldiers go into Ukraine? 
    MR. KIRBY:  Well, for one thing, Jacqui, we don’t exactly know what these guys are going to do. 
    Q    What else could they be there for?
    MR. KIRBY:  We don’t know what they’re going to do.  We don’t know if they’re going to deploy into combat or not.  We don’t know, if they do, in what strength.  We certainly don’t have a sense of what capability they might be able to bring to the field with them.  Now —
    Q    Doesn’t this seem, though, like —
    MR. KIRBY:  Hang on, now.  Just a second.
    Q    — we were — a couple years ago, they were staged — you had Russian troops staged on the Ukrainian border, and this administration was saying, “We don’t know if they’re going to go in.  We don’t want to impose any sanctions.”  We didn’t do it ahead of time. 
    MR. KIRBY:  No, no, no, no, no, no.
    Q    Where — why is there not a consequence first?
    MR. KIRBY:  Well, first of all, let’s not rewrite history, Jacqui.  We — we were the first country to go out publicly and say, “Here’s what we think the Russians are going to do.  Here’s the timeline.”
    Q    But didn’t do anything about it. 
    MR. KIRBY:  That is not true, Jacqui. 
    Q    There was no preemptive sanction.  Nothing. 
    MR. KIRBY:  Jacqui, that is not true.  It is true we didn’t levy sanctions originally because we were hoping that the threat of sanctions might deter or dissuade Mr. Putin.  You lay sanctions on before the man makes a decision, then he might as well just go ahead and do it. 
    Q    Well, he did it anyway.
    MR. KIRBY:  And we — and we did levy sanctions on him — heavy sanctions — not just us but around the world. 
    Number two, we mobilized support for Ukraine even before Mr. Putin decided to step across that line.  And no country — no country has done more than the United States to make sure Ukraine is ready.  So —
    Q    Well, why not do something —
    MR. KIRBY:  — let’s not —
    Q    — to prevent —
    MR. KIRBY:  Wait, wait.  Jac- —
    Q    — this from happening? 
    MR. KIRBY:  Jacqui, let me finish the second question, and then we’ll get your third one. 
    So, let’s not rewrite history.  The United States didn’t sit idly by here.  We’ve been Ukraine’s staunchest and most prolific supporter in terms of security assistance.
    And as for the policy decision, the — the president remains and we all remain in direct contact with our Ukrainian counterparts.  We’re talking to them over what the — what they need.  As I said, we’ve just announced $800 million more, and there’ll be more coming in security assistance. 
    I just don’t have any policy changes to —
    Q    But why —
    MR. KIRBY:  — to speak to today. 
    Q    Why would you not u- — put a restriction on the type of target that can be hit, rather than the distance from a border that obviously Russia doesn’t recognize?  And you’ve got training happening with North Korean troops, I would assume, on the types of military installations that would be fair game if that decision was made. 
    MR. KIRBY:  Yeah, we’ll see —
    Q    That —
    MR. KIRBY:  We’ll see — we’ll see what the Russians and North Koreans decide to do here.  As I said earlier, if these North Korean soldiers decide to join the fight against Ukraine, they will become legitimate military targets. 
    MS. JEAN-PIERRE:  All right, Jacqui.  We got to go.
    Aurelia.
    Q    Yeah.  Thank you.  John, would you still describe the Israeli operation in Lebanon as targeted?
    MR. KIRBY:  I’m sorry, I do-
    Q    Yeah.  The Israeli strikes on Lebanon, would you still describe them as targeted?
    MR. KIRBY:  Again, I’m not going to get into scorecarding each and every strike that the Israelis take.  I’ll just say a couple of things.  They have a right to defend themselves.  There are legitimate threats that Hezbollah still poses to the Israeli people.  I mean, rockets and missiles are still being fired at Israeli cities. 
    So, let’s not forget what Hezbollah continues to be able to do.  That’s number one. 
    Number two, we have said many, many times that we don’t support daily, you know, strikes into heavily populated areas, and that remains the case today.  We still oppose, you know, daily strikes into densely populated areas —
    Q    But they still are coming — the strikes.
    MR. KIRBY:  — and we have had those conversations.  Secretary Blinken has had that exact conversation when he was in Israel for the last couple of days.  We’ll continue to press the Israelis on that. 
    MS. JEAN-PIERRE:  Go ahead.
    Q    Hi.  So, the interest from the frozen assets, does it apply only to the European Union or also the U.S. assets?
    MR. KIRBY:  It is — it’s for all the frozen assets.
    Q    Also in the U.S.?
    MR. KIRBY:  I believe so.  I believe so.
