Emissions Trading – Page 41

MIL-OSI Global: Why meteorologists are comparing Storm Éowyn to a bomb

Source: The Conversation – UK – By Suzanne Gray, Professor of Meteorology, University of Reading

A satellite image of the British Isles during Storm Éowyn’s descent. ©EUMETSAT (2025), CC BY

Storm Éowyn is today unleashing strong and damaging winds over the British Isles, and particularly over Ireland and Scotland.

Air pressure at the centre of the storm plummeted 50 millibars in the 24 hours leading up to midnight on January 24. That’s more than twice what is required in the definition of “explosive cyclogenesis”, in other words, the development of a cyclonic (anticlockwise rotating) storm that is both rapid and severe – like a bomb going off. As a result, Éowyn can be termed a “bomb cyclone”.

It is not unusual for winter storms in this part of the world to reach bomb cyclone status. However, only very few in recent years have shown a rate of deepening pressure that is comparable to that of Storm Éowyn.

The exceptional intensity of Storm Éowyn was predicted and it has prompted the Met Office and Met Éireann to issue red warnings covering the whole island of Ireland and central and southern Scotland. This tells the public to expect widespread gusts of 80-90mph and up to 100mph in the most exposed locations. A record-breaking gust of 114 mph has this morning been provisionally reported at Mace Head on Ireland’s west coast.

Similar intense storms have left widespread damage and tragically claimed lives. Some, such as the infamous Great Storm of 1987, have entered popular culture.

Éowyn’s place in history

The maximum gust during the Great Storm was measured as 115mph at Shoreham, on the west Sussex coast. However, the anemometer stopped recording immediately afterwards so the real peak may have been higher.

A scientific paper has cast doubts on the UK national low-level wind gust record (so, excluding mountain summits) of 142mph. This was recorded at Kinnaird Head Lighthouse at Fraserburgh in Aberdeenshire, Scotland on February 13 1989. The researchers documented brief power supply interruptions to the recording anemograph, which could have given a faulty reading.

The record-highest wind gust measured in England sits at 122mph. This was recorded at the Needles, a very exposed site at the edge of the Isle of Wight, during Storm Eunice in February 2022. Two gusts of similar strength were recorded less than two years later (November 2023) in Brittany during Storm Ciarán.

In Ireland, the strongest gust recorded by an inland low-altitude weather station was during ex-Hurricane Debbie in 1961, with 113mph measured at Malin Head, the most northerly point of mainland Ireland. A gust of 97mph was measured in October 2017 at Roche’s Point at the entrance to Cork harbour during ex-Hurricane Ophelia.

The measurements we’re now seeing during the passage of Storm Éowyn are up there with those recorded during the most infamous storms of recent years and decades.

What makes a storm ‘explode’

Like making a cake, there are several key ingredients to cooking up an explosively developing bomb cyclone like Storm Éowyn.

A strong jet stream – the ribbon of winds about six miles up in the atmosphere over the North Atlantic – is one. Winds here are currently exceeding 200 mph – their strength is linked to the strong temperature contrast between the cold plunge of air across the eastern US and the far warmer air over the western North Atlantic.

This strong jet has provided the energy for the storm’s development and is also the cause of its race towards the UK across the North Atlantic. Storm Éowyn came to life off the eastern seaboard of the US during Wednesday January 22 and will have covered over 2,000 miles before it arrives off western Scotland by Friday midday.

The low-pressure centre of Storm Éowyn crossed the jet stream from south to north en route, an ideal track for explosive development.

Éowyn’s heavy rainfall as it tracks towards the UK is a result of another key ingredient for explosive storm development: deep clouds within the storm that generate energy when their water condenses. These clouds are fed by strong fluxes of heat and moisture from the warm ocean surface, and scientists have been detecting record-warm surface ocean temperatures in the North Atlantic in recent years.

The role of climate change

When a storm such as Éowyn occurs, people ponder the role of climate change in fuelling its strength. Our experiences of future storms will depend on what tracks these storms typically take and how that influences their intensity. Stormy weather is, of course, not unusual in the autumn and winter over the British Isles and it requires detailed research to attribute the strength of any specific storm to climate change.

To date, the observed trends in storminess have not provided a conclusive link with climate change. The latest assessment report from the Intergovernmental Panel on Climate Change, experts relating to all aspects of climate change who are convened by the United Nations, states that there is “low confidence” in the direction of trends in the number and intensity of extratropical storms (those that form outside of the warm band surrounding Earth’s equator) over the last century.

One reason why it is difficult to make this link is that the position and variability of storminess is very dependent on the jet stream, and its position varies a lot from day to day, week to week, and beyond. Large-scale climate patterns such as the El-Niño Southern Oscillation and North Atlantic Oscillation, and sea surface temperatures and the extent of sea ice are also likely to be important factors.

Despite this uncertainty, there are indications that in the future, winter storms may become more frequent and more clustered (such that several storms occur within a few days of each other), which can exacerbate their overall impact. The frequency of storms with extreme winds may also increase. Rainfall is highly likely to increase, as a warmer atmosphere can hold more moisture.

Another thing that could change about intense storms in future is their propensity to develop “sting jets”. Sting jets are descending airstreams that can produce particularly destructive surface winds, as in the Great October storm, Storm Eunice and Storm Ciarán. Sting jets are short-lived and occur over very small areas, making them hard to predict and identify.

There is speculation over whether a sting jet has descended during Storm Éowyn. Post-event verification will be needed. While the overall impact on wind speed is uncertain, the small number of studies that have considered sting jets in future cyclones have predicted an increase in their likelihood.

Cyclones that are capable of producing sting jets also typically show more vigorous cloud development, consistent with the hypothesis that the intense storms of the future will be influenced by our hotter and wetter atmosphere.

Don’t have time to read about climate change as much as you’d like?

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Suzanne Gray has previously received or currently has funding from the Natural Environmental Research Council and AXA Research Fund to work on sting jet storms, and storms in the Arctic and Mediterranean regions.

Ambrogio Volonté has previously received or currently has funding from the Natural Environmental Research Council, AXA Research Fund and the University of Reading to work on sting jet storms, and storms in the Arctic and Mediterranean regions.

– ref. Why meteorologists are comparing Storm Éowyn to a bomb – https://theconversation.com/why-meteorologists-are-comparing-storm-eowyn-to-a-bomb-248203

MIL OSI – Global Reports –

January 25, 2025

MIL-OSI: Trustco Reports Third Quarter 2024 Net Income of $12.9 Million; Skillful Application of Strong Fundamentals Produce Solid Results

Source: GlobeNewswire (MIL-OSI)

Executive Snapshot:

Average Loan portfolio continues to grow:
- On average, total loans were up $127.0 million or 2.6% for the third quarter 2024 compared to the third quarter 2023

Continued solid financial results:
- Key metrics for third quarter 2024:
  - Net income of $12.9 million versus $12.6 million for the second quarter 2024
  - Net interest income of $38.7 million, up from $37.8 million compared to the second quarter of 2024
  - Return on average equity (ROAE) of 7.74% versus 7.76% for the second quarter 2024
Capital continues to grow:
- Consolidated equity to assets increased 6.2% to 10.95% as of September 30, 2024 from 10.31% as of September 30, 2023
- Book value per share as of September 30, 2024 was $35.19, up from $34.46 compared to June 30, 2024

GLENVILLE, N.Y., Oct. 21, 2024 (GLOBE NEWSWIRE) —

TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2024 net income of $12.9 million or $0.68 diluted earnings per share, compared to net income of $14.7 million or $0.77 diluted earnings per share for the third quarter 2023; and net income of $37.6 million or $1.97 diluted earnings per share for the nine months ended September 30, 2024, compared to net income of $48.9 million or $2.57 diluted earnings per share for the nine months ended September 30, 2023. Average loans increased $127.0 million or 2.6% for the third quarter 2024 over the same period in 2023. TrustCo was able to increase the balances of home equity lines of credit (HECLs) outstanding through an aggressive campaign to encourage existing customers to utilize their HECLs in place of the higher rates on other products. The objective was to meet customer needs and encourage increased utilization through existing HECLs.

Overview

Chairman, President, and CEO, Robert J. McCormick said “Hard, consistent work on the fundamentals of banking once again have served the Trustco Bank team well and enabled us to post strong results under challenging circumstances. Our bankers posted one modest success after another – which accumulated into solid performance. We continued to hold the line on demand accounts and capitalized on strong customer relationships which enabled us to direct the flow into competitively-priced CDs, rather than to non-bank investment products. Not having to purchase expensive deposits or pay excessive rates, helped keep interest expense down, contributing to increased net interest income. We have continued to sell home equity products at favorable rates where origination of purchase mortgages lagged due to lack of sales volume. We booked these new loans at higher interest rates, also boosting net interest margin. Once again, loans reached a new all-time high. All of these efforts by our team resulted in net income of $12.9 million for the quarter.”

Details

Average loans were up $127.0 million or 2.6% in the third quarter 2024 over the same period in 2023. Average residential loans and home equity lines of credit, our primary lending focus, were up $50.4 million, or 1.2%, and $60.0 million, or 18.7%, respectively, in the third quarter 2024 over the same period in 2023. Average commercial loans also increased $18.1 million, or 6.9%, in the third quarter 2024 over the same period in 2023. Average deposits were up $15.3 million, or 0.3% for the third quarter 2024 over the same period in 2023. We believe the increase in time deposits compared to the prior year continues to reflect the desire of customers to have additional funds in the safety and security offered by TrustCo’s long history of conservative banking, while earning a competitive interest rate. As we move forward, the objective is to encourage customers to retain these additional funds in the expanded product offerings of Trustco Bank (the “Bank”) through aggressive marketing and product differentiation.

Net interest income was $38.7 million for the third quarter 2024, an increase of $883 thousand, or 2.3%, compared to the prior quarter, driven by loan growth at higher interest rates and lower cost of deposits, partially offset by lower investment earnings and a decrease in interest on federal funds sold and other short-term investments. The net interest margin for the third quarter 2024 was 2.61%, up 8 basis points from 2.53% in the second quarter of 2024. The yield on interest earnings assets increased to 4.11%, up 5 basis points from 4.06% in the second quarter of 2024. The cost of interest bearing liabilities decreased to 1.94% in the third quarter 2024 from 1.97% in the second quarter 2024. The Bank has seen success in retaining deposits while lowering the rates on time deposits, and still being competitive in the markets it serves. The Federal Reserve’s decision regarding whether to cut or hold rates in upcoming meetings will have an effect on the Bank’s ability to continue to manage deposit costs. Further reductions should help margin expansion in future quarters. Non-interest expense decreased $259 thousand over the prior quarter as a result of the Bank’s ongoing efforts to control expenses.

Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $500 thousand in the third quarter of 2024, which is the result of a provision for credit losses on loans of $400 thousand, and provision for credit losses on unfunded commitments of $100 thousand. The ratio of allowance for credit losses on loans to total loans was 0.99% and 0.95% as of September 30, 2024 and 2023, respectively. The allowance for credit losses on loans was $50.0 million at September 30, 2024, compared to $47.2 million at September 30, 2023. Nonperforming loans (NPLs) were $19.4 million at September 30, 2024, compared to $17.9 million at September 30, 2023. NPLs were 0.38% and 0.36% of total loans at September 30, 2024 and 2023, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 256.9% at September 30, 2024, compared to 264.2% at September 30, 2023. Nonperforming assets (NPAs) were $21.9 million at September 30, 2024, compared to $19.1 million at September 30, 2023.

At September 30, 2024, our equity to asset ratio was 10.95%, compared to 10.31% at September 30, 2023. Book value per share at September 30, 2024 was $35.19, up 7.3% compared to $32.80 a year earlier.

A conference call to discuss third quarter 2024 results will be held at 9:00 a.m. Eastern Time on October 22, 2024. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 034120. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, Access code 285814. The call will also be audio webcast at https://events.q4inc.com/attendee/854762065, and will be available for one year.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 138 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2024.

In addition, the Bank’s Wealth Management Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

Forward-Looking Statements

All statements in this news release that are not historical are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our future performance, including our expectations regarding the effects of the economic environment on our financial results, our ability to retain customers and the amount of customers’ business, including deposit balances, with us, the impact of the Federal Reserve’s actions regarding interest rates, and the growth of loans and deposits throughout our branch network. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to inflation, continued elevated interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas). TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: future changes in interest rates; ongoing inflationary pressures and continued elevated prices; exposure to credit risk in our lending activities; our increasing commercial loan portfolio; the sufficiency of our allowance for credit losses on loans to cover actual loan losses; our ability to meet the cash flow requirements of our depositors or borrowers or meet our operating cash needs to fund corporate expansion and other activities; claims and litigation pertaining to fiduciary responsibility and lender liability; our dependency upon the services of the management team; our disclosure controls and procedures’ ability to prevent or detect errors or acts of fraud; the adequacy of our business continuity and disaster recovery plans; the effectiveness of our risk management framework; the impact of any expansion by us into new lines of business or new products and services; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices; the chance of a prolonged economic downturn, especially one affecting our geographic market area; instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; the soundness of other financial institutions; U.S. government shutdowns, credit rating downgrades, or failure to increase the debt ceiling; fluctuations in the trust wealth management fees we receive as a result of investment performance; the impact of regulatory capital rules on our growth; changes in laws and regulations, including changes in cybersecurity or privacy regulations; restrictions on data collection and use; our compliance with the USA PATRIOT Act, Bank Secrecy Act, and other laws and regulations that could result in material fines or sanctions; changes in tax laws; limitations on our ability to pay dividends; TrustCo Realty Corp.’s ability to qualify as a real estate investment trust; changes in accounting standards; competition within our market areas; consumers and businesses’ use of non-banks to complete financial transactions; our reliance on third-party service providers; the impact of data breaches and cyber-attacks; the impact of a failure in or breach of our operational or security systems or infrastructure, or those of third parties; the impact of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of interruptions in the effective operation of our computer systems; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings. The forward-looking statements contained in this news release represent TrustCo management’s judgment as of the date of this news release. TrustCo disclaims, however, any intent or obligation to update forward-looking statements, either as a result of future developments, new information or otherwise, except as may be required by law.


TRUSTCO BANK CORP NY
GLENVILLE, NY

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2024				6/30/2024				9/30/2023
Summary of operations
Net interest income		$	38,671			$	37,788			$	42,221
Provision for credit losses			500				500				100
Net gains on equity securities			23				1,360				–
Noninterest income, excluding net gains on equity securities			4,908				4,291				4,574
Noninterest expense			26,200				26,459				27,460
Net income			12,875				12,551				14,680

Per share
Net income per share:
– Basic		$	0.68			$	0.66			$	0.77
– Diluted			0.68				0.66				0.77
Cash dividends			0.36				0.36				0.36
Book value at period end			35.19				34.46				32.80
Market price at period end			33.07				28.77				27.29

At period end
Full time equivalent employees			735				753				764
Full service banking offices			138				138				143

Performance ratios
Return on average assets			0.84		%		0.82		%		0.96		%
Return on average equity			7.74				7.76				9.32
Efficiency ratio (1)			59.65				62.84				58.33
Net interest spread			2.17				2.09				2.55
Net interest margin			2.61				2.53				2.85
Dividend payout ratio			53.16				54.57				46.65

Capital ratios at period end
Consolidated equity to assets			10.95		%		10.73		%		10.31		%
Consolidated tangible equity to tangible assets (2)			10.94		%		10.72		%		10.30		%

Asset quality analysis at period end
Nonperforming loans to total loans			0.38		%		0.38		%		0.36		%
Nonperforming assets to total assets			0.36				0.35				0.31
Allowance for credit losses on loans to total loans			0.99				0.99				0.95
Coverage ratio (3)		2.6x				2.6x				2.6x


(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE expense) divided by taxable equivalent net interest income plus noninterest income (excluding net gains on equity securities). See Non-GAAP Financial Measures Reconciliation.
(2) Non-GAAP measure; calculated as total shareholders’ equity less $553 of intangible assets divided by total assets less $553 of intangible assets. See Non-GAAP Financial Measures Reconciliation.
(3) Calculated as allowance for credit losses on loans divided by total nonperforming loans.


FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)
(Unaudited)
		Nine Months Ended
		09/30/24				09/30/23
Summary of operations
Net interest income	$		113,037				133,238
Provision (Credit) for credit losses			1,600				(100	)
Net gains on equity securities			1,383				–
Noninterest income, excluding net gains on equity securities			14,042				13,841
Noninterest expense			77,562				82,466
Net income			37,552				48,798

Per share
Net income per share:
– Basic	$		1.97				2.57
– Diluted			1.97				2.57
Cash dividends			1.08				1.08
Book value at period end			35.19				32.80
Market price at period end			33.07				27.29

Performance ratios
Return on average assets			0.82		%		1.08
Return on average equity			7.68				10.57
Efficiency ratio (1)			60.80				55.70
Net interest spread			2.08				2.78
Net interest margin			2.52				3.01
Dividend payout ratio			54.70				42.11

(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE expense) divided by taxable equivalent net interest income plus noninterest income (excluding net gains on equity securities). See Non-GAAP Financial Measures Reconciliation.


CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2024				6/30/2024				3/31/2024				12/31/2023			9/30/2023
Interest and dividend income:
Interest and fees on loans		$	52,112			$	50,660			$	49,804			$	49,201		$	47,921
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises			718				909				906				750			672
State and political subdivisions			–				1				–				1			–
Mortgage-backed securities and collateralized mortgage
obligations – residential			1,397				1,451				1,494				1,533			1,485
Corporate bonds			361				362				476				477			473
Small Business Administration – guaranteed
participation securities			90				94				100				102			107
Other securities			2				2				3				3			2
Total interest and dividends on securities available for sale			2,568				2,819				2,979				2,866			2,739

Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations – residential			62				65				68				70			73
Total interest on held to maturity securities			62				65				68				70			73

Federal Home Loan Bank stock			153				147				152				149			131

Interest on federal funds sold and other short-term investments			6,174				6,894				6,750				6,354			6,688
Total interest income			61,069				60,585				59,753				58,640			57,552

Interest expense:
Interest on deposits:
Interest-bearing checking			311				288				240				165			102
Savings			770				675				712				707			639
Money market deposit accounts			2,154				2,228				2,342				2,500			2,384
Time deposits			18,969				19,400				19,677				16,460			11,962
Interest on short-term borrowings			194				206				204				201			244
Total interest expense			22,398				22,797				23,175				20,033			15,331

Net interest income			38,671				37,788				36,578				38,607			42,221

Less: Provision for credit losses			500				500				600				1,350			100
Net interest income after provision for credit losses			38,171				37,288				35,978				37,257			42,121

Noninterest income:
Trustco Financial Services income			2,044				1,609				1,816				1,612			1,627
Fees for services to customers			2,482				2,399				2,745				2,563			2,590
Net gains on equity securities			23				1,360				–				–			–
Other			382				283				282				299			357
Total noninterest income			4,931				5,651				4,843				4,474			4,574

Noninterest expenses:
Salaries and employee benefits			12,134				12,520				11,427				12,444			12,393
Net occupancy expense			4,271				4,375				4,611				4,209			4,358
Equipment expense			1,757				1,990				1,738				1,852			1,923
Professional services			1,863				1,570				1,460				1,561			1,717
Outsourced services			2,551				2,755				2,501				2,532			2,720
Advertising expense			339				466				408				384			586
FDIC and other insurance			1,112				797				1,094				1,085			1,078
Other real estate expense (income), net			204				16				74				(12	)		163
Other			1,969				1,970				1,590				4,776			2,522
Total noninterest expenses			26,200				26,459				24,903				28,831			27,460

Income before taxes			16,902				16,480				15,918				12,900			19,235
Income taxes			4,027				3,929				3,792				3,052			4,555

Net income		$	12,875			$	12,551			$	12,126			$	9,848		$	14,680

Net income per common share:
– Basic		$	0.68			$	0.66			$	0.64			$	0.52		$	0.77

– Diluted			0.68				0.66				0.64				0.52			0.77

Average basic shares (in thousands)			19,010				19,022				19,024				19,024			19,024
Average diluted shares (in thousands)			19,036				19,033				19,032				19,026			19,024



CONSOLIDATED STATEMENTS OF INCOME, Continued

(dollars in thousands, except per share data)
(Unaudited)
		Nine Months Ended
		09/30/24				09/30/23
Interest and dividend income:
Interest and fees on loans	$		152,576				138,255
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises			2,533				2,055
State and political subdivisions			1				1
Mortgage-backed securities and collateralized mortgage
obligations – residential			4,342				4,613
Corporate bonds			1,199				1,510
Small Business Administration – guaranteed
participation securities			284				335
Other securities			7				7
Total interest and dividends on securities available for sale			8,366				8,521

Interest on held to maturity securities:
Mortgage-backed securities-residential			195				226
Total interest on held to maturity securities			195				226

Federal Home Loan Bank stock			452				351

Interest on federal funds sold and other short-term investments			19,818				20,213
Total interest income			181,407				167,566

Interest expense:
Interest on deposits:
Interest-bearing checking			839				217
Savings			2,157				1,824
Money market deposit accounts			6,724				4,954
Time deposits			58,046				26,525
Interest on short-term borrowings			604				808
Total interest expense			68,370				34,328

Net interest income			113,037				133,238

Less: Provision (Credit) for credit losses			1,600				(100	)
Net interest income after provision (credit) for credit losses			111,437				133,338

Noninterest income:
Trustco Financial Services income			5,469				4,813
Fees for services to customers			7,626				8,085
Net gains on equity securities			1,383				–
Other			947				943
Total noninterest income			15,425				13,841

Noninterest expenses:
Salaries and employee benefits			36,081				38,798
Net occupancy expense			13,257				13,218
Equipment expense			5,485				5,758
Professional services			4,893				4,684
Outsourced services			7,807				7,507
Advertising expense			1,213				1,494
FDIC and other insurance			3,003				3,215
Other real estate expense, net			294				536
Other			5,529				7,256
Total noninterest expenses			77,562				82,466

Income before taxes			49,300				64,713
Income taxes			11,748				15,915

Net income	$		37,552				48,798

Net income per common share:
– Basic	$		1.97				2.57

– Diluted			1.97				2.57

Average basic shares (in thousands)			19,019				19,024
Average diluted shares (in thousands)			19,034				19,024




CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)
(Unaudited)
		9/30/2024				6/30/2024				3/31/2024				12/31/2023			9/30/2023
ASSETS:

Cash and due from banks		$	49,659			$	42,193			$	44,868			$	49,274		$	45,940
Federal funds sold and other short term investments			473,306				493,920				564,815				528,730			461,321
Total cash and cash equivalents			522,965				536,113				609,683				578,004			507,261

Securities available for sale:
U. S. government sponsored enterprises			90,588				106,796				128,854				118,668			121,474
States and political subdivisions			26				26				26				26			34
Mortgage-backed securities and collateralized mortgage
obligations – residential			222,841				218,311				227,078				237,677			233,719
Small Business Administration – guaranteed
participation securities			15,171				15,592				16,260				17,186			17,316
Corporate bonds			54,327				53,764				53,341				78,052			76,935
Other securities			701				688				682				680			657
Total securities available for sale			383,654				395,177				426,241				452,289			450,135

Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential			5,636				5,921				6,206				6,458			6,724
Total held to maturity securities			5,636				5,921				6,206				6,458			6,724

Federal Reserve Bank and Federal Home Loan Bank stock			6,507				6,507				6,203				6,203			6,203

Loans:
Commercial			280,261				282,441				279,092				273,515			268,642
Residential mortgage loans			4,382,674				4,370,640				4,354,369				4,365,063			4,343,006
Home equity line of credit			393,418				370,063				355,879				347,415			332,028
Installment loans			14,503				15,168				16,166				16,886			16,605
Loans, net of deferred net costs			5,070,856				5,038,312				5,005,506				5,002,879			4,960,281

Less: Allowance for credit losses on loans			49,950				49,772				49,220				48,578			47,226
Net loans			5,020,906				4,988,540				4,956,286				4,954,301			4,913,055

Bank premises and equipment, net			33,324				33,466				33,423				34,007			32,135
Operating lease right-of-use assets			37,958				38,376				39,647				40,542			41,475
Other assets			98,730				102,544				101,881				96,387			97,310

Total assets		$	6,109,680			$	6,106,644			$	6,179,570			$	6,168,191		$	6,054,298

LIABILITIES:
Deposits:
Demand		$	753,878			$	745,227			$	742,997			$	754,532		$	773,293
Interest-bearing checking			988,527				1,029,606				1,020,136				1,015,213			1,033,898
Savings accounts			1,092,038				1,144,427				1,155,517				1,179,241			1,235,658
Money market deposit accounts			477,113				517,445				532,611				565,767			610,012
Time deposits			1,952,635				1,840,262				1,903,908				1,836,024			1,581,504
Total deposits			5,264,191				5,276,967				5,355,169				5,350,777			5,234,365

Short-term borrowings			91,450				89,720				94,374				88,990			103,110
Operating lease liabilities			41,469				42,026				43,438				44,471			45,418
Accrued expenses and other liabilities			43,549				42,763				37,399				38,668			47,479

Total liabilities			5,440,659				5,451,476				5,530,380				5,522,906			5,430,372

SHAREHOLDERS’ EQUITY:
Capital stock			20,058				20,058				20,058				20,058			20,058
Surplus			257,644				257,490				257,335				257,181			257,078
Undivided profits			442,079				436,048				430,346				425,069			422,082
Accumulated other comprehensive loss, net of tax			(6,600	)			(14,268	)			(14,763	)			(13,237	)		(31,506	)
Treasury stock at cost			(44,160	)			(44,160	)			(43,786	)			(43,786	)		(43,786	)

Total shareholders’ equity			669,021				655,168				649,190				645,285			623,926

Total liabilities and shareholders’ equity		$	6,109,680			$	6,106,644			$	6,179,570			$	6,168,191		$	6,054,298

Outstanding shares (in thousands)			19,010				19,010				19,024				19,024			19,024


NONPERFORMING ASSETS

(dollars in thousands)
(Unaudited)
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Nonperforming Assets

New York and other states*
Loans in nonaccrual status:
Commercial	$	466		$	741		$	532		$	536		$	540
Real estate mortgage – 1 to 4 family		15,320			14,992			14,359			14,375			14,633
Installment		163			131			149			151			93
Total non-accrual loans		15,949			15,864			15,040			15,062			15,266
Other nonperforming real estate mortgages – 1 to 4 family		–			–			–			3			5
Total nonperforming loans		15,949			15,864			15,040			15,065			15,271
Other real estate owned		2,503			2,334			2,334			194			1,185
Total nonperforming assets	$	18,452		$	18,198		$	17,374		$	15,259		$	16,456

Florida
Loans in nonaccrual status:
Commercial	$	314		$	314		$	314		$	314		$	314
Real estate mortgage – 1 to 4 family		3,176			2,985			2,921			2,272			2,228
Installment		5			22			–			15			65
Total non-accrual loans		3,495			3,321			3,235			2,601			2,607
Other nonperforming real estate mortgages – 1 to 4 family		–			–			–			–			–
Total nonperforming loans		3,495			3,321			3,235			2,601			2,607
Other real estate owned		–			–			–			–			–
Total nonperforming assets	$	3,495		$	3,321		$	3,235		$	2,601		$	2,607

Total
Loans in nonaccrual status:
Commercial	$	780		$	1,055		$	846		$	850		$	854
Real estate mortgage – 1 to 4 family		18,496			17,977			17,280			16,647			16,861
Installment		168			153			149			166			158
Total non-accrual loans		19,444			19,185			18,275			17,663			17,873
Other nonperforming real estate mortgages – 1 to 4 family		–			–			–			3			5
Total nonperforming loans		19,444			19,185			18,275			17,666			17,878
Other real estate owned		2,503			2,334			2,334			194			1,185
Total nonperforming assets	$	21,947		$	21,519		$	20,609		$	17,860		$	19,063


Quarterly Net (Recoveries) Chargeoffs

New York and other states*
Commercial	$	65		$	–		$	–		$	–		$	–
Real estate mortgage – 1 to 4 family		104			(74	)		(78	)		219			(26	)
Installment		11			(2	)		36			23			14
Total net (recoveries) chargeoffs	$	180		$	(76	)	$	(42	)	$	242		$	(12	)

Florida
Commercial	$	–		$	–		$	–		$	–		$	–
Real estate mortgage – 1 to 4 family		–			17			–			–			–
Installment		42			7			–			6			–
Total net (recoveries) chargeoffs	$	42		$	24		$	–		$	6		$	–

Total
Commercial	$	65		$	–		$	–		$	–		$	–
Real estate mortgage – 1 to 4 family		104			(57	)		(78	)		219			(26	)
Installment		53			5			36			29			14
Total net (recoveries) chargeoffs	$	222		$	(52	)	$	(42	)	$	248		$	(12	)


Asset Quality Ratios

Total nonperforming loans (1)	$	19,444		$	19,185		$	18,275		$	17,666		$	17,878
Total nonperforming assets (1)		21,947			21,519			20,609			17,860			19,063
Total net (recoveries) chargeoffs (2)		222			(52	)		(42	)		248			(12	)

Allowance for credit losses on loans (1)		49,950			49,772			49,220			48,578			47,226

Nonperforming loans to total loans		0.38	%		0.38	%		0.37	%		0.35	%		0.36	%
Nonperforming assets to total assets		0.36	%		0.35	%		0.33	%		0.29	%		0.31	%
Allowance for credit losses on loans to total loans		0.99	%		0.99	%		0.98	%		0.97	%		0.95	%
Coverage ratio (1)		256.9	%		259.4	%		269.3	%		275.0	%		264.2	%
Annualized net (recoveries) chargeoffs to average loans (2)		0.02	%		0.00	%		0.00	%		0.02	%		0.00	%
Allowance for credit losses on loans to annualized net chargeoffs (2)	56.3x			N/A			N/A			49.0x			N/A

* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the three-month period ended


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY –
INTEREST RATES AND INTEREST DIFFERENTIAL

(dollars in thousands)
(Unaudited)		Three months ended								Three months ended
		September 30, 2024								September 30, 2023
		Average			Interest		Average			Average			Interest		Average
		Balance					Rate			Balance					Rate
Assets

Securities available for sale:
U. S. government sponsored enterprises		$	95,073		$	718	3.02	%		$	119,406		$	672	2.25	%
Mortgage backed securities and collateralized mortgage
obligations – residential			241,792			1,397	2.29				269,535			1,485	2.19
State and political subdivisions			26			–	6.75				34			–	6.74
Corporate bonds			55,041			361	2.63				80,331			473	2.36
Small Business Administration – guaranteed
participation securities			16,663			90	2.15				19,801			107	2.15
Other			701			2	1.14				686			2	1.17

Total securities available for sale			409,296			2,568	2.51				489,793			2,739	2.24

Federal funds sold and other short-term Investments			465,922			6,174	5.27				494,597			6,688	5.37

Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations – residential			5,779			62	4.29				6,877			73	4.22

Total held to maturity securities			5,779			62	4.29				6,877			73	4.22

Federal Home Loan Bank stock			6,507			153	9.41				6,203			131	8.45

Commercial loans			279,199			3,807	5.45				261,061			3,398	5.21
Residential mortgage loans			4,375,641			41,811	3.82				4,325,219			39,321	3.64
Home equity lines of credit			380,422			6,245	6.53				320,446			4,946	6.12
Installment loans			14,443			249	6.87				15,959			256	6.37

Loans, net of unearned income			5,049,705			52,112	4.12				4,922,685			47,921	3.89

Total interest earning assets			5,937,209		$	61,069	4.11				5,920,155		$	57,552	3.88

Allowance for credit losses on loans			(49,973	)							(47,077	)
Cash & non-interest earning assets			187,166								172,523


Total assets		$	6,074,402							$	6,045,601


Liabilities and shareholders’ equity

Deposits:
Interest bearing checking accounts		$	1,000,333		$	311	0.12	%		$	1,050,313		$	102	0.04	%
Money market accounts			499,408			2,154	1.72				625,031			2,384	1.51
Savings			1,122,673			770	0.27				1,282,641			639	0.20
Time deposits			1,880,021			18,969	4.01				1,494,402			11,962	3.18

Total interest bearing deposits			4,502,435			22,204	1.96				4,452,387			15,087	1.34
Short-term borrowings			87,677			194	0.88				110,018			244	0.88

Total interest bearing liabilities			4,590,112		$	22,398	1.94				4,562,405		$	15,331	1.33

Demand deposits			742,164								776,885
Other liabilities			80,502								81,411
Shareholders’ equity			661,624								624,900

Total liabilities and shareholders’ equity		$	6,074,402							$	6,045,601

Net interest income, GAAP and non-GAAP tax equivalent (1)					$	38,671							$	42,221

Net interest spread, GAAP and non-GAAP tax equivalent (1)							2.17	%							2.55	%


Net interest margin (net interest income to
total interest earning assets), GAAP and non-GAAP tax equivalent (1)							2.61	%							2.85	%

Tax equivalent adjustment (1)						–								–


Net interest income					$	38,671							$	42,221

(1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation.



DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY –
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued

(dollars in thousands)
(Unaudited)		Nine Months Ended								Nine Months Ended
		September 30, 2024								September 30, 2023
		Average			Interest		Average			Average			Interest		Average
		Balance					Rate			Balance					Rate
Assets

Securities available for sale:
U. S. government sponsored enterprises	$		111,570			2,533	3.03	%	$		120,243			2,055	2.28	%
Mortgage backed securities and collateralized mortgage
obligations – residential			250,343			4,342	2.31				278,252			4,613	2.21
State and political subdivisions			26			1	6.80				34			1	6.74
Corporate bonds			61,221			1,199	2.61				83,732			1,510	2.41
Small Business Administration – guaranteed
participation securities			17,438			284	2.17				20,876			335	2.14
Other			697			7	1.34				686			7	1.02

Total securities available for sale			441,295			8,366	2.53				503,823			8,521	1.69

Federal funds sold and other short-term Investments			489,934			19,818	5.40				540,570			20,213	5.00

Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations – residential			6,053			195	4.29				7,205			226	4.18

Total held to maturity securities			6,053			195	4.29				7,205			226	4.18

Federal Home Loan Bank stock			6,350			452	9.49				5,957			351	5.89

Commercial loans			278,981			11,232	5.37				249,738			9,716	5.19
Residential mortgage loans			4,364,821			123,046	3.76				4,269,494			114,227	3.57
Home equity lines of credit			365,932			17,522	6.40				305,075			13,598	5.96
Installment loans			15,319			776	6.76				15,015			714	6.35

Loans, net of unearned income			5,025,053			152,576	4.05				4,839,322			138,255	3.81

Total interest earning assets			5,968,685			181,407	4.05				5,896,877			167,566	3.79

Allowance for credit losses on loans			(49,419	)							(46,812	)
Cash & non-interest earning assets			187,963								173,521


Total assets	$		6,107,229						$		6,023,586


Liabilities and shareholders’ equity

Deposits:
Interest bearing checking accounts	$		999,839			839	0.11	%	$		1,088,859			217	0.03	%
Money market accounts			522,636			6,724	1.72				613,119			4,954	1.08
Savings			1,142,313			2,157	0.25				1,363,052			1,824	0.18
Time deposits			1,881,027			58,046	4.12				1,343,762			26,525	2.64

Total interest bearing deposits			4,545,815			67,766	1.99				4,408,792			33,520	1.02
Short-term borrowings			91,551			604	0.88				121,911			808	0.89

Total interest bearing liabilities			4,637,366			68,370	1.97				4,530,703			34,328	1.01

Demand deposits			734,604								793,890
Other liabilities			82,233								81,771
Shareholders’ equity			653,026								617,224

Total liabilities and shareholders’ equity	$		6,107,229						$		6,023,588

Net interest income, GAAP and non-GAAP tax equivalent (1)						113,037								133,238

Net interest spread, GAAP and non-GAAP tax equivalent (1)							2.08	%							2.78	%


Net interest margin (net interest income to
total interest earning assets), GAAP and non-GAAP tax equivalent (1)							2.52	%							3.01	%

Tax equivalent adjustment (1)						–								–


Net interest income						113,037								133,238

(1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation.

Non-GAAP Financial Measures Reconciliation

Tangible book value per share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible book value by excluding the balance of intangible assets from total shareholders’ equity divided by shares outstanding. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity exclusive of changes in intangible assets.

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from total shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.

Net interest income is commonly presented on a taxable equivalent basis. That is, to the extent that some component of the institution’s net interest income will be exempt from taxation (e.g., was received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added back to the net interest income total. Management considers this adjustment helpful to investors in comparing one financial institution’s net interest income (pre- tax) to that of another institution, as each will have a different proportion of tax-exempt items in their portfolios. Moreover, net interest income is itself a component of another financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest earning assets. Additionally, management and many financial institutions also present net interest spread, which is the average yield on interest earning assets minus the average rate paid on interest bearing liabilities. For purposes of these measures as well, taxable equivalent net interest income is generally used by financial institutions, again to provide investors with a better basis of comparison from institution to institution. We calculate taxable equivalent net interest margin by dividing net interest income, adjusted to include the benefit of non-taxable interest income, by average interest earning assets. We calculate taxable equivalent net interest spread as the difference between average yield on interest earning assets, adjusted to include the benefit of non-taxable interest income, and the average rate paid on interest bearing liabilities.

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding net gains on equity securities. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. Additionally, we believe this measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below. We have not presented a reconciliation of taxable equivalent net interest income, taxable equivalent net interest margin or taxable equivalent net interest spread to the most directly comparable GAAP measure, as there was no difference between the taxable equivalent measure and comparable GAAP measure for any period presented in this release.


NON-GAAP FINANCIAL MEASURES RECONCILIATION

(dollars in thousands)
(Unaudited)
	9/30/2024			6/30/2024			9/30/2023
Tangible Book Value Per Share

Equity (GAAP)	$	669,021		$	655,168		$	623,926
Less: Intangible assets		553			553			553
Tangible equity (Non-GAAP)	$	668,468		$	654,615		$	623,373

Shares outstanding		19,010			19,010			19,024
Tangible book value per share		35.16			34.44			32.77
Book value per share		35.19			34.46			32.80

Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	6,109,680		$	6,106,644		$	6,054,298
Less: Intangible assets		553			553			553
Tangible assets (Non-GAAP)	$	6,109,127		$	6,106,091		$	6,053,745

Tangible Equity to Tangible Assets (Non-GAAP)		10.94	%		10.72	%		10.30	%
Equity to Assets (GAAP)		10.95	%		10.73	%		10.31	%

	Three months ended									Nine Months Ended
Efficiency Ratio	9/30/2024			6/30/2024			9/30/2023			9/30/2024			9/30/2023

Net interest income (GAAP)	$	38,671		$	37,788		$	42,221		$	113,037		$	133,238
Taxable equivalent adjustment		–			–			–			–			–
Net interest income (fully taxable equivalent) (Non-GAAP)		38,671			37,788			42,221			113,037			133,238
Non-interest income (GAAP)		4,931			5,651			4,574			15,425			13,841
Less: Net gains on equity securities		23			1,360			–			1,383			–
Revenue used for efficiency ratio (Non-GAAP)	$	43,579		$	42,079		$	46,795		$	127,079		$	147,079

Total noninterest expense (GAAP)	$	26,200		$	26,459		$	27,460		$	77,562		$	82,466
Less: Other real estate expense, net		204			16			163			294			536
Expense used for efficiency ratio (Non-GAAP)	$	25,996		$	26,443		$	27,297		$	77,268		$	81,930

Efficiency Ratio		59.65	%		62.84	%		58.33	%		60.80	%		55.70	%


Subsidiary:	Trustco Bank

Contact:	Robert Leonard Executive Vice President (518) 381-3693

The MIL Network –

January 24, 2025

MIL-OSI: RBB Bancorp Reports Third Quarter 2024 Earnings and Declares Quarterly Cash Dividend of $0.16 Per Common Share

Source: GlobeNewswire (MIL-OSI)

LOS ANGELES, Oct. 21, 2024 (GLOBE NEWSWIRE) — RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank (the “Bank”) and RBB Asset Management Company (“RAM”), collectively referred to herein as “the Company,” announced financial results for the quarter ended September 30, 2024.

Third Quarter 2024 Highlights

Net income totaled $7.0 million, or $ 0.39 diluted earnings per share
Return on average assets of 0.72%, compared to 0.76% for the quarter ended June 30, 2024
Net interest margin of 2.68% compared to 2.67% for the quarter ended June 30, 2024
Repurchased 508,275 shares of common stock for $11.0 million during the quarter ended September 30, 2024, and completed the authorized program
Book value and tangible book value per share(1) increased to $28.81 and $24.64 at September 30, 2024, up from $28.12 and $24.06 at June 30, 2024

The Company reported net income of $7.0 million, or $ 0.39 diluted earnings per share, for the quarter ended September 30, 2024, compared to net income of $7.2 million, or $ 0.39 diluted earnings per share, for the quarter ended June 30, 2024.

“Loans increased at a 6% annualized rate in the third quarter as our work to expand lending and deposit relationships began to deliver results,” said David Morris, Chief Executive Officer of RBB Bancorp. “Net interest margin increased slightly, and we are optimistic that it will continue to expand from here. We continue to work through our non-performing loans and believe we will be able to resolve the majority of them by mid-2025.”

“The team has done an excellent job building on the Bank’s reputation as one of the premier Asian-centric financial institutions,” said Christina Kao, Chair of the Board of Directors. “Returning the Bank to growth has been a priority for the Board of Directors as we believe it will enhance long-term shareholder value.”

(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures included at the end of this press release.

Net Interest Income and Net Interest Margin

Net interest income was $24.5 million for the third quarter of 2024, compared to $24.0 million for the second quarter of 2024. The $580,000 increase was due to an increase in interest income of $1.5 million offset by an increase in interest expense of $959,000. The increase in interest income was due mostly to higher interest income on loans held for investment (“HFI”) of $2.0 million, partially offset by lower interest income on investment securities of $504,000. The increase in loan interest income was mostly due to higher average loans HFI of $54.4 million combined with a 9 basis point increase in the HFI loan yield. The decrease in investment income was attributed to lower average balances and a lower portfolio yield as proceeds from maturing short-term commercial paper were invested into loans and interest-earning cash. The increase in interest expense was due to higher average interest-bearing deposits of $42.3 million in the third quarter of 2024.

Net interest margin (“NIM”) was 2.68% for the third quarter of 2024, an increase of 1 basis point from 2.67% for the second quarter of 2024. The increase was due to a 5 basis point increase in the yield on average interest-earning assets, partially offset by a 3 basis point increase in the overall cost of funds. The yield on average interest-earning assets increased to 5.94% for the third quarter of 2024 from 5.89% for the second quarter of 2024 due mainly to a 9 basis point increase in the yield on average loans HFI to 6.13% for the third quarter of 2024. The increase in the loan yield was largely attributed to nonaccrual loan activity in the current and prior quarter, including both the recapture of interest income for fully paid off nonaccrual loans and reversals of interest income for loans migrating to nonaccrual status. Such activity increased the third quarter loan yield by 1 basis point and decreased the second quarter loan yield by 7 basis points. Average loans represented 84% of average interest-earning assets in the third quarter of 2024, unchanged from the second quarter of 2024.

The overall cost of funds increased to 3.57% in the third quarter of 2024 from 3.54% in the second quarter of 2024 due to a higher average cost of interest-bearing deposits in the third quarter of 2024 as compared to the second quarter of 2024. The overall funding mix remained relatively unchanged from the second quarter of 2024 as the ratio of average noninterest-bearing deposits to average total funding sources remained relatively unchanged at 16% for the third and second quarters of 2024. The all-in spot rate for total deposits was 3.53% at September 30, 2024.

Provision for Credit Losses

The Company recorded a provision for credit losses of $3.3 million for the third quarter of 2024 compared to $557,000 for the second quarter of 2024. The third quarter provision took into consideration factors including changes in the loan portfolio mix, higher specific reserves, the outlook for economic conditions and market interest rates, and credit quality metrics, including higher nonperforming, special mention and substandard loans at the end of the third quarter of 2024 as compared to the end of the second quarter of 2024.

Noninterest Income

Noninterest income for the third quarter of 2024 was $5.7 million, an increase of $2.3 million from $3.5 million for the second quarter of 2024. This increase was mostly due to a $2.8 million recovery of a fully charged off loan, which had been acquired in a bank acquisition (included in other income), partially offset by lower net gain on other real estate owned (“OREO”) of $292,000.

Noninterest Expense

Noninterest expense for the third quarter of 2024 was $17.4 million, an increase of $297,000 from $17.1 million for the second quarter of 2024. This increase was due to higher salaries and employee benefits expense of $475,000 due in part to higher loan production and higher other expenses of $304,000 due to higher loan related expense. These increases were partially offset by lower insurance and regulatory assessments of $323,000 and lower legal and professional expenses of $302,000, the latter being due to reimbursed legal costs from nonaccrual loan payoffs. The annualized noninterest expenses to average assets ratio was 1.78% for the third quarter of 2024, down from 1.79% for the second quarter of 2024. The efficiency ratio was 57.51% for the third quarter of 2024, down from 62.38% for the second quarter of 2024 due mostly to higher noninterest income.

Income Taxes

The effective tax rate was 26.9% for the third quarter of 2024 and 25.9% for the second quarter of 2024. The effective tax rate for 2024 is estimated to range between 26.0% and 28.0%.

Balance Sheet

At September 30, 2024, total assets were $4.0 billion, a $122.3 million increase compared to June 30, 2024, and a $78.9 million decrease compared to September 30, 2023.

Loan and Securities Portfolio

Loans HFI totaled $3.1 billion as of September 30, 2024, an increase of $44.2 million compared to June 30, 2024 and a $29.1 million decrease compared to September 30, 2023. The increase from June 30, 2024 was primarily due to a $62.5 million increase in commercial real estate (“CRE”) loans, a $5.6 million increase in single-family residential (“SFR”) mortgages and a $2.2 million increase in commercial and industrial (“C&I”) loans, partially offset by a $22.3 million decrease in construction and land development (“C&D”) loans and a $2.2 million decrease in Small Business Administration (“SBA”) loans. The loan to deposit ratio was 98.6% at September 30, 2024, compared to 99.4% at June 30, 2024 and 97.6% at September 30, 2023.

As of September 30, 2024, available-for-sale securities totaled $305.7 million, a decrease of $19.9 million from June 30, 2024. As of September 30, 2024, net unrealized losses totaled $23.2 million, a $6.9 million decrease due to decreases in market interest rates, when compared to net unrealized losses as of June 30, 2024.

Deposits

Total deposits were $3.1 billion as of September 30, 2024, a $68.6 million increase compared to June 30, 2024 and a $61.9 million decrease compared to September 30, 2023. The increase during the third quarter of 2024 was due to an increase in interest-bearing deposits, while noninterest-bearing deposits remained relatively stable at $543.6 million as of September 30, 2024 compared to $543.0 million as of June 30, 2024. The increase in interest-bearing deposits included an increase in time deposits of $49.6 million and an increase in non-maturity deposits of $18.3 million. The increase in time deposits included a $26.6 million increase in wholesale deposits (brokered deposits, collateralized State of California certificates of deposit and deposits acquired through internet listing services). Wholesale deposits totaled $147.3 million at September 30, 2024, and $120.7 million at June 30, 2024. Noninterest-bearing deposits represented 17.6% of total deposits at September 30, 2024 compared to 18.0% at June 30, 2024.

Credit Quality

Nonperforming assets totaled $60.7 million, or 1.52% of total assets, at September 30, 2024, compared to $54.6 million, or 1.41% of total assets, at June 30, 2024. The $6.1 million increase in nonperforming assets was mostly due to two loans that migrated to nonaccrual totaling $13.3 million and consisted of a C&D loan and a CRE loan, offset by $6.1 million in payoffs with no losses and $1.2 million in partial charge-offs of nonaccrual loans.

Special mention loans totaled $77.5 million, or 2.51% of total loans, at September 30, 2024, compared to $19.5 million, or 0.64% of total loans, at June 30, 2024. The $58.0 million increase was primarily due to one $43.6 million C&D loan for a completed hotel construction project, CRE loans totaling $25.2 million and C&I loans totaling $1.2 million. The increase was partially offset by one $11.7 million C&D loan, which migrated from special mention to substandard during the third quarter of 2024. All special mention loans, including the $11.7 million C&D loan which migrated to substandard rating, are all paying current.

Substandard loans totaled $79.8 million, or 2.58% of total loans, at September 30, 2024, compared to $63.1 million, or 2.07% of total loans, at June 30, 2024. The $16.8 million increase was primarily due to downgrades of two C&D loans totaling $21.7 million and one $3.3 million CRE loan, offset by loan payoffs of $6.7 million and charge-offs of $1.2 million. Of the substandard loans at September 30, 2024, there are $19.2 million which are paying current.

30-89 day delinquent loans, excluding nonperforming loans, decreased $645,000 to $10.6 million as of September 30, 2024, compared to $11.3 million as of June 30, 2024. The decrease in past due loans was mostly due to 12 loans totaling $4.7 million that returned to current status and other decreases totaling $784,000, partially offset by new delinquent loans totaling $4.9 million, of which $4.1 million were 30 days past due.

As of September 30, 2024, the allowance for credit losses totaled $44.5 million and was comprised of an allowance for loan losses of $43.7 million and a reserve for unfunded commitments of $779,000 (included in “Accrued interest and other liabilities”). This compares to the allowance for credit losses of $42.4 million comprised of an allowance for loan losses of $41.7 million and a reserve for unfunded commitments of $624,000 at June 30, 2024. The $2.1 million increase in the allowance for credit losses for the third quarter of 2024 was due to a $3.3 million provision for credit losses, including higher specific reserves of $2.5 million, offset by net charge-offs of $1.2 million. The increase in specific reserves and charge-offs in the third quarter of 2024 was primarily due to a decrease in the estimated fair value of collateral dependent loans, including estimated selling costs. Charge-offs in the third quarter of 2024 were related to one C&D loan and one CRE loan, which were written-down to their estimated fair value. The allowance for loan losses as a percentage of loans HFI was 1.41% at September 30, 2024, compared to 1.37% at June 30, 2024. The allowance for loan losses as a percentage of nonperforming loans was 72% at September 30, 2024, a decrease from 76% at June 30, 2024. The decrease in the allowance for loan losses as a percentage of nonperforming loans was due in part to an increase in individually evaluated loans, which required no allowance for loan losses.

	For the Three Months Ended September 30, 2024								For the Nine Months Ended September 30, 2024
*(dollars in thousands)*	Allowance for loan losses			Reserve for unfunded loan commitments		Allowance for credit losses			Allowance for loan losses			Reserve for unfunded loan commitments		Allowance for credit losses
Beginning balance	$	41,741		$	624	$	42,365		$	41,903		$	640	$	42,543
Provision for credit losses		3,145			155		3,300			3,718			139		3,857
Less loans charged-off		(1,210	)		—		(1,210	)		(1,991	)		—		(1,991	)
Recoveries on loans charged-off		9			—		9			55			—		55
Ending balance	$	43,685		$	779	$	44,464		$	43,685		$	779	$	44,464

Shareholders’ Equity

At September 30, 2024, total shareholders’ equity was $509.7 million, a $1.6 million decrease compared to June 30, 2024, and a $7.2 million increase compared to September 30, 2023. The decrease in shareholders’ equity for the third quarter of 2024 was due to common stock repurchases of $11.0 million and common stock cash dividends paid of $2.9 million, offset by net income of $7.0 million, lower net unrealized loss on available-for-sale securities of $4.8 million and equity compensation activity of $528,000. Book value per share and tangible book value per share⁽¹⁾increased to $28.81 and $24.64 at September 30, 2024, up from $28.12 and $24.06 at June 30, 2024.

On February 29, 2024, the Board of Directors authorized the repurchase of up to 1,000,000 shares of common stock. The repurchase program permitted shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Securities and Exchange Commission (“SEC”) Rules 10b5-1 and 10b-8. The Company repurchased 508,275 shares at a weighted average share price of $21.53 during the third quarter of 2024 and completed the authorized program.

Dividend Announcement

The Board of Directors has declared a common stock cash dividend of $0.16 per common share, payable on November 12, 2024 to shareholders of record on October 31, 2024.

	Contact: Lynn Hopkins, Chief Financial Officer
	(213) 716-8066
	lhopkins@rbbusa.com

(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures included at the end of this press release.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of September 30, 2024, the Company had total assets of $4.0 billion. Its wholly-owned subsidiary, Royal Business Bank, is a full service commercial bank, which provides consumer and business banking services predominately to the Asian-centric communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and on Oahu, Hawaii. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, three branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company’s administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company’s website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time on Tuesday, October 22, 2024, to discuss the Company’s third quarter 2024 financial results.

To listen to the conference call, please dial 1-888-506-0062 or 1-973-528-0011, the Participant ID code is 392446, conference ID RBBQ324. A replay of the call will be made available at 1-877-481-4010 or 1-919-882-2331, the passcode is 51366, approximately one hour after the conclusion of the call and will remain available through November 5, 2024.

The conference call will also be simultaneously webcast over the Internet; please visit our Royal Business Bank website at http://www.royalbusinessbankusa.com and click on the “Investors” tab to access the call from the site. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call.

Disclosure

This press release contains certain non-GAAP financial disclosures for tangible common equity and tangible assets and adjusted earnings. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Please refer to the tables at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the potential for additional material weaknesses in the Company’s internal controls over financial reporting or other potential control deficiencies of which the Company is not currently aware or which have not been detected; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the United States (“U.S.”) federal budget or debt or turbulence or uncertainly in domestic or foreign financial markets; the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations; 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; our ability to attract and retain deposits and access other sources of liquidity; possible additional provisions for credit losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; failure to comply with debt covenants; fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; the effects of having concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; severe weather, natural disasters, earthquakes, fires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the conflicts between Russia and Ukraine, in the Middle East, and increasing tensions between China and Taiwan, which could impact business and economic conditions in the U.S. and abroad; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; general economic or business conditions in Asia, and other regions where the Bank has operations; failures, interruptions, or security breaches of our information systems; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; cybersecurity threats and the cost of defending against them; our ability to adapt our systems to the expanding use of technology in banking; risk management processes and strategies; adverse results in legal proceedings; the impact of regulatory enforcement actions, if any; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in tax laws and regulations; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of future or recent changes in the Federal Deposit Insurance Corporation (“FDIC”) insurance assessment rate and the rules and regulations related to the calculation of the FDIC insurance assessments; 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 SEC, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including Accounting Standards Update 2016-13 (Topic 326, “Measurement of Current Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses Model, which changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; market disruption and volatility; fluctuations in the Company’s stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuances of preferred stock; our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California Department of Financial Protection and Innovation; our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K for the year ended December 31, 2023, and particularly the discussion of risk factors within that document. 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.

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Assets
Cash and due from banks	$	26,388		$	23,313		$	21,887		$	22,671		$	23,809
Interest-earning deposits with financial institutions		323,002			229,456			247,356			408,702			306,982
Cash and Cash Equivalents		349,390			252,769			269,243			431,373			330,791
Interest-earning time deposits with financial institutions		600			600			600			600			600
Investment securities available for sale		305,666			325,582			335,194			318,961			354,378
Investment securities held to maturity		5,195			5,200			5,204			5,209			5,214
Mortgage loans held for sale		812			3,146			3,903			1,911			62
Loans held for investment		3,091,896			3,047,712			3,027,361			3,031,861			3,120,952
Allowance for loan losses		(43,685	)		(41,741	)		(41,688	)		(41,903	)		(42,430	)
Net loans held for investment		3,048,211			3,005,971			2,985,673			2,989,958			3,078,522
Premises and equipment, net		24,839			25,049			25,363			25,684			26,134
Federal Home Loan Bank (FHLB) stock		15,000			15,000			15,000			15,000			15,000
Cash surrender value of bank owned life insurance		59,889			59,486			59,101			58,719			58,346
Goodwill		71,498			71,498			71,498			71,498			71,498
Servicing assets		7,256			7,545			7,794			8,110			8,439
Core deposit intangibles		2,194			2,394			2,594			2,795			3,010
Right-of-use assets		29,283			30,530			31,231			29,803			29,949
Accrued interest and other assets		70,644			63,416			65,608			66,404			87,411
Total assets	$	3,990,477		$	3,868,186		$	3,878,006		$	4,026,025		$	4,069,354
Liabilities and shareholders’ equity
Deposits:
Noninterest-bearing demand	$	543,623		$	542,971		$	539,517		$	539,621		$	572,393
Savings, NOW and money market accounts		666,089			647,770			642,840			632,729			608,020
Time deposits, $250,000 and under		1,052,462			1,014,189			1,083,898			1,190,821			1,237,831
Time deposits, greater than $250,000		830,010			818,675			762,074			811,589			735,828
Total deposits		3,092,184			3,023,605			3,028,329			3,174,760			3,154,072
FHLB advances		200,000			150,000			150,000			150,000			150,000
Long-term debt, net of issuance costs		119,433			119,338			119,243			119,147			174,019
Subordinated debentures		15,102			15,047			14,993			14,938			14,884
Lease liabilities – operating leases		30,880			32,087			32,690			31,191			31,265
Accrued interest and other liabilities		23,150			16,818			18,765			24,729			42,603
Total liabilities		3,480,749			3,356,895			3,364,020			3,514,765			3,566,843
Shareholders’ equity:
Common Stock		259,280			266,160			271,645			271,925			277,462
Additional paid-in capital		3,520			3,456			3,348			3,623			3,579
Retained Earnings		262,946			262,518			259,903			255,152			247,159
Non-controlling interest		72			72			72			72			72
Accumulated other comprehensive loss, net		(16,090	)		(20,915	)		(20,982	)		(19,512	)		(25,761	)
Total shareholders’ equity		509,728			511,291			513,986			511,260			502,511
Total liabilities and shareholders’ equity	$	3,990,477		$	3,868,186		$	3,878,006		$	4,026,025		$	4,069,354

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) *(In thousands, except share and per share data)*
	For the Three Months Ended						For the Nine Months Ended
	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Interest and dividend income:
Interest and fees on loans	$	47,326	$	45,320	$	47,617	$	138,193	$	148,369
Interest on interest-earning deposits		3,388		3,353		3,193		11,781		6,096
Interest on investment securities		3,127		3,631		4,211		10,369		10,321
Dividend income on FHLB stock		326		327		290		984		814
Interest on federal funds sold and other		258		255		252		779		716
Total interest and dividend income		54,425		52,886		55,563		162,106		166,316
Interest expense:
Interest on savings deposits, NOW and money market accounts		5,193		4,953		3,106		14,624		8,180
Interest on time deposits		22,553		21,850		21,849		67,725		54,424
Interest on long-term debt and subordinated debentures		1,681		1,679		2,579		5,039		7,668
Interest on other borrowed funds		453		439		440		1,331		2,428
Total interest expense		29,880		28,921		27,974		88,719		72,700
Net interest income before provision for credit losses		24,545		23,965		27,589		73,387		93,616
Provision for credit losses		3,300		557		1,399		3,857		3,793
Net interest income after provision for credit losses		21,245		23,408		26,190		69,530		89,823
Noninterest income:
Service charges and fees		1,071		1,064		1,057		3,127		3,200
Gain on sale of loans		447		451		212		1,210		258
Loan servicing fees, net of amortization		605		579		623		1,773		1,959
Increase in cash surrender value of life insurance		402		385		356		1,169		1,036
Gain on OREO		—		292		190		1,016		190
Other income		3,221		717		332		4,311		982
Total noninterest income		5,746		3,488		2,770		12,606		7,625
Noninterest expense:
Salaries and employee benefits		10,008		9,533		9,744		29,468		28,935
Occupancy and equipment expenses		2,518		2,439		2,414		7,400		7,242
Data processing		1,472		1,466		1,315		4,358		3,969
Legal and professional		958		1,260		1,022		3,098		6,907
Office expenses		348		352		437		1,056		1,163
Marketing and business promotion		252		189		340		613		892
Insurance and regulatory assessments		658		981		730		2,621		2,043
Core deposit premium		200		201		236		602		708
Other expenses		1,007		703		638		2,298		2,445
Total noninterest expense		17,421		17,124		16,876		51,514		54,304
Income before income taxes		9,570		9,772		12,084		30,622		43,144
Income tax expense		2,571		2,527		3,611		8,342		12,752
Net income	$	6,999	$	7,245	$	8,473	$	22,280	$	30,392

Net income per share
Basic	$	0.39	$	0.39	$	0.45	$	1.22	$	1.60
Diluted	$	0.39	$	0.39	$	0.45	$	1.22	$	1.60
Cash Dividends declared per common share	$	0.16	$	0.16	$	0.16	$	0.48	$	0.48
Weighted-average common shares outstanding
Basic		17,812,791		18,375,970		18,995,303		18,261,702		18,991,579
Diluted		17,885,359		18,406,897		18,997,304		18,313,086		19,013,838

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited)
	For the Three Months Ended
	September 30, 2024							June 30, 2024							September 30, 2023
*(tax-equivalent basis, dollars in thousands)*	Average Balance		Interest & Fees		Yield / Rate			Average Balance		Interest & Fees		Yield / Rate			Average Balance		Interest & Fees		Yield / Rate
Interest-earning assets
Cash and cash equivalents⁽¹⁾	$	260,205	$	3,646		5.57	%	$	255,973	$	3,608		5.67	%	$	270,484	$	3,445		5.05	%
FHLB Stock		15,000		326		8.65	%		15,000		327		8.77	%		15,000		290		7.67	%
Securities
Available for sale⁽²⁾		298,948		3,105		4.13	%		318,240		3,608		4.56	%		369,459		4,187		4.50	%
Held to maturity⁽²⁾		5,198		46		3.52	%		5,203		46		3.56	%		5,385		48		3.54	%
Mortgage loans held for sale		1,165		23		7.85	%		3,032		57		7.56	%		739		13		6.98	%
Loans held for investment:⁽³⁾
Real estate		2,888,528		43,495		5.99	%		2,828,339		41,590		5.91	%		2,968,246		43,583		5.83	%
Commercial		179,885		3,808		8.42	%		185,679		3,673		7.96	%		187,140		4,021		8.52	%
Total loans held for investment		3,068,413		47,303		6.13	%		3,014,018		45,263		6.04	%		3,155,386		47,604		5.99	%
Total interest-earning assets		3,648,929	$	54,449		5.94	%		3,611,466	$	52,909		5.89	%		3,816,453	$	55,587		5.78	%
Total noninterest-earning assets		242,059							240,016							250,083
Total average assets	$	3,890,988						$	3,851,482						$	4,066,536

Interest-bearing liabilities
NOW		55,757		277		1.98	%	$	56,081	$	276		1.98	%	$	55,325	$	201		1.44	%
Money Market		439,936		4,093		3.70	%		431,559		3,877		3.61	%		403,300		2,656		2.61	%
Saving deposits		164,515		823		1.99	%		164,913		800		1.95	%		123,709		249		0.80	%
Time deposits, $250,000 and under		1,037,365		12,312		4.72	%		1,049,666		12,360		4.74	%		1,285,320		14,090		4.35	%
Time deposits, greater than $250,000		819,207		10,241		4.97	%		772,255		9,490		4.94	%		717,026		7,759		4.29	%
Total interest-bearing deposits		2,516,780		27,746		4.39	%		2,474,474		26,803		4.36	%		2,584,680		24,955		3.83	%
FHLB advances		150,543		453		1.20	%		150,000		439		1.18	%		150,000		440		1.16	%
Long-term debt		119,370		1,295		4.32	%		119,275		1,296		4.37	%		173,923		2,194		5.00	%
Subordinated debentures		15,066		386		10.19	%		15,011		383		10.26	%		14,848		385		10.29	%
Total interest-bearing liabilities		2,801,759		29,880		4.24	%		2,758,760		28,921		4.22	%		2,923,451		27,974		3.80	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		528,081							529,450							571,371
Other noninterest-bearing liabilities		52,428							51,087							67,282
Total noninterest-bearing liabilities		580,509							580,537							638,653
Shareholders’ equity		508,720							512,185							504,432
Total liabilities and shareholders’ equity	$	3,890,988						$	3,851,482						$	4,066,536
Net interest income / interest rate spreads			$	24,569		1.70	%			$	23,988		1.67	%			$	27,613		1.98	%
Net interest margin						2.68	%						2.67	%						2.87	%

Total cost of deposits	$	3,044,861	$	27,746		3.63	%	$	3,003,924	$	26,803		3.59	%	$	3,156,051	$	24,955		3.14	%
Total cost of funds	$	3,329,840	$	29,880		3.57	%	$	3,288,210	$	28,921		3.54	%	$	3,494,822	$	27,974		3.18	%

_________________
(1) Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets.
(2) Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis.
(3) Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments.

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited)
	For the Nine Months Ended
	September 30, 2024							September 30, 2023
*(tax-equivalent basis, dollars in thousands)*	Average Balance		Interest & Fees		Yield / Rate			Average Balance		Interest & Fees		Yield / Rate
Interest-earning assets
Cash and cash equivalents⁽¹⁾	$	293,597	$	12,560		5.71	%	$	177,393	$	6,812		5.13	%
FHLB Stock		15,000		984		8.76	%		15,000		814		7.26	%
Securities
Available for sale⁽²⁾		312,352		10,302		4.41	%		332,007		10,245		4.13	%
Held to maturity⁽²⁾		5,203		140		3.59	%		5,610		151		3.60	%
Mortgage loans held for sale		1,802		105		7.78	%		295		16		7.25	%
Loans held for investment:⁽³⁾
Real estate		2,851,625		126,852		5.94	%		3,041,393		134,791		5.93	%
Commercial		181,716		11,236		8.26	%		214,618		13,562		8.45	%
Total loans held for investment		3,033,341		138,088		6.08	%		3,256,011		148,353		6.09	%
Total interest-earning assets		3,661,295	$	162,179		5.92	%		3,786,316	$	166,391		5.88	%
Total noninterest-earning assets		242,802							244,822
Total average assets	$	3,904,097						$	4,031,138

Interest-bearing liabilities
NOW	$	56,924		851		2.00	%	$	59,476	$	511		1.15	%
Money Market		427,884		11,496		3.59	%		431,299		7,315		2.27	%
Saving deposits		162,207		2,277		1.88	%		118,550		354		0.40	%
Time deposits, $250,000 and under		1,087,501		38,476		4.73	%		1,141,290		33,905		3.97	%
Time deposits, greater than $250,000		792,310		29,249		4.93	%		729,699		20,519		3.76	%
Total interest-bearing deposits		2,526,826		82,349		4.35	%		2,480,314		62,604		3.37	%
FHLB advances		150,182		1,331		1.18	%		179,707		2,428		1.81	%
Long-term debt		119,276		3,886		4.35	%		173,780		6,584		5.07	%
Subordinated debentures		15,012		1,153		10.26	%		14,794		1,084		9.80	%
Total interest-bearing liabilities		2,811,296		88,719		4.22	%		2,848,595		72,700		3.41	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		528,624							624,781
Other noninterest-bearing liabilities		52,955							58,786
Total noninterest-bearing liabilities		581,579							683,567
Shareholders’ equity		511,222							498,976
Total liabilities and shareholders’ equity	$	3,904,097						$	4,031,138
Net interest income / interest rate spreads			$	73,460		1.70	%			$	93,691		2.47	%
Net interest margin						2.68	%						3.31	%

Total cost of deposits	$	3,055,450	$	82,349		3.60	%	$	3,105,095	$	62,604		2.70	%
Total cost of funds	$	3,339,920	$	88,719		3.55	%	$	3,473,376	$	72,700		2.80	%

_______________
(1) Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets.
(2) Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis.
(3) Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments.

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
	At or for the Three Months Ended									At or for the Nine Months Ended September 30,
	September 30,			June 30,			September 30,
		2024		2024			2023			2024			2023
Per share data (common stock)
Book value	$	28.81		$	28.12		$	26.45		$	28.81		$	26.45
Tangible book value⁽¹⁾	$	24.64		$	24.06		$	22.53		$	24.64		$	22.53
Performance ratios
Return on average assets, annualized		0.72	%		0.76	%		0.83	%		0.76	%		1.01	%
Return on average shareholders’ equity, annualized		5.47	%		5.69	%		6.66	%		5.82	%		8.14	%
Return on average tangible common equity, annualized⁽¹⁾		6.40	%		6.65	%		7.82	%		6.81	%		9.58	%
Noninterest income to average assets, annualized		0.59	%		0.36	%		0.27	%		0.43	%		0.25	%
Noninterest expense to average assets, annualized		1.78	%		1.79	%		1.65	%		1.76	%		1.80	%
Yield on average earning assets		5.94	%		5.89	%		5.78	%		5.92	%		5.88	%
Yield on average loans		6.13	%		6.04	%		5.99	%		6.08	%		6.09	%
Cost of average total deposits⁽²⁾		3.63	%		3.59	%		3.14	%		3.60	%		2.70	%
Cost of average interest-bearing deposits		4.39	%		4.36	%		3.83	%		4.35	%		3.37	%
Cost of average interest-bearing liabilities		4.24	%		4.22	%		3.80	%		4.22	%		3.41	%
Net interest spread		1.70	%		1.67	%		1.98	%		1.70	%		2.47	%
Net interest margin		2.68	%		2.67	%		2.87	%		2.68	%		3.31	%
Efficiency ratio⁽³⁾		57.51	%		62.38	%		55.59	%		59.90	%		53.64	%
Common stock dividend payout ratio		41.03	%		41.03	%		35.56	%		39.34	%		30.00	%

____________________

(1) Non-GAAP measure. See Non–GAAP reconciliations set forth at the end of this press release.
(2) Total deposits include non-interest bearing deposits and interest-bearing deposits.
(3) Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) *(Dollars in thousands)*
	At or for the quarter ended
	September 30,			June 30,			September 30,
	2024			2024			2023
Credit Quality Data:
Special mention loans	$	77,501		$	19,520		$	31,212
Special mention loans to total loans		2.51	%		0.64	%		1.00	%
Substandard loans	$	79,831		$	63,076		$	71,401
Substandard loans to total loans		2.58	%		2.07	%		2.29	%
Loans 30-89 days past due, excluding nonperforming loans	$	10,625		$	11,270		$	19,662
Loans 30-89 days past due, excluding nonperforming loans, to total loans		0.34	%		0.37	%		0.63	%
Nonperforming loans	$	60,662		$	54,589		$	40,146
OREO		—			—			284
Nonperforming assets	$	60,662		$	54,589		$	40,430
Nonperforming loans to total loans		1.96	%		1.79	%		1.29	%
Nonperforming assets to total assets		1.52	%		1.41	%		0.99	%

Allowance for loan losses	$	43,685		$	41,741		$	42,430
Allowance for loan losses to total loans		1.41	%		1.37	%		1.36	%
Allowance for loan losses to nonperforming loans		72.01	%		76.46	%		105.69	%
Net charge-offs	$	1,201		$	551		$	2,206
Net charge-offs to average loans		0.16	%		0.07	%		0.28	%

Capital ratios⁽¹⁾
Tangible common equity to tangible assets⁽²⁾		11.13	%		11.53	%		10.71	%
Tier 1 leverage ratio		12.19	%		12.48	%		11.68	%
Tier 1 common capital to risk-weighted assets		18.16	%		18.89	%		17.65	%
Tier 1 capital to risk-weighted assets		18.74	%		19.50	%		18.22	%
Total capital to risk-weighted assets		24.79	%		25.67	%		26.24	%

______________
(1) September 30, 2024 capital ratios are preliminary.
(2) Non-GAAP measure. See Non-GAAP reconciliations set forth at the end of this press release.

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
Loan Portfolio Detail	As of September 30, 2024					As of June 30, 2024					As of September 30, 2023
*(dollars in thousands)*	$			%		$				%	$				%
Loans:
Commercial and industrial	$	128,861		4.2	%	$	126,649		4.2	%	$	127,655		4.1	%
SBA		48,089		1.6	%		50,323		1.7	%		50,420		1.6	%
Construction and land development		180,196		5.8	%		202,459		6.6	%		259,778		8.3	%
Commercial real estate ⁽¹⁾		1,252,682		40.5	%		1,190,207		39.1	%		1,164,210		37.3	%
Single-family residential mortgages		1,473,396		47.7	%		1,467,802		48.2	%		1,505,307		48.2	%
Other loans		8,672		0.2	%		10,272		0.2	%		13,582		0.5	%
Total loans ⁽²⁾	$	3,091,896		100.0	%	$	3,047,712		100.0	%	$	3,120,952		100.0	%
Allowance for loan losses		(43,685	)				(41,741	)				(42,430	)
Total loans, net	$	3,048,211				$	3,005,971				$	3,078,522

_______________
(1) Includes non-farm and non-residential loans, multi-family residential loans and non-owner occupied single family residential loans.
(2) Net of discounts and deferred fees and costs of $467, $645, and $383 as of September 30, 2024, June 30, 2024, and September 30, 2023, respectively.

Deposits	As of September 30, 2024				As of June 30, 2024				As of September 30, 2023
*(dollars in thousands)*	$		%		$			%	$			%
Deposits:
Noninterest-bearing demand	$	543,623	17.6	%	$	542,971	18.0	%	$	572,393	18.1	%
Savings, NOW and money market accounts		666,089	21.5	%		647,770	21.4	%		608,020	19.3	%
Time deposits, $250,000 and under		926,877	30.0	%		921,712	30.5	%		848,868	26.9	%
Time deposits, greater than $250,000		808,304	26.1	%		790,478	26.1	%		687,365	21.8	%
Wholesale deposits⁽¹⁾		147,291	4.8	%		120,674	4.0	%		437,426	13.9	%
Total deposits	$	3,092,184	100.0	%	$	3,023,605	100.0	%	$	3,154,072	100.0	%

___________________
(1) Includes brokered deposits, collateralized deposits from the State of California, and deposits acquired through internet listing services.

Non-GAAP Reconciliations

Tangible Book Value Reconciliations

Tangible book value per share is a non-GAAP disclosure. Management measures tangible book value per share to assess the Company’s capital strength and business performance and believes this is helpful to investors as additional tools for further understanding our performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of September 30, 2024, June 30, 2024, and September 30, 2023.


*(dollars in thousands, except share and per share data)*	September 30, 2024			June 30, 2024			September 30, 2023
Tangible common equity:
Total shareholders’ equity	$	509,728		$	511,291		$	502,511
Adjustments
Goodwill		(71,498	)		(71,498	)		(71,498	)
Core deposit intangible		(2,194	)		(2,394	)		(3,010	)
Tangible common equity	$	436,036		$	437,399		$	428,003
Tangible assets:
Total assets-GAAP	$	3,990,477		$	3,868,186		$	4,069,354
Adjustments
Goodwill		(71,498	)		(71,498	)		(71,498	)
Core deposit intangible		(2,194	)		(2,394	)		(3,010	)
Tangible assets	$	3,916,785		$	3,794,294		$	3,994,846
Common shares outstanding		17,693,416			18,182,154			18,995,303
Common equity to assets ratio		12.77	%		13.22	%		12.35	%
Tangible common equity to tangible assets ratio		11.13	%		11.53	%		10.71	%
Book value per share	$	28.81		$	28.12		$	26.45
Tangible book value per share	$	24.64		$	24.06		$	22.53

Return on Average Tangible Common Equity

Management measures return on average tangible common equity (“ROATCE”) to assess the Company’s capital strength and business performance and believes this is helpful to investors as an additional tool for further understanding our performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing rights), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles ROATCE to its most comparable GAAP measure:

	Three Months Ended									Nine Months Ended September 30,
*(dollars in thousands)*	September 30, 2024			June 30, 2024			September 30, 2023			2024			2023
Net income available to common shareholders	$	6,999		$	7,245		$	8,473		$	22,280		$	30,392
Average shareholders’ equity		508,720			512,185			504,432			511,222			498,976
Adjustments:
Average goodwill		(71,498	)		(71,498	)		(71,498	)		(71,498	)		(71,498	)
Average core deposit intangible		(2,326	)		(2,525	)		(3,165	)		(2,525	)		(3,398	)
Adjusted average tangible common equity	$	434,896		$	438,162		$	429,769		$	437,199		$	424,080
Return on average common equity		5.47	%		5.69	%		6.66	%		5.82	%		8.14	%
Return on average tangible common equity		6.40	%		6.65	%		7.82	%		6.81	%		9.58	%

The MIL Network –

January 24, 2025

MIL-OSI: CNB Financial Corporation Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

CLEARFIELD, Pa., Oct. 21, 2024 (GLOBE NEWSWIRE) — CNB Financial Corporation (“Corporation”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the three and nine months ended September 30, 2024.

Executive Summary

Net income available to common shareholders (“earnings”) was $12.9 million, or $0.61 per diluted share, for the three months ended September 30, 2024, compared to earnings of $11.9 million, or $0.56 per diluted share, for the three months ended June 30, 2024. The quarterly increase was a result of increases in both net interest income and non-interest income, partially offset by an increase in non-interest expense, as discussed in more detail below. The increase in third quarter 2024 earnings and diluted earnings per share when compared to the quarter ended September 30, 2023 earnings of $12.7 million, or $0.60 per diluted share, was primarily due to the increase in non-interest income, partially offset by an increase in non-interest expense.
Earnings were $36.3 million, or $1.72 per diluted share, for the nine months ended September 30, 2024, compared to earnings of $40.8 million, or $1.94 per diluted share, for the nine months ended September 30, 2023. The decrease in earnings and diluted earnings per share comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023 was primarily due to the rise in deposit costs year over year.
At September 30, 2024, loans totaled $4.5 billion, excluding the balances of syndicated loans. This adjusted total of $4.5 billion in loans represented an increase of $96.7 million, or 2.18% (8.69% annualized), compared to the same adjusted total loans measured as of June 30, 2024, and an increase of $153.4 million, or 3.51%, compared to the same adjusted total loans measured as of September 30, 2023. The increase in loans for the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024 was primarily driven by qualitative commercial and industrial growth in the Erie and Columbus markets and continued growth in new commercial customer relationships in the Corporation’s recent expansion market of Roanoke, coupled with growth in CNB’s Private Banking division with notable activity in the Roanoke market. The year over year growth in loans as of September 30, 2024 compared to loans as of September 30, 2023 resulted primarily from growth in the Corporation’s continued expansion into the newer markets of Cleveland and Roanoke, combined with growth in the Columbus and Erie markets and CNB Bank’s Private Banking division.
- At September 30, 2024, the Corporation’s balance sheet reflected an increase in syndicated lending balances of $15.5 million compared to June 30, 2024. The increase in syndicated lending balances was the result of the Corporation managing the level of its syndicated portfolio by ensuring its historical discipline of seeking high credit quality loans with favorable yields. Year over year, the Corporation’s balance sheet reported a decrease in syndicated lending balances of $53.6 million compared to September 30, 2023, resulting from scheduled paydowns or early payoffs of certain syndicated loans. The syndicated loan portfolio totaled $69.5 million, or 1.51% of total loans, at September 30, 2024, compared to $53.9 million, or 1.20% of total loans, at June 30, 2024 and $123.1 million, or 2.74% of total loans, at September 30, 2023. As noted above, the Corporation is closely managing the level of its syndicated loan portfolio while it focuses more resources on organic loan growth from its in-market customer relationships.
At September 30, 2024, total deposits were $5.2 billion, reflecting an increase of $106.1 million, or 2.08% (8.26% annualized), from the previous quarter ended June 30, 2024, and an increase of $214.2 million, or 4.28%, compared to total deposits measured as of September 30, 2023. The increase in deposit balances compared to June 30, 2024 was primarily attributable to an increase in noninterest-bearing business deposits and retail saving deposits. Additional deposit and liquidity profile details were as follows:
- During the quarter ended September 30, 2024, the Corporation repositioned $135.0 million of brokered deposits from savings to certificates of deposits. Additionally, $50.0 million of maturing brokered certificates of deposit were replaced with a similar offering. The repositioning and replacement totaling $185.0 million during the quarter and reduced the weighted average annual percentage yield (“APY”) from 5.70% to a locked-in APY of 4.37%, for maturity periods ranging from 12-14 months. This adjustment is expected to result in an estimated annual interest expense savings of $2.5 million for the Corporation. The mix of brokered deposits of 3.55% of total deposits at September 30, 2024, remained stable with the mix of 3.58% of total deposits at June 30, 2024.
- At September 30, 2024, the total estimated uninsured deposits for CNB Bank were approximately $1.5 billion, or approximately 28.50% of total CNB Bank deposits. However, when excluding $103.1 million of affiliate company deposits and $462.7 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $950.6 million, or approximately 17.87% of total CNB Bank deposits as of September 30, 2024.
  - The level of adjusted uninsured deposits at September 30, 2024 was relatively unchanged with the prior quarter end’s level. At June 30, 2024, the total estimated uninsured deposits for CNB Bank were approximately $1.5 billion, or approximately 29.00% of total CNB Bank deposits; however, when excluding $101.4 million of affiliate company deposits and $460.7 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $949.8 million, or approximately 18.22% of total CNB Bank deposits as of June 30, 2024.
- At September 30, 2024, the average deposit balance per account for CNB Bank was approximately $33 thousand, which generally remained consistent with the average deposit balance per account from recent quarters. CNB Bank had increases in the volume of business deposits, as well as retail customer household deposits, including those added after the 2023 launches of (i) CNB Bank’s “At Ease” account, a service for U.S. service member and veteran families, and (ii) CNB’s women-focused banking division, Impressia Bank.
- At September 30, 2024, the Corporation had $282.0 million of cash equivalents held in CNB Bank’s interest-bearing deposit account at the Federal Reserve. These excess funds, when combined with collective contingent liquidity resources of $4.5 billion including (i) available borrowing capacity from the Federal Home Bank of Pittsburgh (“FHLB”) and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, resulted in the total on-hand and contingent liquidity sources for the Corporation as of September 30, 2024 to be approximately 5.0 times the estimated amount of adjusted uninsured deposit balances discussed above.
At September 30, 2024, June 30, 2024 and September 30, 2023, the Corporation had no outstanding short-term borrowings from the FHLB or the Federal Reserve’s Discount Window.
At September 30, 2024, the Corporation’s pre-tax net unrealized losses on available-for-sale and held-to-maturity securities totaled approximately $62.5 million, or 10.30% of total shareholders’ equity, compared to $84.1 million, or 14.33% of total shareholders’ equity, at June 30, 2024. The change in unrealized losses was primarily due to changes in the yield curve in the third quarter of 2024 compared to the second quarter of 2024, coupled with the Corporation’s scheduled bond maturities, which were all realized at par. Importantly, all regulatory capital ratios for the Corporation would still exceed regulatory “well-capitalized” levels as of both September 30, 2024 and June 30, 2024 if the net unrealized losses at the respective dates were fully recognized. Additionally, the Corporation maintained $102.0 million of liquid funds at its holding company, which more than covers the $62.5 million in unrealized losses on investments held primarily in its wholly-owned banking subsidiary, as an immediately available source of contingent capital to be down-streamed to CNB Bank, if necessary.
Total nonperforming assets were approximately $42.0 million, or 0.70% of total assets, as of September 30, 2024, compared to $36.5 million, or 0.62% of total assets, as of June 30, 2024, and $29.3 million, or 0.51% of total assets, as of September 30, 2023. The increase in nonperforming assets for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was primarily due to one commercial relationship (consisting of various loan types) totaling $7.9 million with a specific reserve balance of $2.2 million. Management does not believe there is risk of significant additional loss exposures beyond the specific reserves related to this loan relationship. The increase in non-performing assets at September 30, 2024 compared to September 30, 2023 was due to the loan relationship discussed above, as well as certain commercial and industrial relationships as previously disclosed in the fourth quarter of 2023 and second quarter of 2024, and a commercial real estate relationship as previously disclosed in the third quarter of 2023. For the three months ended September 30, 2024, net loan charge-offs were $1.2 million, or 0.11% (annualized) of average total loans and loans held for sale, compared to $2.8 million, or 0.25% (annualized) of average total loans and loans held for sale, during the three months ended June 30, 2024, and $732 thousand, or 0.06% (annualized) of average total loans and loans held for sale, during the three months ended September 30, 2023.
Pre-provision net revenue (“PPNR”), a non-GAAP measure, was $19.7 million for the three months ended September 30, 2024, compared to $18.6 million and $18.2 million for the three months ended June 30, 2024 and September 30, 2023, respectively.¹ The third quarter 2024 PPNR, when compared to the second quarter of 2024, reflected improvements in net interest income and non-interest income, partially offset by higher non-interest expense. The increase in PPNR for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, was primarily attributable to the increase in non-interest income. PPNR was $55.0 million for the nine months ended September 30, 2024 compared to $59.4 million for the nine months ended September 30, 2023.¹ The decrease in PPNR for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily attributable to the significant year-over-year increase in deposit costs, coupled with increases in certain personnel costs (primarily from new offices and personnel added in expansion markets), as well as additional technology expenses for recently completed full implementation of business development and customer relationship management applications.

¹ This release contains references to certain financial measures that are not defined under U.S. Generally Accepted Accounting Principles (“GAAP”). Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. A reconciliation of these non-GAAP financial measures is provided in the “Reconciliation of Non-GAAP Financial Measures” section.

Michael Peduzzi, President and CEO of both the Corporation and CNB Bank, commented on the Corporation’s positive quarterly results, stating, “CNB’s performance for the third quarter of 2024 was much in alignment with themes in a time of year when so many sports are active. We continue to have a strong defense with our traditionally sound loan and investment underwriting, disciplined loan and deposit pricing, and solid risk management practices. This was complemented by a solid offensive push as we translated pipeline activity and qualified business leads into sound loan growth, and an expansion of the number of relationships and accounts in our deposit base, all leading to notable increases in revenues. Further, thanks to effective “special team” efforts by our Finance team, we closely monitored market conditions and took advantage of an opportunity to realize substantial interest expense savings by repositioning a large portion of wholesale funding sources.

The Corporation’s team across our entire footprint continues to be focused on controlling staffing levels and overhead cost management, while expanding the use of the Corporation’s previous investments in key sales and customer experience technologies. Our playbook for implementing our overall strategy remains the same – to maintain a team of motivated and engaged employees delivering products and services to achieve mutually beneficial and sustainable success for our clients and investors.”

Other Balance Sheet Highlights

Book value per common share was $26.13 at September 30, 2024, reflecting an increase from $25.19 at June 30, 2024 and $23.52 at September 30, 2023. Tangible book value per common share, a non-GAAP measure, was $24.03 as of September 30, 2024, reflecting an increase of $0.94, or 16.20% (annualized) from $23.09 as of June 30, 2024 and a year-over-year increase of $2.63, or 12.29%, from $21.40 as of September 30, 2023.¹ The increases in book value per common share and tangible book value per common share compared to June 30, 2024 were primarily due to a $9.1 million increase in retained earnings and a $10.1 million decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s available-for-sale investment portfolio for the past three months. The increases in book value per common share and tangible book value per common share compared to September 30, 2023 were primarily due to (i) a $34.4 million increase in retained earnings over the twelve months ended September 30, 2024, (ii) the Corporation’s repurchase of 23,988 common shares at a weighted average price of $18.38 in the second quarter of 2024, and (iii) a $21.2 million decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s available-for-sale investment portfolio for the past twelve months.

Loan Portfolio Profile

As part of our lending policy and risk management activities, the Corporation tracks lending exposure by industry classification and type to determine potential risks associated with industry concentrations, and if any concentration risk issues could lead to additional credit loss exposure. In the current post-pandemic and relatively inflationary economic environment, the Corporation has continued to evaluate its exposure to the office, hospitality, and multifamily industries within its commercial real estate portfolio. Even given the Corporation’s historically sound underwriting protocols and high credit quality ratings for borrowers in the commercial real estate industry segments, the Corporation monitors numerous relevant sensitivity elements, including occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally. At September 30, 2024, the Corporation had the following key metrics related to its office, hospitality and multifamily portfolios:

Commercial office loans:
- There were 114 outstanding loans, totaling $117.0 million, or 2.55%, of the Corporation loans outstanding;
- There were no nonaccrual commercial office loans at September 30, 2024;
- There was one past due commercial office loan that totaled $214 thousand, or 0.18% of total commercial office loans outstanding at September 30, 2024; and
- The average outstanding balance per commercial office loan was $1.0 million.

Commercial hospitality loans:
- There were 173 outstanding loans, totaling $320.6 million, or 6.98%, of total Corporation loans outstanding;
- There were no nonaccrual commercial hospitality loans at September 30, 2024;
- There were no past due commercial hospitality loans at September 30, 2024; and
- The average outstanding balance per commercial hospitality loan was $1.9 million.

Commercial multifamily loans:
- There were 225 outstanding loans, totaling $349.1 million, or 7.60%, of total Corporation loans outstanding;
- There was one nonaccrual commercial multifamily loan that totaled $268 thousand, or 0.08% of total multifamily loans outstanding. The one customer relationship did not have a related specific loss reserve at September 30, 2024
- There were two past due commercial office loans that totaled $760 thousand, or 0.22% of total commercial multifamily loans outstanding at September 30, 2024; and
- The average outstanding balance per commercial multifamily loan was $1.6 million.

The Corporation had no commercial office, hospitality or multifamily loan relationships considered by the banking regulators to be a high volatility commercial real estate credit (“HVCRE”).

Performance Ratios

Annualized return on average equity was 9.28% for the three months ended September 30, 2024, compared to 8.94% and 9.80% for the three months ended June 30, 2024 and September 30, 2023, respectively. Annualized return on average equity was 9.01% for the nine months ended September 30, 2024 compared to 10.74% for the nine months ended September 30, 2023.

Annualized return on average tangible common equity, a non-GAAP measure, was 10.33% for the three months ended September 30, 2024, compared to 9.93% and 11.07% for the three months ended June 30, 2024 and September 30, 2023, respectively.¹ Annualized return on average tangible common equity, a non-GAAP measure, was 10.01% for the nine months ended September 30, 2024 compared to 12.23% for the nine months ended September 30, 2023.¹

The Corporation’s efficiency ratio was 66.34% for the three months ended September 30, 2024, compared to 65.94% and 67.00% for the three months ended June 30, 2024 and September 30, 2023, respectively. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP measure, was 65.58% for the three months ended September 30, 2024, compared to 65.20% and 66.26% for the three months ended June 30, 2024 and September 30, 2023, respectively.¹ The increase for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was primarily the result of an increase in incentive compensation related accruals which are based on various components of the Corporation’s financial performance for the year.

The Corporation’s efficiency ratio was 67.10% for the nine months ended September 30, 2024, compared to 64.26% for the nine months ended September 30, 2023. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 66.34% for the nine months ended September 30, 2024, compared to 63.60% the nine months ended September 30, 2023.¹

Revenue

Total revenue (net interest income plus non-interest income) was $58.5 million for the three months ended September 30, 2024, compared to $54.6 million and $55.1 million for the three months ended June 30, 2024 and September 30, 2023, respectively.
- Net interest income was $47.5 million for the three months ended September 30, 2024, compared to $45.7 million and $47.2 million, for the three months ended June 30, 2024 and September 30, 2023, respectively. When comparing the third quarter of 2024 to the second quarter of 2024, the difference in net interest income of $1.8 million, or 3.87% (15.39% annualized), reflected the increase in total loans outstanding quarter over quarter, partially offset by targeted interest-bearing deposit rate increases to ensure both deposit relationship retention and new deposit growth in the Corporation’s markets.
- Net interest margin was 3.43%, 3.36% and 3.55% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.42%, 3.34% and 3.53% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.¹
  - The yield on earning assets of 5.98% for the three months ended September 30, 2024 increased 9 basis points from June 30, 2024 and increased 35 basis points from September 30, 2023. The increases in yield compared to June 30, 2024 and September 30, 2023 were attributable to the net benefit of higher interest rates on both variable-rate loans and new loan production.
  - The cost of interest-bearing liabilities of 3.21% for the three months ended September 30, 2024 increased 4 basis points from June 30, 2024 and 55 basis points from September 30, 2023 primarily as a result of the Corporation’s targeted interest-bearing deposit rate increases for deposit retention and growth initiatives given the competitive environment resulting from the numerous Federal Reserve rate hikes since the first quarter of 2022.

Total revenue was $167.2 million for the nine months ended September 30, 2024 compared to $166.3 million for the nine months ended September 30, 2023.
- Net interest income was $138.4 million for the nine months ended September 30, 2024 compared to $142.1 million for the nine months ended September 30, 2023. When comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023, the decrease in net interest income of $3.7 million, or 2.61% (3.49% annualized), was due to loan growth and the benefits of the impact of higher interest rates resulting in greater income on variable-rate loans, coupled with a higher average balance of interest-bearing deposits with the Federal Reserve, being more than offset by an increase in the Corporation’s interest expense as a result of targeted interest-bearing deposit rate increases to ensure both deposit growth and retention.
- Net interest margin was 3.40% and 3.66% for the nine months ended September 30, 2024 and 2023, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.38% and 3.64% for the nine months ended September 30, 2024 and 2023, respectively.¹
  - The yield on earning assets of 5.89% for the nine months ended September 30, 2024 increased 41 basis points from September 30, 2023. The increase in yield compared to September 30, 2023 was attributable to the net benefit of higher interest rates on both variable-rate loans and new loan production.
  - The cost of interest-bearing liabilities of 3.14% for the nine months ended September 30, 2024 increased 80 basis points from September 30, 2023 primarily as a result of the Corporation’s targeted interest-bearing deposit rate increases for deposit retention and growth initiatives given the competitive environment resulting from the numerous Federal Reserve rate hikes since the first quarter of 2022. The Federal Reserve rate decrease announced in mid-September 2024, being only effective for a short period of time in the quarter, had no significant impact on the Corporation’s third quarter results.

Total non-interest income was $11.0 million for the three months ended September 30, 2024 compared to $8.9 million and $7.9 million for the three months ended June 30, 2024 and September 30, 2023, respectively. During the three months ended September 30, 2024, notable changes compared to the three months ended June 30, 2024 included increases in net realized and unrealized gains on equity securities and higher pass-through income from small business investment companies (“SBICs”). The increase in third quarter 2024 noninterest income compared to the three months ended September 30, 2023 was primarily due to higher pass-through income from SBICs and net realized and unrealized gains on equity securities.

Total non-interest income was $28.8 million for the nine months ended September 30, 2024 compared to $24.2 million for the nine months ended September 30, 2023. This increase was primarily due to higher pass-through income from SBICs coupled with an increase in net realized and unrealized gains on equity securities.

Non-Interest Expense

For the three months ended September 30, 2024 total non-interest expense was $38.8 million, compared to $36.0 million and $36.9 million for the three months ended June 30, 2024 and September 30, 2023, respectively. The increase of $2.8 million, or 7.77%, from the three months ended June 30, 2024 was primarily a result of an increase in salaries and benefits, card processing and interchange expenses, and other non-interest expenses. The increase in salaries and benefits resulted primarily from an increase in incentive compensation accruals, which are based on various components of the Corporation’s financial performance for the year, coupled with the timing of profit-sharing accruals. The increase in card processing and interchange expenses related primarily to corporate cardholder rewards program accrual, while the increase in other non-interest expenses was primarily driven by the timing of expenditures and business generation related expenses. The increase in non-interest expense compared to the three months ended September 30, 2023 was primarily attributable to higher salaries and benefits driven by costs for personnel added for new offices in expansion markets, an increase in personnel costs related to annual merit increases, increases in health insurance costs, and contractual renewal increases in the Corporation’s investments in technology applications.

For the nine months ended September 30, 2024 total non-interest expense was $112.2 million, compared to $106.9 million for the nine months ended September 30, 2023. The increase of $5.3 million, or 4.96%, from the nine months ended September 30, 2023 was primarily a result of an increase in salaries and benefits and technology expenses, partially offset by a decrease in card processing and interchange expenses. The increase in salaries and benefits was driven by an increase in personnel costs related to annual merit increases and growth in the Corporation’s staff and new offices in its expansion markets, while the increase in technology was primarily due to year-over-year investments in technology applications aimed at enhancing both customer online banking capabilities, customer call center communications, and in-branch technology delivery channels. The decrease in card processing and interchange expenses related to the changes made by the Corporation to its cardholder rewards program.

Income Taxes

Income tax expense for the three months ended September 30, 2024 was $3.3 million, representing a 19.31% effective tax rate, compared to $3.0 million, representing an 19.03% effective tax rate, for the three months ended June 30, 2024 and $3.4 million, representing a 19.86% effective tax rate, for the three months ended September 30, 2023. Income tax expense for the nine months ended September 30, 2024 was $9.2 million, representing an 18.92% effective tax rate compared to $10.6 million, representing a 19.47% effective tax rate, for the nine months ended September 30, 2023.

Asset Quality

Total nonperforming assets were approximately $42.0 million, or 0.70% of total assets, as of September 30, 2024, compared to $36.5 million, or 0.62% of total assets, as of June 30, 2024, and $29.3 million, or 0.51% of total assets, as of September 30, 2023, as discussed above.

The allowance for credit losses measured as a percentage of total loans was 1.02% as of September 30, 2024 compared to 1.02% as of both June 30, 2024 and September 30, 2023. In addition, the allowance for credit losses as a percentage of nonaccrual loans was 117.03% as of September 30, 2024, compared to 130.88% and 169.34% as of June 30, 2024 and September 30, 2023, respectively. The change in the allowance for credit losses as a percentage of nonaccrual loans was primarily attributable to the levels of nonperforming assets, as discussed above.

The provision for credit losses was $2.4 million for the three months ended September 30, 2024, compared to $2.6 million and $1.1 million for the three months ended June 30, 2024 and September 30, 2023, respectively. The $1.3 million increase in the provision expense for the third quarter of 2024 compared to the third quarter of 2023 was primarily a result of higher loan portfolio growth and increased net loan charge-offs in the third quarter of 2024 compared to the third quarter of 2023.

For the three months ended September 30, 2024, net loan charge-offs were $1.2 million, or 0.11% (annualized) of average total loans and loans held for sale, compared to $2.8 million, or 0.25% (annualized) of average total loans and loans held for sale, during the three months ended June 30, 2024, and $732 thousand, or 0.06% (annualized) of average total loans and loans held for sale, during the three months ended September 30, 2023.

For the nine months ended September 30, 2024, net loan charge-offs were $5.4 million, or 0.16% (annualized) of average total loans and loans held for sale, compared to $2.2 million, or 0.07% (annualized) of average total loans and loans held for sale, during the nine months ended September 30, 2023, with most of the larger year-to-date charge-offs being as previously disclosed occurring in the first and second quarter of 2024.

Capital

As of September 30, 2024, the Corporation’s total shareholders’ equity was $606.4 million, representing an increase of $19.7 million, or 3.35% (13.33% annualized), from June 30, 2024 and an increase of $57.2 million, or 10.41%, from September 30, 2023 primarily due to an increase in the Corporation’s retained earnings (net income, partially offset by the common and preferred stock dividends paid) and a decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s available-for-sale investment portfolio for the past twelve months. The additions to shareholders equity from retained earnings were partially offset by the Corporation’s repurchase of its common stock, as discussed above.

Regulatory capital ratios for the Corporation continue to exceed regulatory “well-capitalized” levels as of September 30, 2024, consistent with prior periods.

As of September 30, 2024, the Corporation’s ratio of common shareholders’ equity to total assets was 9.12% compared to 8.99% at June 30, 2024 and 8.57% at September 30, 2023. As of September 30, 2024, the Corporation’s ratio of tangible common equity to tangible assets, a non-GAAP measure, was 8.45% compared to 8.30% at June 30, 2024 and 7.86% at September 30, 2023. The increases compared to June 30, 2024 and September 30, 2023 were primarily the result of an increase in retained earnings coupled with a decrease in accumulated other comprehensive loss, as discussed above.¹

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $6.0 billion. CNB Financial Corporation conducts business primarily through its principal subsidiary, CNB Bank. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a private banking division, two loan production offices, one drive-up office, one mobile office, and 54 full-service offices in Pennsylvania, Ohio, New York, and Virginia. CNB Bank, headquartered in Clearfield, Pennsylvania, with offices in Central and North Central Pennsylvania, serves as the multi-brand parent to various divisions. These divisions include ERIEBANK, based in Erie, Pennsylvania, with offices in Northwest Pennsylvania and Northeast Ohio; FCBank, based in Worthington, Ohio, with offices in Central Ohio; BankOnBuffalo, based in Buffalo, New York, with offices in Western New York; Ridge View Bank, based in Roanoke, Virginia, with offices in the Southwest Virginia region; and Impressia Bank, a division focused on banking opportunities for women, which operates in CNB Bank’s primary market areas. Additional information about CNB Financial Corporation may be found at http://www.CNBBank.bank.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the Corporation’s financial condition, liquidity, results of operations, future performance and business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Corporation’s control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” The Corporation’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to, (i) adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry; (ii) changes in interest rates; the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (iv) effectiveness of our data security controls in the face of cyber attacks and any reputational risks following a cybersecurity incident; (v) changes in general business, industry or economic conditions or competition; (vi) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise; (vii) higher than expected costs or other difficulties related to integration of combined or merged businesses; (viii) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios; (ix) changes in the quality or composition of our loan and investment portfolios; (x) adequacy of loan loss reserves; (xi) increased competition; (xii) loss of certain key officers; (xiii) deposit attrition; (xiv) rapidly changing technology; (xv) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xvi) changes in the cost of funds, demand for loan products or demand for financial services; and (xvii) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices. Such developments could have an adverse impact on the Corporation’s financial position and results of operations. For more information about factors that could cause actual results to differ from those discussed in the forward-looking statements, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of and the forward-looking statement disclaimers in the Corporation’s annual and quarterly reports filed with the Securities and Exchange Commission.

The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this press release. Factors or events that could cause the Corporation’s actual results to differ may emerge from time to time, and it is not possible for the Corporation to predict all of them. The Corporation undertakes no obligation to publicly update or revise any forward-looking statements included in this press release or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and you should not put undue reliance on any forward-looking statements.

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Income Statement
Interest and fees on loans	$	75,725		$	72,142		$	70,980		$	219,380		$	200,206
Interest and dividends on securities and cash and cash equivalents		7,510			8,510			4,536			22,412			14,279
Interest expense		(35,749	)		(34,935	)		(28,280	)		(103,367	)		(72,353	)
Net interest income		47,486			45,717			47,236			138,425			142,135
Provision for credit losses		2,381			2,591			1,056			6,292			4,751
Net interest income after provision for credit losses		45,105			43,126			46,180			132,133			137,384
Non-interest income
Wealth and asset management fees		2,060			2,007			1,833			5,869			5,567
Service charges on deposit accounts		1,790			1,794			1,861			5,278			5,569
Other service charges and fees		796			712			567			2,203			2,283
Net realized gains (losses) on available-for-sale securities		(9	)		—			—			(9	)		52
Net realized and unrealized gains (losses) on equity securities		656			(80	)		(400	)		767			(930	)
Mortgage banking		197			187			172			580			516
Bank owned life insurance		775			784			754			2,326			2,211
Card processing and interchange income		2,241			2,187			2,098			6,444			6,219
Other non-interest income		2,467			1,274			978			5,335			2,711
Total non-interest income		10,973			8,865			7,863			28,793			24,198
Non-interest expenses
Salaries and benefits		19,572			17,676			17,758			56,035			51,862
Net occupancy expense of premises		3,701			3,580			3,596			10,921			10,790
Technology expense		5,417			5,573			5,232			16,062			14,677
Advertising expense		623			553			840			1,861			2,085
State and local taxes		1,256			1,237			1,028			3,636			3,108
Legal, professional, and examination fees		940			1,119			1,320			3,231			3,167
FDIC insurance premiums		846			1,018			1,027			2,854			2,901
Card processing and interchange expenses		1,193			878			1,207			3,250			4,269
Other non-interest expense		5,236			4,355			4,906			14,347			14,033
Total non-interest expenses		38,784			35,989			36,914			112,197			106,892
Income before income taxes		17,294			16,002			17,129			48,729			54,690
Income tax expense		3,340			3,045			3,402			9,218			10,647
Net income		13,954			12,957			13,727			39,511			44,043
Preferred stock dividends		1,076			1,075			1,076			3,226			3,226
Net income available to common shareholders	$	12,878		$	11,882		$	12,651		$	36,285		$	40,817

Ending shares outstanding		20,994,730			20,998,117			20,895,634			20,994,730			20,895,634
Average diluted common shares outstanding		20,911,862			20,893,396			20,899,744			20,895,538			20,979,032
Diluted earnings per common share	$	0.61		$	0.56		$	0.60		$	1.72		$	1.94
Cash dividends per common share	$	0.180		$	0.175		$	0.175		$	0.530		$	0.525
Dividend payout ratio		30	%		31	%		29	%		31	%		27	%

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Average Balances
Total loans and loans held for sale	$	4,536,702		$	4,441,633		$	4,485,017		$	4,469,321		$	4,373,648
Investment securities		722,577			734,087			749,352			729,273			771,457
Total earning assets		5,503,832			5,465,645			5,273,758			5,440,145			5,194,485
Total assets		5,907,115			5,854,978			5,647,491			5,831,002			5,561,649
Noninterest-bearing deposits		795,771			761,270			792,193			764,770			805,513
Interest-bearing deposits		4,319,606			4,321,678			4,109,360			4,290,247			3,976,820
Shareholders’ equity		597,984			583,221			555,464			586,017			548,034
Tangible common shareholders’ equity (non-GAAP) ⁽¹⁾		496,091			481,309			453,493			484,105			446,048

Average Yields (annualized)
Total loans and loans held for sale		6.66	%		6.55	%		6.30	%		6.57	%		6.14	%
Investment securities		2.19	%		2.14	%		1.96	%		2.11	%		1.96	%
Total earning assets		5.98	%		5.89	%		5.63	%		5.89	%		5.48	%
Interest-bearing deposits		3.19	%		3.15	%		2.62	%		3.11	%		2.27	%
Interest-bearing liabilities		3.21	%		3.17	%		2.66	%		3.14	%		2.34	%

Performance Ratios (annualized)
Return on average assets		0.94	%		0.89	%		0.96	%		0.91	%		1.06	%
Return on average equity		9.28	%		8.94	%		9.80	%		9.01	%		10.74	%
Return on average tangible common equity (non-GAAP) ⁽¹⁾		10.33	%		9.93	%		11.07	%		10.01	%		12.23	%
Net interest margin, fully tax equivalent basis (non-GAAP) ⁽¹⁾		3.42	%		3.34	%		3.53	%		3.38	%		3.64	%
Efficiency Ratio, fully tax equivalent basis (non-GAAP) ⁽¹⁾		65.58	%		65.20	%		66.26	%		66.34	%		63.60	%

Net Loan Charge-Offs
CNB Bank net loan charge-offs	$	837		$	2,348		$	381		$	4,063		$	955
Holiday Financial net loan charge-offs		383			456			351			1,305			1,252
Total Corporation net loan charge-offs	$	1,220		$	2,804		$	732		$	5,368		$	2,207
Annualized net loan charge-offs / average total loans and loans held for sale		0.11	%		0.25	%		0.06	%		0.16	%		0.07	%

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

	September 30, 2024			June 30, 2024			September 30, 2023
Ending Balance Sheet
Cash and due from banks	$	75,214		$	56,031		$	61,529
Interest-bearing deposits with Federal Reserve		281,972			271,943			117,632
Interest-bearing deposits with other financial institutions		3,723			3,171			3,424
Total cash and cash equivalents		360,909			331,145			182,585
Debt securities available-for-sale, at fair value		378,965			359,900			335,122
Debt securities held-to-maturity, at amortized cost		328,152			354,569			391,301
Equity securities		10,389			9,654			8,948
Loans held for sale		768			642			464
Loans receivable
Syndicated loans		69,470			53,938			123,090
Loans		4,522,438			4,425,754			4,369,084
Total loans receivable		4,591,908			4,479,692			4,492,174
Less: allowance for credit losses		(46,644	)		(45,532	)		(45,832	)
Net loans receivable		4,545,264			4,434,160			4,446,342
Goodwill and other intangibles		43,874			43,874			43,874
Core deposit intangible		223			241			299
Other assets		346,300			352,386			322,973
Total Assets	$	6,014,844		$	5,886,571		$	5,731,908

Noninterest-bearing demand deposits	$	841,292		$	762,918		$	782,996
Interest-bearing demand deposits		681,056			693,074			781,309
Savings		3,040,769			3,140,505			2,883,736
Certificates of deposit		653,832			514,348			554,740
Total deposits		5,216,949			5,110,845			5,002,781
Subordinated debentures		20,620			20,620			20,620
Subordinated notes, net of issuance costs		84,495			84,419			84,191
Other liabilities		86,417			83,987			75,104
Total liabilities		5,408,481			5,299,871			5,182,696
Common stock		—			—			—
Preferred stock		57,785			57,785			57,785
Additional paid in capital		219,304			218,756			220,100
Retained earnings		371,086			361,987			336,690
Treasury stock		(4,516	)		(4,438	)		(6,862	)
Accumulated other comprehensive loss		(37,296	)		(47,390	)		(58,501	)
Total shareholders’ equity		606,363			586,700			549,212
Total liabilities and shareholders’ equity	$	6,014,844		$	5,886,571		$	5,731,908

Book value per common share	$	26.13		$	25.19		$	23.52
Tangible book value per common share (non-GAAP) ⁽¹⁾	$	24.03		$	23.09		$	21.40

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

	September 30, 2024			June 30, 2024			September 30, 2023
Capital Ratios
Tangible common equity / tangible assets (non-GAAP) ⁽¹⁾		8.45	%		8.30	%		7.86	%
Tier 1 leverage ratio ⁽²⁾		10.59	%		10.56	%		10.50	%
Common equity tier 1 ratio ⁽²⁾		11.64	%		11.71	%		11.21	%
Tier 1 risk-based ratio ⁽²⁾		13.30	%		13.41	%		12.92	%
Total risk-based ratio ⁽²⁾		16.06	%		16.20	%		15.68	%

Asset Quality Detail
Nonaccrual loans	$	39,855		$	34,788		$	27,065
Loans 90+ days past due and accruing		666			112			231
Total nonperforming loans		40,521			34,900			27,296
Other real estate owned		1,514			1,641			2,039
Total nonperforming assets	$	42,035		$	36,541		$	29,335

Asset Quality Ratios
Nonperforming assets / Total loans + OREO		0.92	%		0.82	%		0.65	%
Nonperforming assets / Total assets		0.70	%		0.62	%		0.51	%
Ratio of allowance for credit losses on loans to nonaccrual loans		117.03	%		130.88	%		169.34	%
Allowance for credit losses / Total loans		1.02	%		1.02	%		1.02	%


Consolidated Financial Data Notes:
⁽¹⁾ Management uses non-GAAP financial information in its analysis of the Corporation’s performance. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Corporation’s management believes that investors may use these non-GAAP measures to analyze the Corporation’s financial performance without the impact of unusual items or events that may obscure trends in the Corporation’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).
⁽²⁾ Capital ratios as of September 30, 2024 are estimated pending final regulatory filings.

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

	Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
	Three Months Ended,
	September 30, 2024							June 30, 2024							September 30, 2023
	Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.
ASSETS:
Securities:
Taxable ^{(1) (4)}	$	690,098		2.14	%	$	3,980	$	702,036		2.09	%	$	3,941	$	711,299		1.89	%	$	3,674
Tax-exempt ^{(1) (2) (4)}		25,368		2.57			178		25,088		2.59			178		29,455		2.55			204
Equity securities ^{(1) (2)}		7,111		5.71			102		6,963		5.72			99		8,598		5.58			121
Total securities ⁽⁴⁾		722,577		2.19			4,260		734,087		2.14			4,218		749,352		1.96			3,999
Loans receivable:
Commercial ^{(2) (3)}		1,457,192		7.02			25,708		1,416,476		6.85			24,133		1,516,942		6.72			25,693
Mortgage and loans held for sale ^{(2) (3)}		2,947,787		6.25			46,278		2,897,473		6.15			44,331		2,834,576		5.83			41,618
Consumer ⁽³⁾		131,723		11.93			3,950		127,684		12.17			3,863		133,499		11.51			3,874
Total loans receivable ⁽³⁾		4,536,702		6.66			75,936		4,441,633		6.55			72,327		4,485,017		6.30			71,185
Interest-bearing deposits with the Federal Reserve and other financial institutions		244,553		5.33			3,279		289,925		5.99			4,321		39,389		5.78			574
Total earning assets		5,503,832		5.98		$	83,475		5,465,645		5.89		$	80,866		5,273,758		5.63		$	75,758
Noninterest-bearing assets:
Cash and due from banks		58,472							53,710							55,502
Premises and equipment		118,404							112,386							109,854
Other assets		272,377							268,930							254,106
Allowance for credit losses		(45,970	)						(45,693	)						(45,729	)
Total non interest-bearing assets		403,283							389,333							373,733
TOTAL ASSETS	$	5,907,115						$	5,854,978						$	5,647,491
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Demand—interest-bearing	$	682,690		0.86	%	$	1,477	$	713,431		0.76	%	$	1,342	$	813,264		0.52	%	$	1,061
Savings		3,076,351		3.55			27,461		3,097,598		3.57			27,464		2,788,499		3.13			22,004
Time		560,565		4.03			5,684		510,649		3.93			4,988		507,597		3.16			4,048
Total interest-bearing deposits		4,319,606		3.19			34,622		4,321,678		3.15			33,794		4,109,360		2.62			27,113
Short-term borrowings		—		0.00			—		—		0.00			—		6,101		5.66			87
Finance lease liabilities		236		5.06			3		259		4.66			3		328		4.84			4
Subordinated notes and debentures		105,077		4.26			1,124		105,001		4.36			1,138		104,773		4.07			1,076
Total interest-bearing liabilities		4,424,919		3.21		$	35,749		4,426,938		3.17		$	34,935		4,220,562		2.66		$	28,280
Demand—noninterest-bearing		795,771							761,270							792,193
Other liabilities		88,441							83,549							79,272
Total Liabilities		5,309,131							5,271,757							5,092,027
Shareholders’ equity		597,984							583,221							555,464
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,907,115						$	5,854,978						$	5,647,491
Interest income/Earning assets				5.98	%	$	83,475				5.89	%	$	80,866				5.63	%	$	75,758
Interest expense/Interest-bearing liabilities				3.21			35,749				3.17			34,935				2.66			28,280
Net interest spread				2.77	%	$	47,726				2.72	%	$	45,931				2.97	%	$	47,478
Interest income/Earning assets				5.98	%		83,475				5.89	%		80,866				5.63	%		75,758
Interest expense/Earning assets				2.56			35,749				2.55			34,935				2.10			28,280
Net interest margin (fully tax-equivalent)				3.42	%	$	47,726				3.34	%	$	45,931				3.53	%	$	47,478

^{_____________________________________________ (1)} Includes unamortized discounts and premiums. ⁽²⁾ Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio. The taxable equivalent adjustment to net interest income for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023 was $240 thousand, $214 thousand and $242 thousand, respectively. ⁽³⁾ Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income. In addition, loans receivable interest income consists of loans receivable fees, including PPP deferred processing fees. ⁽⁴⁾ Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023 was $(51.1) million, $(59.2) million and $(61.1) million, respectively.

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

	Average Balances, Income and Interest Rates on a Taxable Equivalent Basis
	Nine Months Ended,
	September 30, 2024							September 30, 2023
	Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.
ASSETS:
Securities:
Taxable ^{(1) (4)}	$	696,259		2.06	%	$	11,572	$	729,787		1.89	%	$	11,140
Tax-exempt ^{(1) (2) (4)}		26,063		2.58			547		31,025		2.60			646
Equity securities ^{(1) (2)}		6,951		5.69			296		10,645		4.97			396
Total securities ⁽⁴⁾		729,273		2.11			12,415		771,457		1.96			12,182
Loans receivable:
Commercial ^{(2) (3)}		1,434,545		6.92			74,360		1,512,575		6.49			73,423
Mortgage and loans held for sale ^{(2) (3)}		2,905,301		6.16			134,012		2,733,423		5.70			116,439
Consumer ⁽³⁾		129,475		11.96			11,591		127,650		11.50			10,978
Total loans receivable ⁽³⁾		4,469,321		6.57			219,963		4,373,648		6.14			200,840
Interest-bearing deposits with the Federal Reserve and other financial institutions		241,551		5.58			10,085		49,380		6.01			2,221
Total earning assets		5,440,145		5.89		$	242,463		5,194,485		5.48		$	215,243
Noninterest-bearing assets:
Cash and due from banks		55,243							54,494
Premises and equipment		113,629							107,016
Other assets		267,797							250,210
Allowance for credit losses		(45,812	)						(44,556	)
Total non interest-bearing assets		390,857							367,164
TOTAL ASSETS	$	5,831,002						$	5,561,649
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Demand—interest-bearing	$	711,911		0.75	%	$	4,014	$	878,955		0.54	%	$	3,545
Savings		3,046,518		3.53			80,536		2,581,604		2.75			53,070
Time		531,818		3.87			15,414		516,261		2.79			10,775
Total interest-bearing deposits		4,290,247		3.11			99,964		3,976,820		2.27			67,390
Short-term borrowings		—		0.00			—		47,094		5.07			1,787
Finance lease liabilities		259		4.64			9		350		4.58			12
Subordinated notes and debentures		105,001		4.32			3,394		104,698		4.04			3,164
Total interest-bearing liabilities		4,395,507		3.14		$	103,367		4,128,962		2.34		$	72,353
Demand—noninterest-bearing		764,770							805,513
Other liabilities		84,708							79,140
Total Liabilities		5,244,985							5,013,615
Shareholders’ equity		586,017							548,034
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,831,002						$	5,561,649
Interest income/Earning assets				5.89	%	$	242,463				5.48	%	$	215,243
Interest expense/Interest-bearing liabilities				3.14			103,367				2.34			72,353
Net interest spread				2.75	%	$	139,096				3.14	%	$	142,890
Interest income/Earning assets				5.89	%		242,463				5.48	%		215,243
Interest expense/Earning assets				2.51			103,367				1.84			72,353
Net interest margin (fully tax-equivalent)				3.38	%	$	139,096				3.64	%	$	142,890

^{_____________________________________________ (1)} Includes unamortized discounts and premiums. ⁽²⁾ Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio. The taxable equivalent adjustment to net interest income for the nine months ended September 30, 2024 and 2023, was $671 thousand and $755 thousand, respectively. ⁽³⁾ Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income. In addition, loans receivable interest income consists of loans receivable fees, including PPP deferred processing fees. ⁽⁴⁾ Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the nine months ended September 30, 2024 and 2023 was $(55.1) million and $(58.6) million, respectively.

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	September 30, 2024			June 30, 2024			September 30, 2023
Calculation of tangible book value per common share and tangible common equity / tangible assets (non-GAAP):
Shareholders’ equity	$	606,363		$	586,700		$	549,212
Less: preferred equity		57,785			57,785			57,785
Common shareholders’ equity		548,578			528,915			491,427
Less: goodwill and other intangibles		43,874			43,874			43,874
Less: core deposit intangible		223			241			299
Tangible common equity (non-GAAP)	$	504,481		$	484,800		$	447,254

Total assets	$	6,014,844		$	5,886,571		$	5,731,908
Less: goodwill and other intangibles		43,874			43,874			43,874
Less: core deposit intangible		223			241			299
Tangible assets (non-GAAP)	$	5,970,747		$	5,842,456		$	5,687,735

Ending shares outstanding		20,994,730			20,998,117			20,895,634

Book value per common share (GAAP)	$	26.13		$	25.19		$	23.52
Tangible book value per common share (non-GAAP)	$	24.03		$	23.09		$	21.40

Common shareholders’ equity / Total assets (GAAP)		9.12	%		8.99	%		8.57	%
Tangible common equity / Tangible assets (non-GAAP)		8.45	%		8.30	%		7.86	%

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Calculation of net interest margin:
Interest income	$	83,235		$	80,652		$	75,516		$	241,792		$	214,488
Interest expense		35,749			34,935			28,280			103,367			72,353
Net interest income	$	47,486		$	45,717		$	47,236		$	138,425		$	142,135

Average total earning assets	$	5,503,832		$	5,465,645		$	5,273,758		$	5,440,145		$	5,194,485

Net interest margin (GAAP) (annualized)		3.43	%		3.36	%		3.55	%		3.40	%		3.66	%

Calculation of net interest margin (fully tax equivalent basis) (non-GAAP):
Interest income	$	83,235		$	80,652		$	75,516		$	241,792		$	214,488
Tax equivalent adjustment (non-GAAP)		240			214			242			671			755
Adjusted interest income (fully tax equivalent basis) (non-GAAP)		83,475			80,866			75,758			242,463			215,243
Interest expense		35,749			34,935			28,280			103,367			72,353
Net interest income (fully tax equivalent basis) (non-GAAP)	$	47,726		$	45,931		$	47,478		$	139,096		$	142,890

Average total earning assets	$	5,503,832		$	5,465,645		$	5,273,758		$	5,440,145		$	5,194,485
Less: average mark to market adjustment on investments (non-GAAP)		(51,075	)		(59,225	)		(61,103	)		(55,134	)		(58,577	)
Adjusted average total earning assets, net of mark to market (non-GAAP)	$	5,554,907		$	5,524,870		$	5,334,861		$	5,495,279		$	5,253,062

Net interest margin, fully tax equivalent basis (non-GAAP) (annualized)		3.42	%		3.34	%		3.53	%		3.38	%		3.64	%

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended						Nine Months Ended
	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Calculation of PPNR (non-GAAP): ⁽¹⁾
Net interest income	$	47,486	$	45,717	$	47,236	$	138,425	$	142,135
Add: Non-interest income		10,973		8,865		7,863		28,793		24,198
Less: Non-interest expense		38,784		35,989		36,914		112,197		106,892
PPNR (non-GAAP)	$	19,675	$	18,593	$	18,185	$	55,021	$	59,441

⁽¹⁾ Management believes that this is an important metric as it illustrates the underlying performance of the Corporation, it enables investors and others to assess the Corporation’s ability to generate capital to cover credit losses through the credit cycle and provides consistent reporting with a key metric used by bank regulatory agencies.

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Calculation of efficiency ratio:
Non-interest expense	$	38,784		$	35,989		$	36,914		$	112,197		$	106,892

Non-interest income	$	10,973		$	8,865		$	7,863		$	28,793		$	24,198
Net interest income		47,486			45,717			47,236			138,425			142,135
Total revenue	$	58,459		$	54,582		$	55,099		$	167,218		$	166,333
Efficiency ratio		66.34	%		65.94	%		67.00	%		67.10	%		64.26	%

Calculation of efficiency ratio (fully tax equivalent basis) (non-GAAP):
Non-interest expense	$	38,784		$	35,989		$	36,914		$	112,197		$	106,892
Less: core deposit intangible amortization		18			19			20			57			65
Adjusted non-interest expense (non-GAAP)	$	38,766		$	35,970		$	36,894		$	112,140		$	106,827

Non-interest income	$	10,973		$	8,865		$	7,863		$	28,793		$	24,198

Net interest income	$	47,486		$	45,717		$	47,236		$	138,425		$	142,135
Less: tax exempt investment and loan income, net of TEFRA (non-GAAP)		1,473			1,318			1,376			4,127			4,043
Add: tax exempt investment and loan income (fully tax equivalent basis) (non-GAAP)		2,123			1,902			1,955			5,957			5,668
Adjusted net interest income (fully tax equivalent basis) (non-GAAP)		48,136			46,301			47,815			140,255			143,760
Adjusted net revenue (fully tax equivalent basis) (non-GAAP)	$	59,109		$	55,166		$	55,678		$	169,048		$	167,958

Efficiency ratio (fully tax equivalent basis) (non-GAAP)		65.58	%		65.20	%		66.26	%		66.34	%		63.60	%

CNB FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

Reconciliation of Non-GAAP Financial Measures

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Calculation of return on average tangible common equity (non-GAAP):
Net income	$	13,954		$	12,957		$	13,727		$	39,511		$	44,043
Less: preferred stock dividends		1,076			1,075			1,076			3,226			3,226
Net income available to common shareholders	$	12,878		$	11,882		$	12,651		$	36,285		$	40,817

Average shareholders’ equity	$	597,984		$	583,221		$	555,464		$	586,017		$	548,034
Less: average goodwill & intangibles		44,108			44,127			44,186			44,127			44,201
Less: average preferred equity		57,785			57,785			57,785			57,785			57,785
Tangible common shareholders’ equity (non-GAAP)	$	496,091		$	481,309		$	453,493		$	484,105		$	446,048

Return on average equity (GAAP) (annualized)		9.28	%		8.94	%		9.80	%		9.01	%		10.74	%
Return on average common equity (GAAP) (annualized)		9.48	%		9.10	%		10.09	%		9.18	%		11.13	%
Return on average tangible common equity (non-GAAP) (annualized)		10.33	%		9.93	%		11.07	%		10.01	%		12.23	%

The MIL Network –

January 24, 2025

MIL-OSI: HBT Financial, Inc. Announces Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

Third Quarter Highlights

Net income of $18.2 million, or $0.57 per diluted share; return on average assets (“ROAA”) of 1.44%; return on average stockholders’ equity (“ROAE”) of 13.81%; and return on average tangible common equity (“ROATCE”)⁽¹⁾ of 16.25%
Adjusted net income⁽¹⁾ of $19.2 million; or $0.61 per diluted share; adjusted ROAA⁽¹⁾ of 1.53%; adjusted ROAE⁽¹⁾ of 14.62%; and adjusted ROATCE⁽¹⁾ of 17.20%
Asset quality remained strong with nonperforming assets to total assets of 0.17% and net charge-offs to average loans of 0.07%, on an annualized basis
Net interest margin and net interest margin (tax-equivalent basis)⁽¹⁾ expanded to 3.98% and 4.03%, respectively

BLOOMINGTON, Ill., Oct. 21, 2024 (GLOBE NEWSWIRE) — HBT Financial, Inc. (NASDAQ: HBT) (the “Company” or “HBT Financial” or “HBT”), the holding company for Heartland Bank and Trust Company, today reported net income of $18.2 million, or $0.57 diluted earnings per share, for the third quarter of 2024. This compares to net income of $18.1 million, or $0.57 diluted earnings per share, for the second quarter of 2024, and net income of $19.7 million, or $0.62 diluted earnings per share, for the third quarter of 2023.

J. Lance Carter, President and Chief Executive Officer of HBT Financial, said, “In the third quarter, we continued our consistently solid financial performance with net income of $18.2 million, adjusted net income⁽¹⁾ of $19.2 million, adjusted ROAA⁽¹⁾ of 1.53% and adjusted ROATCE⁽¹⁾ of 17.20%. We have also seen tangible equity continue to build, with tangible book value per share increasing 23.3% over the last year. Our net interest margin (tax-equivalent basis)⁽¹⁾ increased 3 basis points to 4.03% while funding costs remained modest, increasing 5 basis points to 1.47%. Our asset quality remains strong with net charge-offs at 0.07% of average loans on an annualized basis during the quarter and nonperforming assets to total assets at 0.17%. We have not seen any significant signs of stress in our loan portfolio, but we continue to monitor the portfolio closely. Noninterest income remained consistent and noninterest expense of $31.3 million was up only 2.1% when compared to the third quarter of 2023, as we remain focused on operational efficiency while continuing to invest in our business. Lastly, all capital ratios had solid increases and can support future organic growth or acquisitions.”
____________________________________
(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.

Adjusted Net Income

In addition to reporting GAAP results, the Company believes non-GAAP measures such as adjusted net income and adjusted earnings per share, which adjust for acquisition expenses, branch closure expenses, gains (losses) on closed branch premises, net earnings (losses) from closed or sold operations, charges related to termination of certain employee benefit plans, realized gains (losses) on sales of securities, and mortgage servicing rights fair value adjustments, provide investors with additional insight into its operational performance. The Company reported adjusted net income of $19.2 million, or $0.61 adjusted diluted earnings per share, for the third quarter of 2024. This compares to adjusted net income of $18.1 million, or $0.57 adjusted diluted earnings per share, for the second quarter of 2024, and adjusted net income of $20.3 million, or $0.63 adjusted diluted earnings per share, for the third quarter of 2023 (see “Reconciliation of Non-GAAP Financial Measures” tables below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures).

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2024 was $47.7 million, an increase of 1.5% from $47.0 million for the second quarter of 2024. The increase was primarily attributable to improved loan yields which were mostly offset by an increase in funding costs.

Relative to the third quarter of 2023, net interest income decreased 1.1% from $48.3 million. The decrease was primarily attributable to higher funding costs which were partially offset by higher asset yields and an increase in interest-earning assets.

Net interest margin for the third quarter of 2024 was 3.98%, compared to 3.95% for the second quarter of 2024, and net interest margin (tax-equivalent basis)⁽¹⁾ for the third quarter of 2024 was 4.03%, compared to 4.00% for the second quarter of 2024. Higher yields on interest-earning assets, which increased by 7 basis points to 5.35%, were mostly offset by an increase in funding costs, with the cost of funds increasing by 5 basis points to 1.47%.