    Q    Because this morning, I heard Daleep Singh said just European Union, so I wasn’t sure. 
    MR. KIRBY:  Okay.  You know what?  Let me take the question.  When I — I can’t even balance my checkbook at home, so — (laughter).
    MS. JEAN-PIERRE:  Go ahead.
    Q    Thank you.  I wanted to ask about Kursk specifically with the North Korean troops in Russia.  Russia and North Korea have this mutual security pact.  If they were to use North Korean troops against Ukrainians in Kursk, would it be legitimate to try to reclaim sovereign territory, or would that be seen as an escalation in the war against Ukraine?
    MR. KIRBY:  Again, I don’t want to get ahead of where we are right now and hypothesize what these troops may or may not be doing and, if the Russians are going to deploy them, where they’re going to deploy them, whether it’ll be inside Russia or inside Ukraine. 
    Let me just please go back to what I said before.  If these North Korean troops are employed against Ukraine, they will become legitimate military targets. 
    MS. JEAN-PIERRE:  All right.  Janne, you have the last one. 
    Q    Thank you very much.  (Inaudible) questions. 
    MS. JEAN-PIERRE:  Well, you’re about to jump out of your seat, so —
    Q    Thank — thank you, John.
    MR. KIRBY:  This — this seems like a fair day for Janne.
    MS. JEAN-PIERRE:  That’s true.  Truly. 
    Q    On same — same topic, on North Korea.  The chairman of the House Intelligence Committee recently sent a letter to President Biden requesting a briefing regarding the seriousness of North Korea’s troops deployment and the neglect of the Korean Peninsula issue.  What is the White House’s response to this?
    MR. KIRBY:  Well, we’ll respond.  We’ll respond as — as appropriate to the chairman, and we won’t do that from the podium here in the briefing room.  We’ll do it appropriately with him and his staff.
    I’ll just say — and hopefully my being here today and the — my statement at the top should reflect how seriously we’re taking this issue and how closely we’re going to monitor it.  We recognize the potential danger here, and we’re going to be talking to allies and partners, including the Ukrainians, about what the proper next steps are going to be. 
    But as for our response to the chairman, I’ll let that stand in legislative channels.
    Q    Last quick one.  Your colleague said at the State Department briefing that the United States does not reflect other countries’ intelligence analyses.  So, what is your assessment of intelligence cooperation with allies at this —
    MR. KIRBY:  What — what did my colleague at the State Department say?
    Q    Said that — at the briefing that the United States does not reflect other countries’ intelligence analyses.
    MR. KIRBY:  About — about —
    Q    About the —
    MR. KIRBY:  — the North Korean troops?
    Q    Yeah, about the North Korean troops, so —
    MR. KIRBY:  I just shared with you — to- — today’s opening statement was a downgrade of U.S. intelligence of what — what we’re seeing.  And I think you can see similarities between what I said today and what our South Korean counterparts have — have said.  Ukrainian intelligence has — has released information very, very similar. 
    And again, we’re — you know, today isn’t the end of this conversation.  It’s — it’s, quite frankly, the beginning of the conversation that we’re going to be having with allies and partners, including through the intelligence community. 
    MS. JEAN-PIERRE:  All right.  Thank you so much, Admiral. 
    MR. KIRBY:  Thank you. 
    MS. JEAN-PIERRE:  Go ahead, Toluse.
    Q    Thanks, John.
    MR. KIRBY:  Thank you.
    MS. JEAN-PIERRE:  Thank you.  Sorry, guys.  Give me one second. 
    Let’s let Toluse take — I know he’s been waiting patiently on the sides- — sideline. 
    We don’t have much time because I have to be in the Oval in about 20 minutes, but go ahead.
    Q    Can I ask about the McDonald’s outbreak, the E. coli outbreak? 
    MS. JEAN-PIERRE:  Yeah.
    Q    And this follows a couple of big ones that we’ve seen over the summer, including Boar’s Head.  I think there’s another nationwide one.  Is the president tracking this?  And more importantly, how confident should Americans feel about the food supply right now?
    MS. JEAN-PIERRE:  So, what I would say is the administration’s top priority — its top priority is to make sure that Americans are safe.  And so, we are taking this very seriously.  We’re monitoring the situation. 
    CDC, as it relates to McDonald’s specifically, is working to determine the source of the outbreak, as we speak abou- — as you asked me about the E. cola — E. coli outbreak.  And so, what I would suggest is that families, they need to and they must follow the latest CDC guidance. 
    Obviously, we’re aware.  The president is — is also aware.  And going back to this particular outbreak with McDonald’s, I understand that the company has halted sales of product to protect customers, and CDC is certainly in touch with — with local authorities to — to prevent infection. 
    So, look, we’re always concerned when we hear these types of — these types of situations — right? — poten- — outbreaks.  And so — and the president wants to make sure that the American people are safe.  So, it is a — it is certainly a priority for us, and CDC is on top of this and looking into it.
    Q    And then just one more.  Any reaction to Jill Stein asserting the U.S. and the UK have blocked a peace agreement between Russia and Ukraine?
    MS. JEAN-PIERRE:  I have not seen those reporting.  I’m not going to respond to a — a political candidate in — for this — for this —
    Q    Well, it seems (inaudible) — it’s a factual thing that’s —
    MS. JEAN-PIERRE:  I — I have not even seen the — the comments that —
    Q    Okay.
    MS. JEAN-PIERRE:  — you are mentioning to me, so I — I can’t give you an honest response from here.
    So, go ahead, M.J.
    Q    Karine, what did the president mean when he said last night, about Donald Trump, “We got to lock him up”? 
    MS. JEAN-PIERRE:  So, look, and I — the president spoke to — about this very clearly as well in his statement, and he — and he said he meant, “lock him out” politically — politically lock him out.  That’s what he said, and that’s what we have to do.  That was the part of his quote that he said last night while he was in — in New Hampshire. 
    Look, let’s not forget, this is a president that has not –never shied away from being very clear and laying down what is at stake in this election. 
    I’m going to be really m- — mindful in not speaking about 2024 election that’s just a — less than two weeks away. 
    But this is just speaking to what the president said last night.  He made clear — he made very clear yesterday that he was referring to defeating — to defeating Donald Trump.  That is what he was talking about.  He said, politically — politically, lock him — lock him out.  That is what he was referring to. 
    Q    Well, he first said twice, “lock him up.”  So, you’re saying —
    MS. JEAN-PIERRE:  And then — and —
    Q    — when he said “lock him up,” he meant, defeat Donald Trump?
    MS. JEAN-PIERRE:  Well, it’s not what saying.  It’s what he said.  He said —
    Q    Well, when —
    MS. JEAN-PIERRE:  — to the au- —
    Q    — he clarified.
    MS. JEAN-PIERRE:  Wa- — wait. 
    Q    But he initially said —
    MS. JEAN-PIERRE:  He — he — right.  
    Q    — “lock him up.”
    MS. JEAN-PIERRE:  Exactly, he clarified himself.  He wanted to make sure that things were put into context.  He wanted to make sure that it — while we are — you know, while not just New Hampshire folks that were there were going to see it but also the Americans who are watching and pay attention to what the president is saying.  He wanted to put it into context.  And he, himself — this is not me; this is the president himself going back to explain — to explain — to say that he was talking about politically — politically locking him out. 
    Q    Is the president aware of John Kelly’s assertion that Donald Trump meets the definition of a fascist and that Trump wanted the kinds of generals Hitler had?
    MS. JEAN-PIERRE:  I mean, look, you have heard from this president over and over again about the threats to democracy, and the president has spoken about that.  You’ve heard from the former president himself saying that he is going to be a dictator on day one.  This is him, not us.  This is him. 
    And it’s not just all — it’s not just us, the White House, saying this.  You’ve heard it from officials — former officials that worked for the former president say this as well. 
    So, you know, do we agree — I know that the — the vice president just spoke about this.  Do we agree about that determination?  Yes, we do.  We do. 
    Let’s not forget — I will point you to January 6th.  What we saw on January 6th: 2,000 people were told to go to the Capitol to undo a free and fair election by the former president.  It was a dark, dark day in our democracy and a dangerous one.  We have people who died because of what happened on January 6th.  And, you know, we cannot forget that.  We cannot forget that.
    And so — and I will add — I will add this, that — and I can’t believe I even have to say this — but our nation’s veterans are heroes.  They are heroes.  They’re not losers or suckers; they are heroes. 
    And to be praising Adolf Hitler is dangerous, and it’s also disgusting. 
    Q    So, just to be clear, when you said, “we do” agree, President Biden believes that Donald Trump is a fascist?
    MS. JEAN-PIERRE:  I mean, yes, we have said — he said himself — the former president has said he is going to be a dictator on day one.  We cannot ignore that.  We cannot.