Relative to the third quarter of 2023, net interest margin decreased 9 basis points from 4.07% and net interest margin (tax-equivalent basis)⁽¹⁾ decreased 10 basis points from 4.13%. These decreases were primarily attributable to increases in funding costs outpacing increases in interest-earning asset yields.
____________________________________
(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.

Noninterest Income

Noninterest income for the third quarter of 2024 was $8.7 million, a decrease from $9.6 million for the second quarter of 2024. The decrease was primarily attributable to changes in the mortgage servicing rights (“MSR”) fair value adjustment, with a $1.5 million negative MSR fair value adjustment included in the third quarter 2024 results compared to a $0.1 million negative MSR fair value adjustment included in the second quarter 2024 results. Partially offsetting the MSR fair value adjustment was a $0.2 million increase in service charge income and a $0.2 million increase in other noninterest income, primarily attributable to swap fee income.

Relative to the third quarter of 2023, noninterest income decreased 8.3% from $9.5 million. The decrease was primarily attributable to the $1.5 million negative MSR fair value adjustment included in the third quarter 2024 results, partially offset by the absence of $0.8 million in realized losses on the sale of securities included in the third quarter 2023 results.

Noninterest Expense

Noninterest expense for the third quarter of 2024 was $31.3 million, a 2.7% increase from $30.5 million for the second quarter of 2024. The increase was primarily attributable to a $0.5 million increase in occupancy expense, driven in part by a seasonal increase in planned building maintenance expenses, and a $0.4 million increase in marketing and customer relations expense.

Relative to the third quarter of 2023, noninterest expense increased 2.1% from $30.7 million. The increase was primarily attributable to a $0.7 million increase in salaries and a $0.4 million increase in employee benefits. Partially offsetting these increases was a $0.3 million decrease in marketing and customer relations expense.

On February 1, 2023, HBT Financial completed its acquisition of Town and Country Financial Corporation (“Town and Country”) with the core system conversion successfully completed in April 2023. Acquisition-related expenses recognized during the nine months ended September 30, 2023 are summarized below. No Town and Country acquisition-related expenses were recognized subsequent to the second quarter of 2023.

(dollars in thousands)		Nine Months Ended September 30, 2023

PROVISION FOR CREDIT LOSSES	$	5,924
NONINTEREST EXPENSE
Salaries		3,584
Furniture and equipment		39
Data processing		2,031
Marketing and customer relations		24
Loan collection and servicing		125
Legal fees and other noninterest expense		1,964
Total noninterest expense		7,767
Total acquisition-related expenses	$	13,691

Loan Portfolio

Total loans outstanding, before allowance for credit losses, were $3.37 billion at September 30, 2024, compared with $3.39 billion at June 30, 2024, and $3.34 billion at September 30, 2023. The $15.7 million decrease from June 30, 2024 was primarily attributable to several larger commercial real estate loan payoffs due to the sale of the property and a couple of larger one-to-four family residential loan payoffs. These decreases were partially offset by increased line usage and term originations in our agricultural and farmland portfolio.

Deposits

Total deposits were $4.28 billion at September 30, 2024, compared with $4.32 billion at June 30, 2024, and $4.20 billion at September 30, 2023. The $38.0 million decrease from June 30, 2024 was primarily attributable to lower balances maintained in retail accounts and a $18.3 million decrease in escrow balances related to seasonal tax payments, partially offset by increases in public funds and business accounts. Additionally, we continue to see a shift towards higher cost deposit products, with decreases in noninterest-bearing deposits, interest-bearing demand, and savings balances being partially offset by an increase in money market and time deposit balances.

Asset Quality

Nonperforming loans totaled $8.2 million, or 0.24% of total loans, at September 30, 2024, compared with $8.4 million, or 0.25% of total loans, at June 30, 2024, and $6.7 million, or 0.20% of total loans, at September 30, 2023. Additionally, of the $8.2 million of nonperforming loans held as of September 30, 2024, $2.0 million is either wholly or partially guaranteed by the U.S. government. The $0.2 million decrease in nonperforming loans from June 30, 2024 was primarily attributable to the payoff of $0.1 million in nonaccrual agricultural and farmland loans.

The Company recorded a provision for credit losses of $0.6 million for the third quarter of 2024. The provision for credit losses primarily reflects a $1.2 million increase in required reserves resulting from changes in economic forecasts; a $0.2 million increase in required reserves resulting from qualitative factor changes; a $0.6 million decrease in required reserves driven by decreased loan balances and changes within the loan portfolio; and a $0.2 million decrease in specific reserves.

The Company had net charge-offs of $0.6 million, or 0.07% of average loans on an annualized basis, for the third quarter of 2024, compared to net charge-offs of $0.7 million, or 0.08% of average loans on an annualized basis, for the second quarter of 2024, and net recoveries of $0.1 million, or 0.01% of average loans on an annualized basis, for the third quarter of 2023. During the third quarter of 2024, net charge-offs were primarily recognized in the commercial and industrial category which had $0.7 million of net charge-offs.

The Company’s allowance for credit losses was 1.22% of total loans and 499% of nonperforming loans at September 30, 2024, compared with 1.21% of total loans and 484% of nonperforming loans at June 30, 2024. In addition, the allowance for credit losses on unfunded lending-related commitments totaled $4.1 million as of September 30, 2024, compared with $4.3 million as of June 30, 2024.

Capital

As of September 30, 2024, the Company exceeded all regulatory capital requirements under Basel III as summarized in the following table:

	September 30, 2024		For Capital Adequacy Purposes With Capital Conservation Buffer

Total capital to risk-weighted assets	16.54	%	10.50	%
Tier 1 capital to risk-weighted assets	14.48		8.50
Common equity tier 1 capital ratio	13.15		7.00
Tier 1 leverage ratio	11.16		4.00

The ratio of tangible common equity to tangible assets⁽¹⁾ increased to 9.35% as of September 30, 2024, from 8.74% as of June 30, 2024, and tangible book value per share⁽¹⁾ increased by $0.91 to $14.55 as of September 30, 2024, when compared to June 30, 2024.

During the third quarter of 2024, the Company did not repurchase shares of its common stock under its stock repurchase program. The Company’s Board of Directors has authorized the repurchase of up to $15 million of HBT Financial common stock under its stock repurchase program, which is in effect until January 1, 2025. As of September 30, 2024, the Company had $10.6 million remaining under the stock repurchase program.
____________________________________
(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.

About HBT Financial, Inc.

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. HBT Financial provides a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa through 66 full-service branches. As of September 30, 2024, HBT Financial had total assets of $5.0 billion, total loans of $3.4 billion, and total deposits of $4.3 billion.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include net interest income (tax-equivalent basis), net interest margin (tax-equivalent basis), efficiency ratio (tax-equivalent basis), ratio of tangible common equity to tangible assets, tangible book value per share, ROATCE, adjusted net income, adjusted earnings per share, adjusted ROAA, adjusted ROAE, and adjusted ROATCE. Our management uses these non-GAAP financial measures, together with the related GAAP financial measures, in its analysis of our performance and in making business decisions. Management believes that it is a standard practice in the banking industry to present these non-GAAP financial measures, and accordingly believes that providing these measures may be useful for peer comparison purposes. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP; nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures in the “Reconciliation of Non-GAAP Financial Measures” tables.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release contains, and future oral and written statements of the Company and its management may contain, “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “will,” “propose,” “may,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “continue,” or “should,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to: (i) the strength of the local, state, national and international economies (including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics, acts of war or other threats thereof (including the Israeli-Palestinian conflict and the Russian invasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board; (iv) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business and any changes in response to the recent failures of other banks or as a result of the upcoming 2024 presidential election; (v) changes in interest rates and prepayment rates of the Company’s assets; (vi) increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; (xiii) fluctuations in the value of securities held in our securities portfolio; (xiv) concentrations within our loan portfolio (including commercial real estate loans), large loans to certain borrowers, and large deposits from certain clients; (xv) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (xvi) the level of non-performing assets on our balance sheets; (xvii) interruptions involving our information technology and communications systems or third-party servicers; (xviii) breaches or failures of our information security controls or cybersecurity-related incidents, and (xix) the ability of the Company to manage the risks associated with the foregoing as well as anticipated. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

CONTACT:
Peter Chapman
HBTIR@hbtbank.com
(309) 664-4556

HBT Financial, Inc. Unaudited Consolidated Financial Summary

	As of or for the Three Months Ended									Nine Months Ended September 30,
(dollars in thousands, except per share data)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023
Interest and dividend income	$	64,117		$	62,824		$	59,041		$	188,902		$	167,588
Interest expense		16,384			15,796			10,762			47,453			23,600
Net interest income		47,733			47,028			48,279			141,449			143,988
Provision for credit losses		603			1,176			480			2,306			6,460
Net interest income after provision for credit losses		47,130			45,852			47,799			139,143			137,528
Noninterest income		8,705			9,610			9,490			23,941			26,841
Noninterest expense		31,322			30,509			30,671			93,099			100,577
Income before income tax expense		24,513			24,953			26,618			69,985			63,792
Income tax expense		6,333			6,883			6,903			18,477			16,396
Net income	$	18,180		$	18,070		$	19,715		$	51,508		$	47,396

Earnings per share – Diluted	$	0.57		$	0.57		$	0.62		$	1.62		$	1.49

Adjusted net income ⁽¹⁾	$	19,244		$	18,139		$	20,279		$	55,456		$	58,910
Adjusted earnings per share – Diluted ⁽¹⁾		0.61			0.57			0.63			1.75			1.86

Book value per share	$	17.04		$	16.14		$	14.36
Tangible book value per share ⁽¹⁾		14.55			13.64			11.80

Shares of common stock outstanding		31,559,366			31,559,366			31,774,140
Weighted average shares of common stock outstanding		31,559,366			31,579,457			31,829,250			31,600,442			31,598,650

SUMMARY RATIOS
Net interest margin *		3.98	%		3.95	%		4.07	%		3.96	%		4.14	%
Net interest margin (tax-equivalent basis) * ⁽¹⁾⁽²⁾		4.03			4.00			4.13			4.01			4.20

Efficiency ratio		54.24	%		52.61	%		51.85	%		55.00	%		57.73	%
Efficiency ratio (tax-equivalent basis) ⁽¹⁾⁽²⁾		53.71			52.10			51.25			54.45			57.04

Loan to deposit ratio		78.72	%		78.39	%		79.63	%

Return on average assets *		1.44	%		1.45	%		1.58	%		1.37	%		1.29	%
Return on average stockholders’ equity *		13.81			14.48			17.02			13.58			14.22
Return on average tangible common equity * ⁽¹⁾		16.25			17.21			20.70			16.11			17.17

Adjusted return on average assets * ⁽¹⁾		1.53	%		1.45	%		1.62	%		1.48	%		1.61	%
Adjusted return on average stockholders’ equity * ⁽¹⁾		14.62			14.54			17.51			14.62			17.68
Adjusted return on average tangible common equity * ⁽¹⁾		17.20			17.27			21.29			17.34			21.34

CAPITAL
Total capital to risk-weighted assets		16.54	%		16.01	%		15.09	%
Tier 1 capital to risk-weighted assets		14.48			13.98			13.18
Common equity tier 1 capital ratio		13.15			12.66			11.88
Tier 1 leverage ratio		11.16			10.83			10.34
Total stockholders’ equity to total assets		10.77			10.18			9.14
Tangible common equity to tangible assets ⁽¹⁾		9.35			8.74			7.64

ASSET QUALITY
Net charge-offs (recoveries) to average loans *		0.07	%		0.08	%		(0.01)	%		0.04	%		(0.01)	%
Allowance for credit losses to loans, before allowance for credit losses		1.22			1.21			1.16
Nonperforming loans to loans, before allowance for credit losses		0.24			0.25			0.20
Nonperforming assets to total assets		0.17			0.17			0.16

* Annualized measure.
(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

HBT Financial, Inc. Unaudited Consolidated Financial Summary Consolidated Statements of Income

	Three Months Ended									Nine Months Ended September 30,
(dollars in thousands, except per share data)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023
INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable	$	53,650		$	52,177		$	49, 640		$	157,753		$	138,948
Federally tax exempt		1,133			1,097			1,072			3,324			3,064
Debt Securities:
Taxable		6,453			6,315			6,402			18,972			19,460
Federally tax exempt		502			521			978			1,620			3,337
Interest-bearing deposits in bank		2,230			2,570			714			6,752			2,234
Other interest and dividend income		149			144			235			481			545
Total interest and dividend income		64,117			62,824			59,041			188,902			167,588
INTEREST EXPENSE
Deposits		14,649			14,133			7,211			42,375			13,908
Securities sold under agreements to repurchase		134			129			35			415			107
Borrowings		119			121			2,108			365			5,594
Subordinated notes		470			469			470			1,409			1,409
Junior subordinated debentures issued to capital trusts		1,012			944			938			2,889			2,582
Total interest expense		16,384			15,796			10,762			47,453			23,600
Net interest income		47,733			47,028			48,279			141,449			143,988
PROVISION FOR CREDIT LOSSES		603			1,176			480			2,306			6,460
Net interest income after provision for credit losses		47,130			45,852			47,799			139,143			137,528
NONINTEREST INCOME
Card income		2,753			2,885			2,763			8,254			8,326
Wealth management fees		2,670			2,623			2,381			7,840			6,998
Service charges on deposit accounts		2,081			1,902			2,040			5,852			5,830
Mortgage servicing		1,113			1,111			1,169			3,279			3,522
Mortgage servicing rights fair value adjustment		(1,488	)		(97	)		23			(1,505	)		(460	)
Gains on sale of mortgage loans		461			443			476			1,202			1,125
Realized gains (losses) on sales of securities		—			—			(813	)		(3,382	)		(1,820	)
Unrealized gains (losses) on equity securities		136			(96	)		(46	)		24			(61	)
Gains (losses) on foreclosed assets		(44	)		(28	)		550			15			443
Gains (losses) on other assets		(2	)		—			52			(637	)		161
Income on bank owned life insurance		170			166			153			500			415
Other noninterest income		855			701			742			2,499			2,362
Total noninterest income		8,705			9,610			9,490			23,941			26,841
NONINTEREST EXPENSE
Salaries		16,325			16,364			15,644			49,346			51,715
Employee benefits		2,997			2,860			2,616			8,662			7,658
Occupancy of bank premises		2,695			2,243			2,573			7,520			7,460
Furniture and equipment		446			548			667			1,544			2,135
Data processing		2,640			2,606			2,581			8,171			9,787
Marketing and customer relations		1,380			996			1,679			3,372			3,874
Amortization of intangible assets		710			710			720			2,130			1,950
FDIC insurance		572			565			512			1,697			1,705
Loan collection and servicing		476			475			345			1,403			971
Foreclosed assets		19			10			76			78			234
Other noninterest expense		3,062			3,132			3,258			9,176			13,088
Total noninterest expense		31,322			30,509			30,671			93,099			100,577
INCOME BEFORE INCOME TAX EXPENSE		24,513			24,953			26,618			69,985			63,792
INCOME TAX EXPENSE		6,333			6,883			6,903			18,477			16,396
NET INCOME	$	18,180		$	18,070		$	19,715		$	51,508		$	47,396

EARNINGS PER SHARE – BASIC	$	0.58		$	0.57		$	0.62		$	1.63		$	1.50
EARNINGS PER SHARE – DILUTED	$	0.57		$	0.57		$	0.62		$	1.62		$	1.49
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING		31,559,366			31,579,457			31,829,250			31,600,442			31,598,650

HBT Financial, Inc. Unaudited Consolidated Financial Summary Consolidated Balance Sheets

(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023
ASSETS
Cash and due from banks	$	26,776		$	22,604		$	24,757
Interest-bearing deposits with banks		152,895			172,636			87,156
Cash and cash equivalents		179,671			195,240			111,913

Interest-bearing time deposits with banks		—			520			500
Debt securities available-for-sale, at fair value		710,303			669,055			753,163
Debt securities held-to-maturity		505,075			512,549			527,144
Equity securities with readily determinable fair value		3,364			3,228			3,106
Equity securities with no readily determinable fair value		2,638			2,613			2,300
Restricted stock, at cost		5,086			5,086			11,165
Loans held for sale		2,959			858			3,563

Loans, before allowance for credit losses		3,369,830			3,385,483			3,342,786
Allowance for credit losses		(40,966	)		(40,806	)		(38,863	)
Loans, net of allowance for credit losses		3,328,864			3,344,677			3,303,923

Bank owned life insurance		24,405			24,235			23,747
Bank premises and equipment, net		65,919			65,711			64,713
Bank premises held for sale		317			317			35
Foreclosed assets		376			320			1,519
Goodwill		59,820			59,820			59,820
Intangible assets, net		18,552			19,262			21,402
Mortgage servicing rights, at fair value		17,496			18,984			20,156
Investments in unconsolidated subsidiaries		1,614			1,614			1,614
Accrued interest receivable		24,160			22,425			23,447
Other assets		40,109			59,685			58,538
Total assets	$	4,990,728		$	5,006,199		$	4,991,768

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	1,008,359		$	1,045,697		$	1,086,877
Interest-bearing		3,272,341			3,272,996			3,111,191
Total deposits		4,280,700			4,318,693			4,198,068

Securities sold under agreements to repurchase		29,029			29,330			28,900
Federal Home Loan Bank advances		13,435			13,734			177,650
Subordinated notes		39,533			39,514			39,454
Junior subordinated debentures issued to capital trusts		52,834			52,819			52,774
Other liabilities		37,535			42,640			38,671
Total liabilities		4,453,066			4,496,730			4,535,517

Stockholders’ Equity
Common stock		328			328			327
Surplus		296,810			296,430			295,483
Retained earnings		302,532			290,386			256,050
Accumulated other comprehensive income (loss)		(38,989	)		(54,656	)		(78,432	)
Treasury stock at cost		(23,019	)		(23,019	)		(17,177	)
Total stockholders’ equity		537,662			509,469			456,251
Total liabilities and stockholders’ equity	$	4,990,728		$	5,006,199		$	4,991,768
SHARES OF COMMON STOCK OUTSTANDING		31,559,366			31,559,366			31,774,140

HBT Financial, Inc. Unaudited Consolidated Financial Summary

(dollars in thousands)	September 30, 2024		June 30, 2024		September 30, 2023

LOANS
Commercial and industrial	$	395,598	$	400,276	$	386,933
Commercial real estate – owner occupied		288,838		289,992		297,242
Commercial real estate – non-owner occupied		889,188		889,193		901,929
Construction and land development		359,151		365,371		371,158
Multi-family		432,712		429,951		388,742
One-to-four family residential		472,040		484,335		488,655
Agricultural and farmland		297,102		285,822		275,239
Municipal, consumer, and other		235,201		240,543		232,888
Total loans	$	3,369,830	$	3,385,483	$	3,342,786

(dollars in thousands)	September 30, 2024		June 30, 2024		September 30, 2023

DEPOSITS
Noninterest-bearing deposits	$	1,008,359	$	1,045,697	$	1,086,877
Interest-bearing deposits:
Interest-bearing demand		1,076,445		1,094,797		1,134,721
Money market		795,150		769,386		673,780
Savings		566,783		582,752		623,083
Time		803,964		796,069		564,634
Brokered		29,999		29,992		114,973
Total interest-bearing deposits		3,272,341		3,272,996		3,111,191
Total deposits	$	4,280,700	$	4,318,693	$	4,198,068

HBT Financial, Inc. Unaudited Consolidated Financial Summary

	Three Months Ended
	September 30, 2024							June 30, 2024							September 30, 2023
(dollars in thousands)	Average Balance			Interest		Yield/Cost *		Average Balance			Interest		Yield/Cost *		Average Balance			Interest		Yield/Cost *

ASSETS
Loans	$	3,379,299		$	54,783	6.45	%	$	3,374,058		$	53,274	6.35	%	$	3,296,703		$	50,712	6.10	%
Debt Securities		1,191,642			6,955	2.32			1,187,795			6,836	2.31			1,317,603			7,380	2.22
Deposits with banks		185,870			2,230	4.77			211,117			2,570	4.90			77,595			714	3.65
Other		12,660			149	4.68			12,588			144	4.60			16,430			235	5.68
Total interest-earning assets		4,769,471		$	64,117	5.35	%		4,785,558		$	62,824	5.28	%		4,708,331		$	59,041	4.97	%
Allowance for credit losses		(40,780	)						(40,814	)						(38,317	)
Noninterest-earning assets		278,030							283,103							294,818
Total assets	$	5,006,721						$	5,027,847						$	4,964,832

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Interest-bearing deposits:
Interest-bearing demand	$	1,085,609		$	1,408	0.52	%	$	1,123,592		$	1,429	0.51	%	$	1,160,654		$	761	0.26	%
Money market		800,651			4,726	2.35			788,744			4,670	2.38			682,772			2,026	1.18
Savings		573,077			396	0.27			592,312			393	0.27			639,384			249	0.15
Time		804,379			7,702	3.81			763,507			7,117	3.75			519,683			3,275	2.50
Brokered		29,996			417	5.54			38,213			524	5.51			66,776			900	5.34
Total interest-bearing deposits		3,293,712			14,649	1.77			3,306,368			14,133	1.72			3,069,269			7,211	0.93
Securities sold under agreements to repurchase		29,426			134	1.80			30,440			129	1.70			33,807			35	0.41
Borrowings		13,691			119	3.47			13,466			121	3.60			157,908			2,108	5.30
Subordinated notes		39,524			470	4.73			39,504			469	4.78			39,444			470	4.72
Junior subordinated debentures issued to capital trusts		52,827			1,012	7.63			52,812			944	7.18			52,767			938	7.05
Total interest-bearing liabilities		3,429,180		$	16,384	1.90	%		3,442,590		$	15,796	1.85	%		3,353,195		$	10,762	1.27	%
Noninterest-bearing deposits		1,013,893							1,043,614							1,105,472
Noninterest-bearing liabilities		39,903							39,806							46,564
Total liabilities		4,482,976							4,526,010							4,505,231
Stockholders’ Equity		523,745							501,837							459,601
Total liabilities and stockholders’ equity	$	5,006,721						$	5,027,847						$	4,964,832

Net interest income/Net interest margin ⁽¹⁾				$	47,733	3.98	%				$	47,028	3.95	%				$	48,279	4.07	%
Tax-equivalent adjustment ⁽²⁾					552	0.05						553	0.05						675	0.06
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) ^{(2) (3)}				$	48,285	4.03	%				$	47,581	4.00	%				$	48,954	4.13	%
Net interest rate spread ⁽⁴⁾						3.45	%						3.43	%						3.70	%
Net interest-earning assets ⁽⁵⁾	$	1,340,291						$	1,342,968						$	1,355,136
Ratio of interest-earning assets to interest-bearing liabilities		1.39							1.39							1.40
Cost of total deposits						1.35	%						1.31	%						0.69	%
Cost of funds						1.47							1.42							0.96

* Annualized measure.
(1) Net interest margin represents net interest income divided by average total interest-earning assets.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

HBT Financial, Inc. Unaudited Consolidated Financial Summary

	Nine Months Ended
	September 30, 2024							September 30, 2023
(dollars in thousands)	Average Balance			Interest		Yield/Cost *		Average Balance			Interest		Yield/Cost *

ASSETS
Loans	$	3,374,875		$	161,077	6.38	%	$	3,183,641		$	142,012	5.96	%
Debt Securities		1,197,772			20,592	2.30			1,366,298			22,797	2.23
Deposits with banks		188,087			6,752	4.80			84,720			2,234	3.53
Other		12,744			481	5.04			15,334			545	4.75
Total interest-earning assets		4,773,478		$	188,902	5.29	%		4,649,993		$	167,588	4.82	%
Allowance for credit losses		(40,611	)						(37,053	)
Noninterest-earning assets		279,789							289,843
Total assets	$	5,012,656						$	4,902,783

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Interest-bearing deposits:
Interest-bearing demand	$	1,112,198		$	4,148	0.50	%	$	1,204,937		$	1,902	0.21	%
Money market		800,693			14,193	2.37			664,036			4,467	0.90
Savings		592,134			1,232	0.28			678,495			616	0.12
Time		744,349			20,744	3.72			441,760			6,011	1.82
Brokered		50,046			2,058	5.49			22,987			912	5.30
Total interest-bearing deposits		3,299,420			42,375	1.72			3,012,215			13,908	0.62
Securities sold under agreements to repurchase		30,769			415	1.80			35,844			107	0.40
Borrowings		13,387			365	3.64			148,443			5,594	5.04
Subordinated notes		39,504			1,409	4.76			39,424			1,409	4.78
Junior subordinated debentures issued to capital trusts		52,812			2,889	7.31			51,054			2,582	6.76
Total interest-bearing liabilities		3,435,892		$	47,453	1.84	%		3,286,980		$	23,600	0.96	%
Noninterest-bearing deposits		1,031,239							1,123,917
Noninterest-bearing liabilities		38,943							46,310
Total liabilities		4,506,074							4,457,207
Stockholders’ Equity		506,582							445,576
Total liabilities and stockholders’ equity	$	5,012,656							4,902,783

Net interest income/Net interest margin ⁽¹⁾				$	141,449	3.96	%				$	143,988	4.14	%
Tax-equivalent adjustment ⁽²⁾					1,680	0.05						2,092	0.06
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) ^{(2) (3)}				$	143,129	4.01	%				$	146,080	4.20	%
Net interest rate spread ⁽⁴⁾						3.45	%						3.86	%
Net interest-earning assets ⁽⁵⁾	$	1,337,586						$	1,363,013
Ratio of interest-earning assets to interest-bearing liabilities		1.39							1.41
Cost of total deposits						1.31	%						0.45	%
Cost of funds						1.42							0.72

* Annualized measure.
(1) Net interest margin represents net interest income divided by average total interest-earning assets.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

HBT Financial, Inc. Unaudited Consolidated Financial Summary

(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023

NONPERFORMING ASSETS
Nonaccrual	$	8,200		$	8,425		$	6,678
Past due 90 days or more, still accruing		5			7			—
Total nonperforming loans		8,205			8,432			6,678
Foreclosed assets		376			320			1,519
Total nonperforming assets	$	8,581		$	8,752		$	8,197

Nonperforming loans that are wholly or partially guaranteed by the U.S. Government	$	2,046		$	2,132		$	1,968

Allowance for credit losses	$	40,966		$	40,806		$	38,863
Loans, before allowance for credit losses		3,369,830			3,385,483			3,342,786

CREDIT QUALITY RATIOS
Allowance for credit losses to loans, before allowance for credit losses		1.22	%		1.21	%		1.16	%
Allowance for credit losses to nonaccrual loans		499.59			484.34			581.96
Allowance for credit losses to nonperforming loans		499.28			483.94			581.96
Nonaccrual loans to loans, before allowance for credit losses		0.24			0.25			0.20
Nonperforming loans to loans, before allowance for credit losses		0.24			0.25			0.20
Nonperforming assets to total assets		0.17			0.17			0.16
Nonperforming assets to loans, before allowance for credit losses, and foreclosed assets		0.25			0.26			0.25

HBT Financial, Inc. Unaudited Consolidated Financial Summary

	Three Months Ended									Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023

ALLOWANCE FOR CREDIT LOSSES
Beginning balance	$	40,806		$	40,815		$	37,814		$	40,048		$	25,333
Adoption of ASC 326		—			—			—			—			6,983
PCD allowance established in acquisition		—			—			—			—			1,247
Provision for credit losses		746			677			983			1,983			5,004
Charge-offs		(1,101	)		(870	)		(412	)		(2,198	)		(733	)
Recoveries		515			184			478			1,133			1,029
Ending balance	$	40,966		$	40,806		$	38,863		$	40,966		$	38,863

Net charge-offs (recoveries)	$	586		$	686		$	(66	)	$	1,065		$	(296	)
Average loans		3,379,299			3,374,058			3,296,703			3,374,875			3,183,641

Net charge-offs (recoveries) to average loans *		0.07	%		0.08	%		(0.01)	%		0.04	%		(0.01)	%

* Annualized measure.

	Three Months Ended								Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024		September 30, 2023				2024		2023

PROVISION FOR CREDIT LOSSES
Loans ⁽¹⁾	$	746		$	677	$	983		$	1,983	$	5,004
Unfunded lending-related commitments ⁽¹⁾		(143	)		499		297			323		1,456
Debt securities		—			—		(800	)		—		—
Total provision for credit losses	$	603		$	1,176	$	480		$	2,306	$	6,460

(1) Includes recognition of an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million in connection with the Town and Country merger during the first quarter of 2023.

Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income and Adjusted Return on Average Assets
	Three Months Ended									Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023

Net income	$	18,180		$	18,070		$	19,715		$	51,508		$	47,396
Adjustments:
Acquisition expenses ⁽¹⁾		—			—			—			—			(13,691	)
Gains (losses) on closed branch premises		—			—			—			(635	)		75
Realized gains (losses) on sales of securities		—			—			(813	)		(3,382	)		(1,820	)
Mortgage servicing rights fair value adjustment		(1,488	)		(97	)		23			(1,505	)		(460	)
Total adjustments		(1,488	)		(97	)		(790	)		(5,522	)		(15,896	)
Tax effect of adjustments ⁽²⁾		424			28			226			1,574			4,382
Total adjustments after tax effect		(1,064	)		(69	)		(564	)		(3,948	)		(11,514	)
Adjusted net income	$	19,244		$	18,139		$	20,279		$	55,456		$	58,910

Average assets	$	5,006,721		$	5,027,847		$	4,964,832		$	5,012,656		$	4,902,783

Return on average assets *		1.44	%		1.45	%		1.58	%		1.37	%		1.29	%
Adjusted return on average assets *		1.53			1.45			1.62			1.48			1.61

* Annualized measure.
(1) Includes recognition of an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million in connection with the Town and Country merger during the first quarter of 2023.
(2) Assumes a federal income tax rate of 21% and a state tax rate of 9.5%.

Reconciliation of Non-GAAP Financial Measures – Adjusted Earnings Per Share — Basic and Diluted
	Three Months Ended							Nine Months Ended September 30,
(dollars in thousands, except per share amounts)	September 30, 2024		June 30, 2024		September 30, 2023				2024		2023

Numerator:
Net income	$	18,180	$	18,070	$	19,715		$	51,508	$	47,396
Earnings allocated to participating securities ⁽¹⁾		—		—		(10	)		—		(26	)
Numerator for earnings per share – basic and diluted	$	18,180	$	18,070	$	19,705		$	51,508	$	47,370

Adjusted net income	$	19,244	$	18,139	$	20,279		$	55,456	$	58,910
Earnings allocated to participating securities ⁽¹⁾		—		—		(10	)		—		(33	)
Numerator for adjusted earnings per share – basic and diluted	$	19,244	$	18,139	$	20,269		$	55,456	$	58,877

Denominator:
Weighted average common shares outstanding		31,559,366		31,579,457		31,829,250			31,600,442		31,598,650
Dilutive effect of outstanding restricted stock units		118,180		87,354		137,187			115,266		102,574
Weighted average common shares outstanding, including all dilutive potential shares		31,677,546		31,666,811		31,966,437			31,715,708		31,701,224

Earnings per share – Basic	$	0.58	$	0.57	$	0.62		$	1.63	$	1.50
Earnings per share – Diluted	$	0.57	$	0.57	$	0.62		$	1.62	$	1.49

Adjusted earnings per share – Basic	$	0.61	$	0.57	$	0.64		$	1.75	$	1.86
Adjusted earnings per share – Diluted	$	0.61	$	0.57	$	0.63		$	1.75	$	1.86

(1) The Company previously granted restricted stock units that contain non-forfeitable rights to dividend equivalents, which were considered participating securities. Prior to 2024, these restricted stock units were included in the calculation of basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.

Reconciliation of Non-GAAP Financial Measures – Net Interest Income (Tax-equivalent Basis) and Net Interest Margin (Tax-equivalent Basis)
	Three Months Ended									Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023

Net interest income (tax-equivalent basis)
Net interest income	$	47,733		$	47,028		$	48,279		$	141,449		$	143,988
Tax-equivalent adjustment ⁽¹⁾		552			553			675			1,680			2,092
Net interest income (tax-equivalent basis) ⁽¹⁾	$	48,285		$	47,581		$	48,954		$	143,129		$	146,080

Net interest margin (tax-equivalent basis)
Net interest margin *		3.98	%		3.95	%		4.07	%		3.96	%		4.14	%
Tax-equivalent adjustment * ⁽¹⁾		0.05			0.05			0.06			0.05			0.06
Net interest margin (tax-equivalent basis) * ⁽¹⁾		4.03	%		4.00	%		4.13	%		4.01	%		4.20	%

Average interest-earning assets	$	4,769,471		$	4,785,558		$	4,708,331		$	4,773,478		$	4,649,993

* Annualized measure.
(1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

Reconciliation of Non-GAAP Financial Measures – Efficiency Ratio (Tax-equivalent Basis)
	Three Months Ended									Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023

Efficiency ratio (tax-equivalent basis)
Total noninterest expense	$	31,322		$	30,509		$	30,671		$	93,099		$	100,577
Less: amortization of intangible assets		710			710			720			2,130			1,950
Noninterest expense excluding amortization of intangible assets	$	30,612		$	29,799		$	29,951		$	90,969		$	98,627

Net interest income	$	47,733		$	47,028		$	48,279		$	141,449		$	143,988
Total noninterest income		8,705			9,610			9,490			23,941			26,841
Operating revenue		56,438			56,638			57,769			165,390			170,829
Tax-equivalent adjustment ⁽¹⁾		552			553			675			1,680			2,092
Operating revenue (tax-equivalent basis) ⁽¹⁾	$	56,990		$	57,191		$	58,444		$	167,070		$	172,921

Efficiency ratio		54.24	%		52.61	%		51.85	%		55.00	%		57.73	%
Efficiency ratio (tax-equivalent basis) ⁽¹⁾		53.71			52.10			51.25			54.45			57.04

(1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

Reconciliation of Non-GAAP Financial Measures – Ratio of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share
(dollars in thousands, except per share data)	September 30, 2024			June 30, 2024			September 30, 2023

Tangible Common Equity
Total stockholders’ equity	$	537,662		$	509,469		$	456,251
Less: Goodwill		59,820			59,820			59,820
Less: Intangible assets, net		18,552			19,262			21,402
Tangible common equity	$	459,290		$	430,387		$	375,029

Tangible Assets
Total assets	$	4,990,728		$	5,006,199		$	4,991,768
Less: Goodwill		59,820			59,820			59,820
Less: Intangible assets, net		18,552			19,262			21,402
Tangible assets	$	4,912,356		$	4,927,117		$	4,910,546

Total stockholders’ equity to total assets		10.77	%		10.18	%		9.14	%
Tangible common equity to tangible assets		9.35			8.74			7.64

Shares of common stock outstanding		31,559,366			31,559,366			31,774,140

Book value per share	$	17.04		$	16.14		$	14.36
Tangible book value per share		14.55			13.64			11.80

Reconciliation of Non-GAAP Financial Measures – Return on Average Tangible Common Equity, Adjusted Return on Average Stockholders’ Equity and Adjusted Return on Average Tangible Common Equity

	Three Months Ended									Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023				2024			2023

Average Tangible Common Equity
Total stockholders’ equity	$	523,745		$	501,837		$	459,601		$	506,582		$	445,576
Less: Goodwill		59,820			59,820			59,875			59,820			56,406
Less: Intangible assets, net		18,892			19,605			21,793			19,607			20,005
Average tangible common equity	$	445,033		$	422,412		$	377,933		$	427,155		$	369,165

Net income	$	18,180		$	18,070		$	19,715		$	51,508		$	47,396
Adjusted net income		19,244			18,139			20,279			55,456			58,910

Return on average stockholders’ equity *		13.81	%		14.48	%		17.02	%		13.58	%		14.22	%
Return on average tangible common equity *		16.25			17.21			20.70			16.11			17.17

Adjusted return on average stockholders’ equity *		14.62	%		14.54	%		17.51	%		14.62	%		17.68	%
Adjusted return on average tangible common equity *		17.20			17.27			21.29			17.34			21.34

* Annualized measure.

The MIL Network –

January 24, 2025

MIL-OSI: Preferred Bank Reports Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

LOS ANGELES, Oct. 21, 2024 (GLOBE NEWSWIRE) — Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2024. Preferred Bank (“the Bank”) reported net income of $33.4 million or $2.46 per diluted share for the third quarter of 2024. This represents a slight decrease in net income of $209,000 from the prior quarter and down by $4.8 million from the same quarter last year. The decrease in net income from the prior year was due to a decrease in net interest income of $4.1 million due to higher deposit costs as well as an increase in noninterest expense of $3.1 million. These were partially offset by lower provision for credit losses and an increase in noninterest income. The decrease from the prior quarter was due to an increase in noninterest expense of $2.4 million, an increase in the provision for credit losses of $700,000 partially offset by an increase in net interest income of $2.7 million. Preferred Bank continues to deliver top-of-peer group profitability metrics and long term shareholder returns.

Highlights for the Quarter:

Return on average assets was 1.95%
Return on beginning equity of 18.37%
Net interest margin (NIM) expanded to 4.10%
Total loans increased by $143 million or 2.6% for the quarter
Efficiency ratio was 30.6%

Li Yu, Chairman and CEO, commented, “I am pleased to report our third quarter 2024 net income was $33.4 million or $2.46 a share. Highlights of the quarter include the successful reduction of $21.2 million in non-performing loans, with no charge-offs. Interest recovery related to this was $800,000. Criticized loans, however, have increased but we believe it may be temporary in nature. Separately, the OREO property is currently in escrow, scheduled to close later this month. The valuation allowance we recorded of $1.7 million is included in the quarter’s non-interest expense.

Loan demand was strong this quarter. We had a net increase of $143 million, or 2.6% on a linked quarter basis. The September’s rate cut seems to have spurred borrower interest in general. Deposits for the quarter had a very small decrease, as we have been careful in monitoring our deposit costs.

At September 30, 2024, Preferred Bank’s loan portfolio was 26% fixed rate loans and 74% floating rate loans with floor rates for most of them. We believe it is well-balanced with the sensitivity of our deposits. However, the time certificates of deposits do have a cost adjustment pattern of slower reduction in the beginning but increasing gradually.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $68.8 million for the third quarter of 2024. This was a decrease from the $73.0 million recorded in the same quarter last year and an increase over the $66.1 million posted in the second quarter of 2024. A higher cost of deposits was to blame for the decrease in net interest income versus the prior year and a curing of a nonaccrual loan in the third quarter of 2024 was the reason for the increase in net interest income over the second quarter of 2024. A loan that was placed into nonaccrual status in the second quarter of 2024 was paid down significantly and the interest was brought current in the third quarter of 2024. This interest recovery of $800,000 helped to increase the Bank’s net interest margin to 4.10% for the quarter from 3.96% in the prior quarter. This compares to a margin of 4.39% one year ago. Also very importantly, the Bank’s total interest expense decreased for the first time since the first quarter of 2022. This was the result of the Bank’s efforts to replace higher cost brokered MMDA accounts with traditional brokered CD’s which carry a lower coupon. This is why, during this quarter, there is a fairly sizeable decrease in money market accounts and a corresponding increase in certificates of deposit.

Noninterest Income. For the third quarter of 2024, noninterest income was $3.5 million compared with $3.0 million for the same quarter last year and compared to $3.4 million for the second quarter of 2024. The increase over the prior quarter was primarily due to letter of credit (LC) fees which increased by $210,000 and other income partially offset by a decrease in gains on sales of SBA loans of $263,000. In comparing to the same quarter last year; LC fee income was up by $547,000 partially offset by a decrease in service charges of $192,000.

Noninterest Expense. Total noninterest expense was $22.1 million for the third quarter of 2024 compared to $19.7 million for the second quarter of 2024 and compared to the $19.0 million recorded in the same period last year. The primary reason for the increase from the prior year and over the prior quarter was the $1.7 million valuation allowance recorded this quarter on the Bank’s other real estate owned (OREO) property. In comparing to the prior quarter; personnel expense increased by $581,000 and occupancy expense increased by $167,000. This was partially offset by a decrease in promotion expense of $162,000. In comparing to same quarter last year; personnel expense was up by $517,000, occupancy expense was up by $320,000 and professional services was up by $393,000. The increase in professional services expense was due to increased legal costs which were associated with a number of nonperforming loans. For the quarter ended September 30, 2024, the Bank’s efficiency ratio was 30.6%, higher than the 28.3% posted last quarter and higher than the 25.04% posted this quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $13.6 million for the third quarter of 2024. This represents an effective tax rate (“ETR”) of 29.0% which is identical to the ETR for last quarter and up from the 28.5% ETR recorded in the same period last year. The Bank’s ETR will fluctuate slightly from quarter to quarter within a fairly small range due to the timing of taxable events throughout the year.

Balance Sheet Summary

Total gross loans at September 30, 2024 were $5.57 billion, an increase of $298.1 million from the total of $5.27 billion as of December 31, 2023. Total deposits decreased during the quarter by $11 million but still increased year-to-date to $5.87 billion, up $158.4 million from the $5.71 billion as of December 31, 2023. Total assets were $6.87 billion, an increase of $213.3 million over the total of $6.66 billion as of December 31, 2023.

Asset Quality

Non-accrual loans as of September 30, 2024, was $19.4 million, a decrease of $21.2 million from $40.6 million on June 30, 2024. There were no charge-offs related to the reduction. Interest recoveries were $800,000 for this quarter

The increase in total criticized loans of $161.2 for the quarter was largely due to the downgrade of a relationship with seven real estate related loans. These seven loans totaling $182.1 were secured by retail or multifamily properties that have late payment irregularities. At September 30, 2024, four of the seven loans totaling $86.5 million have been brought current and are expected to be out of criticized status in the fourth quarter. The three loans that have not been brought to current have a combined weighted average LTV of 64% and DCR of 0.98. All these loans have adequate guarantor support. Combined amount outstanding for these three loans is $95.6 million.

Allowance for Credit Losses

The provision for credit losses for the third quarter of 2024 was $3.2 million compared to $2.5 million last quarter and compared to $3.5 million in the same quarter last year. The Bank’s allowance coverage ratio increased to 1.36% of loans as compared to 1.34% in the prior quarter.

Capitalization

As of September 30, 2024, the Bank’s leverage ratio was 11.28%, the common equity tier 1 capital ratio was 11.66% and the total capital ratio stood at 15.06%. As of December 31, 2023, the Bank’s leverage ratio was 10.85%, the common equity tier 1 ratio was 11.57% and the total capital ratio was 15.18%.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2024 financial results will be held this afternoon, October 21, 2024 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank’s website at http://www.preferredbank.com.

Preferred Bank’s Chairman and CEO Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu will discuss Preferred Bank’s financial results, business highlights and outlook. After the live webcast, a replay will be available at the Investor Relations section of Preferred Bank’s website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through November 4, 2024; the passcode is 7955778.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)), one branch in Flushing, New York and a branch office in the Houston, Texas suburb of Sugar Land. In addition, the Bank also operates a loan production office in Sunnyvale, California. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy
shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank’s results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2023 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at http://www.preferredbank.com.

AT THE COMPANY: Edward J. Czajka Executive Vice President Chief Financial Officer (213) 891-1188	AT FINANCIAL PROFILES: Jeffrey Haas General Information (310) 622-8240 PFBC@finprofiles.com

Financial Tables to Follow

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)


				For the Quarter Ended
				September 30,		June 30,		September 30,
					2024		2024		2023
Interest income:
	Loans, including fees			$	114,112	$	109,451	$	106,695
	Investment securities				15,032		17,552		18,556
	Fed funds sold				280		291		278
		Total interest income			129,424		127,294		125,529

Interest expense:
	Interest-bearing demand				23,211		24,205		20,257
	Savings				84		79		67
	Time certificates				35,956		35,578		29,369
	FHLB borrowings				–		–		1,557
	Subordinated debt				1,325		1,325		1,325
		Total interest expense			60,576		61,187		52,575
		Net interest income			68,848		66,107		72,954
Provision for credit losses					3,200		2,500		3,500
		Net interest income after provision for
			credit losses		65,648		63,607		69,454

Noninterest income:
	Fees & service charges on deposit accounts				747		819		939
	Letters of credit fee income				1,959		1,749		1,412
	BOLI income				108		105		103
	Net gain on sale of loans				91		353		21
	Other income				554		378		497
		Total noninterest income			3,459		3,404		2,972

Noninterest expense:
	Salary and employee benefits				13,525		12,944		13,008
	Net occupancy expense				1,883		1,716		1,563
	Business development and promotion expense				241		403		193
	Professional services				1,816		1,832		1,423
	Office supplies and equipment expense				435		477		395
	Loss on sale of OREO, valuation allowance and related expense				1,915		29		140
	Other				2,274		2,296		2,287
		Total noninterest expense			22,089		19,697		19,009
		Income before provision for income taxes			47,018		47,314		53,417
Income tax expense					13,635		13,722		15,225
		Net income		$	33,383	$	33,592	$	38,192

Income per share available to common shareholders
		Basic		$	2.50	$	2.51	$	2.74
		Diluted		$	2.46	$	2.48	$	2.71

Weighted-average common shares outstanding
		Basic			13,327,848		13,362,522		13,925,994
		Diluted			13,544,273		13,548,400		14,105,915

Cash dividends per common share				$	0.70	$	0.70	$	0.55

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)


			For the Nine Months Ended
			September 30,		September 30,			Change
				2024		2023		%
Interest income:
	Loans, including fees		$	333,543	$	304,796		9.4
	Investment securities			48,841		47,454		2.9
	Fed funds sold			854		774		10.4
		Total interest income		383,238		353,024		8.6

Interest expense:
	Interest-bearing demand			69,706		53,701		29.8
	Savings			238		153		55.6
	Time certificates			105,864		71,399		48.3
	FHLB borrowings			–		3,819		-100.0	%
	Subordinated debt			3,975		3,975		0.0
		Total interest expense		179,783		133,046		35.1
		Net interest income		203,455		219,978		-7.5	%
Provision for credit losses				10,100		6,500		55.4
		Net interest income after provision for credit losses		193,355		213,478		-9.4	%

Noninterest income:
	Fees & service charges on deposit accounts			2,411		2,477		-2.7	%
	Letters of credit fee income			5,211		4,312		20.8	%
	BOLI income			318		307		3.3	%
	Net loss on called and sale of investment securities			–		(4,117	)	-100.0	%
	Net gain on sale of loans			547		547		-0.1	%
	Other income			1,441		1,481		-2.7	%
		Total noninterest income		9,928		5,007		98.3	%

Noninterest expense:
	Salary and employee benefits			40,369		39,256		2.8	%
	Net occupancy expense			5,310		4,513		17.7	%
	Business development and promotion expense			910		498		82.7	%
	Professional services			5,105		3,915		30.4	%
	Office supplies and equipment expense			1,385		1,197		15.7	%
	Loss on sale of OREO, valuation allowance and related expense			2,079		3,050		-31.8	%
	Other			6,656		6,332		5.1	%
		Total noninterest expense		61,814		58,761		5.2	%
		Income before provision for income taxes		141,469		159,724		-11.4	%
Income tax expense				41,028		45,523		-9.9	%
		Net income	$	100,441	$	114,201		-12.0	%

Income per share available to common shareholders
		Basic	$	7.50	$	8.01		-6.4	%
		Diluted	$	7.39	$	7.92		-6.7	%

Weighted-average common shares outstanding
		Basic		13,399,487		14,257,005		-6.0	%
		Diluted		13,587,820		14,418,939		-5.8	%

Dividends per share			$	2.10	$	1.65		27.3	%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)


			September 30,			December 31,
				2024			2023
			(Unaudited)			(Audited)
Assets
Cash and due from banks			$	782,394		$	890,852
Fed funds sold				22,600			20,000
	Cash and cash equivalents			804,994			910,852

Securities held-to-maturity, at amortized cost				20,311			21,171
Securities available-for-sale, at fair value				337,363			313,842

Loans held for sale, at lower of cost or fair value				225			360

Loans				5,571,579			5,273,498
	Less allowance for credit losses			(76,051	)		(78,355	)
	Less amortized deferred loan fees, net			(10,414	)		(11,079	)
	Loans, net			5,485,114			5,184,064

Other real estate owned and repossessed assets				15,082			16,716
Customers’ liability on acceptances				–			315
Bank furniture and fixtures, net				9,195			9,694
Bank-owned life insurance				10,364			10,632
Accrued interest receivable				35,562			33,892
Investment in affordable housing partnerships				58,009			65,276
Federal Home Loan Bank stock, at cost				15,000			15,000
Deferred tax assets				46,209			48,991
Income tax receivable				1,013			2,391
Operating lease right-of-use assets				30,489			22,050
Other assets				3,414			4,030
	Total assets		$	6,872,344		$	6,659,276

Liabilities and Shareholders’ Equity
Deposits:
	Noninterest bearing demand deposits		$	682,859		$	786,995
	Interest bearing deposits:			1,994,288			2,075,156
		Savings		29,793			29,167
		Time certificates of $250,000 or more		1,478,500			1,317,862
		Other time certificates		1,682,324			1,500,162
		Total deposits		5,867,764			5,709,342

Acceptances outstanding				–			315
Subordinated debt issuance, net				148,410			148,232
Commitments to fund investment in affordable housing partnerships				23,617			30,824
Operating lease liabilities				26,730			19,766
Accrued interest payable				16,001			16,124
Other liabilities				39,705			39,568
	Total liabilities			6,122,227			5,964,171

Shareholders’ equity				750,117			695,105
	Total liabilities and shareholders’ equity		$	6,872,344		$	6,659,276

Book value per common share			$	56.54		$	50.54
Number of common shares outstanding				13,267,852			13,753,246

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



			For the Quarter Ended

			September 30,			June 30,			March 31,			December 31,			September 30,
				2024			2024			2024			2023			2023
Unaudited historical quarterly operations data:
	Interest income		$	129,424		$	127,294		$	126,520		$	124,964		$	125,529
	Interest expense			60,576			61,187			58,020			55,568			52,575
		Interest income before provision for credit losses		68,848			66,107			68,500			69,396			72,954
	Provision for credit losses			3,200			2,500			4,400			3,500			3,500
	Noninterest income			3,459			3,404			3,065			2,106			2,972
	Noninterest expense			22,089			19,697			20,028			17,873			19,009
	Income tax expense			13,635			13,722			13,671			14,290			15,225
		Net income	$	33,383		$	33,592		$	33,466		$	35,839		$	38,192

	Earnings per share
		Basic	$	2.50		$	2.51		$	2.48		$	2.63		$	2.74
		Diluted	$	2.46		$	2.48		$	2.44		$	2.60		$	2.71

Ratios for the period:
	Return on average assets			1.95	%		1.97	%		2.00	%		2.15	%		2.25	%
	Return on beginning equity			18.37	%		19.44	%		19.36	%		21.21	%		22.66	%
	Net interest margin (Fully-taxable equivalent)			4.10	%		3.96	%		4.19	%		4.24	%		4.39	%
	Noninterest expense to average assets			1.29	%		1.15	%		1.20	%		1.07	%		1.12	%
	Efficiency ratio			30.55	%		28.34	%		27.99	%		25.00	%		25.04	%
	Net charge-offs (recoveries) to average loans (annualized)			-0.00	%		0.68	%		0.26	%		-0.00	%		0.01	%

Ratios as of period end:
	Tangible common equity ratio			10.92	%		10.55	%		10.35	%		10.43	%		10.10	%
	Tier 1 leverage capital ratio			11.28	%		10.89	%		10.80	%		10.85	%		10.46	%
	Common equity tier 1 risk-based capital ratio			11.66	%		11.52	%		11.50	%		11.57	%		11.63	%
	Tier 1 risk-based capital ratio			11.66	%		11.52	%		11.50	%		11.57	%		11.63	%
	Total risk-based capital ratio			15.06	%		14.93	%		15.08	%		15.18	%		15.32	%
	Allowances for credit losses to loans at end of period			1.36	%		1.34	%		1.49	%		1.49	%		1.46	%
	Allowance for credit losses to non-performing loans		3.92x			1.79x			4.33x			2.73x			3.86x

Average balances:
	Total securities		$	356,590		$	353,357		$	348,961		$	349,863		$	368,968
	Total loans			5,458,613			5,320,360			5,263,562			5,126,918			5,086,241
	Total earning assets			6,684,766			6,728,498			6,585,853			6,499,469			6,597,557
	Total assets			6,817,979			6,863,829			6,718,018			6,627,349			6,719,859
	Total time certificate of deposits			2,874,985			2,884,259			2,852,860			2,767,385			2,680,854
	Total interest bearing deposits			5,124,245			5,203,034			5,004,834			4,906,947			4,800,227
	Total deposits			5,828,227			5,901,976			5,761,488			5,689,713			5,654,350
	Total interest bearing liabilities			5,272,617			5,351,347			5,153,089			5,055,143			5,069,014
	Total equity			747,222			715,190			704,996			683,141			678,020

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



			For the Nine Months Ended
			September 30,			September 30,
				2024			2023

	Interest income		$	383,238		$	353,024
	Interest expense			179,783			133,046
		Interest income before provision for credit losses		203,455			219,978
	Provision for credit losses			10,100			6,500
	Noninterest income			9,928			5,007
	Noninterest expense			61,814			58,761
	Income tax expense			41,028			45,523
		Net income	$	100,441		$	114,201

	Earnings per share
		Basic	$	7.50		$	8.01
		Diluted	$	7.39		$	7.92

Ratios for the period:
	Return on average assets			1.97	%		2.33	%
	Return on beginning equity			19.30	%		24.22	%
	Net interest margin (Fully-taxable equivalent)			4.08	%		4.58	%
	Noninterest expense to average assets			1.21	%		1.20	%
	Efficiency ratio			28.97	%		26.12	%
	Net charge-off (recoveries) to average loans			0.31	%		0.00	%

Average balances:
	Total securities		$	352,982		$	402,971
	Total loans			5,347,918			5,048,452
	Total earning assets			6,666,439			5,047,971
	Total assets			6,800,008			6,436,889
	Total time certificate of deposits			2,870,717			6,560,955
	Total interest bearing deposits			5,110,755			2,504,426
	Total deposits			5,830,555			4,602,039
	Total interest bearing liabilities			5,259,068			5,539,223
	Total equity			722,560			4,851,214

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



				As of

				September 30,			June 30,			March 31,			December 31,			September 30,
					2024			2024			2024			2023			2023
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	804,994		$	917,677		$	936,600		$	910,852		$	1,021,108
	Securities held-to-maturity, at amortized cost				20,311			20,605			20,904			21,171			21,474
	Securities available-for-sale, at fair value				337,363			331,909			333,411			313,842			335,608
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	753,453		$	732,251		$	724,101		$	688,058		$	663,021
			Real estate—Commercial		2,882,506			2,833,430			2,777,608			2,760,761			2,688,148
			Total Real Estate – Mortgage		3,635,959			3,565,681			3,501,709			3,448,819			3,351,169
		Real estate – Construction:
			R/E Construction — Residential		274,214			238,062			236,596			246,201			226,482
			R/E Construction — Commercial		290,308			247,582			213,727			179,775			164,666
			Total real estate construction loans		564,522			485,644			450,323			425,976			391,148
		Commercial and industrial			1,365,550			1,369,617			1,369,529			1,394,871			1,377,675
		SBA			5,649			5,463			3,914			3,469			2,424
		Consumer and others			124			118			379			363			285
			Gross loans		5,571,804			5,428,600			5,325,854			5,273,498			5,128,242
	Allowance for credit losses on loans				(76,051	)		(72,848	)		(79,311	)		(78,355	)		(74,849	)
	Net deferred loan fees				(10,414	)		(10,502	)		(10,460	)		(11,079	)		(10,240	)
		Net loans, excluding loans held for sale		$	5,485,339		$	5,345,250		$	5,236,083		$	5,184,064		$	5,043,153
	Loans held for sale			$	225		$	955		$	605		$	360		$	–
		Net loans		$	5,485,564		$	5,346,205		$	5,236,688		$	5,184,424		$	5,043,153

	Other real estate owned and repossessed assets			$	15,082		$	16,716		$	16,716		$	16,716		$	16,716
	Investment in affordable housing partnerships				58,009			60,432			62,854			65,276			54,679
	Federal Home Loan Bank stock, at cost				15,000			15,000			15,000			15,000			15,000
	Other assets				136,021			138,036			134,040			131,995			124,793
		Total assets		$	6,872,344		$	6,846,580		$	6,756,213		$	6,659,276		$	6,632,530

Liabilities:
	Deposits:
		Demand		$	682,859		$	675,767		$	709,767		$	786,995		$	838,300
		Interest bearing demand			1,994,288			2,326,214			2,159,948			2,075,156			2,091,384
		Savings			29,793			28,251			29,261			29,167			30,427
		Time certificates of $250,000 or more			1,478,500			1,406,149			1,349,927			1,317,862			1,283,461
		Other time certificates			1,682,324			1,442,381			1,552,805			1,500,162			1,439,699
		Total deposits		$	5,867,764		$	5,878,762		$	5,801,708		$	5,709,342		$	5,683,271

	Acceptances outstanding			$	–		$	–		$	–		$	315		$	103
	Subordinated debt issuance, net				148,410			148,351			148,292			148,232			148,173
	Commitments to fund investment in affordable housing partnerships				23,617			27,946			29,647			30,824			20,824
	Other liabilities				82,436			68,394			77,008			75,458			109,651
		Total liabilities		$	6,122,227		$	6,123,453		$	6,056,655		$	5,964,171		$	5,962,022

Equity:
	Net common stock, no par value			$	109,928		$	113,509		$	115,915		$	134,534		$	143,584
	Retained earnings				664,808			640,675			616,417			592,325			566,027
	Accumulated other comprehensive income				(24,619	)		(31,057	)		(32,774	)		(31,754	)		(39,103	)
		Total shareholders’ equity		$	750,117		$	723,127		$	699,558		$	695,105		$	670,508
		Total liabilities and shareholders’ equity		$	6,872,344		$	6,846,580		$	6,756,213		$	6,659,276		$	6,632,530

PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates
(Unaudited)


			Three months ended September 30,							Three months ended June 30,							Three months ended September 30,
				2024							2024							2023
						Interest		Average					Interest		Average					Interest		Average
			Average			Income or		Yield/		Average			Income or		Yield/		Average			Income or		Yield/
			Balance			Expense		Rate		Balance			Expense		Rate		Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest earning assets:
	Loans ^(1,2)		$	5,459,842		$	114,112	8.31	%	$	5,324,410		$	109,451	8.27	%	$	5,086,302		$	106,695	8.32	%
	Investment securities ⁽³⁾			356,590			3,610	4.03	%		353,357			3,652	4.16	%		368,968			3,422	3.68	%
	Federal funds sold			20,164			280	5.52	%		20,866			291	5.61	%		20,111			278	5.48	%
	Other earning assets			848,170			11,521	5.40	%		1,029,865			13,999	5.47	%		1,122,176			15,235	5.39	%
		Total interest earning assets		6,684,766			129,523	7.71	%		6,728,498			127,393	7.61	%		6,597,557			125,630	7.55	%
	Deferred loan fees, net			(10,248	)						(10,459	)						(10,071	)
	Allowance for credit losses on loans			(72,899	)						(79,119	)						(71,503	)
Noninterest earning assets:
	Cash and due from banks			10,826							10,626							12,101
	Bank furniture and fixtures			9,419							9,787							8,814
	Right of use assets			22,496							22,886							21,491
	Other assets			173,619							181,610							161,470
		Total assets	$	6,817,979						$	6,863,829						$	6,719,859

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,249,260		$	23,295	4.12	%	$	2,318,775		$	24,284	4.21	%	$	2,119,373		$	20,324	3.80	%
		TCD $250K or more		1,412,073			17,866	5.03	%		1,379,116			17,295	5.04	%		1,251,397			14,085	4.47	%
		Other time certificates		1,462,912			18,090	4.92	%		1,505,143			18,283	4.89	%		1,429,457			15,284	4.24	%
		Total interest bearing deposits		5,124,245			59,251	4.60	%		5,203,034			59,862	4.63	%		4,800,227			49,693	4.11	%
Advance from Federal Home Loan Bank				–			–	0.00	%		–			–	0.00	%		120,652			1,557	5.12	%
Subordinated debt, net				148,372			1,325	3.55	%		148,313			1,325	3.59	%		148,135			1,325	3.55	%
		Total interest bearing liabilities		5,272,617			60,576	4.57	%		5,351,347			61,187	4.60	%		5,069,014			52,575	4.11	%
Noninterest bearing liabilities:
	Demand deposits			703,982							698,942							854,123
	Lease liability			18,882							19,828							19,759
	Other liabilities			75,276							78,522							98,943
		Total liabilities		6,070,757							6,148,639							6,041,839
Shareholders’ equity				747,222							715,190							678,020
		Total liabilities and shareholders’ equity	$	6,817,979						$	6,863,829						$	6,719,859
Net interest income						$	68,947						$	66,206						$	73,055
Net interest spread								3.14	%						3.02	%						3.44	%
Net interest margin								4.10	%						3.96	%						4.39	%

Cost of Deposits:
	Noninterest bearing demand deposits		$	703,982						$	698,942						$	854,123
	Interest bearing deposits			5,124,245			59,251	4.60	%		5,203,034			59,862	4.63	%		4,800,227			49,693	4.11	%
		Total Deposits	$	5,828,227		$	59,251	4.04	%	$	5,901,976		$	59,862	4.08	%	$	5,654,350		$	49,693	3.49	%

⁽¹⁾	Includes non-accrual loans and loans held for sale
⁽²⁾	Net loan fee income of $991,000, $1.1 million and $1.3 million for the quarter ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively, are included in the yield computations
⁽³⁾	Yields on securities have been adjusted to a tax-equivalent basis

PREFERRED BANK
Year-to-Date Average Balances, Yield and Rates
(Unaudited)


			Nine Months ended September 30,
				2024							2023
						Interest		Average					Interest		Average
			Average			Income or		Yield/		Average			Income or		Yield/
			Balance			Expense		Rate		Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest earning assets:
	Loans ^(1,2)		$	5,350,465		$	333,543	8.33	%	$	5,048,452		$	304,796	8.07	%
	Investment securities ⁽³⁾			352,982			10,691	4.05	%		402,971			11,125	3.69	%
	Federal funds sold			20,472			854	5.57	%		20,111			774	5.14	%
	Other earning assets			942,520			38,448	5.45	%		965,355			36,633	5.07	%
		Total interest earning assets		6,666,439			383,536	7.68	%		6,436,889			353,328	7.34	%
	Deferred loan fees, net			(10,466	)						(10,142	)
	Allowance for credit losses on loans			(76,775	)						(69,653	)
Noninterest earning assets:
	Cash and due from banks			10,693							11,912
	Bank furniture and fixtures			9,762							8,931
	Right of use assets			22,462							21,780
	Other assets			177,893							161,238
		Total assets	$	6,800,008						$	6,560,955

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand/ savings	$	2,240,038		$	69,944	4.17	%	$	2,097,613		$	53,854	3.43	%
		TCD $250K or more		1,377,621			51,662	5.01	%		1,258,870			37,600	3.99	%
		Other time certificates		1,493,096			54,202	4.85	%		1,245,556			33,798	3.63	%
		Total interest bearing deposits		5,110,755			175,808	4.59	%		4,602,039			125,252	3.64	%
Advance from Federal Home Loan Bank				–			–	0.00	%		101,099			3,819	5.05	%
Subordinated debt, net				148,313			3,975	3.58	%		148,076			3,975	3.59	%
		Total interest bearing liabilities		5,259,068			179,783	4.57	%		4,851,214			133,046	3.67	%
Noninterest bearing liabilities:
	Demand deposits			719,800							937,184
	Lease liability			19,401							20,482
	Other liabilities			79,179							83,213
		Total liabilities		6,077,448							5,892,093
Shareholders’ equity				722,560							668,862
		Total liabilities and shareholders’ equity	$	6,800,008						$	6,560,955
Net interest income						$	203,753						$	220,282
Net interest spread								3.12	%						3.67	%
Net interest margin								4.08	%						4.58	%

Cost of Deposits:
	Noninterest bearing demand deposits		$	719,800						$	937,184
	Interest bearing deposits			5,110,755			175,808	4.59	%		4,602,039			125,252	3.64	%
		Total Deposits	$	5,830,555		$	175,808	4.03	%	$	5,539,223		$	125,252	3.02	%

⁽¹⁾	Includes non-accrual loans and loans held for sale
⁽²⁾	Net loan fee income of $3.4 million and $3.2 million for the year ended September 30, 2024 and 2023, respectively, are included in the yield computations
⁽³⁾	Yields on securities have been adjusted to a tax-equivalent basis

PREFERRED BANK
Loan and Credit Quality Information

Allowance For Credit Losses History
			Nine Months Ended			Year ended
			September 30, 2024			December 31, 2023
			(Dollars in 000’s)
Allowance For Credit Losses
Balance at Beginning of Period			$	78,355		$	68,472
	Charge-Offs
		Commercial & Industrial		12,409			124
		Mini-perm Real Estate		–			–
		Total Charge-Offs		12,409			124

	Recoveries
		Commercial & Industrial		5			7
		Mini-perm Real Estate		–			–
		Total Recoveries		5			7

	Net Charge-Offs			12,404			117
	Provision for Credit Losses:			10,100			10,000
Balance at End of Period			$	76,051		$	78,355

Average Loans Held for Investment			$	5,347,918		$	5,067,870
Loans Held for Investment at End of Period			$	5,571,579		$	5,273,498
Net Charge-Offs to Average Loans				0.31	%		0.00	%
Allowances for Credit Losses to Loans at End of Period				1.36	%		1.49	%

The MIL Network –

January 24, 2025

MIL-OSI: Roper Technologies announces third quarter financial results

Source: GlobeNewswire (MIL-OSI)

SARASOTA, Fla., Oct. 23, 2024 (GLOBE NEWSWIRE) — Roper Technologies, Inc. (Nasdaq: ROP) reported financial results for the third quarter ended September 30, 2024. The results in this press release are presented on a continuing operations basis.