    And we cannot ignore or forget what happened on January 6th, 2021.  That is real.  Real people were affected by this — law enforcement who were trying to protect — protect the Capitol, protect law — elected officials in the Capitol, congressional members, senators, House members.  Their lives were ruined because of that day, because 2,000 people — again, 2,000 people were told by the former president to go there to find the former vice president to stop a free and fair election.  That is what — that is what happened. 
    Some of you — some of your colleagues were there, reported it, and saw it for yourself. 
    We cannot forget that. 
    Go ahead.
    Q    Karine, I mean, you talk about the context of the president’s comments yesterday.  I want to put them in the fuller context as well.  The president went to New Hampshire to make a policy argument against Republicans on the issue of prescription drugs, but the majority — more of his comments yesterday were really some of the most dire warnings we’ve heard from this president yet about a return to a Donald Trump presidency and what it would mean — could mean for this country.  He talked about world leaders pulling him aside, saying, “He can’t win.”  He talked about the concern — what it would mean for future generations of America. 
    How concerned is the president about — at this point, about the state of the race?  Is he worried that Trump is on a path to victory at this point?
    MS. JEAN-PIERRE:  So, look, I’m not going to talk about the state of the race.  You heard from the president.  You just laid out very clearly about what the president talked about yesterday in New Hampshire.  He laid out what his thoughts were.  He laid out what the stakes are for this country, and this is somebody who cares, clearly, very deeply about the future of this country.
    And so, I’m not going to get into what he thinks about this — the race in this current moment.  That is not something that I’m here to do.  I am not — I am no longer a political pundit.  I am the White House press secretary.  I speak for the president, but obviously I cannot speak to the 2024 election.
    And you did talk about something else — right? — when you talked about what he went to do on the official side.  And I would read you some quotes here — some headlines that we — that we saw in New Hampshire today from New Hampshire press, which I think is really important: “Biden, Sanders tout prescription drug cost-savings at New — New Hampshire event.”  Another one, “Biden and Bernie Sanders highlight lower prescription drug costs in New Hampshire stop.”  That is important. 
    The president wanted to go to New Hampshire to talk about what he and the vice president have been able to do in more than three and a half years: lowering prescription drugs, beating Big Pharma.  He talked about the Inflation Reduction Act.  By the way, no Republican voted for that.  Now it is popular with Democrats and Republicans, and this is something that is going to change people’s lives. 
    And so, that’s what he was there for.  He talked about — let’s not forget, what — what they’ve been — oth- — other things they’ve been able to do, whether it’s the bipartisan gun violence protection — being able to do that in a bipartisan way, and dealing with COVID that t- — put our economy in a downturn.  And this president has been able to empower — powering the economy, and we are now leading as a country in the world when it comes to the economy.
    So, I think he was able to do both things.  I think he was able to speak his mind on — on the political, you know, nature of where we are right now, which he can — obviously, he spoke to.  And I think people in New Hampshire got a sense of what the president is trying to do on behalf of them in talking about lowering costs.  We saw that in — in the New Hampshire papers.  So, it broke through, and I think that’s important. 
    Q    You were with the president last week in Germany —
    MS. JEAN-PIERRE:  Yes.
    Q    — when he says he had these conversations with world leaders expressing their dire concern about the election here.  What has been his response to those world leaders about that?
    MS. JEAN-PIERRE:  I — I’m not going to get into private diplomatic conversations, and I will just leave it there.
    Q    And then, I’ll ask you — we — NBC News is reporting that the vice president is likely to spend election night here in Washington, perhaps at her alma mater of Howard University.  Do we have an understanding yet of where the president will be —
    MS. JEAN-PIERRE:  (Laughs.)
    Q    — and when — how he plans to vote?
    MS. JEAN-PIERRE:  As soon as — you all know, we certainly will share that with all of you. 
    I will say is that the president is certainly looking forward to casting his ballot in Delaware.  And so, once we have the full information on what his day is going to look like or what the last couple of days leading up to November 5th will look like, we certainly will share that with all of you.
    Go ahead.
    Q    Since we’re talking about scheduling, it is traditional for the president to hold a press conference after —
    MS. JEAN-PIERRE:  Oh boy.  I knew that was coming.  (Laughter.)
    Q    Can’t stop.  Won’t stop.
    MS. JEAN-PIERRE:  You were- — you weren’t here for the — the drop-by.  Were you here for the drop-by?
    Q    Yes, I was. 
    MS. JEAN-PIERRE:  Oh.  It was great.
    Q    It was great.  We’d love to see him again.
    MS. JEAN-PIERRE:  Yeah.
    Q    So, the — and —
    MS. JEAN-PIERRE:  And you know what?  He had a really good time.  He enjoyed — he enjoyed it.
    Q    So, just an —
    Q    Come on back.  (Laughter.)
    Q    — open invitation for the president to follow tradition and do a press conference after the election, which I think —
    MS. JEAN-PIERRE:  I —
    Q    — is standard and important.
    MS. JEAN-PIERRE:  I — I totally hear that, Tam, and I know it is a tradition. 
    I — I don’t want to get ahead of what the schedule is going to look like.  As we know, in less than two weeks, we will have an important election.  Obviously, I’m not speaking about that election specifically, but we want to share — we will share more as we get closer.  And we — we certainly are tracking that tradition, and we’ll certainly have more to share. 
    Q    Are we going to see him with the vice president much in the next couple of weeks?
    MS. JEAN-PIERRE:  I mean, look, I — I know you all have asked this question of him.  You’ve asked this question of me.  They have, as you know, campaigned together.  They’ve done official events together in the past just couple of weeks. 
    They speak regularly.  And — and I would say the president — you’ve heard the president just, you know, tout how proud and how he thinks she will be a great leader on day one, which is –he also said in 2020, which is why he chose her as his running mate, and he has said as well, this was the best decision that he’s made.  And understands that she’s going to cut her own path.  Said this himself just last week when he was in — in Philadelphia. 
    Don’t have anything to share, again, on the schedule.  I know this is all part of a scheduling question, and we certainly will have more to share as the days — as the days — as you know, I mean, one day is like an eternity in — in this space, as you know.  (Laughs.)  And so, less than two weeks is — feels like so far away.  So, we will have more to share, for sure.
    Go ahead, Selina.
    Q    I just want to follow up on M.J.’s question. 
    MS. JEAN-PIERRE:  Yeah.
    Q    So, did the president actually read former Marine General Kelly’s comments or listen to them?  And did you —
    MS. JEAN-PIERRE:  So —
    Q    — do you know how he reacted after doing so?
    MS. JEAN-PIERRE:  So, look — I mean, look, I just gave a really good — I think a good sense of the — what the president has said about our reaction here from the White House.  The president is aware of John Kelly’s comments.  And I gave you a reaction as part of the — as — as the president’s White House press secretary.  And what I’m saying to you today is something that the president has said over and over and over again and repeated. 
    And let’s not forget the words that we have heard from the former president.  And it matters here, because we’re talking about our democracy.  We’re talking about what’s at stake here with our democracy.  And when you have a former president saying that they will be a dictator on day one, that is something that we cannot forget. 
    And so, you know, the president has spoke- — spoken about this and given speeches on this.  And that’s why I continue to point to January 6th, 2020 — -21 — 2021, because it was — it’s something that we cannot forget, a dark day on our democracy — a dark day on our democracy, because of what was — what — what occurred — what occurred.
    Q    Was the president surprised by any of the comments from Kelly?
    MS. JEAN-PIERRE:  No, not at all.  I mean, again, the president has made comments and spoken about this over and over again.  So, no.  I will say no. 
    Go ahead.
    Q    Thanks, Karine.  Elon Musk has been, you know, campaigning with former President Donald Trump, and he is offering $1 million to voters.  I just was wondering: Has the president expressed any concern to, you know, this interference by Elon Musk?  And I don’t know if he — you know, his — the administration maybe has any plans or has discussed maybe how to sort of maybe move forward with what’s El- — Elon Musk is doing with — with the $1 million.