Third quarter 2024 highlights

Revenue increased 13% to $1.76 billion; organic revenue increased 4%
GAAP DEPS increased 6% to $3.40; adjusted DEPS increased 7% to $4.62
GAAP net earnings increased 6% to $368 million; adjusted net earnings increased 7% to $499 million
Adjusted EBITDA increased 10% to $717 million
Operating cash flow was $755 million; adjusted operating cash flow increased 17%

“Our portfolio of market-leading technology businesses delivered another solid quarter, highlighted by 13% total revenue growth, 10% EBITDA growth, and 15% free cash flow growth,” said Neil Hunn, Roper Technologies’ President and CEO. “We are, again, increasing our full year guidance to the high end of the range, supported by our third quarter results, the continued expansion of our recurring revenue base, and improving demand for our businesses’ mission critical solutions.”

“During the third quarter, we completed the acquisition of Transact Campus, which has been combined with our CBORD business. This acquisition adds another high-quality vertical software business to our portfolio with highly compelling value creation opportunities for our shareholders. We remain well positioned to execute our disciplined and process-driven capital deployment strategy, with significant M&A firepower and a robust pipeline of acquisition opportunities,” concluded Mr. Hunn.

Updating 2024 guidance

Roper now expects full year 2024 adjusted DEPS of $18.21 – $18.25, compared to previous guidance of $18.10 – $18.25. The Company increased its full year total revenue growth outlook to 13%+ and continues to expect organic revenue growth of approximately 6%.

For the fourth quarter of 2024, the Company expects adjusted DEPS of $4.70 – $4.74.

The Company’s guidance excludes the impact of unannounced future acquisitions or divestitures.

Conference call to be held at 8:00 AM (ET) today

A conference call to discuss these results has been scheduled for 8:00 AM ET on Wednesday, October 23, 2024. The call can be accessed via webcast or by dialing +1 800-836-8184 (US/Canada) or +1 646-357-8785, using conference call ID 50829. Webcast information and conference call materials will be made available in the Investors section of Roper’s website (http://www.ropertech.com) prior to the start of the call. The webcast can also be accessed directly by using the following URL https://event.webcast. Telephonic replays will be available for up to two weeks and can be accessed by dialing +1 646-517-4150 with access code 50829#.

Use of non-GAAP financial information

The Company supplements its consolidated financial statements presented on a GAAP basis with certain non-GAAP financial information to provide investors with greater insight, increase transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making. Reconciliation of non-GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial schedules or tables. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Minority interests

Following the sale of a majority stake in its industrial businesses to CD&R, Roper holds a minority interest in Indicor. The fair value of Roper’s equity investment in Indicor is updated on a quarterly basis and reported as “equity investments gain, net.” Roper also holds a minority interest in Certinia, a leading provider of professional services automation software. The Company’s investment is accounted for under the equity method and its proportionate share of earnings or loss associated with this investment is reported as “equity investments gain, net.” Roper makes non-GAAP adjustments for the impacts associated with these investments.

Table 1: Revenue and adjusted EBITDA reconciliation ($M) (from continuing operations)
	Q3 2023			Q3 2024			V %
GAAP revenue	$	1,563		$	1,765		13	%

Components of revenue growth
Organic							4	%
Acquisitions							9	%
Foreign exchange							—	%
Revenue growth							13	%

Adjusted EBITDA reconciliation
GAAP net earnings	$	346		$	368
Taxes		97			99
Interest expense		42			68
Depreciation		9			9
Amortization		182			197
EBITDA	$	676		$	741		10	%

Restructuring-related expenses associated with the Syntellis (’23) and Transact (’24) acquisitions		9			9
Transaction-related expenses for completed acquisitions		5			5
Financial impacts associated with the minority investments in Indicor & Certinia ^A		(34	)		(37	)
Gain on sale of non-operating assets		(3	)		—
Adjusted EBITDA	$	652		$	717		10	%
% of revenue		41.7	%		40.7	%	(100 bps)

Table 2: Adjusted net earnings reconciliation ($M) (from continuing operations)
	Q3 2023			Q3 2024			V %
GAAP net earnings	$	346		$	368		6	%
Restructuring-related expenses associated with the Syntellis (’23) and Transact (’24) acquisitions		7			7
Transaction-related expenses for completed acquisitions		4			4
Financial impacts associated with the minority investments in Indicor & Certinia ^A		(28	)		(29	)
Gain on sale of non-operating assets		(3	)		—
Amortization of acquisition-related intangible assets ^B		140			149
Adjusted net earnings	$	465		$	499		7	%

Table 3: Adjusted DEPS reconciliation (from continuing operations)
	Q3 2023			Q3 2024			V %
GAAP DEPS	$	3.21		$	3.40		6	%
Restructuring-related expenses associated with the Syntellis (’23) and Transact (’24) acquisitions		0.06			0.07
Transaction-related expenses for completed acquisitions		0.03			0.03
Financial impacts associated with the minority investments in Indicor & Certinia ^A		(0.26	)		(0.27	)
Gain on sale of non-operating assets		(0.02	)		—
Amortization of acquisition-related intangible assets ^B		1.30			1.38
Adjusted DEPS	$	4.32		$	4.62		7	%

Table 4: Adjusted cash flow reconciliation ($M) (from continuing operations)
	Q3 2023			Q3 2024			V %
Operating cash flow	$	631		$	755		20	%
Taxes paid in period related to divestiture		16			—
Adjusted operating cash flow	$	647		$	755		17	%
Capital expenditures		(13	)		(23	)
Capitalized software expenditures		(9	)		(13	)
Adjusted free cash flow	$	625		$	719		15	%

Table 5: Forecasted adjusted DEPS reconciliation (from continuing operations)
	Q4 2024				FY 2024
	Low end		High end		Low end		High end
GAAP DEPS ^C	$	3.29	$	3.33	$	12.64	$	12.68
Restructuring-related expenses associated with the Transact acquisition		—		—		0.07		0.07
Transaction-related expenses for completed acquisitions		—		—		0.05		0.05
Financial impacts associated with the minority investments in Indicor & Certinia ^A	TBD		TBD		TBD		TBD
Amortization of acquisition-related intangible assets ^B		1.41		1.41		5.45		5.45
Adjusted DEPS	$	4.70	$	4.74	$	18.21	$	18.25

Footnotes:

A.	Adjustments related to the financial impacts associated with the minority investments in Indicor & Certinia as shown below ($M, except per share data). Forecasted results do not include any potential impacts associated with our minority investments in Indicor or Certinia, as these potential impacts cannot be reasonably predicted. These impacts will be excluded from all non-GAAP results in future periods.

		Q3 2023A			Q3 2024A			Q4 2024E		FY 2024E
	Pretax	$	(34	)	$	(37	)	TBD		TBD
	After-tax	$	(28	)	$	(29	)	TBD		TBD
	Per share	$	(0.26	)	$	(0.27	)	TBD		TBD

B.	Actual results and forecast of estimated amortization of acquisition-related intangible assets as shown below ($M, except per share data). These adjustments are taxed at 21%.

		Q3 2023A			Q3 2024A			Q4 2024E		FY 2024E
	Pretax	$	177		$	189		$	193	$	745
	After-tax	$	140		$	149		$	153	$	588
	Per share	$	1.30		$	1.38		$	1.41	$	5.45

C.	Forecasted GAAP DEPS do not include any potential impacts associated with our minority investments in Indicor or Certinia. These impacts will be excluded from all non-GAAP results in future periods.

Note: Numbers may not foot due to rounding.

About Roper Technologies

Roper Technologies is a constituent of the Nasdaq 100, S&P 500, and Fortune 1000. Roper has a proven, long-term track record of compounding cash flow and shareholder value. The Company operates market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets. Roper utilizes a disciplined, analytical, and process-driven approach to redeploy its excess capital toward high-quality acquisitions. Additional information about Roper is available on the Company’s website at http://www.ropertech.com.

Contact information:
Investor Relations
941-556-2601
investor-relations@ropertech.com

The information provided in this press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements may include, among others, statements regarding operating results, the success of our internal operating plans, and the prospects for newly acquired businesses to be integrated and contribute to future growth, profit and cash flow expectations. Forward-looking statements may be indicated by words or phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “believes,” “intends” and similar words and phrases. These statements reflect management’s current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. Such risks and uncertainties include our ability to identify and complete acquisitions consistent with our business strategies, integrate acquisitions that have been completed, realize expected benefits and synergies from, and manage other risks associated with, acquired businesses, including obtaining any required regulatory approvals with respect thereto. We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions and the conditions of the specific markets in which we operate, including risks related to labor shortages and rising interest rates, changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, cybersecurity and data privacy risks, including litigation resulting therefrom, risks related to political instability, armed hostilities, incidents of terrorism, public health crises (such as the COVID-19 pandemic) or natural disasters, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, including as a result of the current inflationary environment and ongoing supply chain constraints, environmental compliance costs and liabilities, risks and cost associated with litigation, potential write-offs of our substantial intangible assets, and risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products. Important risks may be discussed in current and subsequent filings with the SEC. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Roper Technologies, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in millions)

	September 30, 2024			December 31, 2023
ASSETS:

Cash and cash equivalents	$	269.6		$	214.3
Accounts receivable, net		821.2			829.9
Inventories, net		129.0			118.6
Income taxes receivable		43.0			47.7
Unbilled receivables		130.3			106.4
Other current assets		199.2			164.5
Total current assets		1,592.3			1,481.4

Property, plant and equipment, net		132.8			119.6
Goodwill		19,267.2			17,118.8
Other intangible assets, net		9,212.7			8,212.1
Deferred taxes		35.9			32.2
Equity investments		878.6			795.7
Other assets		433.2			407.7
Total assets	$	31,552.7		$	28,167.5

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Accounts payable	$	155.8		$	143.0
Accrued compensation		248.5			250.0
Deferred revenue		1,671.0			1,583.8
Other accrued liabilities		468.4			446.5
Income taxes payable		47.0			40.4
Current portion of long-term debt, net		699.0			499.5
Total current liabilities		3,289.7			2,963.2

Long-term debt, net of current portion		7,677.6			5,830.6
Deferred taxes		1,649.9			1,513.1
Other liabilities		420.0			415.8
Total liabilities		13,037.2			10,722.7

Common stock		1.1			1.1
Additional paid-in capital		2,976.9			2,767.0
Retained earnings		15,661.4			14,816.3
Accumulated other comprehensive loss		(107.4	)		(122.8	)
Treasury stock		(16.5	)		(16.8	)
Total stockholders’ equity		18,515.5			17,444.8
Total liabilities and stockholders’ equity	$	31,552.7		$	28,167.5

Roper Technologies, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in millions, except per share data)

	Three months ended September 30,						Nine months ended September 30,
		2024			2023			2024			2023
Net revenues	$	1,764.6		$	1,563.4		$	5,162.1		$	4,564.3
Cost of sales		542.9			467.1			1,566.1			1,382.3
Gross profit		1,221.7			1,096.3			3,596.0			3,182.0

Selling, general and administrative expenses		725.1			650.2			2,123.9			1,899.6
Income from operations		496.6			446.1			1,472.1			1,282.4

Interest expense, net		67.7			42.4			188.4			114.6
Equity investments gain, net		(37.4	)		(33.9	)		(93.6	)		(98.7	)
Other (income) expense, net		(0.9	)		(5.0	)		0.9			0.1

Earnings before income taxes		467.2			442.6			1,376.4			1,266.4

Income taxes		99.3			97.0			289.4			275.5

Net earnings from continuing operations		367.9			345.6			1,087.0			990.9

Loss from discontinued operations, net of tax		—			(2.9	)		—			(4.1	)
Gain on disposition of discontinued operations, net of tax		—			4.5			—			8.4
Net earnings from discontinued operations		—			1.6			—			4.3

Net earnings	$	367.9		$	347.2		$	1,087.0		$	995.2

Net earnings per share from continuing operations:
Basic	$	3.43		$	3.23		$	10.15		$	9.30
Diluted	$	3.40		$	3.21		$	10.06		$	9.23

Net earnings per share from discontinued operations:
Basic	$	—		$	0.02		$	—		$	0.04
Diluted	$	—		$	0.02		$	—		$	0.04

Net earnings per share:
Basic	$	3.43		$	3.25		$	10.15		$	9.34
Diluted	$	3.40		$	3.23		$	10.06		$	9.27

Weighted average common shares outstanding:
Basic		107.2			106.7			107.1			106.5
Diluted		108.1			107.6			108.0			107.3

Roper Technologies, Inc.
Selected Segment Financial Data (unaudited)
(Amounts in millions; percentages of net revenues)

	Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
	Amount		%		Amount		%		Amount		%		Amount		%
Net revenues:
Application Software	$	984.4			$	803.4			$	2,811.4			$	2,335.1
Network Software		367.1				364.1				1,102.1				1,076.7
Technology Enabled Products		413.1				395.9				1,248.6				1,152.5
Total	$	1,764.6			$	1,563.4			$	5,162.1			$	4,564.3


Gross profit:
Application Software	$	672.8	68.3	%	$	557.7	69.4	%	$	1,939.6	69.0	%	$	1,609.2	68.9	%
Network Software		311.8	84.9	%		310.7	85.3	%		935.9	84.9	%		914.0	84.9	%
Technology Enabled Products		237.1	57.4	%		227.9	57.6	%		720.5	57.7	%		658.8	57.2	%
Total	$	1,221.7	69.2	%	$	1,096.3	70.1	%	$	3,596.0	69.7	%	$	3,182.0	69.7	%


*Operating profit:**
Application Software	$	259.8	26.4	%	$	206.9	25.8	%	$	750.5	26.7	%	$	601.3	25.8	%
Network Software		166.0	45.2	%		164.4	45.2	%		492.1	44.7	%		465.0	43.2	%
Technology Enabled Products		141.1	34.2	%		137.1	34.6	%		424.0	34.0	%		391.7	34.0	%
Total	$	566.9	32.1	%	$	508.4	32.5	%	$	1,666.6	32.3	%	$	1,458.0	31.9	%

* Segment operating profit is before unallocated corporate general and administrative expenses and enterprise-wide stock-based compensation. These expenses were $70.3 and $62.3 for the three months ended September 30, 2024 and 2023, respectively, and $194.5 and $175.6 for the nine months ended September 30, 2024 and 2023, respectively.

Roper Technologies, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in millions)
	Nine months ended September 30,
		2024			2023
Cash flows from operating activities:
Net earnings from continuing operations	$	1,087.0		$	990.9
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment		27.9			26.3
Amortization of intangible assets		573.8			532.8
Amortization of deferred financing costs		7.0			7.7
Non-cash stock compensation		112.9			99.2
Equity investments gain, net		(93.6	)		(98.7	)
Income tax provision		289.4			275.5
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable		82.8			25.8
Unbilled receivables		(17.1	)		(15.3	)
Inventories		(8.3	)		(11.2	)
Accounts payable		(7.2	)		12.1
Other accrued liabilities		(1.7	)		(72.0	)
Deferred revenue		24.5			18.6
Cash taxes paid for gain on disposal of business		—			(16.4	)
Cash income taxes paid, excluding tax associated with gain on disposal of business		(383.1	)		(335.6	)
Other, net		(23.3	)		(24.0	)
Cash provided by operating activities from continuing operations		1,671.0			1,415.7
Cash used in operating activities from discontinued operations		—			(2.4	)
Cash provided by operating activities		1,671.0			1,413.3

Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired		(3,464.1	)		(1,970.1	)
Capital expenditures		(39.2	)		(37.8	)
Capitalized software expenditures		(33.4	)		(28.7	)
Distributions from equity investment		9.5			25.3
Other, net		(1.0	)		0.6
Cash used in investing activities from continuing operations		(3,528.2	)		(2,010.7	)
Cash provided by disposition of discontinued operations		—			2.0
Cash used in investing activities		(3,528.2	)		(2,008.7	)

Cash flows from (used in) financing activities:
Proceeds from senior notes		2,000.0			—
Payments of senior notes		(500.0	)		(700.0	)
Borrowings under revolving line of credit, net		565.0			910.0
Debt issuance costs		(24.7	)		—
Cash dividends to stockholders		(241.1	)		(217.5	)
Proceeds from stock-based compensation, net		88.1			99.3
Treasury stock sales		14.5			11.6
Other		(0.1	)		(0.1	)
Cash provided by financing activities		1,901.7			103.3
(Continued)

Roper Technologies, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited) – Continued
(Amounts in millions)
	Nine months ended September 30,
		2024			2023
Effect of exchange rate changes on cash		10.8			(1.2	)

Net increase (decrease) in cash and cash equivalents		55.3			(493.3	)

Cash and cash equivalents, beginning of period		214.3			792.8

Cash and cash equivalents, end of period	$	269.6		$	299.5

The MIL Network –

January 24, 2025

MIL-OSI: Manhattan Bridge Capital, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

GREAT NECK, N.Y., Oct. 23, 2024 (GLOBE NEWSWIRE) — Manhattan Bridge Capital, Inc. (Nasdaq: LOAN) (the “Company”) announced today that its net income for the three months ended September 30, 2024 was approximately $1,399,000, or $0.12 per basic and diluted share (based on approximately 11.4 million weighted-average outstanding common shares), as compared to approximately $1,446,000, or $0.13 per basic and diluted share (based on approximately 11.5 million weighted-average outstanding common shares), for the three months ended September 30, 2023, a decrease of $47,000, or 3.3%. This decrease is primarily attributable to a decrease in revenue, partially offset by a decrease in interest expense.

Total revenues for the three months ended September 30, 2024 were approximately $2,313,000 compared to approximately $2,434,000 for the three months ended September 30, 2023, a decrease of $121,000 or 5.0%. The decrease in revenue was due to a reduction in loans receivable, period over period, and reduced origination fees, which were impacted by a slowdown in new loan originations, partially offset by higher interest rates charged on the Company’s commercial loans. For the three months ended September 30, 2024 and 2023, approximately $1,953,000 and $1,992,000, respectively, of the Company’s revenues were attributable to interest income on secured commercial loans that the Company offers to real estate investors, and approximately $360,000 and $441,000, respectively, of the Company’s revenues were attributable to origination fees on such loans. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.

Net income for the nine months ended September 30, 2024 was approximately $4,285,000, or $0.37 per basic and diluted share (based on approximately 11.4 million weighted-average outstanding common shares), as compared to approximately $4,128,000, or $0.36 per basic and diluted share (based on approximately 11.5 million weighted-average outstanding common shares) for the nine months ended September 30, 2023, an increase of $157,000, or 3.8%. This increase is primarily attributable to an increase in interest income from loans, partially offset by a decrease in origination fees.

Total revenues for the nine months ended September 30, 2024 were approximately $7,330,000 compared to approximately $7,231,000 for the nine months ended September 30, 2023, an increase of $99,000, or 1.4%. The increase in revenue was due to higher interest rates charged on the Company’s commercial loans, partially offset by a reduction in loans receivable, period over period, and reduced origination fees, which were impacted by a slowdown in new loan originations. For the nine months ended September 30, 2024 and 2023, revenues of approximately $6,128,000 and $5,889,000, respectively, were attributable to interest income on the secured commercial loans that the Company offers to real estate investors, and approximately $1,201,000 and $1,342,000, respectively, of the Company’s revenues were attributable to origination fees on such loans. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers.

As of September 30, 2024, total stockholders’ equity was approximately $43,271,000.

Assaf Ran, Chairman of the Board and Chief Executive Officer of the Company, stated, “The recent 0.5% reduction of interest rate regenerated optimism among real estate investors. The burden of high interest started to take its toll on many of them and the pace of new deals during the third quarter declined. Therefore, we experienced a decline in initiation fees. Yet, since we have more deals in the pipeline, I hope to return to the previous pace soon.”

About Manhattan Bridge Capital, Inc.

Manhattan Bridge Capital, Inc. offers short-term secured, non–banking loans (sometimes referred to as ‘‘hard money’’ loans) to real estate investors to fund their acquisition, renovation, rehabilitation or improvement of properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida. We operate the website: https://www.manhattanbridgecapital.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Because such statements deal with future events and are based on Manhattan Bridge Capital’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of the Company could differ materially from those described in or implied by the statements in this press release. For example, forward-looking statements include statements regarding future deals pipeline and the return to previous deal pace. The forward-looking statements contained or implied in this press release are subject to risks and uncertainties, including the risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC and in subsequent filings with the SEC. Except as otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date they were made, whether as a result of new information, future events or circumstances or otherwise.

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
Assets	September 30, 2024 (unaudited)		December 31, 2023 (audited)
Loans receivable	$	68,711,438	$	73,048,403
Interest and other fees receivable on loans		1,536,643		1,395,905
Cash		167,863		104,222
Cash – restricted		—		1,587,773
Other assets		99,180		63,636
Right-of-use asset – operating lease, net		167,243		207,364
Deferred financing costs, net		19,636		27,583
Total assets	$	70,702,003	$	76,434,886

Liabilities and Stockholders’ Equity

Liabilities:
Line of credit	$	19,170,268		$	25,152,338
Senior secured notes (net of deferred financing costs of $115,756 and $172,069, respectively)		5,884,244			5,827,931
Deferred origination fees		618,812			719,019
Accounts payable and accrued expenses		211,786			295,292
Operating lease liability		180,529			220,527
Loan holdback		50,000			—
Dividends payable		1,315,445			1,287,073
Total liabilities		27,431,084			33,502,180
Commitments and contingencies
Stockholders’ equity:
Preferred shares – $.01 par value; 5,000,000 shares authorized; none issued		—			—
Common shares – $.001 par value; 25,000,000 shares authorized; 11,757,058 issued; 11,438,651 and 11,440,651 outstanding, respectively		11,757			11,757
Additional paid-in capital		45,558,674			45,548,876
Less: Treasury stock, at cost – 318,407 and 316,407 shares, respectively		(1,070,406	)		(1,060,606	)
Accumulated deficit		(1,229,106	)		(1,567,321	)
Total stockholders’ equity		43,270,919			42,932,706
Total liabilities and stockholders’ equity	$	70,702,003		$	76,434,886

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024			2023
Revenue: Interest income from loans	$	1,952,957	$	1,992,495	$	6,128,131		$	5,888,843
Origination fees		360,376		441,271		1,201,494			1,342,077
Total revenue		2,313,333		2,433,766		7,329,625			7,230,920

Operating costs and expenses:
Interest and amortization of deferred financing costs		537,218		614,389		1,831,037			1,856,079
Referral fees		847		361		1,847			1,652
General and administrative expenses		380,482		377,192		1,225,041			1,274,267
Total operating costs and expenses		918,547		991,942		3,057,925			3,131,998
Income from operations		1,394,786		1,441,824		4,271,700			4,098,922
Other income		4,500		4,500		13,500			29,380
Income before income tax expense		1,399,286		1,446,324		4,285,200			4,128,302
Income tax expense		—		—		(650	)		(650	)
Net income	$	1,399,286	$	1,446,324	$	4,284,550		$	4,127,652

Basic and diluted net income per common share outstanding:
–Basic	$	0.12	$	0.13	$	0.37		$	0.36
–Diluted	$	0.12	$	0.13	$	0.37		$	0.36

Weighted average number of common shares outstanding
–Basic		11,438,651		11,461,052		11,438,658			11,477,133
–Diluted		11,438,651		11,461,052		11,438,658			11,477,133

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024

Common Shares

Additional Paid in Capital

Treasury Shares

Accumulated Deficit

Totals

Shares

Amount

Shares

Cost

Balance, July 1, 2024

11,757,058

$11,757

$45,555,408

318,407

$(1,070,406

)

$(1,312,947

)

$43,183,812

Non-cash compensation

3,266

Dividends declared and payable

(1,315,445

)

(1,315,445

)

Net income

1,399,286

Balance, September 30, 2024

11,757,058

$11,757

$45,558,674

318,407

$(1,070,406

)

$(1,229,106

)

$ 43,270,919

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

	Common Shares			Additional Paid in Capital		Treasury Shares				Accumulated Deficit			Totals
	Shares	Amount				Shares	Cost
Balance, July 1, 2023	11,757,058	$	11,757	$	45,542,343	295,473	$	(963,745	)	$	(1,786,337	)	$	42,804,018
Purchase of treasury shares						4,500		(20,885	)					(20,885	)
Non-cash compensation					3,266									3,266
Dividends declared and payable											(1,288,753	)		(1,288,753	)
Net income											1,446,324			1,446,324
Balance, September 30, 2023	11,757,058	$	11,757	$	45,545,609	299,973	$	(984,630	)	$	(1,628,766	)	$	42,943,970

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

	Common Shares			Additional Paid in Capital		Treasury Shares				Accumulated Deficit			Totals
	Shares	Amount				Shares	Cost
Balance, January 1, 2024	11,757,058	$	11,757	$	45,548,876	316,407	$	(1,060,606	)	$	(1,567,321	)	$	42,932,706
Purchase of treasury shares						2,000		(9,800	)					(9,800	)
Non-cash compensation					9,798									9,798
Dividends paid											(2,630,890	)		(2,630,890	)
Dividends declared and payable											(1,315,445	)		(1,315,445	)
Net income											4,284,550			4,284,550
Balance, September 30, 2024	11,757,058	$	11,757	$	45,558,674	318,407	$	(1,070,406	)	$	(1,229,106	)	$	43,270,919

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

	Common Shares			Additional Paid in Capital		Treasury Shares				Accumulated Deficit			Totals
	Shares	Amount				Shares	Cost
Balance, January 1, 2023	11,757,058	$	11,757	$	45,535,811	262,113	$	(798,939	)	$	(1,885,056	)	$	42,863,573
Purchase of treasury shares						37,860		(185,691	)					(185,691	)
Non-cash compensation					9,798									9,798
Dividends paid											(2,582,609	)		(2,582,609	)
Dividends declared and payable											(1,288,753	)		(1,288,753	)
Net income											4,127,652			4,127,652
Balance, September 30, 2023	11,757,058	$	11,757	$	45,545,609	299,973	$	(984,630	)	$	(1,628,766	)	$	42,943,970

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	Nine Months Ended September 30,
		2024			2023
Cash flows from operating activities:
Net income	$	4,284,550		$	4,127,652
Adjustments to reconcile net income to net cash provided by operating activities –
Amortization of deferred financing costs		66,427			71,449
Adjustment to right-of-use asset – operating lease and liability		121			1,636
Depreciation		3,480			3,001
Non-cash compensation expense		9,798			9,798
Changes in operating assets and liabilities:
Interest and other fees receivable on loans		(140,738	)		14,128
Other assets		(35,005	)		(38,381	)
Accounts payable and accrued expenses		(83,505	)		(53,682	)
Deferred origination fees		(100,207	)		1,167
Net cash provided by operating activities		4,004,921			4,136,768

Cash flows from investing activities:
Issuance of short-term loans		(29,362,922	)		(40,810,565	)
Collections received from loans		33,749,887			44,512,989
Purchase of fixed assets		(4,018	)		(5,085	)
Net cash provided by investing activities		4,382,947			3,697,339

Cash flows from financing activities:
Repayment of line of credit, net		(5,982,070	)		(3,561,140	)
Dividends paid		(3,917,963	)		(4,019,478	)
Purchase of treasury shares		(9,800	)		(185,691	)
Deferred financing costs incurred		(2,167	)		(38,191	)
Net cash used in financing activities		(9,912,000	)		(7,804,500	)

Net (decrease) increase in cash		(1,524,132	)		29,607
Cash and cash – restricted, beginning of period*		1,691,995			103,540
Cash, end of period	$	167,863		$	133,147

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for taxes	$	650		$	650
Cash paid during the period for interest	$	1,816,980		$	1,797,254
Cash paid during the period for operating leases	$	47,779		$	47,822

Supplemental Schedule of Noncash Financing Activities:
Dividend declared and payable	$	1,315,445		$	1,288,753
Loan holdback relating to mortgage receivable	$	50,000		$	—

*At December 31, 2023, cash and restricted cash consisted of $1,587,773 of restricted cash.

Contact:
Assaf Ran, CEO
Vanessa Kao, CFO
(516) 444-3400
SOURCE: Manhattan Bridge Capital, Inc.

The MIL Network –

January 24, 2025

MIL-OSI: United Community Banks, Inc. Reports Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

GREENVILLE, S.C. , Oct. 23, 2024 (GLOBE NEWSWIRE) — United Community Banks, Inc. (NYSE: UCB) (United) today announced net income for the 2024 third quarter of $47.3 million and pre-tax, pre-provision income of $74.2 million. The result included the previously announced strategic decision to sell $318 million in manufactured housing loans, which negatively impacted the quarter by $21.4 million after-tax, or $0.18 per share. Diluted earnings per share of $0.38 for the quarter represented a decrease of $0.01, or 3%, from the third quarter a year ago and a decrease of $0.16, or 30%, from the second quarter of 2024.

On an operating basis, United’s diluted earnings per share of $0.57 was up 27% from the year-ago quarter. The primary drivers of the increased earnings per share year-over-year were higher net interest income and a lower provision for credit losses. The $0.57 result includes a $9.9 million Hurricane Helene related loan loss provision to increase the reserve on $383 million of loans in nine North Carolina counties impacted by the hurricane to 3.5% of loans.

United’s return on assets was 0.67%, or 1.01% on an operating basis. Return on common equity was 5.20% and return on tangible common equity on an operating basis was 11.17%. On a pre-tax, pre-provision basis, operating return on assets was 1.50% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.93%, up 15 basis points from the second quarter of 2024.

Chairman and CEO Lynn Harton stated, “We continue to focus on growth and the third quarter saw the return of modest loan and strong deposit growth. Excluding the sale of our manufactured housing portfolio, announced in early September, loan balances were up 1.5% annualized. Customer deposits, which exclude brokered deposits, were up $262 million, or 5% annualized. Our balance sheet remains highly liquid and our internal capital generation rate is running well in excess of our current capital needs. We maintained robust capital ratios with our preliminary CET1 moving to 13.1% and we opportunistically redeemed $8 million of relatively expensive Trust Preferred securities. The increase in liquidity and capital place us in a great position to take advantage of growth opportunities as we move into 2025.”

Mr. Harton continued, “We elected to sell our manufactured housing loan book, a business that was part of our Reliant Bancorp, Inc. acquisition in January of 2022, as a natural conclusion of our exit from the business, as we ceased originating loans in the third quarter of 2023. The transaction reduces our risk profile and allows us to allocate capital to other growth opportunities.”

United’s net interest margin decreased four basis points to 3.33% from the second quarter. The average yield on United’s interest-earning assets was down four basis points to 5.55%, while its cost of interest-bearing liabilities decreased two basis points, leading to the four-basis point reduction in net interest margin. Net charge-offs were $23.7 million, or 0.52% of average loans, during the quarter, up 26 basis points compared to the second quarter of 2024 due to transaction-related losses resulting from the sale of our manufactured housing portfolio. NPAs were 42 basis points relative to total assets, down one basis point from the second quarter.

Mr. Harton concluded, “We are pleased with our operating performance this quarter, but we were also reminded this quarter of the importance of community. Many of our employees, customers, and communities have been impacted by the recent hurricanes. We are actively involved in the recovery process through volunteer hours and financial support and will be ready to lead the rebuilding process, when and as needed. Many thanks to our employees throughout the company that have responded, in sometimes heroic ways, to support each other and our customers.”

Third Quarter 2024 Financial Highlights:

Net income of $47.3 million and pre-tax, pre-provision income of $74.2 million
EPS down 3% compared to third quarter 2023 on a GAAP basis and up 27% on an operating basis; compared to second quarter 2024, EPS down 30% on a GAAP basis and down 2% on an operating basis
The GAAP results were impacted by the decision to sell the manufactured housing loan book at a $21.4 million after-tax loss, or $0.18, approximately one year after making the strategic decision to cease originations
Return on assets of 0.67%, or 1.01% on an operating basis
Pre-tax, pre-provision return on assets of 1.50% on an operating basis
Return on common equity of 5.20%
Return on tangible common equity of 11.17% on an operating basis
A provision for credit losses of $14.4 million, which includes $9.9 million to establish a special reserve for expected credit losses from Hurricane Helene
Net charge-offs of $23.7 million, or 52 basis points as a percent of average loans, which included $11.0 million, or 24 basis points, of transaction-related losses from the sale of our manufactured housing portfolio
Nonperforming assets of 0.42% of total assets, down one basis point compared to June 30, 2024
Loan production of $1.2 billion
Customer deposits were up $262 million from the second quarter, with most of the growth in NOW and money market deposits
Net interest margin of 3.33% decreased by four basis points from the second quarter mostly due to lower purchased loan accretion, the sale of our manufactured housing portfolio, and changing composition of our earning assets and interest-bearing liabilities
Mortgage closings of $239 million compared to $211 million a year ago; mortgage rate locks of $306 million compared to $304 million a year ago
Noninterest income was down $28.5 million on a linked quarter basis with $27.2 million due to losses from the sale of manufactured housing loans. The remaining decrease was primarily driven by the mark on our mortgage servicing rights asset.
Noninterest expenses decreased by $4.0 million compared to the second quarter on a GAAP basis and were up $0.3 million on an operating basis
Efficiency ratio of 65.5%, or 57.4% on an operating basis
Maintained robust capital ratios with preliminary CET1 increasing to 13.1% and opportunistically redeemed $8 million of relatively expensive Trust Preferred securities
Quarterly common dividend of $0.24 per share declared during the quarter, up 4% year-over-year

Conference Call
United will hold a conference call on Wednesday, October 23, 2024 at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10193157/fd9f74293a. Those without internet access or unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and can be accessed by selecting “Events and Presentations” under “News and Events” within the Investor Relations section of the company’s website, http://www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(In thousands, except per share data)
	2024									2023						Third Quarter 2024- 2023 Change		For the Nine Months Ended September 30,						YTD 2024- 2023 Change
		Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter		Third Quarter 2024- 2023 Change			2024			2023		YTD 2024- 2023 Change
INCOME SUMMARY
Interest revenue	$	349,086		$	346,965		$	336,728		$	338,698		$	323,147				$	1,032,779		$	898,409
Interest expense	139,900			138,265			137,579			135,245			120,591					415,744			284,097
Net interest revenue	209,186			208,700			199,149			203,453			202,556			3	%	617,035			614,312			—	%
Provision for credit losses	14,428			12,235			12,899			14,626			30,268					39,562			74,804
Noninterest income	8,091			36,556			39,587			(23,090		)	31,977			(75	)	84,234			98,573			(15	)
Total revenue	202,849			233,021			225,837			165,737			204,265			(1	)	661,707			638,081			4
Noninterest expenses	143,065			147,044			145,002			154,587			144,474			(1	)	435,111			416,686			4
Income before income tax expense	59,784			85,977			80,835			11,150			59,791			—		226,596			221,395			2
Income tax expense	12,437			19,362			18,204			(2,940		)	11,925			4		50,003			47,941			4
Net income	47,347			66,615			62,631			14,090			47,866			(1	)	176,593			173,454			2
Non-operating items	29,385			6,493			2,187			67,450			9,168					38,065			21,444
Income tax benefit of non-operating items	(6,276		)	(1,462		)	(493		)	(16,714		)	(2,000		)			(8,231		)	(4,775		)
Net income – operating⁽¹⁾	$	70,456		$	71,646		$	64,325		$	64,826		$	55,034		28		$	206,427		$	190,123		9
Pre-tax pre-provision income⁽⁵⁾	$	74,212		$	98,212		$	93,734		$	25,776		$	90,059		(18	)	$	266,158		$	296,199		(10	)
PERFORMANCE MEASURES
Per common share:
Diluted net income – GAAP	$	0.38		$	0.54		$	0.51		$	0.11		$	0.39		(3	)	$	1.43		$	1.44		(1	)
Diluted net income – operating⁽¹⁾	0.57			0.58			0.52			0.53			0.45			27		1.67			1.58			6
Cash dividends declared	0.24			0.23			0.23			0.23			0.23			4		0.70			0.69			1
Book value	27.68			27.18			26.83			26.52			25.87			7		27.68			25.87			7
Tangible book value⁽³⁾	19.66			19.13			18.71			18.39			17.70			11		19.66			17.70			11
Key performance ratios:
Return on common equity – GAAP⁽²⁾⁽⁴⁾	5.20		%	7.53		%	7.14		%	1.44		%	5.32		%			6.61		%	6.69		%
Return on common equity – operating^(1)(2)(4)	7.82			8.12			7.34			7.27			6.14					7.76			7.35
Return on tangible common equity – operating^(1)(2)(3)(4)	11.17			11.68			10.68			10.58			9.03					11.18			10.65
Return on assets – GAAP⁽⁴⁾	0.67			0.97			0.90			0.18			0.68					0.85			0.86
Return on assets – operating⁽¹⁾⁽⁴⁾	1.01			1.04			0.93			0.92			0.79					0.99			0.95
Return on assets – pre-tax pre-provision – operating^(1)(4)(5)	1.50			1.54			1.40			1.33			1.44					1.48			1.60
Net interest margin (fully taxable equivalent)⁽⁴⁾	3.33			3.37			3.20			3.19			3.24					3.30			3.41
Efficiency ratio – GAAP	65.51			59.70			60.47			66.33			61.32					61.76			58.06
Efficiency ratio – operating⁽¹⁾	57.37			57.06			59.15			59.57			57.43					57.84			55.07
Equity to total assets	12.45			12.35			12.06			11.95			11.85					12.45			11.85
Tangible common equity to tangible assets⁽³⁾	8.93			8.78			8.49			8.36			8.18					8.93			8.18
ASSET QUALITY
Nonperforming assets (“NPAs”)	$	114,960		$	116,722		$	107,230		$	92,877		$	90,883		26		$	114,960		$	90,883		26
Allowance for credit losses – loans	205,290			213,022			210,934			208,071			201,557			2		205,290			201,557			2
Allowance for credit losses – total	215,517			224,740			224,119			224,128			219,624			(2	)	215,517			219,624			(2	)
Net charge-offs	23,651			11,614			12,908			10,122			26,638					48,173			42,121
Allowance for credit losses – loans to loans	1.14		%	1.17		%	1.15		%	1.14		%	1.11		%			1.14		%	1.11		%
Allowance for credit losses – total to loans	1.20			1.23			1.22			1.22			1.21					1.20			1.21
Net charge-offs to average loans⁽⁴⁾	0.52			0.26			0.28			0.22			0.59					0.35			0.32
NPAs to total assets	0.42			0.43			0.39			0.34			0.34					0.42			0.34
AT PERIOD END ($ in millions)
Loans	$	17,964		$	18,211		$	18,375		$	18,319		$	18,203		(1	)	$	17,964		$	18,203		(1	)
Investment securities	6,425			6,038			5,859			5,822			5,701			13		6,425			5,701			13
Total assets	27,373			27,057			27,365			27,297			26,869			2		27,373			26,869			2
Deposits	23,253			22,982			23,332			23,311			22,858			2		23,253			22,858			2
Shareholders’ equity	3,407			3,343			3,300			3,262			3,184			7		3,407			3,184			7
Common shares outstanding (thousands)	119,283			119,175			119,137			119,010			118,976			—		119,283			118,976			—

⁽¹⁾Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on next page. ⁽²⁾ Net income less preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). ⁽³⁾ Excludes effect of acquisition related intangibles and associated amortization. ⁽⁴⁾ Annualized. ⁽⁵⁾ Excludes income tax expense and provision for credit losses.

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
*(in thousands, except per share data)*
	2024									2023						For the Nine Months Ended September 30,
		Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			2024			2023

Noninterest income reconciliation
Noninterest income (GAAP)	$	8,091		$	36,556		$	39,587		$	(23,090	)	$	31,977		$	84,234		$	98,573
Loss on sale of manufactured housing loans	27,209			—			—			—			—			27,209			—
Gain on lease termination	—			—			(2,400		)	—			—			(2,400		)	—
Bond portfolio restructuring loss	—			—			—			51,689			—			—			—
Noninterest income – operating	$	35,300		$	36,556		$	37,187		$	28,599		$	31,977		$	109,043		$	98,573

Noninterest expense reconciliation
Noninterest expenses (GAAP)	$	143,065		$	147,044		$	145,002		$	154,587		$	144,474		$	435,111		$	416,686
Loss on FinTrust (goodwill impairment)	—			(5,100		)	—			—			—			(5,100		)	—
FDIC special assessment	—			764			(2,500		)	(9,995		)	—			(1,736		)	—
Merger-related and other charges	(2,176		)	(2,157		)	(2,087		)	(5,766		)	(9,168		)	(6,420		)	(21,444		)
Noninterest expenses – operating	$	140,889		$	140,551		$	140,415		$	138,826		$	135,306		$	421,855		$	395,242

Net income to operating income reconciliation
Net income (GAAP)	$	47,347		$	66,615		$	62,631		$	14,090		$	47,866		$	176,593		$	173,454
Loss on sale of manufactured housing loans	27,209			—			—			—			—			27,209			—
Bond portfolio restructuring loss	—			—			—			51,689			—			—			—
Gain on lease termination	—			—			(2,400		)	—			—			(2,400		)	—
Loss on FinTrust (goodwill impairment)	—			5,100			—			—			—			5,100			—
FDIC special assessment	—			(764		)	2,500			9,995			—			1,736			—
Merger-related and other charges	2,176			2,157			2,087			5,766			9,168			6,420			21,444
Income tax benefit of non-operating items	(6,276		)	(1,462		)	(493		)	(16,714		)	(2,000		)	(8,231		)	(4,775		)
Net income – operating	$	70,456		$	71,646		$	64,325		$	64,826		$	55,034		$	206,427		$	190,123

Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	47,347		$	66,615		$	62,631		$	14,090		$	47,866		$	176,593		$	173,454
Income tax expense	12,437			19,362			18,204			(2,940		)	11,925			50,003			47,941
Provision for credit losses	14,428			12,235			12,899			14,626			30,268			39,562			74,804
Pre-tax pre-provision income	$	74,212		$	98,212		$	93,734		$	25,776		$	90,059		$	266,158		$	296,199

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.38		$	0.54		$	0.51		$	0.11		$	0.39		$	1.43		$	1.44
Loss on sale of manufactured housing loans	0.18			—			—			—			—			0.18			—
Bond portfolio restructuring loss	—			—			—			0.32			—			—			—
Gain on lease termination	—			—			(0.02		)	—			—			(0.02		)	—
Loss on FinTrust (goodwill impairment)	—			0.03			—			—			—			0.03			—
FDIC special assessment	—			—			0.02			0.06			—			0.01			—
Merger-related and other charges	0.01			0.01			0.01			0.04			0.06			0.04			0.14
Diluted income per common share – operating	$	0.57		$	0.58		$	0.52		$	0.53		$	0.45		$	1.67		$	1.58

Book value per common share reconciliation
Book value per common share (GAAP)	$	27.68		$	27.18		$	26.83		$	26.52		$	25.87		$	27.68		$	25.87
Effect of goodwill and other intangibles	(8.02		)	(8.05		)	(8.12		)	(8.13		)	(8.17		)	(8.02		)	(8.17		)
Tangible book value per common share	$	19.66		$	19.13		$	18.71		$	18.39		$	17.70		$	19.66		$	17.70

Return on tangible common equity reconciliation
Return on common equity (GAAP)	5.20		%	7.53		%	7.14		%	1.44		%	5.32		%	6.61		%	6.69		%
Loss on sale of manufactured housing loans	2.43			—			—			—			—			0.82			—
Bond portfolio restructuring loss	—			—			—			4.47			—			—			—
Gain on lease termination	—			—			(0.22		)	—			—			(0.07		)	—
Loss on FinTrust (goodwill impairment)	—			0.46			—			—			—			0.16			—
FDIC special assessment	—			(0.07		)	0.23			0.86			—			0.05			—
Merger-related and other charges	0.19			0.20			0.19			0.50			0.82			0.19			0.66
Return on common equity – operating	7.82			8.12			7.34			7.27			6.14			7.76			7.35
Effect of goodwill and other intangibles	3.35			3.56			3.34			3.31			2.89			3.42			3.30
Return on tangible common equity – operating	11.17		%	11.68		%	10.68		%	10.58		%	9.03		%	11.18		%	10.65		%

Return on assets reconciliation
Return on assets (GAAP)	0.67		%	0.97		%	0.90		%	0.18		%	0.68		%	0.85		%	0.86		%
Loss on sale of manufactured housing loans	0.31			—			—			—			—			0.10			—
Bond portfolio restructuring loss	—			—			—			0.57			—			—			—
Gain on lease termination	—			—			(0.03		)	—			—			(0.01		)	—
Loss on FinTrust (goodwill impairment)	—			0.06			—			—			—			0.02			—
FDIC special assessment	—			(0.01		)	0.03			0.11			—			0.01			—
Merger-related and other charges	0.03			0.02			0.03			0.06			0.11			0.02			0.09
Return on assets – operating	1.01		%	1.04		%	0.93		%	0.92		%	0.79		%	0.99		%	0.95		%

Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)	0.67		%	0.97		%	0.90		%	0.18		%	0.68		%	0.85		%	0.86		%
Income tax (benefit) expense	0.19			0.29			0.27			(0.04		)	0.18			0.25			0.25
Provision for credit losses	0.21			0.18			0.19			0.21			0.45			0.19			0.38
Loss on sale of manufactured housing loans	0.40			—			—			—			—			0.13			—
Bond portfolio restructuring loss	—			—			—			0.75			—			—			—
Gain on lease termination	—			—			(0.04		)	—			—			(0.01		)	—
Loss on FinTrust (goodwill impairment)	—			0.08			—			—			—			0.03			—
FDIC special assessment	—			(0.01		)	0.04			0.15			—			0.01			—
Merger-related and other charges	0.03			0.03			0.04			0.08			0.13			0.03			0.11
Return on assets – pre-tax pre-provision – operating	1.50		%	1.54		%	1.40		%	1.33		%	1.44		%	1.48		%	1.60		%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)	65.51		%	59.70		%	60.47		%	66.33		%	61.32		%	61.76		%	58.06		%
Loss on sale of manufactured housing loans	(7.15		)	—			—			—			—			(2.25		)	—
Gain on lease termination	—			—			0.60			—			—			0.21			—
Loss on FinTrust (goodwill impairment)	—			(2.07		)	—			—			—			(0.73		)	—
FDIC special assessment	—			0.31			(1.05		)	(4.29		)	—			(0.24		)	—
Merger-related and other charges	(0.99		)	(0.88		)	(0.87		)	(2.47		)	(3.89		)	(0.91		)	(2.99		)
Efficiency ratio – operating	57.37		%	57.06		%	59.15		%	59.57		%	57.43		%	57.84		%	55.07		%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)	12.45		%	12.35		%	12.06		%	11.95		%	11.85		%	12.45		%	11.85		%
Effect of goodwill and other intangibles	(3.20		)	(3.24		)	(3.25		)	(3.27		)	(3.33		)	(3.20		)	(3.33		)
Effect of preferred equity	(0.32		)	(0.33		)	(0.32		)	(0.32		)	(0.34		)	(0.32		)	(0.34		)
Tangible common equity to tangible assets	8.93		%	8.78		%	8.49		%	8.36		%	8.18		%	8.93		%	8.18		%

UNITED COMMUNITY BANKS, INC.
Loan Portfolio Composition at Period-End
	2024							2023					Linked Quarter Change			Year over Year Change
(in millions)		Third Quarter		Second Quarter			First Quarter		Fourth Quarter		Third Quarter		Linked Quarter Change			Year over Year Change
LOANS BY CATEGORY
Owner occupied commercial RE	$	3,323	$	3,297		$	3,310	$	3,264	$	3,279	$	26		$	44
Income producing commercial RE		4,259		4,058			4,206		4,264		4,130	201			129
Commercial & industrial		2,313		2,299			2,405		2,411		2,504	14			(191		)
Commercial construction		1,785		2,014			1,936		1,860		1,850	(229		)	(65		)
Equipment financing		1,603		1,581			1,544		1,541		1,534	22			69
Total commercial		13,283		13,249			13,401		13,340		13,297	34			(14		)
Residential mortgage		3,263		3,266			3,240		3,199		3,043	(3		)	220
Home equity		1,015		985			969		959		941	30			74
Residential construction		189		211			257		302		399	(22		)	(210		)
Manufactured housing		2		321			328		336		343	(319		)	(341		)
Consumer		188		183			180		181		180	5			8
Other		24		(4	)		—		2	—		28			24
Total loans	$	17,964	$	18,211		$	18,375	$	18,319	$	18,203	$	(247	)	$	(239	)

LOANS BY MARKET
Georgia	$	4,470	$	4,411		$	4,356	$	4,357	$	4,321	$	59		$	149
South Carolina		2,782		2,779			2,804		2,780		2,801	3			(19		)
North Carolina		2,586		2,591			2,566		2,492		2,445	(5		)	141
Tennessee		1,848		2,144			2,209		2,244		2,314	(296		)	(466		)
Florida		2,423		2,407			2,443		2,442		2,318	16			105
Alabama		996		1,021			1,068		1,082		1,070	(25		)	(74		)
Commercial Banking Solutions		2,859		2,858			2,929		2,922		2,934	1			(75		)
Total loans	$	17,964	$	18,211		$	18,375	$	18,319	$	18,203	$	(247	)	$	(239	)

UNITED COMMUNITY BANKS, INC.
Credit Quality
(in thousands)
		2024
	Third Quarter		Second Quarter		First Quarter
NONACCRUAL LOANS
Owner occupied RE	$	7,783	$	4,820	$	2,310
Income producing RE		31,222		34,285		29,186
Commercial & industrial		28,856		17,335		20,134
Commercial construction		7,356		6,854		1,862
Equipment financing		9,123		8,341		8,829
Total commercial		84,340		71,635		62,321
Residential mortgage		21,851		18,473		16,569
Home equity		4,111		3,779		4,984
Residential construction		118		163		1,244
Manufactured housing		1,808		20,356		19,797
Consumer		152		72		54
Total nonaccrual loans		112,380		114,478		104,969
OREO and repossessed assets		2,580		2,244		2,261
Total NPAs	$	114,960	$	116,722	$	107,230

		2024
	Third Quarter					Second Quarter						First Quarter
(in thousands)	Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾		Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾			Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾
NET CHARGE-OFFS (RECOVERIES) BY CATEGORY
Owner occupied RE	$	(184	)	(0.02	)%	$	163			0.02	%	$	202			0.02	%
Income producing RE		1,409		0.13			2,968			0.29			205			0.02
Commercial & industrial		4,577		0.79			1,281			0.22			3,906			0.65
Commercial construction		36		0.01			(48	)		(0.01	)		20			—
Equipment financing		5,268		1.32			5,502			1.42			6,362			1.66
Total commercial		11,106		0.33			9,866			0.30			10,695			0.32
Residential mortgage		32		—			(107	)		(0.01	)		(16	)		—
Home equity		36		0.01			(27	)		(0.01	)		(54	)		(0.02	)
Residential construction		111		0.22			26			0.04			119			0.17
Manufactured housing		11,556		28.51			1,150			1.43			1,569			1.90
Consumer		810		1.74			706			1.57			595			1.33
Total	$	23,651		0.52		$	11,614			0.26		$	12,908			0.28

⁽¹⁾Annualized.

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)	September 30, 2024			December 31, 2023
ASSETS
Cash and due from banks	$	202,644		$	200,781
Interest-bearing deposits in banks		537,395			803,094
Cash and cash equivalents		740,039			1,003,875
Debt securities available-for-sale		4,023,455			3,331,084
Debt securities held-to-maturity (fair value $2,060,729 and $2,095,620, respectively)		2,401,877			2,490,848
Loans held for sale		49,800			33,008
Loans and leases held for investment		17,964,099			18,318,755
Allowance for credit losses – loans and leases		(205,290	)		(208,071	)
Loans and leases, net		17,758,809			18,110,684
Premises and equipment, net		396,696			378,421
Bank owned life insurance		345,703			345,371
Goodwill and other intangible assets, net		975,117			990,087
Other assets		681,636			613,873
Total assets	$	27,373,132		$	27,297,251
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	6,222,518		$	6,534,307
NOW and interest-bearing demand		5,951,900			6,155,193
Money market		6,301,956			5,600,587
Savings		1,113,168			1,207,807
Time		3,490,399			3,649,498
Brokered		173,161			163,219
Total deposits		23,253,102			23,310,611
Long-term debt		316,363			324,823
Accrued expenses and other liabilities		396,987			400,292
Total liabilities		23,966,452			24,035,726
Shareholders’ equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; 3,662 shares Series I issued and outstanding; $25,000 per share liquidation preference		88,266			88,266
Common stock, $1 par value; 200,000,000 shares authorized, 119,282,762 and 119,010,319 shares issued and outstanding, respectively		119,283			119,010
Common stock issuable; 588,296 and 620,108 shares, respectively		12,661			13,110
Capital surplus		2,707,266			2,699,112
Retained earnings		668,965			581,219
Accumulated other comprehensive loss		(189,761	)		(239,192	)
Total shareholders’ equity		3,406,680			3,261,525
Total liabilities and shareholders’ equity	$	27,373,132		$	27,297,251

UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income (Unaudited)
	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands, except per share data)		2024			2023		2024			2023
Interest revenue:
Loans, including fees	$	291,574		$	273,781	$	867,152		$	760,696
Investment securities, including tax exempt of $1,713, $1,722, $5,133 and $5,563, respectively		52,997			44,729		149,496			125,775
Deposits in banks and short-term investments		4,515			4,637		16,131			11,938
Total interest revenue		349,086			323,147		1,032,779			898,409

Interest expense:
Deposits:
NOW and interest-bearing demand		43,401			35,613		133,522			80,809
Money market		56,874			46,884		160,883			105,430
Savings		672			868		2,065			2,108
Time		35,202			33,368		107,925			75,464
Deposits		136,149			116,733		404,395			263,811
Short-term borrowings		27			189		87			3,186
Federal Home Loan Bank advances		—			—		—			5,761
Long-term debt		3,724			3,669		11,262			11,339
Total interest expense		139,900			120,591		415,744			284,097
Net interest revenue		209,186			202,556		617,035			614,312
Provision for credit losses		14,428			30,268		39,562			74,804
Net interest revenue after provision for credit losses		194,758			172,288		577,473			539,508

Noninterest income:
Service charges and fees		10,488			10,315		30,372			28,791
Mortgage loan gains and other related fees		3,520			6,159		17,830			17,264
Wealth management fees		6,338			6,451		19,037			17,775
Net (losses) gains from sales of other loans		(25,700	)		2,688		(22,867	)		6,909
Lending and loan servicing fees		3,512			2,985		11,050			9,979
Securities losses, net		—			—		—			(1,644	)
Other		9,933			3,379		28,812			19,499
Total noninterest income		8,091			31,977		84,234			98,573
Total revenue		202,849			204,265		661,707			638,081

Noninterest expenses:
Salaries and employee benefits		83,533			81,173		254,336			236,121
Communications and equipment		12,626			10,902		36,534			31,654
Occupancy		11,311			10,941		33,466			31,024
Advertising and public relations		2,041			2,251		6,401			6,914
Postage, printing and supplies		2,477			2,386		7,376			7,305
Professional fees		6,432			7,006		18,464			19,670
Lending and loan servicing expense		2,227			2,697		6,068			7,546
Outside services – electronic banking		4,433			2,561		10,163			8,646
FDIC assessments and other regulatory charges		5,003			4,314		17,036			12,457
Amortization of intangibles		3,528			4,171		11,209			11,120
Merger-related and other charges		2,176			9,168		6,420			21,444
Other		7,278			6,904		27,638			22,785
Total noninterest expenses		143,065			144,474		435,111			416,686
Income before income taxes		59,784			59,791		226,596			221,395
Income tax expense		12,437			11,925		50,003			47,941
Net income		47,347			47,866		176,593			173,454
Preferred stock dividends, net of discount on repurchases		1,573			832		4,719			4,270
Earnings allocated to participating securities		272			259		988			939
Net income available to common shareholders	$	45,502		$	46,775	$	170,886		$	168,245

Net income per common share:
Basic	$	0.38		$	0.39	$	1.43		$	1.44
Diluted		0.38			0.39		1.43			1.44
Weighted average common shares outstanding:
Basic		119,818			119,506		119,736			116,925
Diluted		119,952			119,624		119,827			117,084

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
		2024								2023
*(dollars in thousands, fully taxable equivalent (FTE))*	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE)⁽¹⁾⁽²⁾	$	18,051,741		$	291,164		6.42	%	$	18,055,402		$	273,800		6.02	%
Taxable securities⁽³⁾		6,182,164			51,284		3.32			5,933,708			43,007		2.90
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾		361,359			2,292		2.54			368,148			2,313		2.51
Federal funds sold and other interest-earning assets		505,792			5,440		4.28			538,039			5,093		3.76
Total interest-earning assets (FTE)		25,101,056			350,180		5.55			24,895,297			324,213		5.17

Noninterest-earning assets:
Allowance for credit losses		(215,008	)							(209,472	)
Cash and due from banks		206,995								225,831
Premises and equipment		399,262								367,217
Other assets⁽³⁾		1,615,468								1,568,824
Total assets	$	27,107,773							$	26,847,697

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	5,797,845			43,401		2.98		$	5,285,513			35,613		2.67
Money market		6,342,455			56,874		3.57			5,622,355			46,884		3.31
Savings		1,126,774			672		0.24			1,301,047			868		0.26
Time		3,465,980			34,560		3.97			3,473,191			31,072		3.55
Brokered time deposits		50,364			642		5.07			209,119			2,296		4.36
Total interest-bearing deposits		16,783,418			136,149		3.23			15,891,225			116,733		2.91
Federal funds purchased and other borrowings		1,899			27		5.66			44,164			189		1.70
Federal Home Loan Bank advances		11			—		—			—			—		—
Long-term debt		323,544			3,724		4.58			324,770			3,669		4.48
Total borrowed funds		325,454			3,751		4.59			368,934			3,858		4.15
Total interest-bearing liabilities		17,108,872			139,900		3.25			16,260,159			120,591		2.94

Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,239,926								6,916,272
Other liabilities		391,574								435,592
Total liabilities		23,740,372								23,612,023
Shareholders’ equity		3,367,401								3,235,674
Total liabilities and shareholders’ equity	$	27,107,773							$	26,847,697

Net interest revenue (FTE)				$	210,280							$	203,622
Net interest-rate spread (FTE)							2.30	%							2.23	%
Net interest margin (FTE)⁽⁴⁾							3.33	%							3.24	%

⁽¹⁾ Interest revenue on tax-exempt securities and loans includes a taxable-equivalent adjustment to reflect comparable interest on taxable securities and loans. The FTE adjustment totaled $1.09 million and $1.07 million, respectively, for the three months ended September 30, 2024 and 2023. The tax rate used to calculate the adjustment was 25% in 2024 and 26% in 2023, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
⁽²⁾ Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
⁽³⁾ Unrealized gains and losses on AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $295 million in 2024 and $430 million in 2023 are included in other assets for purposes of this presentation.
⁽⁴⁾ Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Nine Months Ended September 30,
		2024								2023
*(dollars in thousands, fully taxable equivalent (FTE))*	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE)⁽¹⁾⁽²⁾	$	18,187,790		$	866,502		6.36	%	$	17,377,210		$	760,802		5.85	%
Taxable securities⁽³⁾		5,988,368			144,363		3.21			5,982,615			120,212		2.68
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾		363,692			6,876		2.52			386,499			7,470		2.58
Federal funds sold and other interest-earning assets		559,786			18,256		4.36			490,703			13,103		3.57
Total interest-earning assets (FTE)		25,099,636			1,035,997		5.51			24,237,027			901,587		4.97

Non-interest-earning assets:
Allowance for loan losses		(214,372	)							(186,428	)
Cash and due from banks		210,982								249,411
Premises and equipment		392,561								347,514
Other assets⁽³⁾		1,613,118								1,518,503
Total assets	$	27,101,925							$	26,166,027

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	5,913,566			133,522		3.02		$	4,891,214			80,809		2.21
Money market		6,092,649			160,883		3.53			5,349,265			105,430		2.64
Savings		1,159,982			2,065		0.24			1,341,033			2,108		0.21
Time		3,535,343			106,199		4.01			2,936,873			65,856		3.00
Brokered time deposits		50,343			1,726		4.58			280,293			9,608		4.58
Total interest-bearing deposits		16,751,883			404,395		3.22			14,798,678			263,811		2.38
Federal funds purchased and other borrowings		2,001			87		5.81			98,884			3,186		4.31
Federal Home Loan Bank advances		5			—		—			166,355			5,761		4.63
Long-term debt		324,414			11,262		4.64			324,737			11,339		4.67
Total borrowed funds		326,420			11,349		4.64			589,976			20,286		4.60
Total interest-bearing liabilities		17,078,303			415,744		3.25			15,388,654			284,097		2.47

Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,306,919								7,226,096
Other liabilities		394,323								393,048
Total liabilities		23,779,545								23,007,798
Shareholders’ equity		3,322,380								3,158,229
Total liabilities and shareholders’ equity	$	27,101,925							$	26,166,027

Net interest revenue (FTE)				$	620,253							$	617,490
Net interest-rate spread (FTE)							2.26	%							2.50	%
Net interest margin (FTE)⁽⁴⁾							3.30	%							3.41	%

⁽¹⁾ Interest revenue on tax-exempt securities and loans includes a taxable-equivalent adjustment to reflect comparable interest on taxable securities and loans. The FTE adjustment totaled $3.22 million and $3.18 million, respectively, for the nine months ended September 30, 2024 and 2023. The tax rate used to calculate the adjustment was 25% in 2024 and 26% in 2023, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
⁽²⁾Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
⁽³⁾ Unrealized gains and losses on AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $320 million in 2024 and $413 million in 2023 are included in other assets for purposes of this presentation.
⁽⁴⁾ Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.
United Community Banks, Inc. (NYSE: UCB) is the financial holding company for United Community, a top 100 U.S. financial institution that is committed to improving the financial health and well-being of its customers and the communities it serves. United Community provides a full range of banking, wealth management and mortgage services. As of September 30, 2024, United Community Banks, Inc. had $27.4 billion in assets, 202 offices across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee, as well as a national SBA lending franchise and a national equipment lending subsidiary. In 2024, United Community became a 10-time winner of J.D. Power’s award for the best customer satisfaction among consumer banks in the Southeast region and was recognized as the most trusted bank in the Southeast. In 2023, United was named by American Banker as one of the “Best Banks to Work For” for the seventh consecutive year and was recognized in the Greenwich Excellence and Best Brands Awards, receiving 15 awards that included national honors for overall satisfaction in small business banking and middle market banking. Forbes has also consistently listed United Community as one of the World’s Best Banks and one of America’s Best Banks. Additional information about United can be found at ucbi.com.

Non-GAAP Financial Measures
This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “noninterest income – operating”, “noninterest expense – operating”, “operating net income,” “pre-tax, pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets – pre-tax, pre-provision – operating,” “return on assets – pre-tax, pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

Caution About Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In general, forward-looking statements usually may be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential,” or the negative of these terms or other comparable terminology. Forward-looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. Factors that could cause or contribute to such differences include, but are not limited to general competitive, economic, political and market conditions. Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in United’s Annual Report on Form 10-K for the year ended December 31, 2023, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).