    MS. JEAN-PIERRE:  So, on — on this particular question, I’m going to have to refer you to the FEC.  I just have to be — that one, I — I — that’s a place that I’m going to have to refer you.  I can’t speak to it beyond that. 
    Q    But has the president mentioned it at all, Elon Musk or —
    MS. JEAN-PIERRE:  He’s aware of it.  He’s aware of it.  That I can tell you.  I just can’t speak to it beyond that.  I have to refer you to the FEC.
    Go ahead, Jared. 
    Q    You talk and you’ve taken questions today, and obviously throughout the — the presidency, President Biden has talked a lot about democratic institutions.  I’m just curious if between now and Election Day, the president is going to speak sort of more broadly about the confidence in the votes being counted accurately.
    MS. JEAN-PIERRE:  Well, the president has talk — talked about this.  He believes in our institution.  He believes in — in — this will be a free and fair election.  He’s talked about this.  We have to give the American people, who some of them are voting right now — to make sure that they have the confidence in their vote and how important it is to cast their vote. 
    I’m not going to go beyond that, but I think the president has been very clear about that. 
    Q    But you don’t — should we talk about schedules or something?  (Laughs.)
    MS. JEAN-PIERRE:  Yeah.
    Q    Is there, like, a big sort of — because he’s done these types of addresses on issues like this before. 
    MS. JEAN-PIERRE:  Yeah, I —
    Q    So, I’m just curious if, like, this is a time that he would do that.
    MS. JEAN-PIERRE:  Oh, no, I hear you.  And I hear you’re talking about the moment that we’re in and if the president is going to speak about it in a more formal way — in remarks, in a speech. 
    I don’t have anything to share with you, but he’s been very clear about having the confidence in our institutions, and so I’ll leave it there.
    Go ahead.
    Q    I just want to ask you briefly about congressional outreach for the $10 billion that would be military aid.  Has the White House started that process, reaching out to members of Congress to get their buy-in to kind of help expedite this process?
    MS. JEAN-PIERRE:  I mean, we’re in regular touch with congressional members about any type of initiative that we’re trying to push through, especially if it involves Congress, obviously.
    I don’t have anything to read out to you at this time, but we are in regular conversation about a myriad of things when it comes to legislation, things that we’re trying to push forward.  Again, certainly that is important to the American people.  I just don’t have anything to share at this time.
    Q    Just a quick —
    MS. JEAN-PIERRE:  Yeah.
    Q    — 2024 question.  You said the president is going to vote.  It’s a scheduling question.
    MS. JEAN-PIERRE:  Yeah. 
    Q    Will he vote ear- —
    MS. JEAN-PIERRE:  You guys are very into schedules today.
    Q    Yeah, we’re — we’re into this.  We’re into this.
    MS. JEAN-PIERRE:  Yeah, I know.  Into th- —
    Q    Will he vote early?  Early voting —
    MS. JEAN-PIERRE:  — into the POTUS schedule.
    Q    Early voting starts in Delaware, obviously, this week, and will he go early, before Election Day?
    MS. JEAN-PIERRE:  I — as — as soon as we have something to share, I will certainly share that.
    Q    Final try.
    MS. JEAN-PIERRE:  I — I appreciate the effort here.  The president — I can say for sure the president is looking forward to casting his ballot.  And when we have more to share about his schedule — I mean, we’re not — we’re — the president can’t not just go vote and not tel- — for you guys not to know, right?  So, you guys follow him wherever he is, which is good —
    Q    Thanks.
    MS. JEAN-PIERRE:  — which is a good thing.  (Laughs.)
    Go ahead.
    Q    Thanks, Karine.  The former president described the vice president as “lazy as hell” yesterday.  She had a day when she was not on the campaign trail.  I was going to give you an opportunity to respond to that.
    MS. JEAN-PIERRE:  I would check the source.  Pay real close attention to who’s saying that.  That’s all I’ll say.
    Q    Okay.  Another question about the vice president’s interview with NBC.  She talked — she was asked about whether there should be any concessions on the issue of abortion and the situation — 
    MS. JEAN-PIERRE:  Wait, say that one more time.
    Q    She was asked whether or not there should be concessions on the issue of abortion — the scenario being a potential divided government like we have now — whether or not she would be willing to offer concessions, things like religious freedom, on the issue of abortion.  And I wanted to see if —
    MS. JEAN-PIERRE:  Meaning like on- — once she’s in office? 
    Q    Yes.
    MS. JEAN-PIERRE:  Oh, look, I’m not going to — I’m not going to get into hypotheticals.  It’s not — that is something that certainly, you know, when she be — when she is in office and becomes pre- — and all of the things happen — I’m not going to get into hypotheticals — she’s going to make her own decisions and decide what’s best for the American people.  I can’t speak to that at this time.  Not going to get into hypotheticals. 
    What you know and what you have seen from this president and this vice president is their commitment to continue to fight for women’s rights and continue to call on Congress to — to — you know, to reinstate Roe v. Wade, make sure that legislation is put out there, voted on.  And so, he would sign that, obviously, if that were to happen. 
    And so, that is what they — he — they both have asked for.  That is what we’ve been saying during this administration.  And she has been, obviously, a passionate fighter on that issue, understanding what this means to women, understanding what this means to people’s rights and freedoms, and so has this president. 
    And so that’s what we’re — you’re going to continue to see.  You just — you just heard us — I forget all the days — all the days come together — recently talk about how we’re expanding in the ACA for contraception, because understanding how that — how important that is to women and families, or — or women and Americans who are trying to make decisions on their family or how to move forward, and they should have that right — and so — and that freedom.
    And so, again, that action shows you the commitment from the — and I hope the American people — from the Biden-Harris administration.
    What she’s going to do next, how she’s going to govern, that’s not for me to say.
    Q    Another question from the interview.  She was asked whether or not sexism would come into play in this election.  She said, “I don’t think of it that way.”  Obviously, the former president, Barack Obama, said that he did believe that sexism was coming into play in this election.  What does the president think about (inaudible)?
    MS. JEAN-PIERRE:  Oh, I’ll say this.  Clearly, the vice president spoke to this, and this is her campaign, and she sees — she’s going to say how she sees things. 
    The president has always said and will continue to say that she is ready to lead on day one.  And you don’t have to just look at her record with him as a critical partner over the last more than three and a half years as vice president, but as senator, as attorney general, as district attorney, she is someone that has always fought for Americans, fought for people, whether it is citizens in California or more broadly, obviously. 
    And I think that’s what the American people — I know that’s what the American people want to see.  They want to see a fighter.  And that’s what the president sees in her.
    And, again, just look at what we’ve been able to do in the more than three and a half years when it comes to trying to beat back COVID and make sure that we all could come together in this room again without masks and make sure there was a strategy to deal with this pandemic; turn the economy around because of this pandemic; make sure that, you know, schools were open, businesses were open.  Now we have a record number of people applying to open up small businesses. 
    They’re doing that because they believe that the economy is working for them.  Nobody wants to open a small business if they don’t think the economy is working — is — is working for them. 
    Now, there’s always a lot more work to be done, and we’re going to continue to do that work.  You saw what the president did with Senator Bernie Sanders in New Hampshire — in Concord, New Hampshire, answering and lay- — and laying out what the — what the Inflation Reduction Act has been able to do, saving people a billion dollars because of that Inflation Reduction Act — which, I may add, Republicans did not vote for.  They did not vote for it. 
    I know I have to get — I’m getting the pull here. 
    Go ahead, Jon. 
    Q    Thanks a lot, Karine.  What’s the level of concern that the administration has about election interference, specifically from Russia? 
    MS. JEAN-PIERRE:  I mean, we spoke to that.  We’ve laid out — we made an — an announcement on what we were seeing from Russia on election interference.  We sent a very clear message on that just a couple of weeks ago.  So, obviously, that is something that continues to be a concern.  We will speak loud and clear about that, as we did just a couple of weeks ago.
    But we also want Americans to know th- — to trust the institution, and that’s what the president is going to continue to say and — and — and also continue to lay out the stakes — what’s at stakes.
    Okay.  Thanks, everybody.  Hopefully, see you on the road.
    2:30 P.M. EDT