Many of these factors are beyond United’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this communication, and United undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for United to predict their occurrence or how they will affect United.

United qualifies all forward-looking statements by these cautionary statements.

For more information:
Jefferson Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com

The MIL Network –

January 24, 2025

MIL-OSI: Southern Michigan Bancorp, Inc. Announces Third Quarter 2024 Earnings

Source: GlobeNewswire (MIL-OSI)

COLDWATER, Mich., Oct. 23, 2024 (GLOBE NEWSWIRE) — Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter net income of $2,586,000, or $0.57 per share, compared to net income of $2,767,000, or $0.61 per share, for the third quarter of 2023. For the first nine months of 2024, Southern earned $7,751,000 or $1.70 per share, compared with $8,468,000 or $1.86 per share, for the same nine-month period one year ago.

John R. Waldron, President and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “For the first time, our bank has surpassed $1.5 billion in total assets, a significant milestone that reflects our ongoing growth and expansion across all markets. While our earnings continue to be impacted by the current interest rate environment, we remain encouraged by the strength of our core deposits and our ability to maintain asset quality. Our focus on disciplined growth strategies has positioned us well, even amid challenges. As we navigate the shifting economic landscape, we are confident in our capacity to sustain momentum and further strengthen our balance sheet.”

As of September 30, 2024, total loans and deposits grew during the first nine months totaling $1.084 billion and $1.266 billion, respectively.

The allowance for credit losses totaled $12,363,000, or 1.14% of loans on September 30, 2024. Net loan charge-offs totaled $20,000 for the first nine months of 2024, compared to net charge-offs of 7,000 for the first nine months of 2023. Non-performing loans as a percentage of total loans were 0.08% on September 30, 2024 compared to 0.09% on December 31, 2023.

The annualized return on average assets for the nine-month periods ended September 30, 2024 and September 30, 2023 was 0.70% and 0.84% respectively. The annualized return on average equity was 10.18% for the first nine months of 2024 compared to 12.42% for the first nine months of 2023. The tax equivalent net interest margin for the nine-month periods ending September 30, 2024 and 2023 was 2.94% and 3.18%, respectively.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 18 offices within Branch, Calhoun, Hillsdale, Jackson, Kalamazoo and St. Joseph Counties providing a broad range of consumer, business and wealth management services throughout the region.

This press release contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and Southern Michigan Bancorp, Inc. Forward-looking statements are identifiable by words or phrases such as “expected,” “begin,” and other similar words or expressions. All statements with reference to a future time period are forward-looking. Management’s determination of the provision and allowance for credit losses and other accounting estimates, such as the carrying value of goodwill, other real estate owned, mortgage servicing rights and the fair value of investment securities, involves judgments that are inherently forward-looking. The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and Southern Michigan Bancorp, Inc., specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“risk factors”) that are difficult to predict with regard to timing, extend, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed in or implied by such forward-looking statements. Southern Michigan Bancorp, Inc. does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.


SOUTHERN MICHIGAN BANCORP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
	September 30, 2024			December 31, 2023
ASSETS
Cash and cash equivalents	$	121,022		$	71,620
Federal funds sold		264			1,468
Securities available for sale, at fair value		160,771			169,740
Securities held-to-maturity, at amortized cost		60,129			61,600
Loans held-for-sale		871			169
Loans, net of allowance for credit losses of $12,363 – 2024, $11,697 – 2023		1,071,234			1,024,720
Premises and equipment, net		23,406			23,114
Net cash surrender value of life insurance		22,970			22,472
Goodwill		13,422			13,422
Other intangible assets, net		120			147
Other assets		36,314			26,323
TOTAL ASSETS	$	1,510,523		$	1,414,795

LIABILITIES
Deposits:
Non-interest bearing	$	219,072		$	226,178
Interest bearing		1,047,024			931,793
Total deposits		1,266,096			1,157,971

Securities sold under agreements to repurchase and overnight borrowings		1,688			1,738
Accrued expenses and other liabilities		17,996			15,703
Other borrowings		82,900			106,900
Subordinated debentures		34,705			34,653
Total liabilities		1,403,385			1,316,965

SHAREHOLDERS’ EQUITY
Preferred stock, 100,000 shares authorized; none issued or outstanding		–			–
Common stock, $2.50 par value:
Authorized – 10,000,000 shares
Issued and outstanding – 4,563,995 shares in 2024, 4,533,637 shares in 2023		11,406			11,330
Additional paid-in capital		13,225			13,126
Retained earnings		95,498			89,808
Accumulated other comprehensive loss		(12,991	)		(16,434	)
Total shareholders’ equity		107,138			97,830
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,510,523		$	1,414,795


Southern Michigan Bancorp, Inc. condensed consolidated statements of income (unaudited)
(In thousands, except per share data)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest income:
Loans, including fees	$	16,444	$	14,563	$	47,748	$	39,579
Federal funds sold and balances with banks		1,313		786		3,630		2,360
Securities:
Taxable		1,465		1,567		4,512		4,655
Tax-exempt		309		315		904		961
Total interest income		19,531		17,231		56,794		47,555

Interest expense:
Deposits		7,567		5,777		21,655		14,516
Other		1,571		1,519		4,701		3,389
Total interest expense		9,138		7,296		26,356		17,905
Net interest income		10,393		9,935		30,438		29,650
Provision for credit losses		425		25		661		950
Net interest income after provision for credit losses		9,968		9,910		29,777		28,700

Non-interest income:
Service charges on deposit accounts		439		422		1,270		1,248
Trust fees		741		629		2,041		1,787
Net gains on loan sales		181		71		419		186
Earnings on life insurance assets		169		157		498		456
ATM and debit card fee income		465		452		1,356		1,339
Other		177		197		608		644
Total non-interest income		2,172		1,928		6,192		5,660

Non-interest expense:
Salaries and employee benefits		5,528		5,356		16,154		14,751
Occupancy, net		519		429		1,515		1,397
Equipment		400		404		1,233		1,063
Professional and outside services		530		443		1,575		1,473
Software maintenance		626		568		1,817		1,639
ATM expenses		229		195		629		602
Printing, postage, and supplies		124		97		413		318
Telecommunication expenses		75		88		240		268
Other		972		869		2,958		2,525
Total non-interest expense		9,003		8,449		26,534		24,036
INCOME BEFORE INCOME TAXES		3,137		3,389		9,435		10,324
Federal income tax provision		551		622		1,684		1,856
NET INCOME	$	2,586	$	2,767	$	7,751	$	8,468

Basic Earnings Per Common Share	$	0.57	$	0.61	$	1.70	$	1.86
Diluted Earnings Per Common Share		0.57		0.61		1.70		1.86
Dividends Declared Per Common Share		0.15		0.14		0.45		0.42

The MIL Network –

January 24, 2025

MIL-OSI: Morris State Bancshares Announces Quarterly Earnings and Declares Fourth Quarter Dividend

Source: GlobeNewswire (MIL-OSI)

DUBLIN, Ga., Oct. 23, 2024 (GLOBE NEWSWIRE) — Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $5.4 million for the quarter ending September 30, 2024, representing an increase of $124 thousand, or 2.34%, compared to net income of $5.3 million for the quarter ended June 30, 2024. Year over year the Company’s net income increased $954 thousand, or 21.23%, compared to net income of $4.5 million for the quarter ended September 30, 2023. The Company’s quarterly net earnings rose due to sustained loan growth, higher loan yields, an increase in noninterest-bearing deposit accounts, and some stabilization in the cost of funds. These factors combined to strengthen the bank’s net interest margin, bringing it to 4.10%.

“We had a solid third quarter. Our core earnings engine remains strong as reflected by the growth in our net interest income. In the third quarter, we generated net interest income of $14.0 million, which was $428 thousand above the June 30, 2024, level of $13.6 million and $1.1 million above the September 30, 2023 level of $12.9 million,” said Spence Mullis, Chairman and CEO. “The Federal Reserve’s reduction in the Fed funds rate, combined with robust growth in noninterest-bearing balances, has contributed to stabilizing our cost of funds. Despite continued payoffs of larger loans, we continue to fund a good volume of new loans and previously unfunded commitments driving our loan balances slightly higher.”

The net interest margin was 4.10% for the third quarter of 2024 compared to 4.02% for the second quarter of 2024 and 3.94% for the third quarter of 2023. The average yield on earning assets grew nine basis points from 5.96%, as of June 30, 2024, to 6.05%, while the Company’s cost of funds increased two basis points from 2.16% to 2.18% during the same period.

Total deposits declined during the quarter by $16.6 million, or 1.37%, which included a $24 million reduction in brokered money market deposits. However, non-interest-bearing deposits increased $21.5 million, or 7.19% during the quarter, helping to bolster the net interest margin. The bank took down $15.0 million in borrowings from the Federal Home Loan Bank during the third quarter of 2024 to help fund new loan demand and offset the reduction in brokered deposits. Loans increased $6.3 million, or an annualized 2.36% during the third quarter, slowing from the second quarter’s annualized growth of 7.24%. Management anticipates steady loan demand in the fourth quarter as political uncertainty eases in November, providing customers with greater clarity to advance their growth strategies.

The bank’s reserve as a percentage of total loans was 1.30% for September 30, 2024, as compared to 1.30% for June 30, 2024, and 1.32% as of September 30, 2023. The Company’s adversely classified index increased slightly from 6.04% as of June 30, 2024, to 6.15% as of September 30, 2024. The bank’s efficiency ratio increased slightly from 58.36% as of June 30, 2024, to 58.90% as of September 30, 2024.

The Company’s total shareholders’ equity increased 2.35% to $190.6 million as of September 30, 2024, as compared to $186.2 million as of June 30, 2024. Tangible book value per share increased to $16.97 as of September 30, 2024, a 2.66% increase from $16.53 per share on June 30, 2024. On October 16, 2024, the board of directors approved its fourth quarter dividend of $0.092 per share payable on or about December 15th to all shareholders of record as of November 15th.

Forward-looking Statements

Certain statements contained in this release may not be based on historical facts and are forward-looking statements. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “would,” “could” or “intend.” We caution you not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors, including, among others, the business and economic conditions; risks related to the integration of acquired businesses and any future acquisitions; changes in management personnel; interest rate risk; ability to execute on planned expansion and organic growth; credit risk and concentrations associated with the Company’s loan portfolio; asset quality and loan charge-offs; inaccuracy of the assumptions and estimates management of the Company makes in establishing reserves for probable loan losses and other estimates; lack of liquidity; impairment of investment securities, goodwill or other intangible assets; the Company’s risk management strategies; increased competition; system failures or failures to prevent breaches of our network security; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes; and increases in capital requirements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release.


MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES

Consolidating Balance Sheet

	September 30,			June 30,								September 30,
		2024			2024		Change			% Change			2023		Change			% Change
	(Unaudited)			(Unaudited)								(Unaudited)
ASSETS

Cash and due from banks	$	48,180,615		$	43,688,884		$	4,491,731		10.28	%	$	36,373,555		$	11,807,060		32.46	%
Federal funds sold		11,932,122			14,624,710			(2,692,588	)	-18.41	%		8,695,149			3,236,973		37.23	%
Total cash and cash equivalents		60,112,737			58,313,594			1,799,143		3.09	%		45,068,704			15,044,033		33.38	%

Interest-bearing time deposits in other banks		100,000			100,000			—		0.00	%		100,000			—		0.00	%
Securities available for sale, at fair value		6,299,609			7,669,642			(1,370,033	)	-17.86	%		3,879,531			2,420,078		0.00	%
Securities held to maturity, at cost (net of CECL Reserve)		224,532,603			227,532,821			(3,000,218	)	-1.32	%		244,837,916			(20,305,313	)	-8.29	%
Federal Home Loan Bank stock, restricted, at cost		1,740,300			1,027,800			712,500		69.32	%		1,727,100			13,200		0.76	%
Loans, net of unearned income		1,088,132,851			1,081,790,223			6,342,628		0.59	%		1,049,730,890			38,401,961		3.66	%
Less-allowance for credit losses		(14,179,392	)		(14,109,191	)		(70,201	)	0.50	%		(13,860,420	)		(318,972	)	2.30	%
Loans, net		1,073,953,459			1,067,681,032			6,272,427		0.59	%		1,035,870,470			38,082,989		3.68	%
																–
Bank premises and equipment, net		12,912,111			13,051,972			(139,861	)	-1.07	%		13,325,846			(413,735	)	-3.10	%
ROU assets for operating lease, net		854,808			945,268			(90,460	)	-9.57	%		1,216,601			(361,793	)	-29.74	%
Goodwill		9,361,704			9,361,704			—		0.00	%		9,361,704			—		0.00	%
Intangible assets, net		1,422,326			1,508,214			(85,888	)	-5.69	%		1,765,877			(343,551	)	-19.45	%
Other real estate and foreclosed assets		39,755			43,408			(3,653	)	-8.42	%		3,567,309			(3,527,554	)	-98.89	%
Accrued interest receivable		6,640,617			6,421,999			218,618		3.40	%		5,585,081			1,055,536		18.90	%
Cash surrender value of life insurance		15,022,374			14,915,967			106,407		0.71	%		14,613,337			409,037		2.80	%
Other assets		22,311,520			21,721,225			590,295		2.72	%		25,711,989			(3,400,469	)	-13.23	%
Total Assets	$	1,435,303,923		$	1,430,294,646		$	5,009,277		0.35	%	$	1,406,631,465			28,672,458		2.04	%


LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:
Non-interest bearing	$	320,503,732		$	298,997,994		$	21,505,738		7.19	%	$	316,825,603			3,678,129		1.16	%
Interest bearing		876,274,737			914,360,430			(38,085,693	)	-4.17	%		862,167,812			14,106,925		1.64	%
		1,196,778,469			1,213,358,424			(16,579,955	)	-1.37	%		1,178,993,415			17,785,054		1.51	%
																–
Other borrowed funds		34,009,138			18,998,904			15,010,234		79.01	%		42,132,633			(8,123,495	)	-19.28	%
Lease liability for operating lease		854,808			945,268			(90,460	)	-9.57	%		1,216,601			(361,793	)	-29.74	%
Accrued interest payable		2,114,956			1,730,280			384,676		22.23	%		979,913			1,135,043		115.83	%
Accrued expenses and other liabilities		10,938,057			9,038,821			1,899,236		21.01	%		10,056,934			881,123		8.76	%
																–
Total liabilities		1,244,695,428			1,244,071,697			623,731		0.05	%		1,233,379,496			11,315,932		0.92	%

Shareholders’ Equity:
Common stock		10,688,223			10,688,223			—		0.00	%		2,179,210			8,509,013		390.46	%
Paid in capital surplus		34,867,691			34,729,351			138,340		0.40	%		41,548,417			(6,680,726	)	-16.08	%
Retained earnings		131,085,914			132,061,494			(975,580	)	-0.74	%		116,705,941			14,379,973		12.32	%
Current year earnings		15,660,043			10,213,197			5,446,846		53.33	%		13,404,804			2,255,239		16.82	%
Accumulated other comprehensive income (loss)		1,582,952			1,648,392			(65,440	)	-3.97	%		2,148,509			(565,557	)	-26.32	%
Treasury Stock, at cost 91,878		(3,276,328	)		(3,117,708	)		(158,620	)	5.09	%		(2,734,912	)		(541,416	)	19.80	%
Total shareholders’ equity		190,608,495			186,222,949			4,385,546		2.35	%		173,251,969			17,356,526		10.02	%

Total Liabilities and Shareholders’ Equity	$	1,435,303,923		$	1,430,294,646			5,009,277		0.35	%	$	1,406,631,465			28,672,458		2.04	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES

Consolidating Statement of Income
for the Three Months Ended

	September 30,		June 30,							September 30,
		2024		2024	Change			% Change			2023		Change			% Change
	(Unaudited)		(Unaudited)							(Unaudited)
Interest and Dividend Income:
Interest and fees on loans	$	18,630,690	$	17,879,134	$	751,556		4.20	%	$	15,803,711		$	2,826,979		17.89	%
Interest income on securities		1,825,236		1,837,396		(12,160	)	-0.66	%		2,051,695			(226,459	)	-11.04	%
Income on federal funds sold		163,624		156,184		7,440		4.76	%		216,377			(52,753	)	-24.38	%
Income on time deposits held in other banks		338,433		590,205		(251,772	)	-42.66	%		302,545			35,888		11.86	%
Other interest and dividend income		21,031		64,639		(43,608	)	-67.46	%		43,630			(22,599	)	-51.80	%
Total interest and dividend income		20,979,014		20,527,558		451,456		2.20	%		18,417,958			2,561,056		13.91	%

Interest Expense:
Deposits		6,671,982		6,568,679		103,303		1.57	%		5,109,712			1,562,270		30.57	%
Interest on other borrowed funds		309,265		389,629		(80,364	)	-20.63	%		455,105			(145,840	)	-32.05	%
Interest on federal funds purchased		—		—		—		—			—			—		0.00	%
Total interest expense		6,981,247		6,958,308		22,939		0.33	%		5,564,817			1,416,430		25.45	%

Net interest income before provision for loan losses		13,997,767		13,569,250		428,517		3.16	%		12,853,141			1,144,626		8.91	%
Less-provision for credit losses		252,021		272,419		(20,398	)	-7.49	%		(33,351	)		285,372		-855.66	%
Net interest income after provision for credit losses		13,745,746		13,296,831		448,915		3.38	%		12,886,492			859,254		6.67	%

Noninterest Income:
Service charges on deposit accounts		576,751		535,847		40,904		7.63	%		532,598			44,153		8.29	%
Other service charges, commissions and fees		399,839		397,787		2,052		0.52	%		399,587			252		0.06	%
Gain on sales of foreclosed assets		—		—		—		0.00	%		—			—		0.00	%
Gain on sales of premises and equipment		—		141		(141	)	-100.00	%		—			—		0.00	%
Increase in CSV of life insurance		106,407		102,828		3,579		3.48	%		97,005			9,402		9.69	%
Other income		23,002		355,155		(332,153	)	-93.52	%		7,681			15,321		199.47	%
Total noninterest income		1,105,999		1,391,758		(285,759	)	-20.53	%		1,036,871			69,128		6.67	%

Noninterest Expense:
Salaries and employee benefits		4,794,940		4,650,704		144,236		3.10	%		4,374,087			420,853		9.62	%
Occupancy and equipment expenses, net		592,165		536,330		55,835		10.41	%		599,714			(7,549	)	-1.26	%
Loss on sales and calls of securities		—		265		(265	)	0.00	%		—			—		0.00	%
Loss on Sales of premises and equipment		—		—		—		0.00	%		54,269			(54,269.0	)	0.00	%
Loss on sales of foreclosed assets		2,065		—		2,065		0.00	%		320,110			(318,045	)	0.00	%
Other expenses		3,752,517		3,860,188		(107,671	)	-2.79	%		3,837,844			(85,327	)	-2.22	%
Total noninterest expense		9,141,687		9,047,487		94,200		1.04	%		9,186,024			(44,337	)	-0.48	%

Income Before Income Taxes		5,710,058		5,641,102		68,956		1.22	%		4,737,339			972,719		20.53	%
Provision for income taxes		263,212		318,723		(55,511	)	17.42	%		244,258			18,954		7.76	%
														–
Net Income	$	5,446,846	$	5,322,379		124,467		2.34	%	$	4,493,081			953,765		21.23	%


Earnings per common share:
Basic	$	0.51	$	0.50		0.01		2.43	%	$	0.42			0.09		21.00	%
Diluted	$	0.51	$	0.50		0.01		2.00	%	$	0.42			0.09		21.43	%

Per share amounts for September 30, 2023 and previous quarters have been adjusted to reflect the April 22, 2024 5-for-1 stock dividend.

	Quarter Ending

	September 30,		June 30,			September 30,
		2024			2024			2023
Dollars in thousand	(Unaudited)		(Unaudited)			(Unaudited)

Per Share Data
Basic Earnings per Common Share	$	0.51		$	0.50		$	0.42
Diluted Earnings per Common Share		0.51			0.50			0.42
Dividends per Common Share		0.092			0.092			0.088
Book Value per Common Share		17.99			17.56			16.37
Tangible Book Value per Common Share		16.97			16.53			15.32

Average Diluted Shared Outstanding		10,602,348			10,611,811			10,582,485
End of Period Common Shares Outstanding		10,596,345			10,605,080			10,582,494


Annualized Performance Ratios (Bank Only)
Return on Average Assets		1.65%			1.73%			1.45%
Return on Average Equity		12.37%			13.12%			11.37%
Equity/Assets		13.23%			13.18%			12.79%
Yield on Earning Assets		6.05%			5.96%			5.48%
Cost of Funds		2.18%			2.16%			1.69%
Net Interest Margin		4.10%			4.02%			3.94%
Efficiency Ratio		58.90%			58.36%			62.24%

Credit Metrics
Allowance for Loan Losses to Total Loans		1.30%			1.30%			1.32%
Adversely Classified Assets to Tier 1 Capital
plus Allowance for Loan Losses		6.15%			6.04%			7.00%

Per share amounts for September 30, 2023 and previous quarters have been adjusted to reflect the April 22, 2024 5-for-1 stock dividend.

The MIL Network –

January 24, 2025

MIL-OSI: Blue Foundry Bancorp Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

RUTHERFORD, N.J., Oct. 23, 2024 (GLOBE NEWSWIRE) — Blue Foundry Bancorp (NASDAQ:BLFY) (the “Company”), the holding company for Blue Foundry Bank (the “Bank”), today reported a net loss of $4.0 million, or $0.19 per diluted common share, for the three months ended September 30, 2024, compared to net loss of $2.3 million, or $0.11 per diluted common share, for the three months ended June 30, 2024, and a net loss of $1.4 million, or $0.06 per diluted common share, for the three months ended September 30, 2023.

James D. Nesci, President and Chief Executive Officer, commented, “The Company continues to maintain its strong capital position and access to liquidity. We executed on our share repurchase program and increased our tangible book value to $14.74 per share.”

Mr. Nesci also noted, “Deposit growth continued in the third quarter. Increases in our construction and commercial and industrial portfolios drove loan growth during the third quarter as we remain focused on growing our commercial portfolio. Credit quality remained strong highlighted by a 17% improvement in non-performing loans. Our 84 basis point allowance for credit losses now covers non-performing loans by over 2.5 times.”

Highlights for the third quarter of 2024:

Deposits increased $7.5 million to $1.32 billion compared to the prior quarter.
Uninsured deposits to third-party customers totaled approximately 12% of total deposits as of September 30, 2024.
Interest income for the quarter was $21.5 million, an increase of $240 thousand, or 1.1%, compared to the prior quarter.
Interest expense for the quarter was $12.4 million, an increase of $726 thousand, or 6.2%, compared to the prior quarter.
Net interest margin decreased 14 basis points from the prior quarter to 1.82%.
Provision for credit losses of $248 thousand was primarily due to the increase in unused lines of credit partially offset by releases of provision for loans of $5 thousand and for securities of $11 thousand.
Book value per share was $14.76 and tangible book value per share was $14.74. See the “Supplemental Information – Non-GAAP Financial Measures” tables below for additional information regarding our non-GAAP measures.
521,685 shares were repurchased under our share repurchase plans at a weighted average share price of $10.52 per share.

Loans

The Company continues to focus on diversifying its lending portfolio by growing its commercial portfolios. While total loans decreased by $9.7 million during the first nine months of 2024, our construction portfolio increased by $19.7 million and our commercial real estate portfolio increased by $9.2 million, of which $7.1 million was on owner-occupied properties. In addition, our consumer and other loans increased by $7.7 million as we took advantage of an opportunity to participate in a consumer loan participation at an attractive rate with credit enhancements. The residential and multifamily portfolios decreased by $34.2 million and $16.3 million, respectively.

The details of the loan portfolio are below:

	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
	(In thousands)
Residential	$	516,754	$	526,453	$	540,427	$	550,929	$	567,384
Multifamily		666,304		671,185		671,011		682,564		689,966
Commercial real estate		241,711		241,867		244,207		232,505		236,325
Construction		80,081		71,882		63,052		60,414		45,064
Junior liens		24,174		23,653		22,052		22,503		22,297
Commercial and industrial		14,228		12,261		13,372		11,768		9,904
Consumer and other		7,731		83		56		47		50
Total loans		1,550,983		1,547,384		1,554,177		1,560,730		1,570,990
Less: Allowance for credit losses		13,012		13,027		13,749		14,154		13,872
Loans receivable, net	$	1,537,971	$	1,534,357	$	1,540,428	$	1,546,576	$	1,557,118

Deposits

As of September 30, 2024, deposits totaled $1.32 billion, an increase of $73.8 million, or 5.93%, from December 31, 2023, mostly due to the increases of $104.6 million in time deposits partially offset by decreases in savings, non-interest bearing deposits and NOW and demand accounts of $21.8 million, $5.5 million and $3.6 million, respectively. The Company’s strategy is to focus on attracting the full banking relationship of small- to medium-sized businesses through an extensive suite of deposit products. While there is strong competition for deposits in the northern New Jersey market, we were able to increase customer deposits during the quarter. Brokered deposits remain unchanged since year end 2023.

The details of deposits are below:

	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
	(In thousands)
Non-interest bearing deposits	$	22,254	$	24,733	$	25,342	$	27,739	$	23,787
NOW and demand accounts		357,503		368,386		373,172		361,139		378,268
Savings		237,651		246,559		250,298		259,402		278,665
Core deposits		617,408		639,678		648,812		648,280		680,720
Time deposits		701,262		671,478		642,372		596,624		572,384
Total deposits	$	1,318,670	$	1,311,156	$	1,291,184	$	1,244,904	$	1,253,104

Financial Performance Overview:

Third quarter of 2024 compared to the second quarter of 2024

Net interest income compared to the second quarter of 2024:

Net interest income was $9.1 million for the three months ended September 30, 2024 compared to $9.6 million for the second quarter of 2024 as the increase in interest paid on interest-bearing liabilities outpaced the increase in interest received on interest-earning assets.
Net interest margin decreased by 14 basis points to 1.82%.
The yield on average interest-earning assets decreased five basis points to 4.32%, while the cost of average interest-bearing liabilities increased nine basis points to 3.03%.
Average interest-earning assets increased by $20.9 million and average interest-bearing liabilities increased by $29.3 million.

Non-interest income compared to the second quarter of 2024:

Non-interest income decreased $149 thousand primarily due the absence of the gain of $123 thousand on the sale of REO property, which was recorded in the second quarter.

Non-interest expense compared to the second quarter of 2024:

Non-interest expense increased $52 thousand primarily driven by increases in professional fees, data processing expense and FDIC insurance premiums of $190 thousand, $77 thousand and $42 thousand, respectively, partially offset by decreases of $329 thousand in compensation and benefits expenses and $32 thousand in occupancy and equipment.

Income tax expense compared to the second quarter of 2024:

The Company did not record a tax benefit for the losses incurred during the third quarter of 2024 and the second quarter of 2024 due to the full valuation allowance required on its deferred tax assets.
The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At September 30, 2024, the valuation allowance on deferred tax assets was $22.2 million.

Third quarter of 2024 compared to the third quarter of 2023

Net interest income compared to the third quarter of 2023:

Net interest income was $9.1 million for the three months ended September 30, 2024 compared to $9.9 million for the same period in 2023. The decrease was largely due to increases in rates paid on interest-bearing liabilities, which outpaced rates received on interest-earning assets.
Net interest margin decreased by 12 basis points to 1.82%.
The yield on average interest-earning assets increased 35 basis points to 4.32%, while the cost of average interest-bearing liabilities increased 54 basis points to 3.03%.
Average interest-earning assets decreased by $32.6 million and average interest-bearing liabilities decreased by $4.1 million. Average FHLB advances decreased by $48.3 million, while average interest-bearing deposits increased by $44.1 million.

Non-interest expense compared to the third quarter of 2023:

Non-interest expense was $13.3 million, an increase of $873 thousand driven by increases of $666 thousand, $167 thousand and $126 thousand in compensation and benefits expenses, professional services and occupancy and equipment expenses, respectively, partially offset by decreases of $61 thousand in data processing and $27 thousand in FDIC insurance premiums.

Income tax expense compared to the third quarter of 2023:

The Company did not record a tax benefit for the losses incurred during the third quarters of 2024 and 2023 due to the full valuation allowance required on its deferred tax assets.
The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At September 30, 2024, the valuation allowance on deferred tax assets was $22.2 million.

Nine Months Ended September 30, 2024 compared to the nine months ended September 30, 2023

Net interest income compared to the nine months ended September 30, 2023:

Net interest income was $28.1 million, a decrease of $4.6 million.
Net interest margin decreased 28 basis points to 1.90%.
The yield on average interest-earning assets increased 39 basis points to 4.30% while the cost of average interest-bearing liabilities increased 78 basis points to 2.93%.
Average interest-earning assets decreased by $39.1 million and average interest-bearing deposits increased by $37.0 million.
Average borrowings decreased by $43.3 million.

Non-interest income compared to the nine months ended September 30, 2023:

Non-interest income increased $141 thousand primarily due to the gain on the sale of REO property during the second quarter of 2024.

Non-interest expense compared to the nine months ended September 30, 2023:

Non-interest expense was $39.7 million, an increase of $705 thousand.
Compensation and benefits expense increased by $938 thousand and occupancy and equipment costs increased by $474 thousand. These increases were partially offset by decreases of $475 thousand and $224 thousand for data processing expense and fees for professional services, respectively.

Income tax expense compared to the nine months ended September 30, 2023:

The Company did not record a tax benefit for the losses incurred during the nine months ended September 30, 2024 and 2023 due to the full valuation allowance required on its deferred tax assets.
The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At September 30, 2024, the valuation allowance on deferred tax assets was $22.2 million.

Balance Sheet Summary:

September 30, 2024 compared to December 31, 2023

Cash and cash equivalents:

Cash and cash equivalents increased $30.1 million to $76.1 million.

Securities available-for-sale:

Securities available-for-sale increased $7.0 million to $290.8 million due to the decrease in unrealized losses of $7.8 million. The favorable impact of the change in the unrealized loss position was partially offset as maturities, calls and paydowns outpaced purchases during the period.

Other investments:

Other investments decreased $2.1 million due to a decrease in FHLB stock as a result of a reduction in FHLB borrowings.

Total loans:

Total loans held for investment decreased $9.7 million to $1.55 billion.
Residential loans and multifamily loans decreased $34.2 million and $16.3 million, respectively, partially offset by increases in construction loans of $19.7 million, commercial real estate loans of $9.2 million and consumer loans of $7.7 million to further diversify our loan portfolio.
The Company purchased a consumer loan participation of $8.0 million and residential loans totaling $7.8 million during the third quarter.

Deposits:

Deposits totaled $1.32 billion, an increase of $73.8 million from December 31, 2023. This was largely the result of a $104.6 million increase in certificate of deposits.
Core deposits (defined as non-interest bearing checking, NOW and demand accounts and savings accounts) represented 46.8% of total deposits, compared to 52.1% at December 31, 2023.
Brokered deposits totaled $125.0 million at both September 30, 2024 and December 31, 2023.
Uninsured and uncollateralized deposits to third-party customers were $159.6 million, or 12% of total deposits, at the end of the third quarter.

Borrowings:

FHLB borrowings decreased $49.0 million to $348.5 million as deposit growth outpaced asset growth.
As of September 30, 2024, the Company had $255.7 million of additional borrowing capacity at the FHLB and $78.2 million of other unsecured lines of credit.

Capital:

Shareholders’ equity decreased $16.3 million to $339.3 million. The decrease was primarily driven by the repurchase of shares, including net shares, at a cost of $14.4 million. Additionally, the year-to-date loss, partially offset by favorable changes in accumulated other comprehensive income, also contributed to the decrease.
Tangible equity to tangible assets was 16.50% and tangible common equity per share outstanding was $14.74. See the “Supplemental Information – Non-GAAP Financial Measures” tables below for additional information regarding our non-GAAP measures.
The Bank’s capital ratios remain above the FDIC’s “well capitalized” standards.

Asset quality:

As of September 30, 2024, the allowance for credit losses (“ACL”) on loans as a percentage of gross loans was 0.84%.
The Company recorded a provision for credit losses of $248 thousand for the third quarter of 2024 and a net release of provision for credit losses of $1.0 million for the nine months ended September 30, 2024. For the third quarter of 2024, there was a provision of $264 thousand in the ACL for off-balance-sheet commitments, offset by a release of $5 thousand in the ACL for loans and $11 thousand in the ACL for held-to-maturity securities. For the nine months ended September 30, 2024, there was a release of $1.1 million in the ACL for loans and $36 thousand in the ACL for held-to-maturity securities, offset by a provision of $94 thousand in the ACL for off-balance-sheet commitments. The release was driven by the impact of the economic forecasts for the key drivers of our loan segments partially offset by an increase in off-balance-sheet commitments.
Non-performing loans totaled $5.1 million, or 0.33% of total loans compared to $5.9 million, or 0.38% of total loans at December 31, 2023.
Net charge-offs were $11 thousand and $36 thousand for the three and nine months ended September 30, 2024, respectively.
Ratio of allowance for credit losses on loans to non-performing loans was 252.86% at September 30, 2024 compared to 239.98% at December 31, 2023.

About Blue Foundry

Blue Foundry Bancorp is the holding company for Blue Foundry Bank, a place where things are made, purpose is formed, and ideas are crafted. Headquartered in Rutherford NJ, with a presence in Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Somerset and Union counties, Blue Foundry Bank is a full-service, innovative bank serving the doers, movers, and shakers in our communities. We offer individuals and businesses alike the tailored products and services they need to build their futures. With a rich history dating back more than 145 years, Blue Foundry Bank has a longstanding commitment to its customers and communities. To learn more about Blue Foundry Bank visit BlueFoundryBank.com or call (888) 931-BLUE. Member FDIC.

Conference Call Information

A conference call covering Blue Foundry’s third quarter 2024 earnings announcement will be held today, Wednesday, October 23, 2024 at 11:00 a.m. (EDT). To listen to the live call, please dial 1-833-470-1428 (toll free) or +1-404-975-4839 (international) and use access code 725750. The webcast (audio only) will be available on ir.bluefoundrybank.com. The conference call will be recorded and will be available on the Company’s website for one month.

Contact:
James D. Nesci
President and Chief Executive Officer
BlueFoundryBank.com
jnesci@bluefoundrybank.com
201-972-8900

Forward Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase in the level of defaults, losses and prepayments on loans we have made and make; general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums; changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; a failure or breach of our operational or security systems or infrastructure, including cyber-attacks; the inability of third party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related there to; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; the current or anticipated impact of military conflict, terrorism or other geopolitical events; the ability of the U.S. Government to manage federal debt limits; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

BLUE FOUNDRY BANCORP AND SUBSIDIARY Consolidated Statements of Financial Condition

	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
	(unaudited)		(unaudited)		(unaudited)		(audited)
	(Dollars in Thousands)
ASSETS
Cash and cash equivalents	$	76,109	$	60,262	$	53,753	$	46,025
Securities available-for-sale, at fair value		290,806		297,790		265,191		283,766
Securities held to maturity		33,119		33,169		33,217		33,254
Other investments		18,203		17,942		17,908		20,346
Loans, net		1,537,971		1,534,357		1,540,428		1,546,576
Real estate owned, net		—		—		593		593
Interest and dividends receivable		8,386		7,882		8,001		7,595
Premises and equipment, net		30,161		30,858		31,696		32,475
Right-of-use assets		24,190		24,596		24,454		25,172
Bank owned life insurance		22,399		22,274		22,153		22,034
Other assets		13,749		16,322		30,393		27,127
Total assets	$	2,055,093	$	2,045,452	$	2,027,787	$	2,044,963

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits	$	1,318,670	$	1,311,156	$	1,291,184	$	1,244,904
Advances from the Federal Home Loan Bank		348,500		342,500		342,500		397,500
Advances by borrowers for taxes and insurance		9,909		9,875		9,368		8,929
Lease liabilities		25,870		26,243		26,081		26,777
Other liabilities		12,845		10,081		8,498		11,213
Total liabilities		1,715,794		1,699,855		1,677,631		1,689,323
Shareholders’ equity		339,299		345,597		350,156		355,640
Total liabilities and shareholders’ equity	$	2,055,093	$	2,045,452	$	2,027,787	$	2,044,963

BLUE FOUNDRY BANCORP AND SUBSIDIARY Consolidated Statements of Operations (Dollars in Thousands Except Per Share Data) (Unaudited)

	Three months ended									Nine months ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
	(Dollars in thousands)
Interest income:
Loans	$	17,646		$	17,570		$	16,728		$	52,408		$	48,778
Taxable investment income		3,850			3,686			3,339			11,150			9,663
Non-taxable investment income		36			36			106			108			329
Total interest income		21,532			21,292			20,173			63,666			58,770
Interest expense:
Deposits		9,712			9,132			7,034			27,257			16,361
Borrowed funds		2,733			2,587			3,263			8,332			9,686
Total interest expense		12,445			11,719			10,297			35,589			26,047
Net interest income		9,087			9,573			9,876			28,077			32,723
Provision for (release of) credit losses		248			(762	)		(717	)		(1,049	)		(597	)
Net interest income after provision for (release of) credit losses		8,839			10,335			10,593			29,126			33,320
Non-interest income:
Fees and service charges		272			296			291			897			833
Gain on sale of loans		—			—			—			36			159
Other income		115			240			78			441			241
Total non-interest income		387			536			369			1,374			1,233
Non-interest expense:
Compensation and employee benefits		7,306			7,635			6,640			22,490			21,552
Occupancy and equipment		2,230			2,262			2,104			6,684			6,210
Data processing		1,412			1,335			1,473			4,134			4,609
Advertising		87			52			85			211			234
Professional services		813			623			646			2,166			2,390
Federal deposit insurance		236			194			263			629			599
Other		1,183			1,114			1,183			3,410			3,425
Total non-interest expense		13,267			13,215			12,394			39,724			39,019
Loss before income tax expense		(4,041	)		(2,344	)		(1,432	)		(9,224	)		(4,466	)
Income tax expense		—			—			—			—			—
Net loss	$	(4,041	)	$	(2,344	)	$	(1,432	)	$	(9,224	)	$	(4,466	)
Basic loss per share	$	(0.19	)	$	(0.11	)	$	(0.06	)	$	(0.43	)	$	(0.18	)
Diluted loss per share	$	(0.19	)	$	(0.11	)	$	(0.06	)	$	(0.43	)	$	(0.18	)
Weighted average shares outstanding
Basic		21,263,482			21,735,002			23,278,490			21,695,895			24,289,599
Diluted (1)		21,263,482			21,735,002			23,278,490			21,695,895			24,289,599

(1) The assumed vesting of outstanding restricted stock units had an antidilutive effect on diluted earnings per share due to the Company’s net loss for the 2024 and 2023 periods.

BLUE FOUNDRY BANCORP AND SUBSIDIARY Consolidated Financial Highlights (Dollars in Thousands Except Per Share Data) (Unaudited)

	Three months ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
	(Dollars in thousands)
Performance Ratios (%):
Return on average assets		(0.79	)		(0.47	)		(0.56	)		(0.57	)		(0.27	)
Return on average equity		(4.68	)		(2.71	)		(3.23	)		(3.25	)		(1.55	)
Interest rate spread ⁽¹⁾		1.29			1.43			1.40			1.33			1.48
Net interest margin ⁽²⁾		1.82			1.96			1.92			1.84			1.94
Efficiency ratio ^{(3) (4)}		140.04			130.73			134.19			128.41			120.98
Average interest-earning assets to average interest-bearing liabilities		121.37			122.28			122.50			122.93			123.05
Tangible equity to tangible assets ⁽⁴⁾		16.50			16.88			17.25			17.37			17.07
Book value per share ⁽⁵⁾	$	14.76		$	14.70		$	14.61		$	14.51		$	14.27
Tangible book value per share ⁽⁴⁾⁽⁵⁾	$	14.74		$	14.69		$	14.60		$	14.49		$	14.24

Asset Quality:
Non-performing loans	$	5,146		$	6,208		$	6,691		$	5,898		$	6,139
Real estate owned, net		—			—			593			593			593
Non-performing assets	$	5,146		$	6,208		$	7,284		$	6,491		$	6,732
Allowance for credit losses to total loans (%)		0.84			0.84			0.88			0.91			0.88
Allowance for credit losses to non-performing loans (%)		252.86			209.84			205.48			239.98			225.97
Non-performing loans to total loans (%)		0.33			0.40			0.43			0.38			0.39
Non-performing assets to total assets (%)		0.25			0.30			0.36			0.32			0.33
Net charge-offs to average outstanding loans during the period (%)		—			—			—			—			0.01

(1) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
(3) Efficiency ratio represents adjusted non-interest expense divided by the sum of net interest income plus non-interest income.
(4) See the “Supplemental Information – Non-GAAP Financial Measures” tables below for additional information regarding our non-GAAP measures.
(5) September 30, 2024 per share metrics computed using 22,990,908 total shares outstanding.

BLUE FOUNDRY BANCORP AND SUBSIDIARY Analysis of Net Interest Income (Dollars in Thousands) (Unaudited)

	Three Months Ended,
	September 30, 2024						June 30, 2024						September 30, 2023
	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
	(Dollars in thousands)
Assets:
Loans ⁽¹⁾	$	1,548,962	$	17,646	4.53	%	$	1,550,736	$	17,570	4.56	%	$	1,577,173	$	16,728	4.21	%
Mortgage-backed securities		181,596		1,186	2.60	%		167,219		960	2.31	%		170,326		840	1.96	%
Other investment securities		173,008		1,527	3.51	%		175,394		1,688	3.87	%		194,953		1,507	3.07	%
FHLB stock		17,666		406	9.15	%		17,223		447	10.44	%		21,047		456	8.60	%
Cash and cash equivalents		61,507		767	4.96	%		51,290		627	4.92	%		51,884		642	4.91	%
Total interest-earning assets		1,982,739		21,532	4.32	%		1,961,862		21,292	4.37	%		2,015,383		20,173	3.97	%
Non-interest earning assets		61,787						56,826						58,042
Total assets	$	2,044,526					$	2,018,688					$	2,073,425
Liabilities and shareholders’ equity:
NOW, savings, and money market deposits	$	598,048		1,925	1.28	%	$	611,931		1,955	1.28	%	$	684,228		2,123	1.23	%
Time deposits		688,570		7,787	4.50	%		655,755		7,177	4.40	%		558,252		4,911	3.49	%
Interest-bearing deposits		1,286,618		9,712	3.00	%		1,267,686		9,132	2.90	%		1,242,480		7,034	2.25	%
FHLB advances		347,076		2,733	3.13	%		336,742		2,587	3.09	%		395,359		3,263	3.27	%
Total interest-bearing liabilities		1,633,694		12,445	3.03	%		1,604,428		11,719	2.94	%		1,637,839		10,297	2.49	%
Non-interest bearing deposits		23,421						25,076						25,540
Non-interest bearing other		43,713						41,061						44,628
Total liabilities		1,700,828						1,670,565						1,708,007
Total shareholders’ equity		343,698						348,123						365,418
Total liabilities and shareholders’ equity	$	2,044,526					$	2,018,688					$	2,073,425
Net interest income			$	9,087					$	9,573					$	9,876
Net interest rate spread ⁽²⁾					1.29	%					1.43	%					1.48	%
Net interest margin ⁽³⁾					1.82	%					1.96	%					1.94	%

(1) Average loan balances are net of deferred loan fees and costs, premiums and discounts and include non-accrual loans.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.

BLUE FOUNDRY BANCORP AND SUBSIDIARY Analysis of Net Interest Income (Dollars in Thousands) (Unaudited)

	Nine Months Ended September 30,
	2024						2023
	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
	(Dollars in thousands)
Assets:
Loans ⁽¹⁾	$	1,551,734	$	52,408	4.50	%	$	1,571,204	$	48,778	4.15	%
Mortgage-backed securities		169,765		3,022	2.37	%		174,742		2,789	2.13	%
Other investment securities		177,455		4,867	3.65	%		197,522		4,523	3.06	%
FHLB stock		18,335		1,345	9.77	%		21,343		1,106	6.93	%
Cash and cash equivalents		54,810		2,024	4.92	%		46,363		1,574	4.54	%
Total interest-earning assets		1,972,099		63,666	4.30	%		2,011,174		58,770	3.91	%
Non-interest earning assets		59,245						56,762
Total assets	$	2,031,344					$	2,067,936
Liabilities and shareholders’ equity:
NOW, savings, and money market deposits	$	608,677	$	5,816	1.27	%	$	753,419	$	6,350	1.13	%
Time deposits		654,639		21,441	4.36	%		472,866		10,011	2.83	%
Interest-bearing deposits		1,263,316		27,257	2.87	%		1,226,285		16,361	1.78	%
FHLB advances		352,544		8,332	3.15	%		395,800		9,686	3.27	%
Total interest-bearing liabilities		1,615,860		35,589	2.93	%		1,622,085		26,047	2.15	%
Non-interest bearing deposits		24,992						23,092
Non-interest bearing other		42,120						44,572
Total liabilities		1,682,972						1,689,749
Total shareholders’ equity		348,372						378,187
Total liabilities and shareholders’ equity	$	2,031,344					$	2,067,936
Net interest income			$	28,077					$	32,723
Net interest rate spread ⁽²⁾					1.37	%					1.76	%
Net interest margin ⁽³⁾					1.90	%					2.18	%

(1) Average loan balances are net of deferred loan fees and costs, premiums and discounts and include non-accrual loans.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.

BLUE FOUNDRY BANCORP AND SUBSIDIARY
Supplemental Information – Non-GAAP Financial Measures
(Unaudited)

This press release contains certain supplemental financial information, described in the table below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”) that management uses in its analysis of Blue Foundry’s performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Blue Foundry’s financial results. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Blue Foundry strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Net income, as presented in the Consolidated Statements of Operations, includes the provision for credit losses and income tax expense, while pre-provision net revenue does not.

	Three months ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
	(Dollars in thousands, except per share data)
Pre-provision net revenue and efficiency ratio:
Net interest income	$	9,087		$	9,573		$	9,417		$	9,196		$	9,876
Other income		387			536			451			572			369
Total revenue		9,474			10,109			9,868			9,768			10,245
Operating expenses		13,267			13,215			13,242			12,543			12,394
Pre-provision net loss	$	(3,793	)	$	(3,106	)	$	(3,374	)	$	(2,775	)	$	(2,149	)
Efficiency ratio		140.0	%		130.7	%		134.2	%		128.4	%		121.0	%

Core deposits:
Total deposits	$	1,318,670		$	1,311,156		$	1,291,184		$	1,244,904		$	1,253,104
Less: time deposits		701,262			671,478			642,372			596,624			572,384
Core deposits	$	617,408		$	639,678		$	648,812		$	648,280		$	680,720
Core deposits to total deposits		46.8	%		48.8	%		50.2	%		52.1	%		54.3	%

Total assets	$	2,055,093		$	2,045,452		$	2,027,787		$	2,044,963		$	2,101,055
Less: intangible assets		300			386			473			557			644
Tangible assets	$	2,054,793		$	2,045,066		$	2,027,314		$	2,044,406		$	2,100,411

Tangible equity:
Shareholders’ equity	$	339,299		$	345,597		$	350,156		$	355,640		$	359,149
Less: intangible assets		300			386			473			557			644
Tangible equity	$	338,999		$	345,211		$	349,683		$	355,083		$	358,505

Tangible equity to tangible assets		16.50	%		16.88	%		17.25	%		17.37	%		17.07	%

Tangible book value per share:
Tangible equity	$	338,999		$	345,211		$	349,683		$	355,083		$	358,505
Shares outstanding		22,990,908			23,505,357			23,958,888			24,509,950			25,174,412
Tangible book value per share	$	14.74		$	14.69		$	14.60		$	14.49			14.24

The MIL Network –

January 24, 2025

MIL-OSI Europe: Debates – Monday, 21 October 2024 – Strasbourg – Provisional edition

Source: European Parliament

Verbatim report of proceedings

413k

815k

Monday, 21 October 2024 – Strasbourg

Provisional edition

IN THE CHAIR: ROBERTA METSOLA
President

1. Resumption of the session

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

2. Opening of the sitting

(The sitting opened at 17:03)

3. Statements by the President

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

(Applause)

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

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

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

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

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

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

This House remembers her and we honour her legacy.

(Applause)

4. Approval of the minutes of the previous sitting

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

5. Composition of Parliament

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

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

6. Composition of committees and delegations

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

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

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

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

8. Corrigenda (Rule 251)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10. Order of business

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

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

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

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

So that is why the EPP will reject this request.

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

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

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

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

(Parliament rejected the request)

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

(Parliament rejected the request)

So the agenda remains unchanged.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PRZEWODNICTWO: EWA KOPACZ
Wiceprzewodnicząca

President. – Thank you very much, Mr Letta.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Zgłoszenia z sali

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Koniec zgłoszeń z sali)

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

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

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

14. Implementation of the Single European Sky (debate)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PREȘEDINȚIA: VICTOR NEGRESCU
Vicepreședinte

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Intervenții la cerere

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

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

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

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

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

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

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

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

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

(Încheierea intervențiilor la cerere)

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

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

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

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

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

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

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

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

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

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

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

President. – The debate is closed.

The vote will take place tomorrow.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IN THE CHAIR: ESTEBAN GONZÁLEZ PONS
Vice-President

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

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

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

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

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

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

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

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

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

Catch-the-eye procedure

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

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

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

(End of catch-the-eye procedure)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

President. – The debate is closed.

16. One-minute speeches on matters of political importance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

President. – That concludes this item.

17. Agenda of the next sitting

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

18. Approval of the minutes of the sitting

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

19. Closure of the sitting

(The sitting closed at 22:02)

MIL OSI Europe News –

January 24, 2025

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

Source: GlobeNewswire (MIL-OSI)

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

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

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

Third Quarter 2024 Highlights

Income Statement

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

Balance Sheet and Asset Quality

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

Non-GAAP Financial Measures

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

About First Community Bankshares, Inc.

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

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


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Amounts in thousands, except share and per share data)
	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,
	2024			2024			2024			2023			2023			2024			2023
Interest income
Interest and fees on loans	$	32,120		$	32,696		$	33,418		$	33,676		$	33,496		$	98,234		$	93,051
Interest on securities		1,070			1,211			1,698			1,888			1,912			3,979			6,068
Interest on deposits in banks		3,702			2,882			913			438			697			7,497			2,044
Total interest income		36,892			36,789			36,029			36,002			36,105			109,710			101,163
Interest expense
Interest on deposits		5,298			4,877			4,365			3,935			2,758			14,540			5,406
Interest on borrowings		–			–			35			4			–			35			136
Total interest expense		5,298			4,877			4,400			3,939			2,758			14,575			5,542
Net interest income		31,594			31,912			31,629			32,063			33,347			95,135			95,621
Provision for credit losses		1,360			144			1,011			1,029			1,109			2,515			6,956
Net interest income after provision		30,234			31,768			30,618			31,034			32,238			92,620			88,665
Noninterest income		10,452			9,342			9,259			10,462			9,622			29,053			26,990
Noninterest expense		24,177			24,897			23,386			26,780			22,913			72,460			68,397
Income before income taxes		16,509			16,213			16,491			14,716			18,947			49,213			47,258
Income tax expense		3,476			3,527			3,646			2,932			4,307			10,649			11,022
Net income	$	13,033		$	12,686		$	12,845		$	11,784		$	14,640		$	38,564		$	36,236


Earnings per common share
Basic	$	0.71		$	0.69		$	0.70		$	0.64		$	0.78		$	2.10		$	2.03
Diluted	$	0.71		$	0.71		$	0.71		$	0.66		$	0.79		$	2.09		$	2.06
Cash dividends per common share
Regular		0.31			0.29			0.29			0.29			0.29			0.89			0.87
Weighted average shares outstanding
Basic		18,279,612			18,343,958			18,476,128			18,530,114			18,786,032			18,366,249			17,816,505
Diluted		18,371,907			18,409,876			18,545,910			18,575,226			18,831,836			18,432,023			17,857,494
Performance ratios
Return on average assets		1.60	%		1.58	%		1.60	%		1.43	%		1.74	%		1.60	%		1.49	%
Return on average common equity		10.04	%		10.02	%		10.18	%		9.39	%		11.63	%		10.08	%		10.25	%
Return on average tangible common equity(1)		14.46	%		14.54	%		14.82	%		13.82	%		17.11	%		14.61	%		14.94	%

____________
(1)	A non-GAAP financial measure defined as net income divided by average stockholders’ equity less average goodwill and other intangible assets.


CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited)

(Amounts in thousands)	Three Months Ended										Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,
	2024		2024		2024		2023		2023		2024		2023
Noninterest income
Wealth management	$	1,071	$	1,064	$	1,099	$	1,052	$	1,145	$	3,234	$	3,127
Service charges on deposits		3,661		3,428		3,310		3,637		3,729		10,399		10,359
Other service charges and fees		3,697		3,670		3,450		3,541		3,564		10,817		10,106
(Loss) gain on sale of securities		–		–		–		–		–		–		(21	)
Other operating income		2,023		1,180		1,400		2,232		1,184		4,603		3,419
Total noninterest income	$	10,452	$	9,342	$	9,259	$	10,462	$	9,622	$	29,053	$	26,990
Noninterest expense
Salaries and employee benefits	$	13,129	$	12,491	$	12,581	$	12,933	$	12,673	$	38,201	$	36,954
Occupancy expense		1,270		1,309		1,378		1,252		1,271		3,957		3,715
Furniture and equipment expense		1,574		1,687		1,545		1,489		1,480		4,806		4,389
Service fees		2,461		2,427		2,449		2,255		2,350		7,337		6,653
Advertising and public relations		967		933		796		843		968		2,696		2,457
Professional fees		221		330		372		787		172		923		780
Amortization of intangibles		536		530		530		536		536		1,596		1,195
FDIC premiums and assessments		365		364		369		376		392		1,098		1,135
Merger expense		–		–		–		–		–		–		2,393
Litigation expense		–		1,800		–		3,000		–		1,800		–
Other operating expense		3,654		3,026		3,366		3,309		3,071		10,046		8,726
Total noninterest expense	$	24,177	$	24,897	$	23,386	$	26,780	$	22,913	$	72,460	$	68,397


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)

(Amounts in thousands, except per share data)	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,
	2024			2024			2024			2023			2023			2024			2023
Adjusted Net Income for diluted earnings per share	$	13,033		$	12,686		$	12,845		$	12,314		$	14,855		$	38,564		$	36,828
Non-GAAP adjustments:
Loss (gain) on sale of securities		–			–			–			–			–			–			21
Merger expense		–			–			–			–			–			–			2,393
Day 2 provision for allowance for credit losses – Surrey		–			–			–			–			–			–			1,614
Litigation expense		–			1,800			–			3,000			–			1,800			–
Other items(1)		(825	)		–			–			–			(204	)		(825	)		–
Total adjustments		(825	)		1,800			–			3,000			(204	)		975			4,028
Tax effect		(198	)		432			–			720			(49	)		234			532
Adjusted earnings, non-GAAP	$	12,406		$	14,054		$	12,845		$	14,594		$	14,700		$	39,305		$	40,324

Adjusted diluted earnings per common share, non-GAAP	$	0.68		$	0.76		$	0.69		$	0.79		$	0.78		$	2.13		$	2.26
Performance ratios, non-GAAP
Adjusted return on average assets		1.53	%		1.75	%		1.60	%		1.77	%		1.75	%		1.63	%		1.66	%
Adjusted return on average common equity		9.56	%		11.10	%		10.18	%		11.63	%		11.68	%		10.27	%		11.40	%
Adjusted return on average tangible common equity (2)		13.77	%		16.11	%		14.82	%		17.11	%		17.18	%		14.89	%		16.62	%

____________
(1)	Includes other non-recurring income and expense items.
(2)	A non-GAAP financial measure defined as adjusted earnings divided by average stockholders’ equity less average goodwill and other intangible assets.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Three Months Ended September 30,
	2024							2023
	Average				Average Yield/			Average				Average Yield/
(Amounts in thousands)	Balance		Interest(1)		Rate(1)			Balance		Interest(1)		Rate(1)
Assets
Earning assets
Loans(2)(3)	$	2,455,807	$	32,201		5.22	%	$	2,604,885	$	33,566		5.11	%
Securities available for sale		133,654		1,099		3.27	%		284,659		1,952		2.72	%
Interest-bearing deposits		270,440		3,701		5.44	%		50,855		697		5.44	%
Total earning assets		2,859,901		37,001		5.15	%		2,940,399		36,215		4.89	%
Other assets		371,358							393,001
Total assets	$	3,231,259						$	3,333,400

Liabilities and stockholders’ equity
Interest-bearing deposits
Demand deposits	$	656,780	$	234		0.14	%	$	699,066	$	165		0.09	%
Savings deposits		886,766		3,735		1.68	%		862,121		1,941		0.89	%
Time deposits		245,020		1,329		2.16	%		263,940		652		0.98	%
Total interest-bearing deposits		1,788,566		5,298		1.18	%		1,825,127		2,758		0.60	%
Borrowings
Retail repurchase agreements		1,054		–		0.05	%		1,254		–		N/M
Total borrowings		1,054		–		0.05	%		1,254		–		N/M
Total interest-bearing liabilities		1,789,620		5,298		1.18	%		1,826,381		2,758		0.60	%
Noninterest-bearing demand deposits		877,472							964,093
Other liabilities		47,892							43,574
Total liabilities		2,714,984							2,834,048
Stockholders’ equity		516,275							499,352
Total liabilities and stockholders’ equity	$	3,231,259						$	3,333,400
Net interest income, FTE(1)			$	31,703						$	33,457
Net interest rate spread						3.97	%						4.29	%
Net interest margin, FTE(1)						4.41	%						4.51	%

____________
(1)	Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2)	Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3)	Interest on loans includes non-cash and accelerated purchase accounting accretion of $592 thousand and $874 thousand for the three months ended September 30, 2024 and 2023, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Nine Months Ended September 30,
	2024							2023
	Average				Average Yield/			Average				Average Yield/
(Amounts in thousands)	Balance		Interest(1)		Rate(1)			Balance		Interest(1)		Rate(1)
Assets
Earning assets
Loans(2)(3)	$	2,501,209	$	98,479		5.26	%	$	2,523,814	$	93,261		4.94	%
Securities available for sale		172,331		4,073		3.16	%		306,435		6,191		2.70	%
Interest-bearing deposits		182,773		7,499		5.48	%		51,759		2,047		5.29	%
Total earning assets		2,856,313		110,051		5.15	%		2,882,008		101,499		4.71	%
Other assets		372,663							366,243
Total assets	$	3,228,976						$	3,248,251

Liabilities and stockholders’ equity
Interest-bearing deposits
Demand deposits	$	662,433	$	570		0.11	%	$	682,820	$	225		0.04	%
Savings deposits		875,797		10,730		1.64	%		850,411		3,731		0.59	%
Time deposits		247,088		3,240		1.75	%		272,435		1,450		0.71	%
Total interest-bearing deposits		1,785,318		14,540		1.09	%		1,805,666		5,406		0.40	%
Borrowings
Federal funds purchased		839		35		5.52	%		3,532		135		5.11	%
Retail repurchase agreements		1,061		–		0.05	%		1,674		1		0.06	%
Total borrowings		1,900		35		2.46	%		5,206		136		3.49	%
Total interest-bearing liabilities		1,787,218		14,575		1.09	%		1,810,872		5,542		0.41	%
Noninterest-bearing demand deposits		883,013							924,591
Other liabilities		47,772							40,014
Total liabilities		2,718,003							2,775,477
Stockholders’ equity		510,973							472,774
Total liabilities and stockholders’ equity	$	3,228,976						$	3,248,251
Net interest income, FTE(1)			$	95,476						$	95,957
Net interest rate spread						4.06	%						4.30	%
Net interest margin, FTE(1)						4.46	%						4.45	%

____________
(1)	Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2)	Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3)	Interest on loans includes non-cash and accelerated purchase accounting accretion of $2.04 million and $1.95 million for the nine months ended September 30, 2024 and 2023, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

	September 30,			June 30,			March 31,			December 31,			September 30,
(Amounts in thousands, except per share data)	2024			2024			2024			2023			2023
Assets
Cash and cash equivalents	$	315,338		$	329,877		$	248,905		$	116,420		$	113,397
Debt securities available for sale, at fair value		166,669			129,686			166,247			280,961			275,332
Loans held for investment, net of unearned income		2,444,113			2,473,268			2,519,833			2,572,298			2,593,472
Allowance for credit losses		(35,118	)		(34,885	)		(35,461	)		(36,189	)		(36,031	)
Loans held for investment, net		2,408,995			2,438,383			2,484,372			2,536,109			2,557,441
Premises and equipment, net		49,654			50,528			51,333			50,680			51,205
Other real estate owned		346			100			374			192			243
Interest receivable		9,883			9,984			10,719			10,881			10,428
Goodwill		143,946			143,946			143,946			143,946			143,946
Other intangible assets		13,550			14,085			14,615			15,145			15,681
Other assets		115,980			116,230			115,470			114,211			116,552
Total assets	$	3,224,361		$	3,232,819		$	3,235,981		$	3,268,545		$	3,284,225

Liabilities
Deposits
Noninterest-bearing	$	869,723		$	889,462		$	902,396		$	931,920		$	944,301
Interest-bearing		1,789,530			1,787,810			1,779,819			1,790,405			1,801,835
Total deposits		2,659,253			2,677,272			2,682,215			2,722,325			2,746,136
Securities sold under agreements to repurchase		954			894			1,006			1,119			1,029
Interest, taxes, and other liabilities		43,460			45,769			45,816			41,807			41,393
Total liabilities		2,703,667			2,723,935			2,729,037			2,765,251			2,788,558

Stockholders’ equity
Common stock		18,291			18,270			18,413			18,502			18,671
Additional paid-in capital		168,691			168,272			173,041			175,841			180,951
Retained earnings		342,121			334,756			327,389			319,902			313,489
Accumulated other comprehensive loss		(8,409	)		(12,414	)		(11,899	)		(10,951	)		(17,444	)
Total stockholders’ equity		520,694			508,884			506,944			503,294			495,667
Total liabilities and stockholders’ equity	$	3,224,361		$	3,232,819		$	3,235,981		$	3,268,545		$	3,284,225

Shares outstanding at period-end		18,290,938			18,270,273			18,413,088			18,502,396			18,671,470
Book value per common share	$	28.47		$	27.85		$	27.53		$	27.20		$	26.55
Tangible book value per common share(1)		19.86			19.20			18.92			18.60			18.00

____________
(1)	A non-GAAP financial measure defined as stockholders’ equity less goodwill and other intangible assets, divided by shares outstanding.


SELECTED CREDIT QUALITY INFORMATION (Unaudited)

	September 30,			June 30,			March 31,			December 31,			September 30,
(Amounts in thousands)	2024			2024			2024			2023			2023
Allowance for Credit Losses
Balance at beginning of period:
Allowance for credit losses – loans	$	34,885		$	35,461		$	36,189		$	36,031		$	36,177
Allowance for credit losses – loan commitments		441			746			746			758			964
Total allowance for credit losses beginning of period		35,326			36,207			36,935			36,789			37,141
Adjustments to beginning balance:
Allowance for credit losses – loans – Surrey acquisition for purchased credit deteriorated loans		–			–			–			–			–
Allowance for credit losses – loan commitments		–			–			–			–			–
Net Adjustments		–			–			–			–			–
Provision for credit losses:
Provision for credit losses – loans		1,360			449			1,011			1,041			1,315
(Recovery of) provision for credit losses – loan commitments		–			(305	)		–			(12	)		(206	)
Total provision for credit losses – loans and loan commitments		1,360			144			1,011			1,029			1,109
Charge-offs		(1,799	)		(1,599	)		(2,448	)		(2,105	)		(2,157	)
Recoveries		672			574			709			1,222			696
Net (charge-offs) recoveries		(1,127	)		(1,025	)		(1,739	)		(883	)		(1,461	)
Balance at end of period:
Allowance for credit losses – loans		35,118			34,885			35,461			36,189			36,031
Allowance for credit losses – loan commitments		441			441			746			746			758
Ending balance	$	35,559		$	35,326		$	36,207		$	36,935		$	36,789

Nonperforming Assets
Nonaccrual loans	$	19,754		$	19,815		$	19,617		$	19,356		$	18,366
Accruing loans past due 90 days or more		176			19			30			104			59
Modified loans past due 90 days or more		–			–			–			–			–
Total nonperforming loans		19,930			19,834			19,647			19,460			18,425
OREO		346			100			374			192			243
Total nonperforming assets	$	20,276		$	19,934		$	20,021		$	19,652		$	18,668


Additional Information
Total modified loans	$	2,320		$	2,290		$	2,177		$	1,873		$	1,674

Asset Quality Ratios
Nonperforming loans to total loans		0.82	%		0.80	%		0.78	%		0.76	%		0.71	%
Nonperforming assets to total assets		0.63	%		0.62	%		0.62	%		0.60	%		0.57	%
Allowance for credit losses to nonperforming loans		176.21	%		175.88	%		180.49	%		185.97	%		195.55	%
Allowance for credit losses to total loans		1.44	%		1.41	%		1.41	%		1.41	%		1.39	%
Annualized net charge-offs (recoveries) to average loans		0.18	%		0.16	%		0.27	%		0.14	%		0.22	%

FOR MORE INFORMATION, CONTACT:

David D. Brown

(276) 326-9000

The MIL Network –

January 24, 2025

MIL-OSI: Enphase Energy Reports Financial Results for the Third Quarter of 2024

Source: GlobeNewswire (MIL-OSI)

FREMONT, Calif., Oct. 22, 2024 (GLOBE NEWSWIRE) — Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company and the world’s leading supplier of microinverter-based solar and battery systems, announced today financial results for the third quarter of 2024, which included the summary below from its President and CEO, Badri Kothandaraman.