    MIL OSI USA News

  • MIL-OSI USA: Wyden, Colleagues Call on Feds to Prosecute Tax Prep Companies for Illegally Sharing Sensitive Personal and Financial Taxpayer Data

    US Senate News:

    Source: United States Senator Ron Wyden (D-Ore)

    October 23, 2024

    Lawmakers: “DOJ has the sole authority to enforce the criminal statute on behalf of the millions of taxpayers harmed by this unauthorized disclosure of their sensitive personal and financial data.”

    Washington D.C.— U.S. Senator Ron Wyden said today he has joined Senate and House colleagues to urge the Department of Justice to act against major tax preparation companies illegally sharing protected and sensitive taxpayer information with Big Tech firms. 

    “We write to urge you to investigate and prosecute the criminal behavior of major tax preparation companies identified in our investigation and confirmed by the Treasury Inspector General for Tax Administration and the Internal Revenue Service,” the lawmakers wrote.

    Last month, the U.S. Treasury Inspector General for Tax Administration released an audit report confirming that four online tax preparation companies broke the law by sharing legally protected and sensitive taxpayer information with Big Tech firms without taxpayer consent.  Specifically, the report found that consent statements being used by the tax prep companies did not clearly identify the intended use of taxpayer data, a violation of Treasury regulations. The IRS agreed with that assessment. 

    “The penalties for knowingly or recklessly disclosing or using tax return information include up to 1 year in prison, and penalties of up to $1000 per violation. DOJ has the sole authority to enforce the criminal statute on behalf of the millions of taxpayers harmed by this unauthorized disclosure of their sensitive personal and financial data,” the lawmakers continued.

    Tax prep companies used pixels, computer code that tracks a user’s website activity, to obtain sensitive personal and financial information, including approximate income and refund amounts, for millions of taxpayers who filed their taxes online with these companies. Meta then used that information for advertising and to train its AI algorithm. 

    The U.S. Treasury Inspector General for Tax Administration conducted a detailed review of four tax preparation companies, and found the companies did not obtain proper taxpayer consent for the release of their information. 

    “Accountability for these tax preparation companies – who disclosed millions of taxpayers’ tax return data…is essential for protecting the rule of law and the privacy of taxpayers,” concluded the lawmakers. 

    The IRS recently announced the expansion of the highly successful Direct File program to 24 total states, including Oregon – making 30 million taxpayers eligible to file for free, securely, and directly with the IRS. However, many taxpayers still rely on private tax prep companies. 

    The letter was led by U.S. Senator Elizabeth Warren (D-Mass.). Along with Wyden, the letter was also signed by Senator Richard Blumenthal (D-Conn.) and U.S. House Representative Katie Porter (D-Calif.).

    The full text of the letter is here.

    MIL OSI USA News