We reported quarterly revenue of $380.9 million in the third quarter of 2024, along with 48.1% for non-GAAP gross margin. We shipped 1,731,768 microinverters, or approximately 730.0 megawatts DC, and 172.9 megawatt hours of IQ^® Batteries.

Financial highlights for the third quarter of 2024 are listed below:

Quarterly revenue of $380.9 million
GAAP gross margin of 46.8%; non-GAAP gross margin of 48.1% with net IRA benefit
Non-GAAP gross margin of 38.9%, excluding net IRA benefit of 9.2%
GAAP operating income of $49.8 million; non-GAAP operating income of $101.4 million
GAAP net income of $45.8 million; non-GAAP net income of $88.4 million
GAAP diluted earnings per share of $0.33, non-GAAP diluted earnings per share of $0.65
Free cash flow of $161.6 million; ending cash, cash equivalents, and marketable securities of $1.77 billion

Our revenue and earnings for the third quarter of 2024 are provided below, compared with the prior quarter:

(In thousands, except per share and percentage data)

	GAAP									Non-GAAP
	Q3 2024			Q2 2024			Q3 2023			Q3 2024			Q2 2024			Q3 2023
Revenue	$	380,873		$	303,458		$	551,082		$	380,873		$	303,458		$	551,082
Gross margin		46.8	%		45.2	%		47.5	%		48.1	%		47.1	%		48.4	%
Operating expenses	$	128,383		$	135,367		$	144,024		$	81,612		$	81,706		$	99,027
Operating income	$	49,788		$	1,799		$	117,989		$	101,411		$	61,080		$	167,593
Net income	$	45,762		$	10,833		$	113,953		$	88,402		$	58,824		$	141,849
Basic EPS	$	0.34		$	0.08		$	0.84		$	0.65		$	0.43		$	1.04
Diluted EPS	$	0.33		$	0.08		$	0.80		$	0.65		$	0.43		$	1.02

Total revenue for the third quarter of 2024 was $380.9 million, compared to $303.5 million in the second quarter of 2024. Our revenue in the United States for the third quarter of 2024 increased approximately 43%, compared to the second quarter of 2024. The increase was due to higher shipments to distributors as inventory returned to normal levels. Our revenue in Europe decreased approximately 15% for the third quarter of 2024, compared to the second quarter of 2024. The decline in revenue was the result of a further softening in European demand.

Our non-GAAP gross margin was 48.1% in the third quarter of 2024, compared to 47.1% in the second quarter of 2024. Our non-GAAP gross margin, excluding net IRA benefit, was 38.9% in the third quarter of 2024, compared to 41.0% in the second quarter of 2024.

Our non-GAAP operating expenses were $81.6 million in the third quarter of 2024, compared to $81.7 million in the second quarter of 2024. Our non-GAAP operating income was $101.4 million in the third quarter of 2024, compared to $61.1 million in the second quarter of 2024.

We exited the third quarter of 2024 with $1.77 billion in cash, cash equivalents, and marketable securities and generated $170.1 million in cash flow from operations in the third quarter of 2024. Our capital expenditures were $8.5 million in the third quarter of 2024, compared to $9.6 million in the second quarter of 2024.

In the third quarter of 2024, we repurchased 434,947 shares of our common stock at an average price of $114.48 per share for a total of approximately $49.8 million. We also spent approximately $6.3 million dollars by withholding shares to cover taxes for employee stock vesting that reduced the diluted shares by 59,607 shares.

We shipped 172.9 megawatt hours of IQ Batteries in the third quarter of 2024, compared to 120.2 megawatt hours in the second quarter of 2024. We are now shipping our third generation of IQ Batteries, the IQ^® Battery 5P™, to the United States, Puerto Rico, Mexico, Canada, Australia, the United Kingdom, Italy, France, the Netherlands, Luxembourg, and Belgium. More than 9,000 installers worldwide are certified to install our IQ Batteries, compared to more than 7,400 installers worldwide in the second quarter of 2024.

During the third quarter of 2024, we shipped approximately 1,176,000 microinverters from our contract manufacturing facilities in the United States that we booked for 45X production tax credits. We began shipping IQ8HC™ Microinverters with higher domestic content, produced at our contract manufacturing facilities in the United States. We expect to begin shipping our commercial microinverters, and batteries with higher domestic content, produced at our United States contract manufacturing facilities in the fourth quarter of 2024.

During the third quarter of 2024, we launched AI-based software that is designed to optimize energy use by integrating solar and consumption forecasting with electricity tariff. This is intended to help consumers maximize savings as energy markets become increasingly complex, such as with dynamic electricity rates in parts of Europe and NEM 3.0 in California. We are gearing up to launch our second-generation IQ^® EV charger, the 3-Phase IQ Battery with backup, and the IQ^® Balcony Solar Kit all for the European market – pushing the boundaries of innovation. Finally, our fourth-generation energy system, featuring the IQ^® Meter Collar, 10 kWh IQ Battery, and enhanced IQ^® Combiner, is expected to debut in the United States in early 2025, targeting a substantial reduction in installation costs.

BUSINESS HIGHLIGHTS

On Oct. 16, 2024, Enphase Energy announced that it started shipping IQ8™ Microinverters to support newer, high-powered solar panels in select countries and territories, including the Netherlands, Austria, New Caledonia, and Malta.

On Oct. 9, 2024, Enphase Energy announced that it is expanding its support for grid services programs – or virtual power plants (VPPs) – in New Hampshire, North Carolina, and California, powered by the new IQ Battery 5P.

On Oct. 3, 2024, Enphase Energy announced the launch of its IQ8X™ Microinverters in Australia, and that all IQ8 Microinverters activated starting Oct. 1, 2024 in Australia come with an industry-leading 25-year limited warranty, currently the longest standard residential warranty in the Australian market.

On Sept. 24, 2024, Enphase Energy announced the launch of its most powerful Enphase^® Energy System™ to-date, featuring the new IQ Battery 5P and IQ8 Microinverters, for customers in India.

On Sept. 16, 2024, Enphase Energy announced that it started shipping the IQ Battery 5P in Belgium. Enphase also introduced IQ^® Energy Management, its new AI-based energy management software to enable support for dynamic electricity rates and the integration of third-party EV chargers and heat pumps in Belgium.

On Sept. 10, 2024, Enphase Energy announced initial shipments of IQ8HC Microinverters supplied from contract manufacturing facilities in the United States with higher domestic content than previous models. The microinverters have SKUs with a “DOM” suffix, indicating the increased amount of domestic content.

On Sept. 4, 2024, Enphase Energy announced a solution for expanding legacy net energy metering (NEM) solar energy systems in California without penalty using new Enphase Energy Systems configurations with IQ^® Microinverters, IQ Batteries, and Enphase Power Control.

On Aug. 27, 2024, Enphase Energy announced the availability of pre-orders for IQ Battery 5Ps produced in the United States. Pre-orders are also available for IQ8HC Microinverters, IQ8P-3P™ Microinverters, and IQ8X Microinverters produced in the United States with higher domestic content.

On Aug. 19, 2024, Enphase Energy announced that it started shipping the IQ Battery 5P in the Netherlands. Enphase also introduced IQ Energy Management, its new energy management software to enable support for dynamic electricity rates and the integration of third-party EV chargers and heat pumps in the Netherlands.

On Aug. 8, 2024, Enphase Energy announced the launch of its new North American Charging Standard (NACS) connectors for its entire line of IQ EV Chargers. NACS connectors and charger ports have recently become the industry standard embraced by several major automakers for electric vehicles (EVs).

On Aug. 5, 2024, Enphase Energy announced that it started shipping IQ8P™ and IQ8HC Microinverters to support newer, high-powered solar panels in select countries throughout the Caribbean.

On Aug. 1, 2024, Enphase Energy announced that it started shipping IQ8 Microinverters to support newer, high-powered solar modules in select countries throughout Europe, including France, Germany, Spain, Bulgaria, Estonia, Slovakia, and Croatia.

FOURTH QUARTER 2024 FINANCIAL OUTLOOK

For the fourth quarter of 2024, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

Revenue to be within a range of $360.0 million to $400.0 million, which includes shipments of 140 to 160 megawatt hours of IQ Batteries
GAAP gross margin to be within a range of 47.0% to 50.0% with net IRA benefit
Non-GAAP gross margin to be within a range of 49.0% to 52.0% with net IRA benefit and 39.0% to 42.0% excluding net IRA benefit. Non-GAAP gross margin excludes stock-based compensation expense and acquisition related amortization
Net IRA benefit to be within a range of $38.0 million to $41.0 million based on estimated shipments of 1,300,000 units of U.S. manufactured microinverters
GAAP operating expenses to be within a range of $135.0 million to $139.0 million
Non-GAAP operating expenses to be within a range of $81.0 million to $85.0 million, excluding $54.0 million estimated for stock-based compensation expense, acquisition related expenses and amortization

For 2024, GAAP and non-GAAP annualized effective tax rate with IRA benefit, excluding discrete items, is expected to be within a range of 17.0% to 19.0%.

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Use of non-GAAP Financial Measures

Enphase Energy has presented certain non-GAAP financial measures in this press release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (GAAP). Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this press release. Non-GAAP financial measures presented by Enphase Energy include non-GAAP gross profit, gross margin, operating expenses, income from operations, net income, net income per share (basic and diluted), net IRA benefit, and free cash flow.

These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Enphase Energy’s results of operations as determined in accordance with GAAP. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Enphase Energy uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. Enphase Energy believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

As presented in the “Reconciliation of Non-GAAP Financial Measures” tables below, each of the non-GAAP financial measures excludes one or more of the following items for purposes of calculating non-GAAP financial measures to facilitate an evaluation of Enphase Energy’s current operating performance and a comparison to its past operating performance:

Stock-based compensation expense. Enphase Energy excludes stock-based compensation expense from its non-GAAP measures primarily because they are non-cash in nature. Moreover, the impact of this expense is significantly affected by Enphase Energy’s stock price at the time of an award over which management has limited to no control.

Acquisition related expenses and amortization. This item represents expenses incurred related to Enphase Energy’s business acquisitions, which are non-recurring in nature, and amortization of acquired intangible assets, which is a non-cash expense. Acquisition related expenses and amortization of acquired intangible assets are not reflective of Enphase Energy’s ongoing financial performance.

Restructuring and asset impairment charges. Enphase Energy excludes restructuring and asset impairment charges due to the nature of the expenses being unusual and arising outside the ordinary course of continuing operations. These costs primarily consist of fees paid for cash-based severance costs and asset write-downs of property and equipment and acquired intangible assets, and other contract termination costs resulting from restructuring initiatives.

Non-cash interest expense. This item consists primarily of amortization of debt issuance costs and accretion of debt discount because these expenses do not represent a cash outflow for Enphase Energy except in the period the financing was secured and such amortization expense is not reflective of Enphase Energy’s ongoing financial performance.

Non-GAAP income tax adjustment. This item represents the amount adjusted to Enphase Energy’s GAAP tax provision or benefit to exclude the income tax effects of GAAP adjustments such as stock-based compensation, amortization of purchased intangibles, and other non-recurring items that are not reflective of Enphase Energy ongoing financial performance.

Non-GAAP net income per share, diluted. Enphase Energy excludes the dilutive effect of in-the-money portion of convertible senior notes as they are covered by convertible note hedge transactions that reduce potential dilution to our common stock upon conversion of the Notes due 2025, Notes due 2026, and Notes due 2028, and includes the dilutive effect of employee’s stock-based awards and the dilutive effect of warrants. Enphase Energy believes these adjustments provide useful supplemental information to the ongoing financial performance.

Net IRA benefit. This item represents the advanced manufacturing production tax credit (AMPTC) from the IRA for manufacturing microinverters in the United States, partially offset by the incremental manufacturing cost incurred in the United States relative to manufacturing in Mexico, India, and China. The AMPTC is accounted for by Enphase Energy as an income-based government grants that reduces cost of revenues in the condensed consolidated statements of operations.

Free cash flow. This item represents net cash flows from operating activities less purchases of property and equipment.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its third quarter 2024 results and fourth quarter 2024 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (833) 634-5018. A live webcast of the conference call will also be accessible from the “Investor Relations” section of Enphase Energy’s website at https://investor.enphase.com. Following the webcast, an archived version will be available on the website for approximately one year. In addition, an audio replay of the conference call will be available by calling (877) 344-7529; replay access code 2677879, beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to its fourth quarter of 2024 financial outlook, including revenue, shipments of IQ Batteries by megawatt hours, gross margin with net IRA benefit and excluding net IRA benefit, estimated shipments of U.S. manufactured microinverters, operating expenses, and annualized effective tax rate with IRA benefit; its expectations regarding the expected net IRA benefit; its expectations on the timing and introduction of new products and updates to existing products; its expectations for global capacity of microinverters; its ability to support grid services in new locations; the ability of its AI-based software to help consumers maximize savings as energy markets become increasingly complex; and the capabilities, advantages, features, and performance of its technology and products. These forward-looking statements are based on Enphase Energy’s current expectations and inherently involve significant risks and uncertainties. Enphase Energy’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of certain risks and uncertainties including those risks described in more detail in its most recently filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other documents on file with the SEC from time to time and available on the SEC’s website at http://www.sec.gov. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.

A copy of this press release can be found on the investor relations page of Enphase Energy’s website at https://investor.enphase.com.

About Enphase Energy, Inc.

Enphase Energy, a global energy technology company based in Fremont, CA, is the world’s leading supplier of microinverter-based solar and battery systems that enable people to harness the sun to make, use, save, and sell their own power—and control it all with a smart mobile app. The company revolutionized the solar industry with its microinverter-based technology and builds all-in-one solar, battery, and software solutions. Enphase has shipped approximately 78.0 million microinverters, and over 4.5 million Enphase-based systems have been deployed in more than 160 countries. For more information, visit https://enphase.com/.

© 2024 Enphase Energy, Inc. All rights reserved. Enphase Energy, Enphase, the “e” logo, IQ, IQ8, and certain other marks listed at https://enphase.com/trademark-usage-guidelines are trademarks or service marks of Enphase Energy, Inc. Other names are for informational purposes and may be trademarks of their respective owners.

Contact:

Zach Freedman
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Net revenues	$	380,873		$	303,458		$	551,082		$	947,670		$	1,988,216
Cost of revenues		202,702			166,292			289,069			516,825			1,076,490
Gross profit		178,171			137,166			262,013			430,845			911,726
Operating expenses:
Research and development		47,843			48,871			54,873			150,925			172,045
Sales and marketing		49,671			51,775			55,357			154,753			178,383
General and administrative		30,192			33,550			33,794			98,924			104,456
Restructuring and asset impairment charges		677			1,171			—			3,755			870
Total operating expenses		128,383			135,367			144,024			408,357			455,754
Income from operations		49,788			1,799			117,989			22,488			455,972
Other income, net
Interest income		19,977			19,203			19,669			58,889			49,235
Interest expense		(2,237	)		(2,220	)		(2,196	)		(6,653	)		(6,571	)
Other income (expense), net		(16,785	)		(7,566	)		1,883			(24,264	)		2,276
Total other income, net		955			9,417			19,356			27,972			44,940
Income before income taxes		50,743			11,216			137,345			50,460			500,912
Income tax provision		(4,981	)		(383	)		(23,392	)		(9,962	)		(82,895	)
Net income	$	45,762		$	10,833		$	113,953		$	40,498		$	418,017
Net income per share:
Basic	$	0.34		$	0.08		$	0.84		$	0.30		$	3.06
Diluted	$	0.33		$	0.08		$	0.80		$	0.30		$	2.92
Shares used in per share calculation:
Basic		135,329			135,646			136,165			135,621			136,491
Diluted		139,914			136,123			143,863			136,236			145,081

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	256,325	$	288,748
Marketable securities		1,510,299		1,406,286
Accounts receivable, net		232,225		445,959
Inventory		158,837		213,595
Prepaid expenses and other assets		203,195		88,930
Total current assets		2,360,881		2,443,518
Property and equipment, net		148,444		168,244
Operating lease, right of use asset, net		28,120		19,887
Intangible assets, net		51,152		68,536
Goodwill		214,292		214,562
Other assets		185,448		215,895
Deferred tax assets, net		275,854		252,370
Total assets	$	3,264,191	$	3,383,012
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	112,417	$	116,164
Accrued liabilities		189,819		261,919
Deferred revenues, current		129,556		118,300
Warranty obligations, current		35,755		36,066
Debt, current		99,931		—
Total current liabilities		567,478		532,449
Long-term liabilities:
Deferred revenues, non-current		354,210		369,172
Warranty obligations, non-current		148,477		153,021
Other liabilities		62,392		51,008
Debt, non-current		1,200,261		1,293,738
Total liabilities		2,332,818		2,399,388
Total stockholders’ equity		931,373		983,624
Total liabilities and stockholders’ equity	$	3,264,191	$	3,383,012

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Cash flows from operating activities:
Net income	$	45,762		$	10,833		$	113,953		$	40,498		$	418,017
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,103			20,484			19,448			60,724			53,867
Net amortization (accretion) of premium (discount) on marketable securities		(2,904	)		(1,030	)		5,094			(1,109	)		(12,611	)
Provision for doubtful accounts		2,704			1,897			653			4,471			1,282
Asset impairment		17,568			6,241			903			24,141			903
Non-cash interest expense		2,173			2,157			2,114			6,462			6,254
Net loss (gain) from change in fair value of debt securities		741			1,931			(1,910	)		1,730			(5,408	)
Stock-based compensation		45,940			52,757			43,814			159,530			157,635
Deferred income taxes		(5,276	)		(14,076	)		(11,499	)		(27,644	)		(38,295	)
Changes in operating assets and liabilities:
Accounts receivable		49,414			82,183			(34,752	)		208,956			(118,249	)
Inventory		17,231			31,825			(8,003	)		54,758			(24,406	)
Prepaid expenses and other assets		(64,149	)		(42,810	)		(15,383	)		(117,856	)		(57,376	)
Accounts payable, accrued and other liabilities		32,088			(23,944	)		9,903			(58,140	)		117,128
Warranty obligations		7,053			15			8,151			(4,855	)		57,420
Deferred revenues		1,690			(1,401	)		13,369			(5,265	)		105,169
Net cash provided by operating activities		170,138			127,062			145,855			346,401			661,330
Cash flows from investing activities:
Purchases of property and equipment		(8,533	)		(9,636	)		(23,848	)		(25,540	)		(90,326	)
Purchases of marketable securities		(319,190	)		(300,053	)		(470,766	)		(1,091,511	)		(1,743,674	)
Maturities and sale of marketable securities		215,241			282,063			494,804			994,677			1,406,608
Investments in private companies		—			—			(15,000	)		—			(15,000	)
Net cash used in investing activities		(112,482	)		(27,626	)		(14,810	)		(122,374	)		(442,392	)
Cash flows from financing activities:
Partial settlement of convertible notes		(5	)		—			—			(7	)		—
Repurchase of common stock		(49,794	)		(99,908	)		(110,000	)		(191,698	)		(310,000	)
Proceeds from issuance of common stock under employee equity plans		14			6,769			719			7,969			1,315
Payment of withholding taxes related to net share settlement of equity awards		(6,286	)		(7,473	)		(8,465	)		(73,801	)		(93,100	)
Net cash used in financing activities		(56,071	)		(100,612	)		(117,746	)		(257,537	)		(401,785	)
Effect of exchange rate changes on cash and cash equivalents		2,638			(374	)		(1,900	)		1,087			(322	)
Net increase (decrease) in cash and cash equivalents		4,223			(1,550	)		11,399			(32,423	)		(183,169	)
Cash and cash equivalents—Beginning of period		252,102			253,652			278,676			288,748			473,244
Cash and cash equivalents —End of period	$	256,325		$	252,102		$	290,075		$	256,325		$	290,075

ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Gross profit (GAAP)	$	178,171		$	137,166		$	262,013		$	430,845		$	911,726
Stock-based compensation		2,948			3,730			2,708			10,860			9,775
Acquisition related amortization		1,904			1,890			1,899			5,685			5,686
Gross profit (Non-GAAP)	$	183,023		$	142,786		$	266,620		$	447,390		$	927,187

Gross margin (GAAP)		46.8	%		45.2	%		47.5	%		45.5	%		45.9	%
Stock-based compensation		0.8			1.3			0.6			1.1			0.5
Acquisition related amortization		0.5			0.6			0.3			0.6			0.2
Gross margin (Non-GAAP)		48.1	%		47.1	%		48.4	%		47.2	%		46.6	%

Operating expenses (GAAP)	$	128,383		$	135,367		$	144,024		$	408,357		$	455,754
Stock-based compensation⁽¹⁾		(42,992	)		(49,027	)		(41,106	)		(148,670	)		(147,860	)
Acquisition related expenses and amortization		(3,102	)		(3,463	)		(3,891	)		(10,027	)		(11,429	)
Restructuring and asset impairment charges		(677	)		(1,171	)		—			(3,755	)		(901	)
Operating expenses (Non-GAAP)	$	81,612		$	81,706		$	99,027		$	245,905		$	295,564

⁽¹⁾Includes stock-based compensation as follows:
Research and development	$	19,790		$	20,210		$	19,285		$	64,550		$	64,528
Sales and marketing		14,237			16,784			13,297			49,199			49,231
General and administrative		8,965			12,033			8,524			34,921			34,101
Total	$	42,992		$	49,027		$	41,106		$	148,670		$	147,860

Income from operations (GAAP)	$	49,788		$	1,799		$	117,989		$	22,488		$	455,972
Stock-based compensation		45,940			52,757			43,814			159,530			157,635
Acquisition related expenses and amortization		5,006			5,353			5,790			15,712			17,115
Restructuring and asset impairment charges		677			1,171			—			3,755			901
Income from operations (Non-GAAP)	$	101,411		$	61,080		$	167,593		$	201,485		$	631,623

Net income (GAAP)	$	45,762		$	10,833		$	113,953		$	40,498		$	418,017
Stock-based compensation		45,940			52,757			43,814			159,530			157,635
Acquisition related expenses and amortization		5,006			5,353			5,790			15,712			17,115
Restructuring and asset impairment charges		677			1,171			—			3,755			901
Non-cash interest expense		2,173			2,157			2,114			6,462			6,254
Non-GAAP income tax adjustment		(11,156	)		(13,447	)		(23,822	)		(30,775	)		(61,413	)
Net income (Non-GAAP)	$	88,402		$	58,824		$	141,849		$	195,182		$	538,509

Net income per share, basic (GAAP)	$	0.34		$	0.08		$	0.84		$	0.30		$	3.06
Stock-based compensation		0.34			0.39			0.32			1.17			1.15
Acquisition related expenses and amortization		0.04			0.04			0.04			0.12			0.13
Restructuring and asset impairment charges		0.01			0.01			—			0.03			0.01
Non-cash interest expense		0.02			0.02			0.02			0.05			0.04
Non-GAAP income tax adjustment		(0.10	)		(0.11	)		(0.18	)		(0.23	)		(0.44	)
Net income per share, basic (Non-GAAP)	$	0.65		$	0.43		$	1.04		$	1.44		$	3.95

Shares used in basic per share calculation GAAP and Non-GAAP		135,329			135,646			136,165			135,621			136,491

Net income per share, diluted (GAAP)	$	0.33		$	0.08		$	0.80		$	0.30		$	2.92
Stock-based compensation		0.33			0.38			0.32			1.17			1.17
Acquisition related expenses and amortization		0.04			0.04			0.04			0.12			0.12
Restructuring and asset impairment charges		0.01			0.01			—			0.03			0.01
Non-cash interest expense		0.02			0.02			0.02			0.05			0.04
Non-GAAP income tax adjustment		(0.08	)		(0.10	)		(0.16	)		(0.24	)		(0.40	)
Net income per share, diluted (Non-GAAP)⁽²⁾	$	0.65		$	0.43		$	1.02		$	1.43		$	3.86

Shares used in diluted per share calculation GAAP		139,914			136,123			143,863			136,236			145,081
Shares used in diluted per share calculation Non-GAAP		135,839			136,123			138,535			136,236			139,753

Income-based government grants (GAAP)	$	46,552		$	24,329		$	18,532		$	89,498		$	20,583
Incremental cost for manufacturing in U.S.		(11,396	)		(5,950	)		(4,085	)		(22,228	)		(4,491	)
Net IRA benefit (Non-GAAP)	$	35,156		$	18,379		$	14,447		$	67,270		$	16,092

Net cash provided by operating activities (GAAP)	$	170,138		$	127,062		$	145,855		$	346,401		$	661,330
Purchases of property and equipment		(8,533	)		(9,636	)		(23,848	)		(25,540	)		(90,326	)
Free cash flow (Non-GAAP)	$	161,605		$	117,426		$	122,007		$	320,861		$	571,004

(2) Calculation of non-GAAP diluted net income per share for the three and nine months ended September 30, 2023 excludes convertible Notes due 2023 interest expense, net of tax of less than $0.1 million from non-GAAP net income.

This press release was published by a CLEAR® Verified individual.

The MIL Network –

January 24, 2025

MIL-OSI: National Bank Holdings Corporation Announces Third Quarter 2024 Financial Results and Increase to Quarterly Dividend

Source: GlobeNewswire (MIL-OSI)

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


	For the three months ended						For the nine months ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
Total interest and dividend income	$	138,003	$	132,447	$	126,110	$	402,182	$	360,712
Total interest expense		50,350		48,873		38,333		146,925		88,262
Net interest income		87,653		83,574		87,777		255,257		272,450
Taxable equivalent adjustment		1,816		1,711		1,575		5,220		4,432
Net interest income FTE⁽¹⁾		89,469		85,285		89,352		260,477		276,882
Provision expense for credit losses		2,000		2,776		1,125		4,776		3,725
Net interest income after provision for credit losses FTE⁽¹⁾		87,469		82,509		88,227		255,701		273,157
Non-interest income:
Service charges		4,912		4,295		4,849		13,598		13,394
Bank card fees		4,832		4,882		4,993		14,292		14,721
Mortgage banking income		2,981		3,296		4,688		8,932		11,614
Other non-interest income		5,664		1,556		4,835		13,290		8,124
Total non-interest income		18,389		14,029		19,365		50,112		47,853
Non-interest expense:
Salaries and benefits		37,331		36,933		35,027		110,784		103,231
Occupancy and equipment		9,697		10,120		9,167		29,758		27,366
Professional fees		2,111		1,706		2,215		5,463		7,951
Data processing		4,398		4,117		3,546		12,581		10,257
Other non-interest expense		8,648		8,222		8,640		25,523		25,693
Other intangible assets amortization		1,977		1,977		2,008		5,962		5,378
Total non-interest expense		64,162		63,075		60,603		190,071		179,876

Income before income taxes FTE⁽¹⁾		41,696		33,463		46,989		115,742		141,134
Taxable equivalent adjustment		1,816		1,711		1,575		5,220		4,432
Income before income taxes		39,880		31,752		45,414		110,522		136,702
Income tax expense		6,775		5,617		9,327		19,891		27,775
Net income	$	33,105	$	26,135	$	36,087	$	90,631	$	108,927
Earnings per share – basic	$	0.86	$	0.68	$	0.95	$	2.37	$	2.87
Earnings per share – diluted		0.86		0.68		0.94		2.36		2.85

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

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


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

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

NATIONAL BANK HOLDINGS CORPORATION
Loan Portfolio
(Dollars in thousands)

Period End Loan Balances by Type


					September 30, 2024				September 30, 2024
					vs. June 30, 2024				vs. September 30, 2023
	September 30, 2024		June 30, 2024		% Change		September 30, 2023		% Change
Originated:
Commercial:
Commercial and industrial	$	1,894,830	$	1,906,095	(0.6	)%	$	1,784,188	6.2	%
Municipal and non-profit		1,096,843		1,063,706	3.1	%		1,012,967	8.3	%
Owner-occupied commercial real estate		949,330		921,122	3.1	%		827,679	14.7	%
Food and agribusiness		257,743		248,401	3.8	%		258,609	(0.3	)%
Total commercial		4,198,746		4,139,324	1.4	%		3,883,443	8.1	%
Commercial real estate non-owner occupied		1,113,796		1,116,424	(0.2	)%		1,026,133	8.5	%
Residential real estate		933,644		923,313	1.1	%		897,804	4.0	%
Consumer		13,600		14,385	(5.5	)%		16,700	(18.6	)%
Total originated		6,259,786		6,193,446	1.1	%		5,824,080	7.5	%

Acquired:
Commercial:
Commercial and industrial		116,683		124,104	(6.0	)%		156,012	(25.2	)%
Municipal and non-profit		282		288	(2.1	)%		305	(7.5	)%
Owner-occupied commercial real estate		221,928		232,890	(4.7	)%		247,701	(10.4	)%
Food and agribusiness		43,733		48,061	(9.0	)%		61,551	(28.9	)%
Total commercial		382,626		405,343	(5.6	)%		465,569	(17.8	)%
Commercial real estate non-owner occupied		720,384		752,040	(4.2	)%		787,926	(8.6	)%
Residential real estate		349,916		369,003	(5.2	)%		398,187	(12.1	)%
Consumer		1,783		2,321	(23.2	)%		2,676	(33.4	)%
Total acquired		1,454,709		1,528,707	(4.8	)%		1,654,358	(12.1	)%
Total loans	$	7,714,495	$	7,722,153	(0.1	)%	$	7,478,438	3.2	%

Loan Fundings⁽¹⁾


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

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

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


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

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

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


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

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

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

Allowance for Credit Losses Analysis


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

Past Due and Non-accrual Loans


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

Asset Quality Data


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

NATIONAL BANK HOLDINGS CORPORATION
Key Metrics⁽¹⁾


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

Total Loans Asset Quality Data^(6)(7)(8)
Non-performing loans to total loans		0.31	%		0.34	%		0.44	%		0.31	%		0.44	%
Non-performing assets to total loans and OREO		0.32	%		0.36	%		0.49	%		0.32	%		0.49	%
Allowance for credit losses to total loans		1.23	%		1.25	%		1.25	%		1.23	%		1.33	%
Allowance for credit losses to non-performing loans		403.68	%		370.18	%		281.36	%		403.68	%		281.36	%
Net charge-offs to average loans		0.18	%		0.22	%		0.01	%		0.13	%		0.02	%

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

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

Tangible Common Book Value Ratios


	September 30, 2024			June 30, 2024			December 31, 2023			September 30, 2023
Total shareholders’ equity	$	1,291,997		$	1,247,644		$	1,212,807		$	1,163,585
Less: goodwill and other intangible assets, net		(358,754	)		(360,732	)		(364,716	)		(366,724	)
Add: deferred tax liability related to goodwill		13,203			12,871			12,208			11,876
Tangible common equity (non-GAAP)	$	946,446		$	899,783		$	860,299		$	808,737

Total assets	$	9,993,283		$	9,970,851		$	9,951,064		$	9,866,283
Less: goodwill and other intangible assets, net		(358,754	)		(360,732	)		(364,716	)		(366,724	)
Add: deferred tax liability related to goodwill		13,203			12,871			12,208			11,876
Tangible assets (non-GAAP)	$	9,647,732		$	9,622,990		$	9,598,556		$	9,511,435

Tangible common equity to tangible assets calculations:
Total shareholders’ equity to total assets		12.93	%		12.51	%		12.19	%		11.79	%
Less: impact of goodwill and other intangible assets, net		(3.12	)%		(3.16	)%		(3.23	)%		(3.29	)%
Tangible common equity to tangible assets (non-GAAP)		9.81	%		9.35	%		8.96	%		8.50	%

Tangible common book value per share calculations:
Tangible common equity (non-GAAP)	$	946,446		$	899,783		$	860,299		$	808,737
Divided by: ending shares outstanding		37,988,364			37,899,453			37,784,851			37,739,776
Tangible common book value per share (non-GAAP)	$	24.91		$	23.74		$	22.77		$	21.43

Tangible common book value per share, excluding accumulated other comprehensive loss calculations:
Tangible common equity (non-GAAP)	$	946,446		$	899,783		$	860,299		$	808,737
Accumulated other comprehensive loss, net of tax		62,485			80,425			76,401			100,853
Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP)		1,008,931			980,208			936,700			909,590
Divided by: ending shares outstanding		37,988,364			37,899,453			37,784,851			37,739,776
Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP)	$	26.56		$	25.86		$	24.79		$	24.10

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


	As of and for the three months ended									As of and for the nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Net income	$	33,105		$	26,135		$	36,087		$	90,631		$	108,927
Add: impact of other intangible assets amortization expense, after tax		1,517			1,516			1,541			4,575			4,128
Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP)	$	34,622		$	27,651		$	37,628		$	95,206		$	113,055

Average assets	$	9,960,730		$	9,891,665		$	9,788,909		$	9,913,724		$	9,725,130
Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill		(346,757	)		(349,030	)		(356,083	)		(348,717	)		(342,826	)
Average tangible assets (non-GAAP)	$	9,613,973		$	9,542,635		$	9,432,826		$	9,565,007		$	9,382,304

Average shareholders’ equity	$	1,274,873		$	1,243,156		$	1,168,199		$	1,248,202		$	1,146,210
Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill		(346,757	)		(349,030	)		(356,083	)		(348,717	)		(342,826	)
Average tangible common equity (non-GAAP)	$	928,116		$	894,126		$	812,116		$	899,485		$	803,384

Return on average assets		1.32	%		1.06	%		1.46	%		1.22	%		1.50	%
Return on average tangible assets (non-GAAP)		1.43	%		1.17	%		1.58	%		1.33	%		1.61	%
Return on average equity		10.33	%		8.46	%		12.26	%		9.70	%		12.71	%
Return on average tangible common equity (non-GAAP)		14.84	%		12.44	%		18.38	%		14.14	%		18.81	%

Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin


	As of and for the three months ended									As of and for the nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Interest income	$	138,003		$	132,447		$	126,110		$	402,182		$	360,712
Add: impact of taxable equivalent adjustment		1,816			1,711			1,575			5,220			4,432
Interest income FTE (non-GAAP)	$	139,819		$	134,158		$	127,685		$	407,402		$	365,144

Net interest income	$	87,653		$	83,574		$	87,777		$	255,257		$	272,450
Add: impact of taxable equivalent adjustment		1,816			1,711			1,575			5,220			4,432
Net interest income FTE (non-GAAP)	$	89,469		$	85,285		$	89,352		$	260,477		$	276,882

Average earning assets	$	9,192,454		$	9,117,766		$	9,039,864		$	9,146,020		$	8,981,033
Yield on earning assets		5.97	%		5.84	%		5.53	%		5.87	%		5.37	%
Yield on earning assets FTE (non-GAAP)		6.05	%		5.92	%		5.60	%		5.95	%		5.44	%
Net interest margin		3.79	%		3.69	%		3.85	%		3.73	%		4.06	%
Net interest margin FTE (non-GAAP)		3.87	%		3.76	%		3.92	%		3.80	%		4.12	%

Efficiency Ratio and Pre-Provision Net Revenue


	As of and for the three months ended									As of and for the nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Net interest income	$	87,653		$	83,574		$	87,777		$	255,257		$	272,450
Add: impact of taxable equivalent adjustment		1,816			1,711			1,575			5,220			4,432
Net interest income FTE (non-GAAP)	$	89,469		$	85,285		$	89,352		$	260,477		$	276,882

Non-interest income	$	18,389		$	14,029		$	19,365		$	50,112		$	47,853

Non-interest expense	$	64,162		$	63,075		$	60,603		$	190,071		$	179,876
Less: other intangible assets amortization		(1,977	)		(1,977	)		(2,008	)		(5,962	)		(5,378	)
Non-interest expense excluding other intangible assets amortization (non-GAAP)	$	62,185		$	61,098		$	58,595		$	184,109		$	174,498

Efficiency ratio		60.51	%		64.62	%		56.56	%		62.24	%		56.16	%
Efficiency ratio excluding other intangible assets amortization FTE (non-GAAP)		57.65	%		61.52	%		53.90	%		59.28	%		53.74	%
Pre-provision net revenue (non-GAAP)	$	41,880		$	34,528		$	46,539		$	115,298		$	140,427
Pre-provision net revenue, FTE (non-GAAP)		43,696			36,239			48,114			120,518			144,859

The MIL Network –

January 24, 2025

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

Source: GlobeNewswire (MIL-OSI)

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

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

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

Third Quarter Highlights:

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

¹ See the GAAP to Non-GAAP reconciliations.

3rd Quarter 2024 vs 2nd Quarter 2024

Net Interest Income:

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

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

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

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

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

Provision for Credit Losses:

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

Non-Interest Income:

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

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

Non-Interest Expense:

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

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

Income Tax Expense:

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

3rd Quarter 2024 vs 3rd Quarter 2023

Net Interest Income:

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

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

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

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

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

Provision for Credit Losses:

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

Non-Interest Income:

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

Non-Interest Expense:

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

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

Income Tax Expense:

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

Asset Quality

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

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

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

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

Balance Sheet Activity

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

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

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

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

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

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

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

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

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

¹ See the GAAP to Non-GAAP reconciliations

Liquidity

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

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

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

Other Items

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

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

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

About Chemung Financial Corporation

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

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

Forward-Looking Statements

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

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


Chemung Financial Corporation
Consolidated Balance Sheets (Unaudited)
		Sept. 30,				June 30,				March 31,				Dec. 31,				Sept. 30,
(in thousands)		2024				2024				2024				2023				2023
ASSETS
Cash and due from financial institutions		$	36,247			$	23,184			$	22,984			$	22,247			$	52,563
Interest-earning deposits in other financial institutions			44,193				47,033				71,878				14,600				23,017
Total cash and cash equivalents			80,440				70,217				94,862				36,847				75,580

Equity investments			3,244				3,090				3,093				3,046				2,811

Securities available for sale			554,575				550,927				566,028				583,993				569,004
Securities held to maturity			657				657				785				785				1,804
FHLB and FRB stock, at cost			4,189				5,506				4,071				5,498				4,053
Total investment securities			559,421				557,090				570,884				590,276				574,861

Commercial			1,464,205				1,445,258				1,425,437				1,387,321				1,341,017
Mortgage			274,099				271,620				277,246				277,992				281,361
Consumer			290,650				294,594				300,927				307,351				308,310
Loans, net of deferred loan fees			2,028,954				2,011,472				2,003,610				1,972,664				1,930,688
Allowance for credit losses			(21,441	)			(21,031	)			(20,471	)			(22,517	)			(20,252	)
Loans, net			2,007,513				1,990,441				1,983,139				1,950,147				1,910,436

Loans held for sale			—				381				96				—				—
Premises and equipment, net			14,915				14,731				14,183				14,571				15,036
Operating lease right-of-use assets			5,637				5,827				6,018				5,648				5,850
Goodwill			21,824				21,824				21,824				21,824				21,824
Accrued interest receivable and other assets			81,221				92,212				90,791				88,170				101,436
Total assets		$	2,774,215			$	2,755,813			$	2,784,890			$	2,710,529			$	2,707,834

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing demand deposits		$	616,126			$	619,192			$	656,330			$	653,166			$	683,348
Interest-bearing demand deposits			349,383				328,370				315,154				291,138				310,885
Money market accounts			630,870				613,131				631,350				623,714				626,256
Savings deposits			242,911				248,528				248,578				249,144				261,822
Time deposits			611,831				606,700				629,360				612,265				591,188
Total deposits			2,451,121				2,415,921				2,480,772				2,429,427				2,473,499

Advances and other debt			53,757				83,835				52,979				34,970				3,120
Operating lease liabilities			5,820				6,009				6,197				5,827				6,028
Accrued interest payable and other liabilities			42,863				48,826				47,814				45,064				55,123
Total liabilities			2,553,561				2,554,591				2,587,762				2,515,288				2,537,770

Shareholders’ equity
Common stock			53				53				53				53				53
Additional paid-in capital			48,457				48,102				47,794				47,773				47,974
Retained earnings			243,266				239,021				235,506				229,930				227,596
Treasury stock, at cost			(15,987	)			(16,043	)			(16,147	)			(16,502	)			(16,880	)
Accumulated other comprehensive loss			(55,135	)			(69,911	)			(70,078	)			(66,013	)			(88,679	)
Total shareholders’ equity			220,654				201,222				197,128				195,241				170,064
Total liabilities and shareholders’ equity		$	2,774,215			$	2,755,813			$	2,784,890			$	2,710,529			$	2,707,834

Period-end shares outstanding	4,774				4,772				4,768				4,754				4,738


Chemung Financial Corporation
Consolidated Statements of Income (Unaudited)
	Three Months Ended September 30,						Percent		Nine Months Ended September 30,						Percent
(in thousands, except per share data)		2024			2023		Change			2024			2023		Change
Interest and dividend income:
Loans, including fees	$	28,611		$	25,033		14.3		$	83,323		$	71,113		17.2
Taxable securities		3,060			3,537		(13.5	)		9,868			10,750		(8.2	)
Tax exempt securities		250			258		(3.1	)		762			778		(2.1	)
Interest-earning deposits		441			187		135.8			1,014			400		153.5
Total interest and dividend income		32,362			29,015		11.5			94,967			83,041		14.4

Interest expense:
Deposits		13,005			10,721		21.3			37,861			24,577		54.1
Borrowed funds		969			277		249.8			2,868			1,905		50.6
Total interest expense		13,974			10,998		27.1			40,729			26,482		53.8

Net interest income		18,388			18,017		2.1			54,238			56,559		(4.1	)
Provision (credit) for credit losses		564			449		25.6			(597	)		962		(162.1	)
Net interest income after provision for credit losses		17,824			17,568		1.5			54,835			55,597		(1.4	)

Non-interest income:
Wealth management group fee income		2,991			2,533		18.1			8,554			7,716		10.9
Service charges on deposit accounts		1,016			1,018		(0.2	)		2,929			2,918		0.4
Interchange revenue from debit card transactions		1,123			1,141		(1.6	)		3,327			3,468		(4.1	)
Change in fair value of equity investments		118			(68	)	273.5			233			(99	)	335.4
Net gains on sales of loans held for sale		91			67		35.8			162			90		80.0
Net gains (losses) on sales of other real estate owned		(19	)		—		N/M			(22	)		14		N/M
Income from bank owned life insurance		10			11		(9.1	)		29			32		(9.4	)
Other		589			3,106		(81.0	)		1,962			4,539		(56.8	)
Total non-interest income		5,919			7,808		(24.2	)		17,174			18,678		(8.1	)

Non-interest expense:
Salaries and wages		7,168			6,542		9.6			21,007			20,029		4.9
Pension and other employee benefits		1,627			1,979		(17.8	)		5,787			5,467		5.9
Other components of net periodic pension and postretirement benefits		(227	)		(174	)	(30.5	)		(691	)		(522	)	(32.4	)
Net occupancy		1,422			1,337		6.4			4,360			4,242		2.8
Furniture and equipment		402			353		13.9			1,197			1,232		(2.8	)
Data processing		2,567			2,480		3.5			7,437			7,334		1.4
Professional services		522			554		(5.8	)		1,639			1,596		2.7
Marketing and advertising		210			218		(3.7	)		943			720		31.0
Other real estate owned expense		55			10		N/M			116			49		136.7
FDIC insurance		524			525		(0.2	)		1,617			1,608		0.6
Loan expense		353			249		41.8			808			789		2.4
Other		1,887			1,595		18.3			5,207			4,873		6.9
Total non-interest expense		16,510			15,668		5.4			49,427			47,417		4.2

Income before income tax expense		7,233			9,708		(25.5	)		22,582			26,858		(15.9	)
Income tax expense		1,513			2,060		(26.6	)		4,825			5,660		(14.8	)
Net income	$	5,720		$	7,648		(25.2	)	$	17,757		$	21,198		(16.2	)

Basic and diluted earnings per share	$	1.19		$	1.61				$	3.72		$	4.48
Cash dividends declared per share	$	0.31		$	0.31				$	0.93		$	0.93
Average basic and diluted shares outstanding		4,773			4,736					4,769			4,729


N/M – Not Meaningful

Chemung Financial Corporation	As of or for the Three Months Ended															As of or for the Nine Months Ended
Consolidated Financial Highlights (Unaudited)	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
(in thousands, except per share data)		2024			2024			2024			2023			2023			2024			2023
RESULTS OF OPERATIONS
Interest income	$	32,362		$	31,386		$	31,219		$	30,033		$	29,015		$	94,967		$	83,041
Interest expense		13,974			13,625			13,130			12,135			10,998			40,729			26,482
Net interest income		18,388			17,761			18,089			17,898			18,017			54,238			56,559
Provision (credit) for credit losses		564			879			(2,040	)		2,300			449			(597	)		962
Net interest income after provision for credit losses		17,824			16,882			20,129			15,598			17,568			54,835			55,597
Non-interest income		5,919			5,598			5,657			5,871			7,808			17,174			18,678
Non-interest expense		16,510			16,219			16,698			16,826			15,668			49,427			47,417
Income before income tax expense		7,233			6,261			9,088			4,643			9,708			22,582			26,858
Income tax expense		1,513			1,274			2,038			841			2,060			4,825			5,660
Net income	$	5,720		$	4,987		$	7,050		$	3,802		$	7,648		$	17,757		$	21,198

Basic and diluted earnings per share	$	1.19		$	1.05		$	1.48		$	0.80		$	1.61		$	3.72		$	4.48
Average basic and diluted shares outstanding		4,773			4,770			4,764			4,743			4,736			4,769			4,729

PERFORMANCE RATIOS
Return on average assets		0.83	%		0.73	%		1.04	%		0.56	%		1.14	%		0.87	%		1.07	%
Return on average equity		10.81	%		10.27	%		14.48	%		8.63	%		16.89	%		11.82	%		15.93	%
Return on average tangible equity (a)		12.07	%		11.56	%		16.29	%		9.86	%		19.22	%		13.27	%		18.15	%
Efficiency ratio (unadjusted) (e)		67.92	%		69.43	%		70.32	%		70.79	%		60.67	%		69.21	%		63.02	%
Efficiency ratio (adjusted) (a)		67.69	%		69.19	%		70.07	%		70.42	%		66.55	%		68.97	%		64.83	%
Non-interest expense to average assets		2.39	%		2.38	%		2.47	%		2.48	%		2.33	%		2.41	%		2.39	%
Loans to deposits		82.78	%		83.26	%		80.77	%		81.20	%		78.05	%		82.78	%		78.05	%

YIELDS / RATES – Fully Taxable Equivalent
Yield on loans		5.65	%		5.52	%		5.51	%		5.31	%		5.21	%		5.56	%		5.07	%
Yield on investments		2.21	%		2.27	%		2.35	%		2.24	%		2.22	%		2.28	%		2.21	%
Yield on interest-earning assets		4.78	%		4.69	%		4.70	%		4.50	%		4.40	%		4.72	%		4.27	%
Cost of interest-bearing deposits		2.88	%		2.86	%		2.75	%		2.59	%		2.44	%		2.83	%		1.94	%
Cost of borrowings		5.08	%		5.04	%		5.15	%		5.52	%		5.25	%		5.09	%		5.04	%
Cost of interest-bearing liabilities		2.97	%		2.94	%		2.85	%		2.68	%		2.47	%		2.92	%		2.03	%
Interest rate spread		1.81	%		1.75	%		1.85	%		1.82	%		1.93	%		1.80	%		2.24	%
Net interest margin, fully taxable equivalent		2.72	%		2.66	%		2.73	%		2.69	%		2.73	%		2.70	%		2.91	%

CAPITAL
Total equity to total assets at end of period		7.95	%		7.30	%		7.08	%		7.20	%		6.28	%		7.95	%		6.28	%
Tangible equity to tangible assets at end of period (a)		7.22	%		6.56	%		6.34	%		6.45	%		5.52	%		7.22	%		5.52	%
Book value per share	$	46.22		$	42.17		$	41.34		$	41.07		$	35.90		$	46.22		$	35.90
Tangible book value per share (a)		41.65			37.59			36.77			36.48			31.29			41.65			31.29
Period-end market value per share		48.02			48.00			42.48			49.80			39.61			48.02			39.61
Dividends declared per share		0.31			0.31			0.31			0.31			0.31			0.93			0.93

AVERAGE BALANCES
Loans and loans held for sale (b)	$	2,020,280		$	2,009,823		$	1,989,185		$	1,956,022		$	1,909,100		$	2,006,479		$	1,879,765
Interest-earning assets		2,699,968			2,699,402			2,681,059			2,654,638			2,627,012			2,693,499			2,609,999
Total assets		2,751,392			2,740,967			2,724,391			2,688,536			2,664,570			2,738,962			2,650,908
Deposits		2,410,735			2,419,169			2,402,215			2,397,663			2,410,931			2,410,706			2,371,021
Total equity		210,421			195,375			195,860			174,868			179,700			200,588			177,969
Tangible equity (a)		188,597			173,551			174,036			153,044			157,876			178,764			156,145

ASSET QUALITY
Net charge-offs	$	79		$	306		$	182		$	171		$	356		$	566		$	771
Non-performing loans (c)		10,545			8,195			7,835			10,411			6,826			10,545			6,826
Non-performing assets (d)		11,134			8,872			8,394			10,737			7,055			11,134			7,055
Allowance for credit losses		21,441			21,031			20,471			22,517			20,252			21,441			20,252
Annualized net charge-offs to average loans		0.02	%		0.06	%		0.04	%		0.03	%		0.07	%		0.04	%		0.05	%
Non-performing loans to total loans		0.52	%		0.41	%		0.39	%		0.53	%		0.35	%		0.52	%		0.35	%
Non-performing assets to total assets		0.40	%		0.32	%		0.30	%		0.40	%		0.26	%		0.40	%		0.26	%
Allowance for credit losses to total loans		1.06	%		1.05	%		1.02	%		1.14	%		1.05	%		1.06	%		1.05	%
Allowance for credit losses to non-performing loans		203.33	%		256.63	%		261.28	%		216.28	%		296.69	%		203.33	%		296.69	%

(a) See the GAAP to Non-GAAP reconciliations.
(b) Loans and loans held for sale do not reflect the allowance for credit losses.
(c) Non-performing loans include non-accrual loans only.
(d) Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles.
(e) Efficiency ratio (unadjusted) is non-interest expense divided by the total of net interest income plus non-interest income.

Chemung Financial Corporation
Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)
	Three Months Ended September 30, 2024								Three Months Ended September 30, 2023								Three Months Ended September 30, 2024 vs. 2023
(in thousands)	Average Balance			Interest			Yield / Rate		Average Balance			Interest			Yield / Rate		Total Change			Due to Volume			Due to Rate

Interest-earning assets:
Commercial loans	$	1,453,418		$	21,854		5.98	%	$	1,319,110		$	18,672		5.62	%	$	3,182		$	1,953		$	1,229
Mortgage loans		273,374			2,713		3.97	%		282,578			2,572		3.61	%		141			(92	)		233
Consumer loans		293,488			4,102		5.56	%		307,412			3,843		4.96	%		259			(183	)		442
Taxable securities		605,631			3,063		2.01	%		663,240			3,540		2.12	%		(477	)		(299	)		(178	)
Tax-exempt securities		38,537			272		2.81	%		40,380			288		2.83	%		(16	)		(14	)		(2	)
Interest-earning deposits		35,520			441		4.94	%		14,292			187		5.19	%		254			263			(9	)
Total interest-earning assets		2,699,968			32,445		4.78	%		2,627,012			29,102		4.40	%		3,343			1,628			1,715

Non interest-earning assets:
Cash and due from banks		25,086								26,272
Other assets		47,571								31,496
Allowance for credit losses (3)		(21,233	)							(20,210	)
Total assets	$	2,751,392							$	2,664,570

Interest-bearing liabilities:
Interest-bearing checking	$	311,406		$	1,445		1.85	%	$	281,106		$	963		1.36	%	$	482		$	111		$	371
Savings and money market		864,541			4,607		2.12	%		890,109			3,945		1.76	%		662			(117	)		779
Time deposits		554,605			6,056		4.34	%		383,786			3,269		3.38	%		2,787			1,701			1,086
Brokered deposits		65,913			897		5.41	%		189,628			2,543		5.32	%		(1,646	)		(1,688	)		42
FHLBNY overnight advances		541			7		5.06	%		17,879			249		5.53	%		(242	)		(223	)		(19	)
FRB advances and other debt		75,305			962		5.08	%		3,144			29		3.66	%		933			918			15
Total interest-bearing liabilities		1,872,311			13,974		2.97	%		1,765,652			10,998		2.47	%		2,976			702			2,274

Non interest-bearing liabilities:
Demand deposits		614,270								666,302
Other liabilities		54,390								52,916
Total liabilities		2,540,971								2,484,870
Shareholders’ equity		210,421								179,700
Total liabilities and shareholders’ equity	$	2,751,392							$	2,664,570

Fully taxable equivalent net interest income					18,471								18,104				$	367		$	926		$	(559	)
Net interest rate spread (1)							1.81	%							1.93	%
Net interest margin, fully taxable equivalent (2)							2.72	%							2.73	%
Taxable equivalent adjustment					(83	)							(87	)
Net interest income				$	18,388							$	18,017

(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
(3) The Corporation implemented CECL as of January 1, 2023.

Chemung Financial Corporation
Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)
	Nine Months Ended September 30, 2024								Nine Months Ended September 30, 2023								Nine Months Ended September 30, 2024 vs. 2023
(in thousands)	Average Balance			Interest			Yield/ Rate		Average Balance			Interest			Yield / Rate		Total Change			Due to Volume			Due to Rate

Interest earning assets:
Commercial loans	$	1,433,224		$	63,501		5.92	%	$	1,289,638		$	53,047		5.50	%	$	10,454		$	6,201		$	4,253
Mortgage loans		274,834			7,879		3.82	%		284,351			7,553		3.55	%		326			(253	)		579
Consumer loans		298,421			12,114		5.42	%		305,776			10,673		4.67	%		1,441			(261	)		1,702
Taxable securities		619,657			9,877		2.13	%		679,330			10,758		2.12	%		(881	)		(933	)		52
Tax-exempt securities		39,453			830		2.81	%		40,562			887		2.92	%		(57	)		(24	)		(33	)
Interest-earning deposits		27,910			1,014		4.85	%		10,342			400		5.17	%		614			641			(27	)
Total interest-earning assets		2,693,499			95,215		4.72	%		2,609,999			83,318		4.27	%		11,897			5,371			6,526

Non interest-earning assets:
Cash and due from banks		25,131								25,512
Other assets		41,807								35,547
Allowance for credit losses (3)		(21,475	)							(20,150	)
Total assets	$	2,738,962							$	2,650,908

Interest-bearing liabilities:
Interest-bearing checking	$	308,318		$	4,170		1.81	%	$	286,220		$	1,959		0.92	%	$	2,211		$	164		$	2,047
Savings and money market		861,382			13,190		2.05	%		899,871			8,645		1.28	%		4,545			(389	)		4,934
Time deposits		521,997			16,603		4.25	%		350,846			8,041		3.06	%		8,562			4,764			3,798
Brokered deposits		96,056			3,898		5.42	%		153,774			5,932		5.16	%		(2,034	)		(2,322	)		288
FHLBNY overnight advances		15,359			646		5.53	%		47,321			1,819		5.14	%		(1,173	)		(1,304	)		131
FRB advances and other debt		59,584			2,222		4.98	%		3,212			86		3.58	%		2,136			2,089			47
Total interest-bearing liabilities		1,862,696			40,729		2.92	%		1,741,244			26,482		2.03	%		14,247			3,002			11,245

Non interest-bearing liabilities:
Demand deposits		622,953								680,310
Other liabilities		52,725								51,385
Total liabilities		2,538,374								2,472,939
Shareholders’ equity		200,588								177,969
Total liabilities and shareholders’ equity	$	2,738,962							$	2,650,908

Fully taxable equivalent net interest income					54,486								56,836				$	(2,350	)	$	2,369		$	(4,719	)
Net interest rate spread (1)							1.80	%							2.24	%
Net interest margin, fully taxable equivalent (2)							2.70	%							2.91	%
Taxable equivalent adjustment					(248	)							(277	)
Net interest income				$	54,238							$	56,559

(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
(3) The Corporation implemented CECL as of January 1, 2023.

Chemung Financial Corporation

GAAP to Non-GAAP Reconciliations (Unaudited)

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

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

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

Fully Taxable Equivalent Net Interest Income and Net Interest Margin

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


																As of or for the
	As of or for the Three Months Ended															Nine Months Ended
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
(in thousands, except ratio data)		2024			2024			2024			2023			2023			2024			2023
NET INTEREST MARGIN – FULLY TAXABLE EQUIVALENT
Net interest income (GAAP)	$	18,388		$	17,761		$	18,089		$	17,898		$	18,017		$	54,238		$	56,559
Fully taxable equivalent adjustment		83			81			84			87			87			248			277
Fully taxable equivalent net interest income (non-GAAP)	$	18,471		$	17,842		$	18,173		$	17,985		$	18,104		$	54,486		$	56,836

Average interest-earning assets (GAAP)	$	2,699,968		$	2,699,402		$	2,681,059		$	2,654,638		$	2,627,012		$	2,693,499		$	2,609,999

Net interest margin – fully taxable equivalent (non-GAAP)		2.72	%		2.66	%		2.73	%		2.69	%		2.73	%		2.70	%		2.91	%

Efficiency Ratio

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


																As of or for the
	As of or for the Three Months Ended															Nine Months Ended
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
(in thousands, except ratio data)		2024			2024			2024			2023			2023			2024			2023
EFFICIENCY RATIO
Net interest income (GAAP)	$	18,388		$	17,761		$	18,089		$	17,898		$	18,017		$	54,238		$	56,559
Fully taxable equivalent adjustment		83			81			84			87			87			248			277
Fully taxable equivalent net interest income (non-GAAP)	$	18,471		$	17,842		$	18,173		$	17,985		$	18,104		$	54,486		$	56,836

Non-interest income (GAAP)	$	5,919		$	5,598		$	5,657		$	5,871		$	7,808		$	17,174		$	18,678
Less: net (gains) losses on security transactions		—			—			—			39			—			—			—
Less: recognition of employee retention tax credit		—			—			—			—			(2,370	)		—			(2,370	)
Adjusted non-interest income (non-GAAP)	$	5,919		$	5,598		$	5,657		$	5,910		$	5,438		$	17,174		$	16,308

Non-interest expense (GAAP)	$	16,510		$	16,219		$	16,698		$	16,826		$	15,668		$	49,427		$	47,417

Efficiency ratio (unadjusted)		67.92	%		69.43	%		70.32	%		70.79	%		60.67	%		69.21	%		63.02	%
Efficiency ratio (adjusted)		67.69	%		69.19	%		70.07	%		70.42	%		66.55	%		68.97	%		64.83	%

Tangible Equity and Tangible Assets (Period-End)

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


																As of or for the
	As of or for the Three Months Ended															Nine Months Ended
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
(in thousands, except per share and ratio data)		2024			2024			2024			2023			2023			2024			2023
TANGIBLE EQUITY AND TANGIBLE ASSETS
(PERIOD END)
Total shareholders’ equity (GAAP)	$	220,654		$	201,222		$	197,128		$	195,241		$	170,064		$	220,654		$	170,064
Less: intangible assets		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)
Tangible equity (non-GAAP)	$	198,830		$	179,398		$	175,304		$	173,417		$	148,240		$	198,830		$	148,240

Total assets (GAAP)	$	2,774,215		$	2,755,813		$	2,784,890		$	2,710,529		$	2,707,834		$	2,774,215		$	2,707,834
Less: intangible assets		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)
Tangible assets (non-GAAP)	$	2,752,391		$	2,733,989		$	2,763,066		$	2,688,705		$	2,686,010		$	2,752,391		$	2,686,010

Total equity to total assets at end of period (GAAP)		7.95	%		7.30	%		7.08	%		7.20	%		6.28	%		7.95	%		6.28	%
Book value per share (GAAP)	$	46.22		$	42.17		$	41.34		$	41.07		$	35.90		$	46.22		$	35.90

Tangible equity to tangible assets at end of period (non-GAAP)		7.22	%		6.56	%		6.34	%		6.45	%		5.52	%		7.22	%		5.52	%
Tangible book value per share (non-GAAP)	$	41.65		$	37.59		$	36.77		$	36.48		$	31.29		$	41.65		$	31.29

Tangible Equity (Average)

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


																As of or for the
	As of or for the Three Months Ended															Nine Months Ended
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
(in thousands, except ratio data)		2024			2024			2024			2023			2023			2024			2023
TANGIBLE EQUITY (AVERAGE)
Total average shareholders’ equity (GAAP)	$	210,421		$	195,375		$	195,860		$	174,868		$	179,700		$	200,588		$	177,969
Less: average intangible assets		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)		(21,824	)
Average tangible equity (non-GAAP)	$	188,597		$	173,551		$	174,036		$	153,044		$	157,876		$	178,764		$	156,145

Return on average equity (GAAP)		10.81	%		10.27	%		14.48	%		8.63	%		16.89	%		11.82	%		15.93	%
Return on average tangible equity (non-GAAP)		12.07	%		11.56	%		16.29	%		9.86	%		19.22	%		13.27	%		18.15	%

In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular period in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.


																As of or for the
	As of or for the Three Months Ended															Nine Months Ended
	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
(in thousands, except per share and ratio data)		2024			2024			2024			2023			2023			2024			2023
NON-GAAP NET INCOME
Reported net income (GAAP)	$	5,720		$	4,987		$	7,050		$	3,802		$	7,648		$	17,757		$	21,198
Net (gains) losses on security transactions (net of tax)		—			—			—			29			—			—			—
Recognition of employee retention tax credit (net of tax)		—			—			—			—			(1,873	)		—			(1,873	)
Net income (non-GAAP)	$	5,720		$	4,987		$	7,050		$	3,831		$	5,775		$	17,757		$	19,325

Average basic and diluted shares outstanding		4,773			4,770			4,764			4,743			4,736			4,769			4,729

Reported basic and diluted earnings per share (GAAP)	$	1.19		$	1.05		$	1.48		$	0.80		$	1.61		$	3.72		$	4.48
Reported return on average assets (GAAP)		0.83	%		0.73	%		1.04	%		0.56	%		1.14	%		0.87	%		1.07	%
Reported return on average equity (GAAP)		10.81	%		10.27	%		14.48	%		8.63	%		16.89	%		11.82	%		15.93	%

Basic and diluted earnings per share (non-GAAP)	$	1.19		$	1.05		$	1.48		$	0.81		$	1.21		$	3.72		$	4.08
Return on average assets (non-GAAP)		0.83	%		0.73	%		1.04	%		0.57	%		0.86	%		0.87	%		0.97	%
Return on average equity (non-GAAP)		10.81	%		10.27	%		14.48	%		8.69	%		12.75	%		11.82	%		14.52	%

Category: Financial

Source: Chemung Financial Corp

For further information contact:
Dale M. McKim, III, EVP and CFO
dmckim@chemungcanal.com
Phone: 607-737-3714

The MIL Network –

January 24, 2025

MIL-OSI: Orrstown Financial Services, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Orrstown Financial Services, Inc. (“Orrstown” or the “Company”) closed the merger of equals transaction with Codorus Valley Bancorp, Inc. (“Codorus”) on July 1, 2024, creating a premier Pennsylvania and Maryland community bank; as a result, the Company’s results for the three months ended September 30, 2024 reflect the combined operating results of the combined companies;
Codorus contributed, after fair value purchase accounting adjustments, approximately $2.2 billion in total assets, $1.6 billion in loans, and $1.9 billion in deposits at July 1, 2024;
Net loss of $7.9 million, or $0.41 per diluted share, for the three months ended September 30, 2024 compared to net income of $7.7 million, or $0.73 per diluted share, for the three months ended June 30, 2024, reflecting the impact of $17.0 million in expenses related to the merger, $15.5 million of provision for credit losses on non-purchase credit deteriorated (“PCD”) loans and $4.8 million for the previously announced executive retirement, net of taxes, collectively the “non-recurring charges”;
Excluding the impact of the non-recurring charges, net income and diluted earnings per share, respectively, were $21.4 million⁽¹⁾ and $1.11⁽¹⁾ for the third quarter of 2024 compared to net income and diluted earnings per share of $8.7 million⁽¹⁾ and $0.83⁽¹⁾, respectively, as adjusted for the impact of $1.1 million in merger-related expenses, net of taxes, recorded for the second quarter of 2024;
Net interest margin, on a tax equivalent basis, was 4.14% in the third quarter of 2024 compared to 3.54% in the second quarter of 2024; the net accretion impact of purchase accounting marks on loans, deposits and borrowings was $5.8 million of net interest income, which represents 52 basis points of net interest margin;
Noninterest income increased by $5.1 million to $12.4 million in the three months ended September 30, 2024 compared to $7.2 million in the three months ended June 30, 2024; continued strength in wealth management and swap fee generation by commercial teams are driving fee income growth;
Return on average assets for the three months ended September 30, 2024 was (0.57)% compared to 0.97% for the three months ended June 30, 2024; excluding the non-recurring charges, return on average assets was 1.55%⁽¹⁾ for the three months ended September 30, 2024 compared to 1.09%⁽¹⁾ for the three months ended June 30, 2024, excluding merger-related expenses;
Return on average equity for the three months ended September 30, 2024 was (5.85)% compared to 11.41% for the three months ended June 30, 2024; excluding the non-recurring charges, return on average equity was 15.85%⁽¹⁾ for the three months ended September 30, 2024 compared to 12.88%⁽¹⁾ for the three months ended June 30, 2024, excluding merger related expenses;
The provision for credit losses was $13.7 million for the three months ended September 30, 2024 compared to $812 thousand for the three months ended June 30, 2024; the provision for credit losses on non-PCD loans for the three months ended September 30, 2024 was $15.5 million; excluding the impact of the merger, the provision for credit losses for the three months ended September 30, 2024 was a reversal of $1.8 million;
At September 30, 2024, nonaccrual loans totaled $26.9 million, an increase of $18.5 million from $8.4 million at June 30, 2024; non-accrual loans acquired from Codorus totaled $12.8 million;
Tangible book value per common share⁽¹⁾ decreased to $21.12 per share at September 30, 2024 compared to $24.08 per share at June 30, 2024; this decrease was primarily due to the impact of loan marks associated with the merger and the net loss incurred for the third quarter of 2024;
The Board of Directors declared a cash dividend of $0.23 per common share, payable November 12, 2024, to shareholders of record as of November 5, 2024.

⁽¹⁾ Non-GAAP measure. See Appendix A for additional information.

HARRISBURG, Pa., Oct. 22, 2024 (GLOBE NEWSWIRE) — Orrstown Financial Services, Inc. (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended September 30, 2024. Net loss totaled $7.9 million for the three months ended September 30, 2024, compared to net income of $7.7 million for the three months ended June 30, 2024 and $9.0 million for the three months ended September 30, 2023. Diluted loss per share was $0.41 for the three months ended September 30, 2024, compared to diluted earnings per share of $0.73 for the three months ended June 30, 2024 and $0.87 for the three months ended September 30, 2023. For the third quarter of 2024, excluding the impact from the non-recurring charges, net of taxes, net income and diluted earnings per share were $21.4 million⁽¹⁾ and $1.11⁽¹⁾, respectively. For the second quarter of 2024, excluding the impact of the merger-related expenses, net of taxes, net income and diluted earnings per share were $8.7 million⁽¹⁾ and $0.83⁽¹⁾, respectively.

“While the results for the quarter reflected the impact of certain non-recurring charges, the core income generated by the business demonstrates the significant opportunities afforded by the additional scale and synergies created by the merger. Our core earnings were strong. We already have taken significant steps to achieve the cost savings announced in December, which we are on target to achieve in full in the defined timeline. Our system conversion in scheduled for completion in November 2024, at which time we expect further expense savings to be realized. We believe we are well on our way to improving our client experience, expanding and deepening our community presence, and enhancing shareholder value,” commented Thomas R. Quinn, Jr., President and Chief Executive Officer.

DISCUSSION OF RESULTS

Merger Update

The Company acquired Codorus and its wholly-owned bank subsidiary PeoplesBank, A Codorus Valley Company on July 1, 2024. The merger and acquisition method of accounting was used to account for the transaction with the Company as the acquirer. The Company recorded the assets and liabilities of Codorus at their respective fair values as of July 1, 2024. The transaction was valued at approximately $234 million and expanded the Bank’s footprint into the York, Pennsylvania market while increasing its market penetration in its existing markets.

At the time of the merger, Codorus contributed, after fair value purchase accounting adjustments, approximately $2.2 billion in assets, $1.6 billion in loans, $326.7 million in investment securities and $1.9 billion in deposits. The excess of the merger consideration over the fair value of net Codorus assets resulted in goodwill of $51.9 million. The merger led to a 12% dilution in our tangible book value per share which was $21.12 at September 30, 2024 compared to $24.08 at June 30, 2024. The principal cause of the dilution was the impact of the associated purchase accounting marks on loans. The Company’s tangible common equity ratio at September 30, 2024 was 7.5%. The loan fair value adjustments are expected to accrete back through income and capital as the loans mature and should lead to earnings per share and capital accretion moving forward. The fair value of assets and liabilities are subject to refinement for up to one year after the acquisition date as allowable under U.S. Generally Accepted Accounting Principles.

The Company incurred expenses of $32.5 million and $34.3 million for the three and nine months ended September 30, 2023, respectively, related to merger costs and an increased allowance for credit losses on non-PCD portion of the loans assumed from Codorus.

The Company’s financial results for any periods ended prior to July 1, 2024 reflect Orrstown’s results only on a standalone basis. As a result of this factor and the below listed adjustments related to the merger, the Company’s financial results for the third quarter of 2024 may not be directly comparable to prior reported periods.

Balance Sheet

Loans

Loans held for investment increased by $1.7 billion from June 30, 2024 to September 30, 2024 as $1.6 billion of loans, net of purchase accounting marks, were assumed in the merger with Codorus.

Investment Securities

Investment securities, all of which are classified as available-for-sale, increased by $297.7 million to $826.8 million at September 30, 2024 from $529.1 million at June 30, 2024. Investments with a fair value of $326.7 million were assumed in the merger with Codorus. During the third quarter of 2024, investment securities totaling $162.7 million were sold from the portfolio acquired from Codorus. The portfolio was restructured to align the interest rate risk and credit profile for the combined balance sheet. Most of these proceeds were reinvested in investment securities as purchases of $140.4 million were made in the three months ended September 30, 2024. These purchases were partially offset by paydowns of investment securities of $20.6 million and two calls totaling $5.0 million. The overall duration of the Company’s investment securities portfolio was 4.6 years at September 30, 2024 compared to 4.2 years at June 30, 2024. See Appendix B for a summary of the Bank’s investment securities at September 30, 2024, highlighting their concentrations, credit ratings and credit enhancement levels.

Deposits

During the third quarter of 2024, deposits increased by $2.0 billion to approximately $4.7 billion at September 30, 2024 compared to $2.7 billion at June 30, 2024. Deposits of $1.9 billion were assumed in the merger. At September 30, 2024, deposits that are uninsured and not collateralized totaled $692.6 million, or 15% of total deposits compared to $422.3 million, or 16% of total deposits at June 30, 2024. The Bank’s loan-to-deposit ratio decreased slightly to 86% at September 30, 2024 from 87% at June 30, 2024.

Borrowings

The Bank actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were $115.4 million at September 30, 2024 and $115.0 million at June 30, 2024. The Bank seeks to maintain sufficient liquidity to ensure client needs can be addressed on a timely basis. The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of approximately $1.0 billion at September 30, 2024. The Bank’s FHLB borrowing capacity at September 30, 2024 was not inclusive of Codorus, which will be reflected in the fourth quarter.

The Company assumed $31.0 million aggregate principal amount of subordinated debentures and $10.3 million aggregate amount of trust preferred securities from Codorus in the merger. Fair value adjustments of $5.1 million were recorded on July 1, 2024 which reduced the amounts recorded on the balance sheet.

Income Statement

Net Interest Income and Margin

Net interest income was $51.7 million for the three months ended September 30, 2024 compared to $26.1 million for the three months ended June 30, 2024. The net interest margin, on a tax equivalent basis, increased to 4.14% in the third quarter of 2024 from 3.54% in the second quarter of 2024. The net interest margin was positively impacted by the net accretion impact of purchase accounting marks on loans, deposits and borrowings of $5.8 million, which represents 52 basis points of net interest margin. Funding costs show signs of stabilizing.

Several components of the net interest margin increased primarily as the result of the assets and liabilities assumed in the merger with Codorus.

Interest income on loans, on a tax equivalent basis, increased by $35.2 million to $70.8 million for the three months ended September 30, 2024 compared to $35.7 million for the three months ended June 30, 2024.

Interest income on investment securities, on a tax equivalent basis, was $10.1 million for the third quarter of 2024 compared to $6.1 million in the second quarter of 2024.

Interest expense, on a tax equivalent basis, increased by $14.1 million to $31.3 million for the three months ended September 30, 2024 compared to $17.2 million for the three months ended June 30, 2024. Average interest-bearing deposits increased by $1.6 billion during the three months ended September 30, 2024 compared to the three months ended June 30, 2024. Average borrowings increased by $35.8 million during the three months ended September 30, 2024 compared to the three months ended June 30, 2024. Interest expense includes $0.4 million and $0 of amortization of purchase accounting marks for the three months ended September 30, 2024 and June 30, 2024, respectively.

Provision for Credit Losses

The Company recorded a provision for credit losses of $13.7 million for the three months ended September 30, 2024 compared to $0.8 million for the three months ended June 30, 2024. The allowance for credit losses (“ACL”) on loans increased to $49.6 million at September 30, 2024 from $29.9 million at June 30, 2024. The increase in the ACL was primarily due to the addition of $21.4 million of reserves as a result of the merger. This increase was made up of $15.5 million for non-PCD loans, which was recognized through the provision for credit losses, and $5.9 million for PCD loans which was recognized through retained earnings. The provision for credit losses for the three months ended September 30, 2024 included a provision reversal of $1.8 million due to changes in qualitative factors, a change in the peer group utilized for the calculation and a reduction in the required reserve for unfunded commitments. The ACL to total loans was 1.25% at September 30, 2024 compared to 1.27% at June 30, 2024. Net charge-offs were $0.3 million for the three months ended September 30, 2024 compared to net charge-offs of $0.1 million for the three months ended June 30, 2024.

As a result of the merger, classified loans increased by $56.8 million to $105.5 million at September 30, 2024 from $48.7 million at June 30, 2024. Non-accrual loans increased by $18.5 million to $26.9 million at September 30, 2024 from $8.4 million at June 30, 2024 due primarily to the assumption of $12.8 million of non-accrual loans from Codorus. Nonaccrual loans to total loans increased to 0.68% at September 30, 2024 compared to 0.36% at June 30, 2024 and decreased from 1.11% at December 31, 2023. Management believes the ACL to be adequate based on current asset quality metrics and economic conditions.

Noninterest Income

Noninterest income increased by $5.1 million to $12.4 million in the three months ended September 30, 2024 compared to $7.2 million in the three months ended June 30, 2024 primarily due to the merger.

Wealth management income increased to $5.0 million in the three months ended September 30, 2024 compared to $3.3 million for the three months ended June 30, 2024. The strong sales efforts, organic growth and stock market performance have collectively driven exceptional wealth results throughout the year. As a result of the merger, assets under management increased to approximately $3.2 billion at September 30, 2024 from $2.1 billion at June 30, 2024.

During the third quarter of 2024, the Company recorded swap fee income of $0.5 million compared to $0.4 million in the three months ended June 30, 2024. Swap fee generation has been strong, but fluctuates based on market conditions and client demand.

Noninterest Expenses

Noninterest expenses increased by $37.7 million to $60.3 million in the three months ended September 30, 2024 from $22.6 million in the three months ended June 30, 2024 primarily due to the merger.

For the three months ended September 30, 2024, merger-related expenses totaled $17.0 million, an increase of $15.9 million, compared to $1.1 million for the three months ended June 30, 2024. The increase is due to primarily to employee separation costs, vendor contract terminations, and professional fees incurred during the third quarter of 2024. The Company will incur additional merger-related expenses from the operational and technology processes to combine systems and services of both companies, which is expected to be completed in November 2024.

Salaries and benefits expense increased by $14.0 million to $27.2 million for the three months ended September 30, 2024 compared to $13.2 million for the three months ended June 30, 2024. The three months ended September 30, 2024 includes $4.8 million of expenses associated with the retirement of an executive.

Intangible asset amortization increased to $2.5 million for the three months ended September 30, 2024 compared to $0.2 million for the three months ended June 30, 2024. This increase is due to the amortization expense recognized on the core deposit intangible of $35.9 million and wealth customer relationship intangible of $10.4 million established on July 1, 2024 from the merger.

Taxes other than income increased to $0.5 million in the three months ended September 30, 2024 compared to less than $0.1 million in the three months ended June 30, 2024. This increase reflects the tax credits recognized on the contributions during the second quarter of 2024.

There was $257 thousand of restructuring expenses recognized in the three months ended September 30, 2024 associated with previously announced branch closures.

Income Taxes

The Company’s effective tax rate for the third quarter of 2024 was 20.1% compared to 21.2% for the second quarter of 2024. The Company’s effective tax rate for the three months ended September 30, 2024 is less than the 21% federal statutory rate primarily due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank’s tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) and the impact of nondeductible merger-related costs. The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly.

Capital

Shareholders’ equity totaled $516.2 million at September 30, 2024, an increase of $237.8 million from $278.4 million at June 30, 2024. The increase was primarily attributable to the equity assumed in the merger, net of purchase accounting adjustments, partially offset by a net loss of $7.9 million and dividends paid of $4.4 million.

Tangible book value per share⁽¹⁾ decreased to $21.12 per share at September 30, 2024 from $24.08 per share at June 30, 2024 due to the purchase accounting adjustments associated with the merger.

The Company’s tangible common equity ratio decreased to 7.5% at September 30, 2024 from 8.1% at June 30, 2024 due to purchase accounting marks and a net loss recorded during the third quarter of 2024. The Company’s total risk-based capital ratio was 12.5% at September 30, 2024 compared to 13.3% at June 30, 2024. The Company’s Tier 1 leverage ratio was 8.0% at September 30, 2024 compared to 8.9% at June 30, 2024. The loan fair value adjustments are expected to accrete back through income and capital as the loans mature and should lead to earnings per share and capital accretion moving forward.

At September 30, 2024, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines. The Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.

⁽¹⁾ Non-GAAP measure. See Appendix A for additional information.

Investor Relations Contact:

Neelesh Kalani

Executive Vice President, Chief Financial Officer

Phone (717) 510-7097

FINANCIAL HIGHLIGHTS (Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
(In thousands)		2024			2023			2024			2023

Profitability for the period:
Net interest income	$	51,697		$	26,219		$	104,681		$	78,888
Provision for credit losses		13,681			136			14,791			1,264
Noninterest income		12,386			5,925			26,188			19,161
Noninterest expenses		60,299			20,447			105,407			61,451
(Loss) income before income tax (benefit) expense		(9,897	)		11,561			10,671			35,334
Income tax (benefit) expense		(1,994	)		2,535			2,305			7,314
Net (loss) income available to common shareholders	$	(7,903	)	$	9,026		$	8,366		$	28,020

Financial ratios:
Return on average assets ⁽¹⁾	(0.57)%				1.18	%		0.28	%		1.25	%
Return on average assets, adjusted ^{(1) (2) (3)}		1.55	%		1.18	%		1.33	%		1.25	%
Return on average equity ⁽¹⁾	(5.85)%				14.42	%		3.10	%		15.51	%
Return on average equity, adjusted ^{(1) (2) (3)}		15.85	%		14.42	%		14.59	%		15.51	%
Net interest margin ⁽¹⁾		4.14	%		3.73	%		3.88	%		3.83	%
Efficiency ratio		94.1	%		63.6	%		80.5	%		62.7	%
Efficiency ratio, adjusted ^{(2) (3)}		60.2	%		63.6	%		62.6	%		62.7	%
(Loss) income per common share:
Basic	$	(0.41	)	$	0.87		$	0.63		$	2.71
Basic, adjusted ^{(2) (3)}	$	1.12		$	0.87		$	2.96		$	2.71
Diluted	$	(0.41	)	$	0.87		$	0.62		$	2.68
Diluted, adjusted ^{(2) (3)}	$	1.11		$	0.87		$	2.93		$	2.68

Average equity to average assets		9.75	%		8.18	%		9.13	%		8.09	%

⁽¹⁾ Annualized for the three and nine months ended September 30, 2024 and 2023.
⁽²⁾ Ratio for the three and nine months ended September 30, 2024 has been adjusted for the non-recurring charges.
⁽³⁾ Non-GAAP based financial measure. Please refer to Appendix A – Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.

FINANCIAL HIGHLIGHTS (Unaudited)
(continued)
	September 30,			December 31,
(Dollars in thousands, except per share amounts)		2024			2023
At period-end:
Total assets	$	5,470,589		$	3,064,240
Loans, net of allowance for credit losses		3,931,807			2,269,611
Loans held-for-sale, at fair value		3,561			5,816
Securities available for sale, at fair value		826,828			513,519
Total deposits		4,650,853			2,558,814
FHLB advances and other borrowings and Securities sold under agreements to repurchase		137,310			147,285
Subordinated notes and trust preferred debt		68,510			32,093
Shareholders’ equity		516,206			265,056

Credit quality and capital ratios ⁽¹⁾:
Allowance for credit losses to total loans		1.25	%		1.25	%
Total nonaccrual loans to total loans		0.68	%		1.11	%
Nonperforming assets to total assets		0.49	%		0.83	%
Allowance for credit losses to nonaccrual loans		184	%		112	%
Total risk-based capital:
Orrstown Financial Services, Inc.		12.5	%		13.0	%
Orrstown Bank		12.3	%		12.8	%
Tier 1 risk-based capital:
Orrstown Financial Services, Inc.		10.0	%		10.8	%
Orrstown Bank		11.1	%		11.6	%
Tier 1 common equity risk-based capital:
Orrstown Financial Services, Inc.		9.8	%		10.8	%
Orrstown Bank		11.1	%		11.6	%
Tier 1 leverage capital:
Orrstown Financial Services, Inc.		8.0	%		8.9	%
Orrstown Bank		8.8	%		9.5	%

Book value per common share	$	26.65		$	24.98

⁽¹⁾ Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses (“CECL”) to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the CECL standard.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands, except per share amounts)	September 30, 2024			December 31, 2023
Assets
Cash and due from banks	$	65,064		$	32,586
Interest-bearing deposits with banks		171,716			32,575
Cash and cash equivalents		236,780			65,161
Restricted investments in bank stocks		20,247			11,992
Securities available for sale (amortized cost of $845,869 and $549,089 at September 30, 2024 and December 31, 2023, respectively)		826,828			513,519
Loans held for sale, at fair value		3,561			5,816
Loans		3,981,437			2,298,313
Less: Allowance for credit losses		(49,630	)		(28,702	)
Net loans		3,931,807			2,269,611
Premises and equipment, net		49,839			29,393
Cash surrender value of life insurance		142,895			73,204
Goodwill		70,655			18,724
Other intangible assets, net		46,144			2,414
Accrued interest receivable		20,562			13,630
Deferred tax assets, net		38,517			22,017
Other assets		82,754			38,759
Total assets	$	5,470,589		$	3,064,240

Liabilities
Deposits:
Noninterest-bearing	$	815,404		$	430,959
Interest-bearing		3,835,449			2,127,855
Total deposits		4,650,853			2,558,814
Securities sold under agreements to repurchase and federal funds purchased		21,932			9,785
FHLB advances and other borrowings		115,378			137,500
Subordinated notes and trust preferred debt		68,510			32,093
Other liabilities		97,710			60,992
Total liabilities		4,954,383			2,799,184

Shareholders’ Equity
Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding		—			—
Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 19,723,217 shares issued and 19,373,354 outstanding at September 30, 2024; 11,204,599 shares issued and 10,612,390 outstanding at December 31, 2023		1,027			583
Additional paid—in capital		422,177			189,027
Retained earnings		117,311			117,667
Accumulated other comprehensive loss		(15,888	)		(28,476	)
Treasury stock— 349,863 and 592,209 shares, at cost at September 30, 2024 and December 31, 2023, respectively		(8,421	)		(13,745	)
Total shareholders’ equity		516,206			265,056
Total liabilities and shareholders’ equity	$	5,470,589		$	3,064,240

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,		September 30,
(Dollars in thousands, except per share amounts)		2024			2023			2024		2023
Interest income
Loans	$	70,647		$	32,738		$	142,417	$	92,685
Investment securities – taxable		9,005			4,459			18,588		13,244
Investment securities – tax-exempt		883			861			2,641		2,591
Short-term investments		2,452			633			5,272		1,349
Total interest income		82,987			38,691			168,918		109,869
Interest expense
Deposits		28,603			10,582			57,384		25,392
Securities sold under agreements to repurchase and federal funds purchased		96			31			148		84
FHLB advances and other borrowings		1,154			1,354			3,780		3,992
Subordinated notes and trust preferred debt		1,437			505			2,925		1,513
Total interest expense		31,290			12,472			64,237		30,981
Net interest income		51,697			26,219			104,681		78,888
Provision for credit losses		13,681			136			14,791		1,264
Net interest income after provision for credit losses		38,016			26,083			89,890		77,624
Noninterest income
Service charges		2,360			1,260			4,843		3,668
Interchange income		1,779			963			3,651		2,921
Swap fee income		505			255			1,079		451
Wealth management income		5,037			2,826			11,451		8,395
Mortgage banking activities		491			(142	)		1,318		448
Investment securities gains (losses)		271			2			254		(8	)
Other income		1,943			761			3,592		3,286
Total noninterest income		12,386			5,925			26,188		19,161
Noninterest expenses
Salaries and employee benefits		27,190			12,885			54,137		38,135
Occupancy, furniture and equipment		4,333			2,460			9,677		7,059
Data processing		2,046			1,248			4,548		3,666
Advertising and bank promotions		537			332			1,709		1,656
FDIC insurance		862			477			1,722		1,500
Professional services		1,119			965			2,551		2,203
Taxes other than income		503			387			1,046		847
Intangible asset amortization		2,464			228			2,904		717
Merger-related expenses		16,977			—			18,784		—
Restructuring expenses		257			—			257		—
Other operating expenses		4,011			1,465			8,072		5,668
Total noninterest expenses		60,299			20,447			105,407		61,451
(Loss) income before income tax (benefit) expense		(9,897	)		11,561			10,671		35,334
Income tax (benefit) expense		(1,994	)		2,535			2,305		7,314
Net (loss) income	$	(7,903	)	$	9,026		$	8,366	$	28,020
continued

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,		September 30,
		2024			2023			2024		2023
Share information:
Basic (loss) earnings per share	$	(0.41	)	$	0.87		$	0.63	$	2.71
Diluted (loss) earnings per share	$	(0.41	)	$	0.87		$	0.62	$	2.68
Dividends paid per share	$	0.23		$	0.20		$	0.63	$	0.60
Weighted average shares – basic		19,088			10,319			13,298		10,346
Weighted average shares – diluted		19,226			10,405			13,441		10,440

ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
	Three Months Ended
	9/30/2024							6/30/2024							3/31/2024							12/31/2023							9/30/2023
			Taxable-			Taxable-				Taxable-			Taxable-				Taxable-			Taxable-				Taxable-			Taxable-				Taxable-			Taxable-
(In	Average		Equivalent			Equivalent		Average		Equivalent			Equivalent		Average		Equivalent			Equivalent		Average		Equivalent			Equivalent		Average		Equivalent			Equivalent
thousands)	Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate
Assets
Federal funds sold & interest-bearing bank balances	$	184,465	$	2,452		5.29	%	$	142,868	$	1,864		5.25	%	$	74,523	$	956		5.16	%	$	37,873	$	460		4.82	%	$	57,778	$	633		4.35	%
Investment securities ⁽¹⁾⁽²⁾		849,700		10,123		4.77			538,451		6,114		4.54			519,851		5,694		4.39			508,891		5,890		4.63			521,234		5,548		4.26
Loans ^(1)(3)(4)(5)		3,989,259		70,849		7.07			2,324,942		35,690		6.17			2,308,103		36,382		6.34			2,286,678		34,055		5.91			2,256,727		32,878		5.78
Total interest-earning assets		5,023,424		83,424		6.61			3,006,261		43,668		5.84			2,902,477		43,032		5.96			2,833,442		40,405		5.67			2,835,739		39,059		5.47
Other assets		491,719							204,863							196,295							204,382							200,447
Total assets	$	5,515,143						$	3,211,124						$	3,098,772						$	3,037,824						$	3,036,186
Liabilities and Shareholders’ Equity
Interest-bearing demand deposits	$	2,554,743		16,165		2.52		$	1,649,753		10,118		2.47		$	1,570,622		9,192		2.35		$	1,543,575		8,333		2.14		$	1,541,728		7,476		1.92
Savings deposits		283,337		148		0.21			165,467		140		0.34			170,005		144		0.34			178,351		153		0.34			190,817		164		0.34
Time deposits		1,014,628		12,290		4.82			481,721		5,007		4.18			428,443		4,180		3.92			392,085		3,632		3.67			357,194		2,942		3.27
Total interest-bearing deposits		3,852,708		28,603		2.95			2,296,941		15,265		2.67			2,169,070		13,516		2.51			2,114,011		12,118		2.27			2,089,739		10,582		2.01
Securities sold under agreements to repurchase and federal funds purchased		23,075		96		1.66			13,412		27		0.81			12,010		25		0.85			13,874		30		0.85			15,006		31		0.83
FHLB advances and other borrowings		115,388		1,154		3.98			115,000		1,152		4.03			137,505		1,474		4.31			127,843		1,358		4.21			128,131		1,354		4.19
Subordinated notes and trust preferred debt		68,399		1,437		8.36			32,118		734		9.19			32,100		754		9.45			32,083		504		6.29			32,066		505		6.29
Total interest-bearing liabilities		4,059,570		31,290		3.07			2,457,471		17,178		2.81			2,350,685		15,769		2.70			2,287,811		14,010		2.43			2,264,942		12,472		2.19
Noninterest-bearing demand deposits		807,886							423,037							417,469							441,695							468,628
Other liabilities		110,017							57,828							62,329							59,876							54,353
Total liabilities		4,977,473							2,938,336							2,830,483							2,789,382							2,787,923
Shareholders’ equity		537,670							272,788							268,289							248,442							248,263
Total	$	5,515,143						$	3,211,124						$	3,098,772						$	3,037,824						$	3,036,186
Taxable-equivalent net interest income / net interest spread				52,134		3.55	%				26,490		3.02	%				27,263		3.26	%				26,395		3.24	%				26,587		3.29	%
Taxable-equivalent net interest margin						4.14	%						3.54	%						3.77	%						3.71	%						3.73	%
Taxable-equivalent adjustment				(437	)						(387	)						(382	)						(377	)						(368	)
Net interest income			$	51,697						$	26,103						$	26,881						$	26,018						$	26,219
Ratio of average interest-earning assets to average interest-bearing liabilities						124	%						122	%						123	%						124	%						125	%

NOTES:
⁽¹⁾ Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
⁽²⁾ Average balance of investment securities is computed at fair value.
⁽³⁾ Average balances include nonaccrual loans.
⁽⁴⁾ Interest income on loans includes prepayment and late fees, where applicable.
⁽⁵⁾ Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status in the three months ended March 31, 2024.

ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
(continued)
	Nine Months Ended
	September 30, 2024							September 30, 2023
			Taxable-			Taxable-				Taxable-			Taxable-
	Average		Equivalent			Equivalent		Average		Equivalent			Equivalent
(In thousands)	Balance		Interest			Rate		Balance		Interest			Rate
Assets
Federal funds sold & interest-bearing bank balances	$	134,136	$	5,272		5.25	%	$	41,861	$	1,349		4.31	%
Investment securities ⁽¹⁾⁽²⁾		636,781		21,931		4.60			524,365		16,523		4.21
Loans ^(1)(3)(4)(5)		2,878,171		142,921		6.63			2,223,701		93,051		5.59
Total interest-earning assets		3,649,088		170,124		6.23			2,789,927		110,923		5.31
Other assets		298,334							196,694
Total assets	$	3,947,422						$	2,986,621
Liabilities and Shareholders’ Equity
Interest-bearing demand deposits	$	1,927,337		35,475		2.46		$	1,519,013		18,611		1.64
Savings deposits		206,552		432		0.28			204,832		431		0.28
Time deposits		642,959		21,477		4.46			320,000		6,350		2.65
Total interest-bearing deposits		2,776,848		57,384		2.76			2,043,845		25,392		1.66
Securities sold under agreements to repurchase and federal funds purchased		16,191		148		1.22			14,190		84		0.79
FHLB advances and other borrowings		122,604		3,780		4.12			122,300		3,992		4.36
Subordinated notes and trust preferred debt		44,294		2,925		8.82			32,049		1,513		6.29
Total interest-bearing liabilities		2,959,937		64,237		2.90			2,212,384		30,981		1.87
Noninterest-bearing demand deposits		550,407							480,006
Other liabilities		76,846							52,618
Total liabilities		3,587,190							2,745,008
Shareholders’ equity		360,232							241,613
Total liabilities and shareholders’ equity	$	3,947,422						$	2,986,621
Taxable-equivalent net interest income / net interest spread				105,887		3.33	%				79,942		3.44	%
Taxable-equivalent net interest margin						3.88	%						3.83	%
Taxable-equivalent adjustment				(1,206	)						(1,054	)
Net interest income			$	104,681						$	78,888
Ratio of average interest-earning assets to average interest-bearing liabilities						123	%						126	%

NOTES TO ANALYSIS OF NET INTEREST INCOME:
⁽¹⁾ Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
⁽²⁾ Average balance of investment securities is computed at fair value.
⁽³⁾ Average balances include nonaccrual loans.
⁽⁴⁾ Interest income on loans includes prepayment and late fees, where applicable.
⁽⁵⁾ Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status for the nine months ended September 30, 2024.

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)

(In thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Profitability for the quarter:
Net interest income	$	51,697		$	26,103		$	26,881		$	26,018		$	26,219
Provision for credit losses		13,681			812			298			418			136
Noninterest income		12,386			7,172			6,630			6,491			5,925
Noninterest expenses		60,299			22,639			22,469			22,392			20,447
(Loss) income before income taxes		(9,897	)		9,824			10,744			9,699			11,561
Income tax (benefit) expense		(1,994	)		2,086			2,213			2,056			2,535
Net (loss) income	$	(7,903	)	$	7,738		$	8,531		$	7,643		$	9,026

Financial ratios:
Return on average assets ⁽¹⁾	(0.57)%				0.97	%		1.11	%		1.00	%		1.18	%
Return on average assets, adjusted ^(1)(2)(3)		1.55	%		1.09	%		1.19	%		1.13	%		1.18	%
Return on average equity ⁽¹⁾	(5.85)%				11.41	%		12.79	%		12.21	%		14.42	%
Return on average equity, adjusted ^(1)(2)(3)		15.85	%		12.88	%		13.79	%		13.77	%		14.42	%
Net interest margin ⁽¹⁾		4.14	%		3.54	%		3.77	%		3.71	%		3.73	%
Efficiency ratio		94.1	%		68.0	%		67.0	%		68.9	%		63.6	%
Efficiency ratio, adjusted ⁽²⁾⁽³⁾		60.2	%		64.6	%		65.0	%		65.6	%		63.6	%

Per share information:
(Loss) income per common share:
Basic	$	(0.41	)	$	0.74		$	0.82		$	0.74		$	0.87
Basic, adjusted ⁽²⁾⁽³⁾		1.12			0.84			0.89			0.84			0.87
Diluted		(0.41	)		0.73			0.81			0.73			0.87
Diluted, adjusted ⁽²⁾⁽³⁾		1.11			0.83			0.88			0.83			0.87
Book value		26.65			25.97			25.38			24.98			22.90
Tangible book value⁽³⁾		21.12			24.08			23.47			23.03			20.94
Cash dividends paid		0.23			0.20			0.20			0.20			0.20

Average basic shares		19,088			10,393			10,349			10,321			10,319
Average diluted shares		19,226			10,553			10,482			10,419			10,405
⁽¹⁾ Annualized.
⁽²⁾ Ratio has been adjusted for non-recurring expenses for the three months ended September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023.
⁽³⁾ Non-GAAP based financial measure. Please refer to Appendix A – Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
(In thousands)	September 30, 2024		June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Noninterest income:
Service charges	$	2,360	$	1,283		$	1,200		$	1,198		$	1,260
Interchange income		1,779		961			911			952			963
Swap fee income		505		375			199			588			255
Wealth management income		5,037		3,312			3,102			2,945			2,826
Mortgage banking activities		491		369			458			143			(142	)
Other income		1,943		884			765			704			761
Investment securities gains (losses)		271		(12	)		(5	)		(39	)		2
Total noninterest income	$	12,386	$	7,172		$	6,630		$	6,491		$	5,925

Noninterest expenses:
Salaries and employee benefits	$	27,190	$	13,195		$	13,752		$	12,848		$	12,885
Occupancy, furniture and equipment		4,333		2,705			2,639			2,534			2,460
Data processing		2,046		1,237			1,265			1,247			1,248
Advertising and bank promotions		537		774			398			501			332
FDIC insurance		862		419			441			460			477
Professional services		1,119		801			631			702			965
Taxes other than income		503		49			494			203			387
Intangible asset amortization		2,464		215			225			236			228
Merger-related expenses		16,977		1,135			672			1,059			—
Restructuring expenses		257		—			—			—			—
Other operating expenses		4,011		2,109			1,952			2,602			1,465
Total noninterest expenses	$	60,299	$	22,639		$	22,469		$	22,392		$	20,447

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
(In thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Balance Sheet at quarter end:
Cash and cash equivalents	$	236,780		$	132,509		$	182,722		$	65,161		$	94,939
Restricted investments in bank stocks		20,247			11,147			11,453			11,992			12,987
Securities available for sale		826,828			529,082			514,909			513,519			495,162
Loans held for sale, at fair value		3,561			1,562			535			5,816			6,448
Loans:
Commercial real estate:
Owner occupied		622,726			371,301			364,280			373,757			376,350
Non-owner occupied		1,164,501			710,477			707,871			694,638			630,514
Multi-family		276,296			151,542			147,773			150,675			143,437
Non-owner occupied residential		190,786			89,156			91,858			95,040			100,391
Commercial and industrial		601,469			374,976			365,524			367,085			374,190
Acquisition and development:
1-4 family residential construction		56,383			32,439			22,277			24,516			25,642
Commercial and land development		262,317			129,883			118,010			115,249			153,279
Municipal		27,960			10,594			10,925			9,812			10,334
Total commercial loans		3,202,438			1,870,368			1,828,518			1,830,772			1,814,137
Residential mortgage:
First lien		451,195			271,153			270,748			266,239			248,335
Home equity – term		6,508			4,633			4,966			5,078			5,223
Home equity – lines of credit		303,165			192,736			189,966			186,450			188,736
Installment and other loans		18,131			8,713			8,875			9,774			10,405
Total loans		3,981,437			2,347,603			2,303,073			2,298,313			2,266,836
Allowance for credit losses		(49,630	)		(29,864	)		(29,165	)		(28,702	)		(28,278	)
Net loans held for investment		3,931,807			2,317,739			2,273,908			2,269,611			2,238,558
Goodwill		70,655			18,724			18,724			18,724			18,724
Other intangible assets, net		46,144			1,974			2,189			2,414			2,650
Total assets		5,470,589			3,198,782			3,183,331			3,064,240			3,054,435
Total deposits		4,650,853			2,702,884			2,695,951			2,558,814			2,546,435
FHLB advances and other borrowings and and Securities sold under agreements to repurchase		137,310			129,625			127,099			147,285			175,241
Subordinated notes and trust preferred debt		68,510			32,128			32,111			32,093			32,076
Total shareholders’ equity		516,206			278,376			271,682			265,056			243,080

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Capital and credit quality measures⁽¹⁾:
Total risk-based capital:
Orrstown Financial Services, Inc.		12.5	%		13.3	%		13.4	%		13.0	%		13.0	%
Orrstown Bank		12.3	%		13.1	%		13.1	%		12.8	%		12.5	%
Tier 1 risk-based capital:
Orrstown Financial Services, Inc.		10.0	%		11.1	%		11.2	%		10.8	%		10.6	%
Orrstown Bank		11.1	%		12.0	%		11.9	%		11.6	%		11.4	%
Tier 1 common equity risk-based capital:
Orrstown Financial Services, Inc.		9.8	%		11.1	%		11.2	%		10.8	%		10.6	%
Orrstown Bank		11.1	%		12.0	%		11.9	%		11.6	%		11.4	%
Tier 1 leverage capital:
Orrstown Financial Services, Inc.		8.0	%		8.9	%		9.0	%		8.9	%		8.7	%
Orrstown Bank		8.8	%		9.5	%		9.6	%		9.5	%		9.3	%

Average equity to average assets		9.75	%		8.50	%		8.66	%		8.18	%		8.18	%
Allowance for credit losses to total loans		1.25	%		1.27	%		1.27	%		1.25	%		1.25	%
Total nonaccrual loans to total loans		0.68	%		0.36	%		0.56	%		1.11	%		0.98	%
Nonperforming assets to total assets		0.49	%		0.26	%		0.40	%		0.83	%		0.73	%
Allowance for credit losses to nonaccrual loans		184	%		357	%		226	%		112	%		127	%

Other information:
Net charge-offs (recoveries)	$	269		$	113		$	(42	)	$	(6	)	$	241
Classified loans		105,465			48,722			48,997			55,030			33,593
Nonperforming and other risk assets:
Nonaccrual loans		26,927			8,363			12,886			25,527			22,324
Other real estate owned		138			—			—			—			—
Total nonperforming assets		27,065			8,363			12,886			25,527			22,324
Financial difficulty modifications still accruing		9,497			—			—			9			—
Loans past due 90 days or more and still accruing		337			187			99			66			277
Total nonperforming and other risk assets	$	36,899		$	8,550		$	12,985		$	25,602		$	22,601
(1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses (“CECL”) to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard.

Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations

Management believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.

As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled $116.8 million and $21.1 million at September 30, 2024 and December 31, 2023, respectively. In addition, during the three months ended September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023, the Company incurred $17.0 million, $1.1 million, $0.7 million and $1.1 million in merger-related expenses, respectively. During the three months ended September 30, 2024, the Company incurred other non-recurring charges totaling $20.2 million.

Tangible book value per common share and the impact of the non-recurring expenses on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.

The following tables present the computation of each non-GAAP based measure:

(In thousands)

Tangible Book Value per Common Share	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Shareholders’ equity (most directly comparable GAAP-based measure)	$	516,206		$	278,376		$	271,682		$	265,056		$	243,080
Less: Goodwill		70,655			18,724			18,724			18,724			18,724
Other intangible assets		46,144			1,974			2,189			2,414			2,650
Related tax effect		(9,690	)		(415	)		(460	)		(507	)		(557	)
Tangible common equity (non-GAAP)	$	409,097		$	258,093		$	251,229		$	244,425		$	222,263

Common shares outstanding		19,373			10,720			10,705			10,612			10,613

Book value per share (most directly comparable GAAP-based measure)	$	26.65		$	25.97		$	25.38		$	24.98		$	22.90
Intangible assets per share		5.53			1.89			1.91			1.95			1.96
Tangible book value per share (non-GAAP)	$	21.12		$	24.08		$	23.47		$	23.03		$	20.94

(In thousands)	Three Months Ended															Nine Months Ended
Adjusted Ratios for Non-recurring Charges	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			September 30, 2024			September 30, 2023
Net (loss) income (A) – most directly comparable GAAP-based measure	$	(7,903	)	$	7,738		$	8,531		$	8,531		$	9,026		$	8,366		$	28,020
Plus: Merger-related expenses (B)		16,977			1,135			672			672			—			18,784			—
Plus: Executive retirement expenses (B)		4,758			—			—			—			—			4,758			—
Plus: Provision for credit losses on non-PCD loans (B)		15,504			—			—			—			—			15,504			—
Less: Related tax effect (C)		(7,915	)		(139	)		(1	)		(1	)		—			(8,056	)		—
Adjusted net (loss) income (D=A+B-C) – Non-GAAP	$	21,421		$	8,734		$	9,202		$	9,202		$	9,026		$	39,356		$	28,020

Average assets (E)	$	5,515,143		$	3,211,124		$	3,098,772		$	3,098,772		$	3,036,186		$	3,947,422		$	2,986,621
Return on average assets (= A / E) – most directly comparable GAAP-based measure ⁽¹⁾	(0.57)%				0.97	%		1.11	%		1.11	%		1.18	%		0.28	%		1.25	%
Return on average assets, adjusted (= D / E) – Non-GAAP ⁽¹⁾		1.55	%		1.09	%		1.19	%		1.19	%		1.18	%		1.33	%		1.25	%

Average equity (F)	$	537,670		$	272,788		$	268,289		$	268,289		$	248,263		$	360,232		$	241,613
Return on average equity (= A / F) – most directly comparable GAAP-based measure ⁽¹⁾	(5.85)%				11.41	%		12.79	%		12.79	%		14.42	%		3.10	%		15.51	%
Return on average equity, adjusted (= D / F) – Non-GAAP ⁽¹⁾		15.85	%		12.88	%		13.79	%		13.79	%		14.42	%		14.59	%		15.51	%

Weighted average shares – basic (G) – most directly comparable GAAP-based measure		19,088			10,393			10,349			10,349			10,319			13,298			10,346
Basic (loss) earnings per share (= A / G) – most directly comparable GAAP-based measure	$	(0.41	)	$	0.74		$	0.82		$	0.82		$	0.87		$	0.63		$	2.71
Basic earnings per share, adjusted (= D / G) – Non-GAAP	$	1.12		$	0.84		$	0.89		$	0.89		$	0.87		$	2.96		$	2.71

Weighted average shares – diluted (H) – most directly comparable GAAP-based measure		19,226			10,553			10,482			10,482			10,405			13,441			10,440
Diluted (loss) earnings per share (= A / H) – most directly comparable GAAP-based measure	$	(0.41	)	$	0.73		$	0.81		$	0.81		$	0.87		$	0.62		$	2.68
Diluted earnings per share, adjusted (= D / H) – Non-GAAP	$	1.11		$	0.83		$	0.88		$	0.88		$	0.87		$	2.93		$	2.68

continued
(1) Annualized

	Three Months Ended															Nine Months Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			September 30, 2024			September 30, 2023
Noninterest expense (I) – most directly comparable GAAP-based measure	$	60,299		$	22,639		$	22,469		$	22,469		$	20,447		$	105,407		$	61,451
Less: Merger-related expenses (B)		(16,977	)		(1,135	)		(672	)		(672	)		—			(18,784	)		—
Less: Executive retirement expenses (B)		(4,758	)		—			—			—			—			(4,758	)		—
Adjusted noninterest expense (J = I – B) – Non-GAAP	$	38,564		$	21,504		$	21,797		$	21,797		$	20,447		$	81,865		$	61,451

Net interest income (K)	$	51,697		$	26,103		$	26,881		$	26,881		$	26,219		$	104,681		$	78,888
Noninterest income (L)		12,386			7,172			6,630			6,630			5,925			26,188			19,161
Total operating income (M = K + L)	$	64,083		$	33,275		$	33,511		$	33,511		$	32,144		$	130,869		$	98,049

Efficiency ratio (= I / M) – most directly comparable GAAP-based measure		94.1	%		68.0	%		67.0	%		67.0	%		63.6	%		80.5	%		62.7	%
Efficiency ratio, adjusted (= J / M) – Non-GAAP		60.2	%		64.6	%		65.0	%		65.0	%		63.6	%		62.6	%		62.7	%



(1) Annualized

Appendix B- Investment Portfolio Concentrations

The following table summarizes the credit ratings and collateral associated with the Company’s investment security portfolio, excluding equity securities, at September 30, 2024:

(In thousands)

Sector	Portfolio Mix		Amortized Book		Fair Value		Credit Enhancement		AAA		AA		A		BBB		NR		Collateral / Guarantee Type
Unsecured ABS	—	%	$	3,199	$	2,975	27	%	—	%	—	%	—	%	—	%	100	%	Unsecured Consumer Debt
Student Loan ABS	1			4,348		4,283	27		—		—		—		—		100		Seasoned Student Loans
Federal Family Education Loan ABS	10			83,199		82,962	11		7		80		—		13		—		Federal Family Education Loan ⁽¹⁾
PACE Loan ABS	—			2,034		1,813	7		100		—		—		—		—		PACE Loans ⁽²⁾
Non-Agency CMBS	2			13,750		14,045	26		—		—		—		—		100
Non-Agency RMBS	2			16,749		14,212	16		100		—		—		—		—		Reverse Mortgages ⁽³⁾
Municipal – General Obligation	12			99,779		93,395			11		82		7		—		—
Municipal – Revenue	14			121,130		112,705			—		82		12		—		6
SBA ReRemic ⁽⁵⁾	—			2,427		2,409			—		100		—		—		—		SBA Guarantee ⁽⁴⁾
Small Business Administration	1			6,632		7,042			—		100		—		—		—		SBA Guarantee ⁽⁴⁾
Agency MBS	18			154,058		154,762			—		100		—		—		—		Residential Mortgages ⁽⁴⁾
Agency CMO	38			316,385		315,677			—		100		—		—		—
U.S. Treasury securities	2			20,047		18,373			—		100		—		—		—		U.S. Government Guarantee ⁽⁴⁾
Corporate bonds	—			1,932		1,975			—		—		52		48		—
	100	%	$	845,669	$	826,628			4	%	89	%	3	%	1	%	3	%

⁽¹⁾ 97% guaranteed by U.S. government
⁽²⁾ PACE acronym represents Property Assessed Clean Energy loans
⁽³⁾ Non-agency reverse mortgages with current structural credit enhancements
⁽⁴⁾ Guaranteed by U.S. government or U.S. government agencies
⁽⁵⁾ SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits

Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor’s, Moody’s, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor’s rates U.S. government obligations at AA+.

About the Company

With $5.5 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties, Pennsylvania and Anne Arundel, Baltimore, Harford, Howard, and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company’s lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit http://www.orrstown.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company’s management with respect to, among other things, future events and the Company’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results of the Company’s operations to differ materially from expectations include, but are not limited to: general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ineffectiveness of the Company’s strategic growth plan due to changes in current or future market conditions; changes in interest rates; the diversion of management’s attention from ongoing business operations and opportunities; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in laws and regulations; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with litigation and legal proceedings; the possibility that the anticipated benefits of the merger with Codorus (the “Merger”) are not realized when expected or at all; the possibility that the Merger may be more expensive to complete than anticipated; the possibility that revenues following the Merger may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the ability to complete the integration of the two companies successfully; the dilution caused by the Company’s issuance of additional shares of its capital stock in connection with the Merger; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2023 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequent filings made with the Securities and Exchange Commission.

The foregoing list of factors is not exhaustive. If one or more events related to these or other risks or uncertainties materializes, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company disclaims any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company’s behalf may issue.

The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only and are not forecasts and may not reflect actual results.

The MIL Network –

January 24, 2025

MIL-OSI New Zealand: Government reduces Forestry ETS annual charge by 50 per cent

Source: New Zealand Government

The Government has today started consultation on a 50 per cent reduction to the annual charge for forest owners participating in the Forestry Emissions Trading Scheme (ETS) Registry, Forestry Minister Todd McClay announced.

“Following an independent review released last week we are proposing to lower the per-hectare annual charge to $14.90.

“This is a 50 per cent reduction from Labour’s excessive charge announced just before the election of $30.25 per hectare per year.

“It’s now clear that the previous Labour government made a number of decisions that drove up the cost of this Registry and they expected the forestry sector to pay for their mistakes. Cabinet has agreed that the sector should not bear the brunt of Labour’s previous decisions,” Mr McClay says.

“The Ministry for Primary Industries has worked hard to find efficiencies and drive down costs over the last 10 months. We’ve also been focused on improving service delivery to ensure the Registry meets the expectations of forestry users. As a result the annual charge has reduced significantly.

“Last week, we announced the formation of a Forestry Sector Reference Group to further improve outcomes for the ETS Registry and find greater cost savings over the next year. This is an opportunity for the forestry sector and government to partner to drive better outcomes for forestry.”

The new annual charge would begin in the 2024/25 financial year and stay in place until a full review is conducted after the current emissions reporting period.

“This proposal is part of the Government’s promise to rebuild confidence in the forestry sector and support its role in achieving New Zealand’s exporting and emissions targets.”

Consultation on the new annual charge starts today (23 October 2024) and runs for three weeks. It covers the reduced annual charge and adjustments to the Climate Change (Forestry) Regulations 2022 for participants using the field measurement approach during the 2023–25 period.

Following consultation, Cabinet will move quickly to finalise the regulations, giving participants clarity and certainty on charges.

MIL OSI New Zealand News –

January 24, 2025

MIL-OSI: Peapack-Gladstone Financial Corporation Reports Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

BEDMINSTER, N.J., Oct. 22, 2024 (GLOBE NEWSWIRE) — Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2024 financial results.

This earnings release should be read in conjunction with the Company’s Q3 2024 Investor Update, a copy of which is available on our website at http://www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at http://www.sec.gov.

During the third quarter of 2024, deposits grew $279 million, to $5.9 billion, which represents an annualized growth rate of 20%. Nearly half of the deposit growth during the quarter was attributed to an increase in noninterest-bearing demand deposit balances which grew $130 million to $1.1 billion. Strong core relationship growth throughout 2024 has allowed the Company to repay all outstanding short-term borrowings and strengthen its liquidity position. The Company also saw an increase in loan demand during the third quarter. Outstanding loan balances increased by $51 million to $5.3 billion as of September 30, 2024.

The Company recorded net income of $7.6 million and diluted earnings per share (“EPS”) of $0.43 for the quarter ended September 30, 2024 compared to net income of $7.5 million and EPS of $0.42 for the quarter ended June 30, 2024.

Net interest income increased $2.6 million, or 8%, on a linked quarter basis to $37.7 million during the third quarter of 2024 compared to $35.0 million in the second quarter. The growth in net interest income was driven by continued improvement in the net interest margin. The net interest margin increased to 2.34% for the quarter ended September 30, 2024 compared to 2.25% for the quarter ended June 30, 2024 and 2.20% for the quarter ended March 31, 2024.

Douglas L. Kennedy, President and CEO said, “Our expansion into the metro New York market, leading with our ‘Single Point of Contact’ private banking strategy, continues to deliver results ahead of plan. Our third quarter results reflect this success through strong core deposit growth, continued improvement in net interest income and enhanced liquidity profile. Our New York Commercial Private Banking initiative is currently managing over $730 million in customer relationship deposits, which includes 31% in noninterest-bearing demand deposits. We expect that our expansion will become accretive to earnings in early 2025.”

Mr. Kennedy also noted, “During the third quarter of 2024, Moody’s reaffirmed our investment grade ratings with a stable outlook after a thorough analysis of our business model and balance sheet. We are fully aware of the headwinds created by the current interest rate environment, and we are confident in our ability to manage through any of these issues that may arise as we execute our private banking strategy, which over time will deliver shareholder value.”

The following are select highlights for the period ended September 30, 2024:

Wealth Management:

AUM/AUA in our Wealth Management Division totaled a record $12.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023.
Gross new business inflows for Q3 2024 totaled $140 million ($130 million managed).
Wealth Management fee income was $15.2 million in Q3 2024, which amounted to 27% of total revenue for the quarter.

Commercial Banking and Balance Sheet Management:

Year-to-date total deposits have increased by $661 million, to $5.9 billion at September 30, 2024 compared to $5.3 billion at December 31, 2023. The Company intentionally allowed $121 million in high cost, non-core relationship deposits to roll off during the first nine months of 2024. Excluding this deposit run-off, core relationship deposits have grown by $782 million during 2024.
The Company has repaid $404 million in short-term borrowings as of September 30, 2024.
Total loans declined $116 million to $5.3 billion at September 30, 2024 from $5.4 billion at December 31, 2023. However, outstanding loans increased by $51 million during the three-month period ended September 30, 2024 after experiencing contraction during the first six months of 2024.
Commercial and industrial lending (“C&I”) drove a majority of the growth during the third quarter. C&I balances represent 42% of the total loan portfolio at September 30, 2024. A strong pipeline of new business has been built heading into Q4.
Fee income on unused commercial lines of credit totaled $845,000 for Q3 2024.
The net interest margin (“NIM”) was 2.34% in Q3 2024, an increase of 9 basis points compared to 2.25% at Q2 2024.
Noninterest-bearing demand deposits increased by $130 million during the third quarter of 2024 and represented 18% of total deposits as of September 30, 2024.

Capital Management:

Tangible book value per share increased 6% to $32.00 per share at September 30, 2024 compared to $30.31 at December 31, 2023. Book value per share increased 5% to $34.57 per share at September 30, 2024 compared to $32.90 at December 31, 2023.
During the third quarter, the Company repurchased 100,000 shares of common stock at a total cost of $2.6 million, or an average cost of $25.92 per share. During the first nine months of 2024, the Company repurchased 300,000 shares of common stock at a cost of $7.2 million. For the full year 2023, the Company repurchased 455,341 shares at a cost of $12.5 million.
At September 30, 2024, the Tier 1 Leverage Ratio stood at 10.99% for Peapack-Gladstone Bank (the “Bank”) and 9.33% for the Company. The Common Equity Tier 1 Ratio (to Risk-Weighted Assets) was 13.75% for the Bank and 11.67% for the Company at September 30, 2024. These ratios remain significantly above well capitalized standards, as capital continues to benefit from net income generation.

SUMMARY INCOME STATEMENT DETAILS:

The following tables summarize specified financial details for the periods shown.

Nine Months Ended September 30, 2024 Year Compared to Nine Months Ended September 30, 2023

	Nine Months Ended			Nine Months Ended
	September 30,			September 30,			Increase/
(Dollars in millions, except per share data) (unaudited)	2024			2023			(Decrease)
Net interest income	$	107.10		$	119.41		$	(12.31	)	(10	)%
Wealth management fee income		45.98			41.99			3.99		10
Capital markets activity		2.30			2.45			(0.15	)	(6	)
Other income		10.91			11.55			(0.64	)	(6	)
Total other income		59.19			55.99			3.20		6

Total Revenue		166.29			175.40			(9.11	)	(5	)%

Operating expenses		127.82			110.68			17.14		15
Pretax income before provision for credit losses		38.47			64.72			(26.25	)	(41	)
Provision for credit losses		5.76			9.06			(3.30	)	(36	)
Pretax income		32.71			55.66			(22.95	)	(41	)
Income tax expense		8.96			15.40			(6.44	)	(42	)
Net income	$	23.75		$	40.26		$	(16.51	)	(41	)%
Diluted EPS	$	1.34		$	2.23		$	(0.89	)	(40	)%

Return on average assets		0.49	%		0.84	%		(0.35	)
Return on average equity		5.42	%		9.66	%		(4.24	)

September 2024 Quarter Compared to Prior Year Quarter

	Three Months Ended			Three Months Ended
	September 30,			September 30,			Increase/
(Dollars in millions, except per share data) (unaudited)	2024			2023			(Decrease)
Net interest income	$	37.68		$	36.52		$	1.16		3	%
Wealth management fee income		15.15			13.98			1.17		8
Capital markets activity		0.44			0.61			(0.17	)	(28	)
Other income		3.35			4.76			(1.41	)	(30	)
Total other income		18.94			19.35			(0.41	)	(2	)

Total Revenue		56.62			55.87			0.75		1	%

Operating expenses		44.65			37.41			7.24		19
Pretax income before provision for credit losses		11.97			18.46			(6.49	)	(35	)
Provision for credit losses		1.22			5.86			(4.64	)	(79	)
Pretax income		10.75			12.60			(1.85	)	(15	)
Income tax expense		3.16			3.84			(0.68	)	(18	)
Net income	$	7.59		$	8.76		$	(1.17	)	(13	)%
Diluted EPS	$	0.43		$	0.49		$	(0.06	)	(12	)%

Return on average assets annualized		0.46	%		0.54	%		(0.08	)
Return on average equity annualized		5.12	%		6.20	%		(1.08	)

September 2024 Quarter Compared to Linked Quarter

	Three Months Ended			Three Months Ended
	September 30,			June 30,			Increase/
(Dollars in millions, except per share data) (unaudited)	2024			2024			(Decrease)
Net interest income	$	37.68		$	35.04		$	2.64		8	%
Wealth management fee income		15.15			16.42			(1.27	)	(8	)
Capital markets activity		0.44			0.59			(0.15	)	(25	)
Other income		3.35			4.55			(1.20	)	(26	)
Total other income		18.94			21.56			(2.62	)	(12	)

Total Revenue		56.62			56.60			0.02		0	%

Operating expenses		44.65			43.13			1.52		4
Pretax income before provision for credit losses		11.97			13.47			(1.50	)	(11	)
Provision for credit losses		1.22			3.91			(2.69	)	(69	)
Pretax income		10.75			9.56			1.19		12
Income tax expense		3.16			2.03			1.13		56
Net income	$	7.59		$	7.53		$	0.06		1	%
Diluted EPS	$	0.43		$	0.42		$	0.01		2	%

Return on average assets annualized		0.46	%		0.47	%		(0.01	)
Return on average equity annualized		5.12	%		5.22	%		(0.10	)

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division reached a record high of $12.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023. For the September 2024 quarter, the Wealth Management Team generated $15.2 million in fee income, compared to $16.4 million for the June 30, 2024 quarter and $14.0 million for the September 2023 quarter. The equity markets continued to improve during 2024, contributing to the increase in AUM/AUA along with gross new business inflows of $547 million.

John Babcock, President of the Bank’s Wealth Management Division, noted, “Q3 2024 saw continued strong client inflows totaling new accounts and client additions of $140 million ($130 million managed). Our new business pipeline is healthy, and we continue to remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities combined with our high-touch client service model distinguishes us in our market and continues to drive our growth and success.”

Loans / Commercial Banking

Total loans declined $116 million, or 2%, to $5.3 billion at September 30, 2024 compared to December 31, 2023, primarily driven by repayments, maturities and tighter lending standards. Most of the decline in outstanding loans during the first nine months of 2024 was related to reductions in multifamily and commercial real estate balances. Total C&I loans and leases at September 30, 2024 were $2.2 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “Based on a more constructive economic backdrop, we recently began building our pipeline of C&I loans and leases and believe that loan demand will continue to show improvement as we look forward to coming periods ahead. We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, Corporate Advisory and SBA businesses. We anticipate these business lines fit perfectly with our private banking business model and will generate solid production going forward. During the quarter we originated loans that carried an average spread of more than 4% above our cost of funds. Having this capability will help us in the near term as the real estate market adjusts to changing market conditions.”

Net Interest Income (NII)/Net Interest Margin (NIM)

The Company’s NII of $37.7 million and NIM of 2.34% for Q3 2024 increased $2.6 million and 9 basis points from NII of $35.0 million and NIM of 2.25% for the linked quarter (Q2 2024), and increased $1.2 million and 6 basis points from NII of $36.5 million and NIM of 2.28% compared to the prior year period (Q3 2023). Our single point of contact private banking strategy continues to deliver lower cost core deposit relationships. Noninterest-bearing checking deposits increased by $130 million during the third quarter of 2024, which also drove the improvement in NIM.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $661 million to $5.9 billion at September 30, 2024 from $5.3 billion at December 31, 2023. The change in deposit balances included a decline in brokered deposits and non-core deposit relationships. The overall growth in deposits has strengthened balance sheet liquidity and reduced reliance on outside borrowings and other non-core funding sources. There were no outstanding overnight borrowings at September 30, 2024, compared to $404 million at December 31, 2023.

At September 30, 2024, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $1.2 billion, or 18% of assets. The Company maintains additional liquidity resources of approximately $3.0 billion through secured available borrowing facilities with the Federal Home Loan Bank and the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios. The Company’s total on and off-balance sheet liquidity totaled $4.2 billion, which amounts to 293% of the total uninsured/uncollateralized deposits currently on the Company’s balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $435,000 for the September 2024 quarter compared to $586,000 for the June 2024 quarter and $613,000 for the September 2023 quarter.

	Three Months Ended		Three Months Ended		Three Months Ended
	September 30,		June 30,		September 30,
(Dollars in thousands, except per share data) (unaudited)	2024		2024		2023
Gain on loans held for sale at fair value (Mortgage banking)	$	15	$	34	$	37
Gain on sale of SBA loans		365		449		491
Corporate advisory fee income		55		103		85
Total capital markets activity	$	435	$	586	$	613

Other Noninterest Income (other than Wealth Management Fee Income and Income from Capital Markets Activities)

Other noninterest income was $3.4 million for Q3 2024 compared to $4.6 million for Q2 2024 and $4.8 million for Q3 2023. Q3 2024 included $225,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases, compared to $1.6 million in Q2 2024 and $2.3 million in Q3 2023, respectively. Additionally, Q3 2024 included $845,000 of unused line fees compared to $786,000 for Q2 2024 and $794,000 for Q3 2023.

Operating Expenses

The Company’s total operating expenses were $44.6 million for the third quarter of 2024, compared to $43.1 million for the second quarter of 2024 and $37.4 million for the quarter ended September 2023. The third quarter of 2024 reflects the full run rate of expenses associated with the Company’s expansion into New York City.

Mr. Kennedy noted, “We continue to make investments related to our strategic decision to expand into New York City and are confident that these investments will position us for future growth and profitability, which will ultimately translate to increased shareholder value. We continue to look for opportunities to create efficiencies and manage expenses throughout the Company while investing in enhancements to the client experience.”

Income Taxes

The effective tax rate for the three months ended September 30, 2024 was 29.4%, as compared to 21.2% for the June 2024 quarter and 30.5% for the quarter ended September 30, 2023. The June 2024 quarter included a one-time benefit related to the Company’s deferred tax assets associated with a surtax imposed by the State of New Jersey in June 2024. Excluding such benefit, the effective tax rate for the June 2024 quarter would have been approximately 29.0%.

Asset Quality / Provision for Credit Losses

Nonperforming assets remained elevated at $80.5 million, or 1.18% of total assets, at September 30, 2024, as compared to $82.1 million, or 1.26% of total assets, at June 30, 2024. Loans past due 30 to 89 days and still accruing were $31.4 million, or 0.59% of total loans, at September 30, 2024 compared to $34.7 million, or 0.66% of total loans, at June 30, 2024. Criticized and classified loans totaled $261.1 million at September 30, 2024, reflecting a decrease of $8.0 million as compared to $269.1 million at June 30, 2024. The Company currently has no loans or leases on deferral and still accruing.

For the quarter ended September 30, 2024, the Company’s provision for credit losses was $1.2 million compared to $3.9 million for the June 2024 quarter and $5.9 million for the September 2023 quarter. The provision for credit losses in the third quarter of 2024 was driven by overall slower loan growth along with additional specific reserves related to certain isolated credits, of $1.8 million partially offset by a recovery of approximately $2.1 million. The higher provision for the second quarter of 2024 was primarily driven by charge-offs related to the sale of two problem loans, which were approaching foreclosure and transferred to other real estate owned.

At September 30, 2024, the allowance for credit losses was $71.3 million (1.34% of total loans), compared to $68.0 million (1.29% of total loans) at June 30, 2024, and $68.6 million (1.25% of total loans) at September 30, 2023.

Mr. Kennedy noted, “We are starting to see some of our asset quality metrics improve, which supports our position that most of our credit issues are isolated to a small number of specific borrowers and sponsors. We continue to work through each credit one at a time while building up reserve coverage. All of the multifamily loans that matured or repriced in 2024 have continued to make their scheduled payments despite the higher rate environment.”

Capital

The Company’s capital position increased during the third quarter of 2024 due to net income of $7.6 million, which was partially offset by the repurchase of 100,000 shares through the Company’s repurchase program at a total cost of $2.6 million and the quarterly dividend payment totaling $882,000. Additionally, during the third quarter of 2024, capital benefited from a reduction in accumulated other comprehensive losses of $13.5 million, net of tax. The total accumulated other comprehensive loss declined to $54.8 million as of September 30, 2024 ($57.6 million loss related to the available for sale securities portfolio partially offset by a $2.8 million gain on the cash flow hedges).

Tangible book value per share increased 6% to $32.00 at September 30, 2024 from $30.31 at December 31, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release for further detail. Book value per share increased 5% to $34.57 per share at September 30, 2024 compared to $32.90 at December 31, 2023. The Company’s and Bank’s regulatory capital ratios as of September 30, 2024 remain strong and reflect increases from December 31, 2023 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of June 30, 2024), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On September 25, 2024, the Company declared a cash dividend of $0.05 per share payable on November 22, 2024 to shareholders of record on November 7, 2024.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey based bank holding company with total assets of $6.8 billion and assets under management/administration of $12.1 billion as of September 30, 2024. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses, not for profits and consumers. Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy. Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service. Visit http://www.pgbank.com and http://www.peapackprivate.com for more information.

FORWARD-LOOKING STATEMENTS

The foregoing may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect,” “look,” “believe,” “anticipate,” “may” or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to:

our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
the impact of anticipated higher operating expenses in 2024 and beyond;
our ability to successfully integrate wealth management firm and team acquisitions;
our ability to successfully integrate our expanded employee base;
an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;
declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
declines in the value in our investment portfolio;
impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
higher than expected increases in our allowance for credit losses;
higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;
inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
decline in real estate values within our market areas;
legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
higher than expected FDIC insurance premiums;
adverse weather conditions;
the current or anticipated impact of military conflict, terrorism or other geopolitical events;
our inability to successfully generate new business in new geographic markets, including our expansion into New York City;
a reduction in our lower-cost funding sources;
changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
our inability to adapt to technological changes;
claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
our inability to retain key employees;
demands for loans and deposits in our market areas;
adverse changes in securities markets;
changes in New York City rent regulation law;
changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
changes in accounting policies and practices; and/or
other unexpected material adverse changes in our financial condition, operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2023. Except as may be required by the applicable law or regulation, we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Contact:
Frank A. Cavallaro, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-306-8933

(Tables to follow)

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except per share data)
(Unaudited)

	For the Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
	2024			2024			2024			2023			2023
Income Statement Data:
Interest income	$	83,203		$	79,238		$	79,194		$	80,178		$	78,489
Interest expense		45,522			44,196			44,819			43,503			41,974
Net interest income		37,681			35,042			34,375			36,675			36,515
Wealth management fee income		15,150			16,419			14,407			13,758			13,975
Service charges and fees		1,327			1,345			1,322			1,255			1,319
Bank owned life insurance		390			328			503			357			310
Gain on loans held for sale at fair value (Mortgage banking)		15			34			56			18			37
Gain on loans held for sale at lower of cost or fair value		—			23			—			—			—
Gain on sale of SBA loans		365			449			400			239			491
Corporate advisory fee income		55			103			818			39			85
Other income		1,162			2,938			1,306			1,339			3,541
Fair value adjustment for CRA equity security		474			(84	)		(111	)		585			(404	)
Total other income		18,938			21,555			18,701			17,590			19,354

Total revenue		56,619			56,597			53,076			54,265			55,869

Salaries and employee benefits		31,050			29,884			28,476			24,320			25,264
Premises and equipment		5,633			5,776			5,081			5,416			5,214
FDIC insurance expense		870			870			945			765			741
Other expenses		7,096			6,596			5,539			7,115			6,194
Total operating expenses		44,649			43,126			40,041			37,616			37,413
Pretax income before provision for credit losses		11,970			13,471			13,035			16,649			18,456
Provision for credit losses		1,224			3,911			627			5,026			5,856
Income before income taxes		10,746			9,560			12,408			11,623			12,600
Income tax expense		3,159			2,030			3,777			3,024			3,845
Net income	$	7,587		$	7,530		$	8,631		$	8,599		$	8,755

Per Common Share Data:
Earnings per share (basic)	$	0.43		$	0.42		$	0.49		$	0.48		$	0.49
Earnings per share (diluted)		0.43			0.42			0.48			0.48			0.49
Weighted average number of common shares outstanding:
Basic		17,616,046			17,747,070			17,711,639			17,770,158			17,856,961
Diluted		17,700,042			17,792,296			17,805,347			17,961,400			18,010,127
Performance Ratios:
Return on average assets annualized (ROAA)		0.46	%		0.47	%		0.54	%		0.53	%		0.54	%
Return on average equity annualized (ROAE)		5.12	%		5.22	%		5.94	%		6.13	%		6.20	%
Return on average tangible equity annualized (ROATCE) (A)		5.54	%		5.67	%		6.45	%		6.68	%		6.75	%
Net interest margin (tax-equivalent basis)		2.34	%		2.25	%		2.20	%		2.29	%		2.28	%
GAAP efficiency ratio (B)		78.86	%		76.20	%		75.44	%		69.32	%		66.97	%
Operating expenses / average assets annualized		2.73	%		2.70	%		2.51	%		2.33	%		2.31	%

(A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(B) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except per share data)
(Unaudited)

	For the Nine Months Ended
	September 30,						Change
	2024			2023			$			%
Income Statement Data:
Interest income	$	241,635		$	223,832		$	17,803			8	%
Interest expense		134,537			104,418			30,119			29	%
Net interest income		107,098			119,414			(12,316	)		-10	%
Wealth management fee income		45,976			41,989			3,987			9	%
Service charges and fees		3,994			3,897			97			2	%
Bank owned life insurance		1,221			912			309			34	%
Gain on loans held for sale at fair value (Mortgage banking)		105			73			32			44	%
Gain on loans held for sale at lower of cost or fair value		23			—			23		N/A
Gain on sale of SBA loans		1,214			2,194			(980	)		-45	%
Corporate advisory fee income		976			180			796			442	%
Other income		5,406			7,147			(1,741	)		-24	%
Fair value adjustment for CRA equity security		279			(404	)		683			-169	%
Total other income		59,194			55,988			3,206			6	%

Total revenue		166,292			175,402			(9,110	)		-5	%

Salaries and employee benefits		89,410			76,204			13,206			17	%
Premises and equipment		16,490			14,317			2,173			15	%
FDIC insurance expense		2,685			2,181			504			23	%
Other expenses		19,231			17,977			1,254			7	%
Total operating expenses		127,816			110,679			17,137			15	%
Pretax income before provision for credit losses		38,476			64,723			(26,247	)		-41	%
Provision for credit losses		5,762			9,065			(3,303	)		-36	%
Income before income taxes		32,714			55,658			(22,944	)		-41	%
Income tax expense		8,966			15,403			(6,437	)		-42	%
Net income	$	23,748		$	40,255		$	(16,507	)		-41	%


Per Common Share Data:
Earnings per share (basic)	$	1.34		$	2.25		$	(0.91	)		-40	%
Earnings per share (diluted)		1.34			2.23			(0.89	)		-40	%
Weighted average number of common shares outstanding:
Basic		17,691,309			17,876,316			(185,007	)		-1	%
Diluted		17,746,560			18,091,524			(344,964	)		-2	%
Performance Ratios:
Return on average assets (ROAA)		0.49	%		0.84	%		(0.35	)%		-41	%
Return on average equity (ROAE)		5.42	%		9.66	%		(4.24	)%		-44	%
Return on average tangible equity (ROATCE) (A)		5.88	%		10.55	%		(4.67	)%		-44	%
Net interest margin (tax-equivalent basis)		2.26	%		2.54	%		(0.28	)%		-11	%
GAAP efficiency ratio (B)		76.86	%		63.10	%		13.76	%		22	%
Operating expenses / average assets		2.65	%		2.31	%		0.34	%		15	%

(A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(B) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)

	As of
	Sept 30,		June 30,		March 31,		Dec 31,		Sept 30,
	2024		2024		2024		2023		2023
ASSETS
Cash and due from banks	$	8,129	$	5,586	$	5,769	$	5,887	$	7,400
Federal funds sold		—		—		—		—		—
Interest-earning deposits		484,529		310,143		189,069		181,784		180,469
Total cash and cash equivalents		492,658		315,729		194,838		187,671		187,869
Securities available for sale		682,713		591,884		550,870		550,617		521,005
Securities held to maturity		103,158		105,013		106,498		107,755		108,940
CRA equity security, at fair value		13,445		12,971		13,055		13,166		12,581
FHLB and FRB stock, at cost (A)		12,459		12,478		18,079		31,044		34,158

Residential mortgage		591,374		579,057		581,426		578,427		585,295
Multifamily mortgage		1,784,861		1,796,687		1,827,165		1,836,390		1,871,853
Commercial mortgage		578,559		600,859		615,964		637,625		622,469
Commercial and industrial loans		2,247,853		2,185,827		2,235,342		2,284,940		2,321,917
Consumer loans		78,160		69,579		66,827		62,036		57,227
Home equity lines of credit		38,971		37,117		35,542		36,464		34,411
Other loans		389		172		184		238		265
Total loans		5,320,167		5,269,298		5,362,450		5,436,120		5,493,437
Less: Allowance for credit losses		71,283		67,984		66,251		65,888		68,592
Net loans		5,248,884		5,201,314		5,296,199		5,370,232		5,424,845

Premises and equipment		25,716		24,932		24,494		24,166		23,969
Accrued interest receivable		31,973		33,534		32,672		30,676		22,889
Bank owned life insurance		47,837		47,716		47,580		47,581		47,509
Goodwill and other intangible assets		45,198		45,470		45,742		46,014		46,286
Finance lease right-of-use assets		1,020		1,055		1,900		2,087		2,274
Operating lease right-of-use assets		41,650		38,683		16,035		12,096		12,800
Due from brokers		—		3,184		—		—		—
Other assets		47,081		71,387		60,591		53,752		76,456
TOTAL ASSETS	$	6,793,792	$	6,505,350	$	6,408,553	$	6,476,857	$	6,521,581

LIABILITIES
Deposits:
Noninterest-bearing demand deposits	$	1,079,877	$	950,368	$	914,893	$	957,687	$	947,405
Interest-bearing demand deposits		3,316,217		3,229,814		3,029,119		2,882,193		2,871,359
Savings		103,979		105,602		108,305		111,573		117,905
Money market accounts		902,562		824,158		775,132		740,559		761,833
Certificates of deposit – Retail		515,297		502,810		486,079		443,791		422,291
Certificates of deposit – Listing Service		7,454		7,454		7,704		7,804		9,103
Subtotal “customer” deposits		5,925,386		5,620,206		5,321,232		5,143,607		5,129,896
IB Demand – Brokered		10,000		10,000		10,000		10,000		10,000
Certificates of deposit – Brokered		—		26,000		145,480		120,507		119,463
Total deposits		5,935,386		5,656,206		5,476,712		5,274,114		5,259,359
Short-term borrowings		—		—		119,490		403,814		470,576
Finance lease liability		1,388		1,427		3,104		3,430		3,752
Operating lease liability		44,775		41,347		17,630		12,876		13,595
Subordinated debt, net		133,489		133,417		133,346		133,274		133,203
Due to brokers		—		9,981		—		—		—
Other liabilities		71,140		74,650		75,892		65,668		82,140
TOTAL LIABILITIES		6,186,178		5,917,028		5,826,174		5,893,176		5,962,625
Shareholders’ equity		607,614		588,322		582,379		583,681		558,956
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY	$	6,793,792	$	6,505,350	$	6,408,553	$	6,476,857	$	6,521,581
Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions)	$	12.1	$	11.5	$	11.5	$	10.9	$	10.4

(A) FHLB means “Federal Home Loan Bank” and FRB means “Federal Reserve Bank.”

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)

	As of
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
	2024			2024			2024			2023			2023
Asset Quality:
Loans past due over 90 days and still accruing	$	—		$	—		$	35		$	—		$	—
Nonaccrual loans		80,453			82,075			69,811			61,324			70,809
Other real estate owned		—			—			—			—			—
Total nonperforming assets	$	80,453		$	82,075		$	69,846		$	61,324		$	70,809

Nonperforming loans to total loans		1.51	%		1.56	%		1.30	%		1.13	%		1.29	%
Nonperforming assets to total assets		1.18	%		1.26	%		1.09	%		0.95	%		1.09	%

Performing modifications (A)(B)	$	51,796		$	26,788		$	12,311		$	248		$	248

Loans past due 30 through 89 days and still accruing	$	31,446		$	34,714		$	73,699		$	34,589		$	9,780

Loans subject to special mention	$	113,655		$	140,791		$	59,450		$	71,397		$	53,328

Classified loans	$	147,422		$	128,311		$	117,869		$	84,372		$	94,866

Individually evaluated loans	$	79,972		$	81,802		$	69,530		$	60,710		$	70,184

Allowance for credit losses (“ACL”):
Beginning of quarter	$	67,984		$	66,251		$	65,888		$	68,592		$	62,704
Provision for credit losses (C)		1,227			3,901			615			5,082			5,944
(Charge-offs)/recoveries, net (D)		2,072			(2,168	)		(252	)		(7,786	)		(56	)
End of quarter	$	71,283		$	67,984		$	66,251		$	65,888		$	68,592

ACL to nonperforming loans		88.60	%		82.83	%		94.85	%		107.44	%		96.87	%
ACL to total loans		1.34	%		1.29	%		1.24	%		1.21	%		1.25	%
Collectively evaluated ACL to total loans (E)		1.16	%		1.14	%		1.15	%		1.13	%		1.10	%

(A) Amounts reflect modifications that are paying according to modified terms.
(B) Excludes modifications included in nonaccrual loans of $3.7 million at September 30, 2024, $3.2 million at June 30, 2024, $3.2 million at March 31, 2024, $3.0 million at December 31, 2023 and $3.1 million at September 30, 2023.
(C) Excludes a credit of $3,000 at September 30, 2024, a provision of $10,000 at June 30, 2024, a provision of $12,000 at March 31, 2024, a credit of $55,000 at December 31, 2023 and a credit of $88,000 at September 30, 2023 related to off-balance sheet commitments.
(D) Net charge-offs for the quarter ended December 31, 2023 included charge-offs of $2.2 million of a previously established reserve to loans individually evaluated on one multifamily loan and $5.6 million on one equipment finance relationship.
(E) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)

	As of
	September 30,				December 31,				September 30,
	2024				2023				2023
Capital Adequacy
Equity to total assets (A)			8.94	%			9.01	%			8.57	%
Tangible equity to tangible assets (B)			8.33	%			8.36	%			7.92	%
Book value per share (C)		$	34.57			$	32.90			$	31.37
Tangible book value per share (D)		$	32.00			$	30.31			$	28.77

Tangible equity to tangible assets excluding other comprehensive loss*			9.07	%			9.28	%			9.06	%
Tangible book value per share excluding other comprehensive loss*		$	35.11			$	33.97			$	33.36

*Excludes other comprehensive loss of $54.8 million for the quarter ended September 30, 2024, $64.9 million for the quarter ended December 31, 2023, and $81.7 million for the quarter ended September 30, 2023. See Non-GAAP financial measures reconciliation included in these tables.

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter end.
(B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at quarter end is calculated by dividing tangible equity by tangible assets at quarter end. See Non-GAAP financial measures reconciliation included in these tables.
(C) Book value per common share is calculated by dividing shareholders’ equity by quarter end common shares outstanding.
(D) Tangible book value per share excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by quarter end common shares outstanding. See Non-GAAP financial measures reconciliation tables.

	As of
	September 30,				December 31,				September 30,
	2024				2023				2023
Regulatory Capital – Holding Company
Tier I leverage	$	615,486	9.33	%	$	600,444	9.19	%	$	592,061	9.05	%
Tier I capital to risk-weighted assets		615,486	11.67			600,444	11.43			592,061	11.13
Common equity tier I capital ratio to risk-weighted assets		615,474	11.67			600,432	11.43			592,043	11.13
Tier I & II capital to risk-weighted assets		800,961	15.19			785,413	14.95			784,777	14.76

Regulatory Capital – Bank
Tier I leverage (E)	$	724,038	10.99	%	$	707,446	10.83	%	$	702,517	10.75	%
Tier I capital to risk-weighted assets (F)		724,038	13.75			707,446	13.48			702,517	13.22
Common equity tier I capital ratio to risk-weighted assets (G)		724,026	13.75			707,434	13.47			702,499	13.22
Tier I & II capital to risk-weighted assets (H)		789,954	15.00			773,083	14.73			768,979	14.47

(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($264 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($448 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($369 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($553 million)

PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)

	For the Quarters Ended
	Sept 30,		June 30,		March 31,		Dec 31,		Sept 30,
	2024		2024		2024		2023		2023
Residential loans retained	$	26,955	$	16,087	$	11,661	$	5,895	$	21,310
Residential loans sold		1,853		2,361		4,025		1,449		2,503
Total residential loans		28,808		18,448		15,686		7,344		23,813
Commercial real estate		4,300		2,600		11,500		21,375		3,900
Multifamily		11,295		4,330		1,900		5,725		3,000
Commercial (C&I) loans (A) (B)		242,829		103,065		145,803		145,397		176,845
SBA		9,106		8,200		2,790		7,326		300
Wealth lines of credit (A)		11,675		10,950		3,850		350		6,875
Total commercial loans		279,205		129,145		165,843		180,173		190,920
Installment loans		8,137		1,664		6,868		2,946		6,999
Home equity lines of credit (A)		10,421		4,787		2,103		4,174		6,275
Total loans closed	$	326,571	$	154,044	$	190,500	$	194,637	$	228,007

	For the Nine Months Ended
	Sept 30,		Sept 30,
	2024		2023
Residential loans retained	$	54,703	$	90,971
Residential loans sold		8,239		5,052
Total residential loans		62,942		96,023
Commercial real estate		18,400		66,125
Multifamily		17,525		59,812
Commercial (C&I) loans (A) (B)		491,697		543,631
SBA		20,096		23,963
Wealth lines of credit (A)		26,475		34,050
Total commercial loans		574,193		727,581
Installment loans		16,669		23,672
Home equity lines of credit (A)		17,311		15,303
Total loans closed	$	671,115	$	862,579

(A) Includes loans and lines of credit that closed in the period but not necessarily funded.
(B) Includes equipment finance.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
(Tax-Equivalent Basis, Dollars in Thousands)
(Unaudited)

	For the Three Months Ended
	September 30, 2024								September 30, 2023
	Average			Income/		Annualized			Average			Income/		Annualized
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	865,892		$	6,107		2.82	%	$	806,861		$	5,170		2.56	%
Tax-exempt (A) (B)		—			—		—			1,198			11		3.67

Loans (B) (C):
Mortgages		579,949			5,834		4.02			580,951			5,208		3.59
Commercial mortgages		2,381,771			27,362		4.60			2,502,351			27,746		4.44
Commercial		2,159,648			37,588		6.96			2,298,723			37,357		6.50
Commercial construction		22,371			507		9.07			12,346			282		9.14
Installment		73,440			1,267		6.90			56,248			967		6.88
Home equity		38,768			814		8.40			34,250			680		7.94
Other		239			6		10.04			234			7		11.97
Total loans		5,256,186			73,378		5.58			5,485,103			72,247		5.27
Federal funds sold		—			—		—			—			—		—
Interest-earning deposits		326,707			3,982		4.88			136,315			1,463		4.29
Total interest-earning assets		6,448,785			83,467		5.18	%		6,429,477			78,891		4.91	%
Noninterest-earning assets:
Cash and due from banks		7,521								6,954
Allowance for credit losses		(70,317	)							(63,625	)
Premises and equipment		25,530								23,880
Other assets		139,042								85,582
Total noninterest-earning assets		101,776								52,791
Total assets	$	6,550,561							$	6,482,268

LIABILITIES:
Interest-bearing deposits:
Checking	$	3,214,186		$	31,506		3.92	%	$	2,813,080		$	24,318		3.46	%
Money markets		833,325			6,419		3.08			771,781			4,458		2.31
Savings		104,293			117		0.45			118,718			75		0.25
Certificates of deposit – retail		512,794			5,540		4.32			415,665			3,459		3.33
Subtotal interest-bearing deposits		4,664,598			43,582		3.74			4,119,244			32,310		3.14
Interest-bearing demand – brokered		10,000			134		5.36			10,000			136		5.44
Certificates of deposit – brokered		7,913			106		5.36			102,777			1,183		4.60
Total interest-bearing deposits		4,682,511			43,822		3.74			4,232,021			33,629		3.18
Borrowings		—			—		—			470,616			6,569		5.58
Capital lease obligation		1,401			15		4.28			3,863			46		4.76
Subordinated debt		133,449			1,685		5.05			133,163			1,730		5.20
Total interest-bearing liabilities		4,817,361			45,522		3.78	%		4,839,663			41,974		3.47	%
Noninterest-bearing liabilities:
Demand deposits		1,016,014								990,854
Accrued expenses and other liabilities		124,399								86,598
Total noninterest-bearing liabilities		1,140,413								1,077,452
Shareholders’ equity		592,787								565,153
Total liabilities and shareholders’ equity	$	6,550,561							$	6,482,268
Net interest income				$	37,945							$	36,917
Net interest spread							1.40	%							1.44	%
Net interest margin (D)							2.34	%							2.28	%

(A) Average balances for available for sale securities are based on amortized cost.
(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
(C) Loans are stated net of unearned income and include nonaccrual loans.
(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
(Tax-Equivalent Basis, Dollars in Thousands)
(Unaudited)

	For the Three Months Ended
	September 30, 2024								June 30, 2024
	Average			Income/		Annualized			Average			Income/		Annualized
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	865,892		$	6,107		2.82	%	$	801,715		$	5,168		2.58	%
Tax-exempt (A) (B)		—			—		—			—			—		—

Loans (B) (C):
Mortgages		579,949			5,834		4.02			576,944			5,582		3.87
Commercial mortgages		2,381,771			27,362		4.60			2,420,570			26,881		4.44
Commercial		2,159,648			37,588		6.96			2,191,370			37,067		6.77
Commercial construction		22,371			507		9.07			21,628			489		9.04
Installment		73,440			1,267		6.90			67,034			1,143		6.82
Home equity		38,768			814		8.40			36,576			748		8.18
Other		239			6		10.04			200			6		12.00
Total loans		5,256,186			73,378		5.58			5,314,322			71,916		5.41
Federal funds sold		—			—		—			—			—		—
Interest-earning deposits		326,707			3,982		4.88			207,287			2,418		4.67
Total interest-earning assets		6,448,785			83,467		5.18	%		6,323,324			79,502		5.03	%
Noninterest-earning assets:
Cash and due from banks		7,521								7,537
Allowance for credit losses		(70,317	)							(67,568	)
Premises and equipment		25,530								24,820
Other assets		139,042								99,838
Total noninterest-earning assets		101,776								64,627
Total assets	$	6,550,561							$	6,387,951

LIABILITIES:
Interest-bearing deposits:
Checking	$	3,214,186		$	31,506		3.92	%	$	3,094,386		$	29,252		3.78	%
Money markets		833,325			6,419		3.08			791,385			6,016		3.04
Savings		104,293			117		0.45			105,825			96		0.36
Certificates of deposit – retail		512,794			5,540		4.32			504,313			5,367		4.26
Subtotal interest-bearing deposits		4,664,598			43,582		3.74			4,495,909			40,731		3.62
Interest-bearing demand – brokered		10,000			134		5.36			10,000			134		5.36
Certificates of deposit – brokered		7,913			106		5.36			98,642			1,242		5.04
Total interest-bearing deposits		4,682,511			43,822		3.74			4,604,551			42,107		3.66
Borrowings		—			—		—			27,247			381		5.59
Capital lease obligation		1,401			15		4.28			2,869			22		3.07
Subordinated debt		133,449			1,685		5.05			133,377			1,686		5.06
Total interest-bearing liabilities		4,817,361			45,522		3.78	%		4,768,044			44,196		3.71	%
Noninterest-bearing liabilities:
Demand deposits		1,016,014								945,231
Accrued expenses and other liabilities		124,399								97,470
Total noninterest-bearing liabilities		1,140,413								1,042,701
Shareholders’ equity		592,787								577,206
Total liabilities and shareholders’ equity	$	6,550,561							$	6,387,951
Net interest income				$	37,945							$	35,306
Net interest spread							1.40	%							1.32	%
Net interest margin (D)							2.34	%							2.25	%

(A) Average balances for available for sale securities are based on amortized cost.
(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
(C) Loans are stated net of unearned income and include nonaccrual loans.
(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
(Tax-Equivalent Basis, Dollars in Thousands)
(Unaudited)

	For the Nine Months Ended
	September 30, 2024								September 30, 2023
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	820,594		$	16,411		2.67	%	$	801,535		$	14,541		2.42	%
Tax-exempt (A) (B)		—			—		—			1,637			49		3.99

Loans (B) (C):
Mortgages		578,187			16,836		3.88			556,220			14,433		3.46
Commercial mortgages		2,420,772			81,783		4.50			2,495,175			80,503		4.30
Commercial		2,196,921			112,214		6.81			2,247,803			106,182		6.30
Commercial construction		20,981			1,425		9.06			7,903			536		9.04
Installment		68,605			3,524		6.85			49,214			2,416		6.55
Home equity		37,255			2,298		8.22			33,914			1,903		7.48
Other		218			19		11.62			260			22		11.28
Total loans		5,322,939			218,099		5.46			5,390,489			205,995		5.10
Federal funds sold		—			—		—			—			—		—
Interest-earning deposits		225,070			7,922		4.69			147,071			4,452		4.04
Total interest-earning assets		6,368,603			242,432		5.08	%		6,340,732			225,037		4.73	%
Noninterest-earning assets:
Cash and due from banks		8,384								8,388
Allowance for credit losses		(68,337	)							(62,753	)
Premises and equipment		24,917								23,850
Other assets		109,152								76,992
Total noninterest-earning assets		74,116								46,477
Total assets	$	6,442,719							$	6,387,209

LIABILITIES:
Interest-bearing deposits:
Checking	$	3,088,218		$	88,192		3.81	%	$	2,739,115		$	63,018		3.07	%
Money markets		794,297			17,959		3.01			893,567			13,185		1.97
Savings		106,200			302		0.38			128,437			148		0.15
Certificates of deposit – retail		498,353			15,762		4.22			386,488			7,650		2.64
Subtotal interest-bearing deposits		4,487,068			122,215		3.63			4,147,607			84,001		2.70
Interest-bearing demand – brokered		10,000			394		5.25			15,311			469		4.08
Certificates of deposit – brokered		78,042			2,950		5.04			51,916			1,584		4.07
Total interest-bearing deposits		4,575,110			125,559		3.66			4,214,834			86,054		2.72
Borrowings		87,224			3,848		5.88			331,170			13,249		5.33
Capital lease obligation		2,491			75		4.01			4,179			149		4.75
Subordinated debt		133,377			5,055		5.05			133,090			4,966		4.98
Total interest-bearing liabilities		4,798,202			134,537		3.74	%		4,683,273			104,418		2.97	%
Noninterest-bearing liabilities:
Demand deposits		959,571								1,066,162
Accrued expenses and other liabilities		101,247								82,215
Total noninterest-bearing liabilities		1,060,818								1,148,377
Shareholders’ equity		583,699								555,559
Total liabilities and shareholders’ equity	$	6,442,719							$	6,387,209
Net interest income				$	107,895							$	120,619
Net interest spread							1.34	%							1.76	%
Net interest margin (D)							2.26	%							2.54	%

(A) Average balances for available for sale securities are based on amortized cost.
(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
(C) Loans are stated net of unearned income and include nonaccrual loans.
(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by common shares outstanding at period end. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding other real estate owned provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides a reasonable measure of core expenses relative to core revenue.

We believe these non-GAAP financial measures provide information that is important to investors and useful in understanding our financial position, results and ratios because our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

(Dollars in thousands, except per share data)

	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
Tangible Book Value Per Share	2024			2024			2024			2023			2023
Shareholders’ equity	$	607,614		$	588,322		$	582,379		$	583,681		$	558,956
Less: Intangible assets, net		45,198			45,470			45,742			46,014			46,286
Tangible equity	$	562,416		$	542,852		$	536,637		$	537,667		$	512,670
Less: other comprehensive loss		(54,820	)		(68,342	)		(67,760	)		(64,878	)		(81,653	)
Tangible equity excluding other comprehensive loss	$	617,236		$	611,194		$	604,397		$	602,545		$	594,323

Period end shares outstanding		17,577,747			17,666,490			17,761,538			17,739,677			17,816,922
Tangible book value per share	$	32.00		$	30.73		$	30.21		$	30.31		$	28.77
Tangible book value per share excluding other comprehensive loss	$	35.11		$	34.60		$	34.03		$	33.97		$	33.36
Book value per share		34.57			33.30			32.79			32.90			31.37

Tangible Equity to Tangible Assets
Total assets	$	6,793,792		$	6,505,350		$	6,408,553		$	6,476,857		$	6,521,581
Less: Intangible assets, net		45,198			45,470			45,742			46,014			46,286
Tangible assets	$	6,748,594		$	6,459,880		$	6,362,811		$	6,430,843		$	6,475,295
Less: other comprehensive loss		(54,820	)		(68,342	)		(67,760	)		(64,878	)		(81,653	)
Tangible assets excluding other comprehensive loss	$	6,803,414		$	6,528,222		$	6,430,571		$	6,495,721		$	6,556,948

Tangible equity to tangible assets		8.33	%		8.40	%		8.43	%		8.36	%		7.92	%
Tangible equity to tangible assets excluding other comprehensive loss		9.07	%		9.36	%		9.40	%		9.28	%		9.06	%
Equity to assets		8.94	%		9.04	%		9.09	%		9.01	%		8.57	%

(Dollars in thousands)

	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
Return on Average Tangible Equity	2024			2024			2024			2023			2023
Net income	$	7,587		$	7,530		$	8,631		$	8,599		$	8,755

Average shareholders’ equity	$	592,787		$	577,206		$	581,003		$	561,055		$	565,153
Less: Average intangible assets, net		45,350			45,624			45,903			46,167			46,468
Average tangible equity	$	547,437		$	531,582		$	535,100		$	514,888		$	518,685

Return on average tangible common equity		5.54	%		5.67	%		6.45	%		6.68	%		6.75	%

	For the Nine Months Ended
	Sept 30,			Sept 30,
Return on Average Tangible Equity	2024			2023
Net income	$	23,748		$	40,255

Average shareholders’ equity	$	583,699		$	555,559
Less: Average intangible assets, net		45,625			46,825
Average tangible equity		538,074			508,734

Return on average tangible common equity		5.88	%		10.55	%

(Dollars in thousands)

	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
Efficiency Ratio	2024			2024			2024			2023			2023
Net interest income	$	37,681		$	35,042		$	34,375		$	36,675		$	36,515
Total other income		18,938			21,555			18,701			17,590			19,354
Add:
Fair value adjustment for CRA equity security		(474	)		84			111			(585	)		404
Less:
Gain on loans held for sale at lower of cost or fair value		—			(23	)		—			—			—
Income from life insurance proceeds		(55	)		—			(181	)		—			—
Total recurring revenue		56,090			56,658			53,006			53,680			56,273

Operating expenses		44,649			43,126			40,041			37,616			37,413
Total operating expense		44,649			43,126			40,041			37,616			37,413

Efficiency ratio		79.60	%		76.12	%		75.54	%		70.07	%		66.48	%

(Dollars in thousands)

	For the Nine Months Ended
	Sept 30,			Sept 30,
Efficiency Ratio	2024			2023
Net interest income	$	107,098		$	119,414
Total other income		59,194			55,988
Add:
Fair value adjustment for CRA equity security		(279	)		404
Less:
Gain on loans held for sale at lower of cost or fair value		(23	)		—
Income from life insurance proceeds		(236	)		—
Total recurring revenue		165,754			175,806

Operating expenses		127,816			110,679
Less:
Accelerated Expense for Retirement		—			1,965
Branch Closure Expense		—			175
Total operating expense		127,816			108,539

Efficiency ratio		77.11	%		61.74	%

The MIL Network –

January 24, 2025

MIL-OSI: FS Bancorp, Inc. Reports Third Quarter Net Income of $10.3 Million or $1.29 Per Diluted Share and the Forty-Seventh Consecutive Quarterly Cash Dividend

Source: GlobeNewswire (MIL-OSI)

MOUNTLAKE TERRACE, Wash., Oct. 22, 2024 (GLOBE NEWSWIRE) — FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2024 third quarter net income of $10.3 million, or $1.29 per diluted share, compared to $9.0 million, or $1.13 per diluted share, for the comparable quarter one year ago. For the nine months ended September 30, 2024, net income was $27.6 million, or $3.45 per diluted share, compared to net income of $26.3 million, or $3.33 per diluted share, for the comparable nine-month period in 2023.

“Deposit growth experienced in the third quarter of 2024 was a direct result of the Bank-wide focus and strategic planning objective to fund loan growth with core deposits,” stated Joe Adams, CEO. “We are also pleased that our Board of Directors approved our forty-seventh consecutive quarterly cash dividend of $0.27 per common share, demonstrating our continued commitment to returning value to shareholders. The cash dividend will be paid on November 21, 2024, to shareholders of record as of November 7, 2024,” concluded Adams.

2024 Third Quarter Highlights

Net income was $10.3 million for the third quarter of 2024, compared to $9.0 million for both the previous quarter and the comparable quarter one year ago;
Net interest margin (“NIM”) increased to 4.35% for the third quarter of 2024, compared to 4.29% in the previous quarter, and 4.34% for the comparable quarter one year ago;
Total deposits increased $44.5 million, or 1.9%, to $2.43 billion at September 30, 2024, primarily due to an increase in noninterest-bearing checking of $34.4 million and certificates of deposit (“CDs”) of $15.0 million, compared to $2.38 billion at June 30, 2024 and decreased $27.1 million, or 1.1%, from $2.45 billion at September 30, 2023. Noninterest-bearing deposits were $657.8 million at September 30, 2024, $623.3 million at June 30, 2024, and $670.2 million at September 30, 2023;
Borrowings decreased $18.1 million, or 9.9% to $163.8 million at September 30, 2024, compared to $181.9 million at June 30, 2024, as a result of the Company’s strategic planning objective to fund loan growth with core deposits;
Loans receivable, net was unchanged at $2.46 billion at September 30, 2024, and June 30, 2024, and increased $88.1 million, or 3.7%, from $2.38 billion at September 30, 2023;
Consumer loans, of which 87.3% are home improvement loans, decreased $9.3 million, or 1.4%, to $632.4 million at September 30, 2024, compared to $641.7 million in the previous quarter, and decreased $7.7 million, or 1.2%, from $640.1 million in the comparable quarter one year ago. Yields on consumer loans increased 18 basis points to 7.59% from 7.41% at the end of the second quarter 2024. During the three months ended September 30, 2024, consumer loan originations included 80.4% of home improvement loans originated with a Fair Isaac Corporation (“FICO”) score above 720 and 83.9% of home improvement loans with a UCC-2 security filing;
For the third quarter of 2024, there was a tax benefit of $420,000, compared to tax provisions of $2.4 million in the prior quarter, and $2.5 million for the same quarter last year. The tax benefit for the third quarter of 2024 was due to $28.4 million of energy tax credits purchased during the current quarter related to the Inflation Reduction Act of 2022;
Repurchased 97,000 shares of the Company’s common stock in the third quarter of 2024 at an average price of $43.58 per share with $1.4 million remaining for future purchases under the share repurchase plan that was approved in July 2024;
Book value per share increased $0.30 to $37.45 at September 30, 2024, compared to $37.15 at June 30, 2024, and increased $4.87 from $32.58 at September 30, 2023. Tangible book value per share (non-GAAP financial measure) increased $0.44 to $35.10 at September 30, 2024, compared to $34.66 at June 30, 2024, and increased $5.37 from $29.73 at September 30, 2023. See, “Non-GAAP Financial Measures.”
Segment reporting in the third quarter of 2024 reflected net income of $9.3 million for the Commercial and Consumer Banking segment and $1.0 million for the Home Lending segment, compared to net income of $8.0 million and $1.0 million in the prior quarter, and net income of $8.8 million and $166,000 in the third quarter of 2023, respectively;
The percentage of available unencumbered cash and secured borrowing capacity at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank to uninsured deposits was 182% at September 30, 2024, compared to 191% in the prior quarter. The average deposit size per FDIC-insured account at the Bank was $33,000 and $32,000 for September 30, 2024 and June 30, 2024, respectively; and
Regulatory capital ratios at the Bank were 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at September 30, 2024, compared to 13.9% for total risk-based capital and 10.9% for Tier 1 leverage capital at June 30, 2024.

Segment Reporting

The Company reports two segments: Commercial and Consumer Banking and Home Lending. The Commercial and Consumer Banking segment provides diversified financial products and services to our commercial and consumer customers. These products and services include deposit products; residential, consumer, business and commercial real estate lending portfolios and cash management services. This segment is also responsible for the management of the investment portfolio and other assets of the Bank. The Home Lending segment originates one-to-four-family residential mortgage loans primarily for sale in the secondary markets as well as loans held for investment.

The Company reflected the sale of servicing rights in the first quarter of 2024 as a gain to the Commercial and Consumer Banking segment to offset the realized loss on sale of investment securities and will allocate the gain on a straight-line basis over four years as intercompany income from the Commercial and Consumer Banking segment to the Home Lending segment.

The tables below provide a summary of segment reporting at or for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

	At or For the Three Months Ended September 30, 2024
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	28,612		$	2,632		$	31,244
Provision for credit losses		(1,331	)		(182	)		(1,513	)
Noninterest income ⁽²⁾		2,257			3,710			5,967
Noninterest expense ⁽³⁾		(20,199	)		(5,633	)		(25,832	)
Income before (provision) benefit for income taxes		9,339			527			9,866
(Provision) benefit for income taxes		(71	)		491			420
Net income	$	9,268		$	1,018		$	10,286
Total average assets for period ended	$	2,347,855		$	612,935		$	2,960,790
Full-time employees (“FTEs”)		442			117			559

	At or For the Three Months Ended September 30, 2023
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	27,563		$	3,071		$	30,634
Provision for credit losses		(437	)		(111	)		(548	)
Noninterest income ⁽²⁾		2,680			2,302			4,982
Noninterest expense ⁽³⁾		(18,539	)		(5,047	)		(23,586	)
Income before provision for income taxes		11,267			215			11,482
Provision for income taxes		(2,480	)		(49	)		(2,529	)
Net income	$	8,787		$	166		$	8,953
Total average assets for period ended	$	2,361,014		$	540,372		$	2,901,386
FTEs		434			128			562

	At or For the Nine Months Ended September 30, 2024
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	84,749		$	7,242		$	91,991
Provision for credit losses		(3,796	)		(193	)		(3,989	)
Noninterest income ⁽²⁾		6,919			10,027			16,946
Noninterest expense ⁽³⁾		(58,250	)		(14,968	)		(73,218	)
Income before (provision) benefit for income taxes		29,622			2,108			31,730
(Provision) benefit for income taxes		(4,253	)		165			(4,088	)
Net income	$	25,369		$	2,273		$	27,642
Total average assets for period ended	$	2,369,740		$	586,001		$	2,955,741
FTEs		442			117			559

	At or For the Nine Months Ended September 30, 2023
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	83,332		$	9,516		$	92,848
Provision for credit losses		(2,555	)		(817	)		(3,372	)
Noninterest income ⁽²⁾		7,766			7,268			15,034
Noninterest expense ⁽³⁾		(56,099	)		(15,215	)		(71,314	)
Income before provision for income taxes		32,444			752			33,196
Provision for income taxes		(6,758	)		(157	)		(6,915	)
Net income	$	25,686		$	595		$	26,281
Total average assets for period ended	$	2,288,996		$	520,513		$	2,809,509
FTEs		434			128			562

__________________________

(1)		Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of assigned liabilities to fund segment assets.
(2)		Noninterest income includes activity from certain residential mortgage loans that were initially originated for sale and measured at fair value, and subsequently transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of noninterest income. For the three and nine months ended September 30, 2024, the Company recorded net increases in fair value of $262,000 and $448,000, respectively, as compared to net decreases in fair value of $343,000 and $285,000 for the three and nine months ended September 30, 2023. As of September 30, 2024 and 2023, there were $13.9 million and $15.2 million, respectively, in residential mortgage loans recorded at fair value as they were previously transferred from loans held for sale to loans held for investment.
(3)		Noninterest expense includes allocated overhead expense from general corporate activities. Allocation is determined based on a combination of segment assets and FTEs. For the three and nine months ended September 30, 2024 and 2023, the Home Lending segment included allocated overhead expenses of $1.8 million and $4.8 million, compared to $1.5 million and $4.7 million, respectively.

Asset Summary

Total assets increased $28.8 million, or 1.0%, to $2.97 billion at September 30, 2024, compared to $2.94 billion at June 30, 2024, and increased $50.1 million, or 1.7%, from $2.92 billion at September 30, 2023. The increase in total assets at September 30, 2024, compared to June 30, 2024, included increases of $15.7 million in other assets, consisting primarily of a federal income tax receivable of $25.7 million, $7.3 million in total cash and cash equivalents, $7.0 million in securities available-for-sale, and $6.5 million in loans receivable, net, partially offset by decreases in loans held for sale (“HFS”) of $4.4 million, and core deposit intangible (“CDI”), net of $897,000. The increase compared to September 30, 2023, was primarily due to increases in loans receivable, net of $88.1 million, loans HFS of $30.7 million, other assets of $13.1 million, and FHLB stock of $5.8 million. These increases were partially offset by decreases in total cash and cash equivalents of $40.3 million, securities available-for-sale of $23.7 million, mortgage servicing rights (“MSR”) of $8.9 million, certificates of deposit at other financial institutions of $5.6 million, CDI, net of $3.7 million, deferred tax asset, net of $3.2 million, operating lease right-of-use assets of $1.7 million, and premises and equipment, net of $900,000.

LOAN PORTFOLIO
(Dollars in thousands)	September 30, 2024						June 30, 2024						September 30, 2023
	Amount			Percent			Amount			Percent			Amount			Percent
REAL ESTATE LOANS
Commercial	$	352,933			14.1	%	$	359,404			14.4	%	$	364,673			15.2	%
Construction and development		292,366			11.7			274,209			11.0			289,873			12.0
Home equity		75,063			3.0			73,749			3.0			67,103			2.8
One-to-four-family (excludes HFS)		591,666			23.7			588,966			23.7			540,670			22.5
Multi-family		238,462			9.6			239,675			9.6			243,661			10.1
Total real estate loans		1,550,490			62.1			1,536,003			61.7			1,505,980			62.6

CONSUMER LOANS
Indirect home improvement		552,226			22.2			563,621			22.7			562,650			23.4
Marine		76,845			3.1			74,627			3.0			73,887			3.1
Other consumer		3,346			0.1			3,440			0.1			3,547			0.1
Total consumer loans		632,417			25.4			641,688			25.8			640,084			26.6

COMMERCIAL BUSINESS LOANS
Commercial and industrial (“C&I”)		296,773			11.9			285,183			11.5			236,520			9.8
Warehouse lending		15,249			0.6			25,548			1.0			23,489			1.0
Total commercial business loans		312,022			12.5			310,731			12.5			260,009			10.8
Total loans receivable, gross		2,494,929			100.0	%		2,488,422			100.0	%		2,406,073			100.0	%

Allowance for credit losses on loans		(31,232	)					(31,238	)					(30,501	)
Total loans receivable, net	$	2,463,697					$	2,457,184					$	2,375,572

Loans receivable, net was unchanged at $2.46 billion at September 30, 2024 and June 30, 2024, and increased $88.1 million from $2.38 billion at September 30, 2023. Total real estate loans remained virtually unchanged at $1.55 billion at September 30, 2024, compared to June 30, 2024, however, there were notable shifts within the portfolio. Specifically, construction and development loans increased $18.2 million, one-to-four-family loans (excluding HFS) increased $2.7 million mainly due to new loan originations, and home equity loans increased $1.3 million. These gains were partially offset by declines of $6.5 million in commercial real estate loans and $1.2 million in multi-family loans. In addition, commercial business loans increased $1.3 million to $312.0 million at September 30, 2024, up from $310.7 million on June 30, 2024, resulting from an increase of $11.6 million in C&I loans and a decrease of $10.3 million in warehouse lending. Consumer loans decreased $9.3 million to $632.4 million at September 30, 2024, compared to June 30, 2024, resulting from an $11.4 million decrease in indirect home improvement loans, partially offset by an increase of $2.2 million in marine loans.

The composition of CRE loans at the dates indicated were as follows:

(Dollars in thousands)
	September 30, 2024		June 30, 2024		September 30, 2023
CRE by Type:	Amount		Amount		Amount
Agriculture	$	3,610	$	3,639	$	3,926
CRE Non-owner occupied:
Office		40,672		41,381		41,878
Retail		36,070		37,507		37,865
Hospitality/restaurant		27,743		28,314		25,252
Self storage		19,130		19,141		21,381
Mixed use		17,881		18,062		16,768
Industrial		15,402		17,163		17,431
Senior housing/assisted living		7,621		7,675		8,556
Other ⁽¹⁾		6,684		6,847		7,814
Land		2,523		3,021		6,381
Education/worship		2,545		2,571		2,645
Total CRE non-owner occupied		176,271		181,682		185,971
CRE owner occupied:
Industrial		63,577		63,969		63,307
Office		42,156		41,978		41,663
Retail		19,968		20,885		23,228
Hospitality/restaurant		10,528		10,800		14,153
Other ⁽²⁾		8,116		8,354		8,850
Car wash		9,575		9,607		7,818
Automobile related		8,874		8,200		8,193
Education/worship		4,609		4,610		4,617
Mixed use		5,649		5,680		2,947
Total CRE owner occupied		173,052		174,083		174,776
Total	$	352,933	$	359,404	$	364,673

__________________________________

(1)		Primarily includes loans secured by mobile home parks totaling $774,000, $782,000, and $2.4 million, RV parks totaling $689,000, $692,000, and $702,000, automobile-related collateral totaling $594,000, $599,000, and $0, and other collateral totaling $4.6 million, $4.7 million, and $4.8 million at September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
(2)		Primarily includes loans secured by gas stations totaling $1.5 million, $1.6 million and $1.7 million, non-profit organization totaling $901,000, $908,000 and $928,000, and other collateral totaling $5.7 million, $5.1 million and $6.2 million at September 30, 2024, June 30, 2024, and September 30, 2023, respectively.

The following tables includes CRE loans repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:

(Dollars in thousands)		For the Quarter Ended																	Current Weighted
	Dec 31,		Mar 31,		Jun 30,		Sep 30,		Dec 31,		Mar 31,		Jun 30,		Sep 30,				Average
CRE by type:	2024		2025		2025		2025		2025		2026		2026		2026		Total		Rate
Agriculture	$	926	$	—	$	424	$	—	$	311	$	181	$	259	$	306	$	2,407	6.40%
Apartment		9,990		9,817		5,271		1,829		18,671		1,908		14,485		9,797		71,768	4.87%
Auto related		—		—		2,091		—		—		—		—		—		2,091	4.18%
Hotel / hospitality		—		579		1,212		1,336		—		118		1,307		—		4,552	4.39%
Industrial		8,337		897		588		—		10,361		584		173		1,636		22,576	5.29%
Mixed use		795		1,750		3,490		250		318		—		—		—		6,603	5.00%
Office		4,702		11,171		—		4,214		988		528		1,666		566		23,835	4.88%
Other		1,227		—		116		1,168		246		901		—		2,545		6,203	4.96%
Retail		1,266		2,006		—		83		—		465		3,285		—		7,105	4.15%
Senior housing and assisted living		—		—		—		—		—		2,186		—		—		2,186	4.75%
Total	$	27,243	$	26,220	$	13,192	$	8,880	$	30,895	$	6,871	$	21,175	$	14,850	$	149,326	4.91%

A breakdown of construction loans at the dates indicated were as follows:

(Dollars in thousands)
	September 30, 2024					June 30, 2024
Construction Types:	Amount		Percent			Amount		Percent
Commercial construction ─ retail	$	8,710		3.0	%	$	8,698		3.2	%
Commercial construction ─ office		4,737		1.6			4,737		1.7
Commercial construction ─ self storage		10,408		3.5			10,000		3.6
Commercial construction ─ car wash		7,807		2.7			7,807		2.8
Multi-family		30,931		10.6			30,960		11.3
Custom construction ─ single family residential and single family manufactured residential		43,528		14.9			46,107		16.8
Custom construction ─ land, lot and acquisition and development		8,220		2.8			7,310		2.7
Speculative residential construction ─ vertical		145,549		49.8			131,293		47.9
Speculative residential construction ─ land, lot and acquisition and development		32,476		11.1			27,297		10.0
Total	$	292,366		100.0	%	$	274,209		100.0	%

(Dollars in thousands)
	September 30, 2024					September 30, 2023
Construction Types:	Amount		Percent			Amount		Percent
Commercial construction ─ retail	$	8,710		3.0	%	$	7,347		2.5	%
Commercial construction ─ office		4,737		1.6			4,591		1.6
Commercial construction ─ self storage		10,408		3.5			10,734		3.7
Commercial construction ─ car wash		7,807		2.7			7,287		2.5
Multi-family		30,931		10.6			52,913		18.3
Custom construction ─ single family residential and single family manufactured residential		43,528		14.9			44,542		15.4
Custom construction ─ land, lot and acquisition and development		8,220		2.8			7,012		2.4
Speculative residential construction ─ vertical		145,549		49.8			124,244		42.8
Speculative residential construction ─ land, lot and acquisition and development		32,476		11.1			31,203		10.8
Total	$	292,366		100.0	%	$	289,873		100.0	%

Originations of one-to-four-family loans to purchase and refinance a home for the periods indicated were as follows:

(Dollars in thousands)	For the Three Months Ended					For the Three Months Ended
	September 30, 2024					June 30, 2024
	Amount		Percent			Amount		Percent			$ Change			% Change
Purchase	$	168,088		85.7	%	$	193,715		92.3	%	$	(25,627	)		(13.2	)%
Refinance		28,001		14.3			16,173		7.7			11,828			73.1	%
Total	$	196,089		100.0	%	$	209,888		100.0	%	$	(13,799	)		(6.5	)%

(Dollars in thousands)	For the Three Months Ended September 30,
	2024					2023
	Amount		Percent			Amount		Percent			$ Change		% Change
Purchase	$	168,088		85.7	%	$	139,345		92.1	%	$	28,743		20.6	%
Refinance		28,001		14.3			12,001		7.9			16,000		133.3	%
Total	$	196,089		100.0	%	$	151,346		100.0	%	$	44,743		29.6	%

(Dollars in thousands)	For the Nine Months Ended September 30,
	2024					2023
	Amount		Percent			Amount		Percent			$ Change		% Change
Purchase	$	497,705		88.8	%	$	387,211		91.8	%	$	110,494		28.5	%
Refinance		62,546		11.2			34,635		8.2			27,911		80.6	%
Total	$	560,251		100.0	%	$	421,846		100.0	%	$	138,405		32.8	%

During the quarter ended September 30, 2024, the Company sold $167.6 million of one-to-four-family loans compared to $164.5 million during the previous quarter and $117.6 million during the same quarter one year ago. Gross margins on home loan sales were unchanged at 2.96% for both quarters ended September 30, 2024, and June 30, 2024, and declined from 3.08% in the same quarter one year ago. Gross margins are defined as the margin on loans sold (cash sales) without the impact of deferred costs.

Liabilities and Equity Summary

Changes in deposits at the dates indicated were as follows:

(Dollars in thousands)
	September 30, 2024					June 30, 2024
Transactional deposits:	Amount		Percent			Amount		Percent			$ Change			% Change
Noninterest-bearing checking	$	641,270		26.4	%	$	613,137		25.7	%	$	28,133			4.6	%
Interest-bearing checking ⁽¹⁾		165,944		6.8			166,839		7.0			(895	)		(0.5	)
Escrow accounts related to mortgages serviced ⁽²⁾		16,483		0.7			10,212		0.4			6,271			61.4
Subtotal		823,697		33.9			790,188		33.1			33,509			4.2
Savings		151,364		6.2			151,398		6.4			(34	)		(0.0	)
Money market ⁽³⁾		340,049		14.0			343,995		14.4			(3,946	)		(1.1	)
Subtotal		491,413		20.2			495,393		20.8			(3,980	)		(0.8	)
Certificates of deposit less than $100,000 ⁽⁴⁾		533,441		22.0			530,537		22.3			2,904			0.5
Certificates of deposit of $100,000 through $250,000		452,705		18.7			427,893		18.0			24,812			5.8
Certificates of deposit greater than $250,000		126,075		5.2			138,792		5.8			(12,717	)		(9.2	)
Subtotal		1,112,221		45.9			1,097,222		46.1			14,999			1.4
Total	$	2,427,331		100.0	%	$	2,382,803		100.0	%	$	44,528			1.9	%

(Dollars in thousands)
	September 30, 2024					September 30, 2023
Transactional deposits:	Amount		Percent			Amount		Percent			$ Change			% Change
Noninterest-bearing checking	$	641,270		26.4	%	$	643,670		26.2	%	$	(2,400	)		(0.4	)%
Interest-bearing checking ⁽¹⁾		165,944		6.8			219,468		8.9			(53,524	)		(24.4	)
Escrow accounts related to mortgages serviced ⁽²⁾		16,483		0.7			26,489		1.1			(10,006	)		(37.8	)
Subtotal		823,697		33.9			889,627		36.2			(65,930	)		(7.4	)
Savings		151,364		6.2			157,901		6.4			(6,537	)		(4.1	)
Money market ⁽³⁾		340,049		14.0			389,962		15.9			(49,913	)		(12.8	)
Subtotal		491,413		20.2			547,863		22.3			(56,450	)		(10.3	)
Certificates of deposit less than $100,000 ⁽⁴⁾		533,441		22.0			527,032		21.5			6,409			1.2
Certificates of deposit of $100,000 through $250,000		452,705		18.7			406,545		16.6			46,160			11.4
Certificates of deposit greater than $250,000		126,075		5.2			83,377		3.4			42,698			51.2
Subtotal		1,112,221		45.9			1,016,954		41.5			95,267			9.4
Total	$	2,427,331		100.0	%	$	2,454,444		100.0	%	$	(27,113	)		(1.1	)%

__________________________________

(1)		There were no brokered deposits at September 30, 2024 and June 30, 2024, compared to $50.1 million at September 30, 2023.
(2)		Noninterest-bearing accounts.
(3)		Includes $1.0 million, $4.0 million and $51,000 of brokered deposits at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(4)		Includes $250.2 million, $261.0 million, and $323.3 million of brokered deposits at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

At September 30, 2024, CDs, which include retail and non-retail CDs, totaled $1.11 billion, compared to $1.10 billion at June 30, 2024 and $1.02 billion at September 30, 2023, with non-retail CDs representing 22.5%, 24.9% and 33.2% of total CDs at such dates, respectively. At September 30, 2024, non-retail CDs, which include brokered CDs, online CDs and public funds CDs, decreased $10.4 million to $262.9 million, compared to $273.4 million at June 30, 2024, primarily due to a decrease of $10.8 million in brokered CDs. Non-retail CDs totaled $262.9 million at September 30, 2024, compared to $337.2 million at September 30, 2023.

At September 30, 2024, the Bank had uninsured deposits of approximately $644.9 million, compared to approximately $586.6 million at June 30, 2024, and $591.6 million at September 30, 2023. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

At September 30, 2024, borrowings decreased $18.1 million to $163.8 million at September 30, 2024, from $181.9 million at June 30, 2024, and increased $41.9 million from $121.9 million at September 30, 2023. These borrowings were comprised of FHLB advances of $153.8 million, and overnight borrowings of $10.0 million.

Total stockholders’ equity increased $4.9 million to $288.9 million at September 30, 2024, from $284.0 million at June 30, 2024, and increased $38.2 million, from $250.7 million at September 30, 2023. The increase in stockholders’ equity at September 30, 2024, compared to June 30, 2024, reflects net income of $10.3 million, partially offset by cash dividends paid of $2.1 million. Stockholders’ equity was also impacted by decreases in unrealized net losses on securities available for sale of $4.2 million, net of tax, and decreases in unrealized net gains on fair value and cash flow hedges of $7.0 million, net of tax, reflecting changes in market interest rates during the quarter, resulting in a $2.7 million increase in accumulated other comprehensive loss, net of tax. Book value per common share was $37.45 at September 30, 2024, compared to $37.15 at June 30, 2024, and $32.58 at September 30, 2023.

The Bank is considered well capitalized under the capital requirements established by the Federal Deposit Insurance Corporation (“FDIC”) with a total risk-based capital ratio of 14.2%, a Tier 1 leverage capital ratio of 11.2%, and a common equity Tier 1 (“CET1”) capital ratio of 12.9% at September 30, 2024.

The Company exceeded all regulatory capital requirements with a total risk-based capital ratio of 14.4%, a Tier 1 leverage capital ratio of 9.7%, and a CET1 ratio of 11.2% at September 30, 2024.

Credit Quality

The allowance for credit losses on loans (“ACLL”) was $31.2 million, or 1.25% of gross loans receivable (excluding loans HFS) at September 30, 2024, compared to $31.2 million, or 1.26% of gross loans receivable (excluding loans HFS), at June 30, 2024, and $30.5 million, or 1.27% of gross loans receivable (excluding loans HFS), at September 30, 2023. The virtually static balance in the ACLL at September 30, 2024, compared to the prior quarter was primarily due to insignificant changes in the loan portfolio period over period and provision for credit losses on loans that offset consumer loan net charge-offs. The increase of $731,000 in the ACLL from the same quarter the prior year was primarily due to organic loan growth and increases in nonperforming loans and net charge-offs. The allowance for credit losses on unfunded loan commitments decreased $79,000 to $1.5 million at September 30, 2024, compared to $1.6 million at June 30, 2024, and decreased $291,000 from $1.8 million at September 30, 2023.

Nonperforming loans decreased $634,000 to $10.8 million at September 30, 2024, compared to $11.4 million at June 30, 2024, and increased $5.2 million from $5.6 million at September 30, 2023. The decrease in nonperforming loans compared to the prior quarter was primarily due to decreases in nonperforming indirect home improvement loans of $549,000 and marine loans of $94,000. The increase in nonperforming loans compared to the same quarter the prior year was primarily due to increases in nonperforming construction and development loans of $4.7 million and commercial business loans of $461,000.

Loans classified as substandard decreased $1.1 million to $23.2 million at September 30, 2024, compared to $24.3 million at June 30, 2024, and increased $4.0 million from $19.2 million at September 30, 2023. The decrease in substandard loans compared to the prior quarter was primarily due to a decrease of $549,000 in indirect home improvement loans, $323,000 in commercial real estate loans, $94,000 in marine loans, $74,000 in C&I loans, and $59,000 in one-to-four family loans. The increase in substandard loans compared to the prior year was primarily due to increases of $4.7 million in construction and development loans, $108,000 in home equity loans, $102,000 in indirect home improvement loans, partially offset by decreases of $462,000 in C&I loans, $293,000 in one-to-four-family loans, and $173,000 in marine loans. There was no other real estate owned (“OREO”) property at September 30, 2024 and June 30, 2024, compared to one OREO property (a closed branch in Centralia, Washington) of $570,000 at September 30, 2023.

Operating Results

Net interest income increased $610,000 to $31.2 million for the three months ended September 30, 2024, from $30.6 million for the three months ended September 30, 2023, primarily due to an increase in interest and dividend income of $3.8 million, partially offset by an increase in interest expense of $3.2 million. The $3.8 million increase in total interest income was primarily due to an increase of $3.9 million in interest income on loans receivable, including fees, primarily as a result of new loans being originated at higher rates and variable rate loans repricing higher. The $3.2 million increase in total interest expense was primarily the result of higher market interest rates, higher utilization of borrowings and a shift in deposit mix from transactional accounts to higher cost CDs.

For the nine months ended September 30, 2024, net interest income decreased $857,000 to $92.0 million, from $92.8 million for the nine months ended September 30, 2023, resulting from an increase in interest expense of $16.0 million and an increase in interest income of $15.1 million.

NIM (annualized) increased one basis point to 4.35% for the three months ended September 30, 2024, from 4.34% for the same period in the prior year, and decreased 26 basis points to 4.30% for the nine months ended September 30, 2024, from 4.56% for the nine months ended September 30, 2023. The change in NIM for the three and nine months ended September 30, 2024 compared to the same periods in 2023, reflects the increased costs of deposits and borrowings, which outpaced the increased yields earned on interest-earning assets.

The average total cost of funds, including noninterest-bearing checking, increased 47 basis points to 2.39% for the three months ended September 30, 2024, from 1.92% for the three months ended September 30, 2023. This increase was predominantly due to higher market rates for deposits and increased utilization of higher cost borrowings. The average cost of funds increased 75 basis points to 2.33% for the nine months ended September 30, 2024, from 1.58% for the nine months ended September 30, 2023, also reflecting increases in market interest rates over last year and increased utilization of borrowings. Management remains focused on matching deposit/liability duration with the duration of loans/assets where feasible.

For the three and nine months ended September 30, 2024, the provision for credit losses on loans was $1.5 million and $4.0 million, compared to $683,000 and $4.1 million for the three and nine months ended September 30, 2023. The provision for credit losses on loans reflects an increase in charge-off activity for the quarter and increases in the loan portfolio for the year-to-date periods.

During the three months ended September 30, 2024, net charge-offs increased $1.1 million to $1.6 million, compared to $531,000 for the same period last year. This increase was the result of increased net charge-offs of $996,000 in indirect home improvement loans and $82,000 in marine loans, partially offset by a net recovery of $8,000 in other consumer loans. Net charge-offs increased $2.7 million to $4.3 million during the nine months ended September 30, 2024, compared to $1.6 million during the nine months ended September 30, 2023. This increase included net charge-off increases of $1.5 million in indirect home improvement loans, $1.0 million C&I loans, $146,000 in marine loans and $117,000 in other consumer loans. Management attributes the increase in net charge-offs over the year primarily to volatile economic conditions.

Noninterest income increased $985,000 to $6.0 million for the three months ended September 30, 2024, from $5.0 million for the three months ended September 30, 2023. The increase reflects a $648,000 increase in gain on sale of loans, primarily as a result of the increased volume of loans sold and an increase of $566,000 in other noninterest income, primarily due to fair value changes on loans. Noninterest income during the three months ended September 30, 2024, also reflects a $141,000 gain on the sale of MSRs, with no similar transaction occurring in the comparable quarter last year. These increases were partially offset by a $400,000 decrease in service charges and fee income, primarily due to the sale of MSRs in the first quarter of 2024. Noninterest income increased $1.9 million to $16.9 million for the nine months ended September 30, 2024, from $15.0 million for the nine months ended September 30, 2023. This increase was primarily the result of an $8.4 million gain on sale of MSRs recorded during the first nine months of 2024 with no similar transaction occurring in the comparable nine month period in 2023, and a $1.5 million increase in gain on sale of loans, partially offset by a $7.8 million loss on sale of investment securities resulting from management’s strategic decision to increase the yields earned on and reduce the duration of the securities portfolio, and an $839,000 decrease in service charges and fee income due to a reduction in loan servicing fees due to the sale of MSRs in the first quarter of 2024.

Noninterest expense increased $2.2 million to $25.8 million for the three months ended September 30, 2024, from $23.6 million for the three months ended September 30, 2023. The increase in noninterest expense was primarily due to increases of $506,000 in impairment of MSRs, $482,000 in salaries and benefits, $557,000 in professional and board fees, which included $571,000 in nonrecurring consulting charges and legal fees related to application/system upgrades and tax credit work, $418,000 in operations, $315,000 in data processing, and a decrease of $105,000 in amortization of CDI. Noninterest expense increased $1.9 million to $73.2 million for the nine months ended September 30, 2024, from $71.3 million for the nine months ended September 30, 2023. This increase was primarily due to increases of $1.1 million in data processing, $1.0 million in professional and board fees which included $824,000 in nonrecurring consulting charges and legal fees for the reasons stated above, $610,000 in operations expense, and $545,000 in impairment of MSRs, partially offset by a decrease of $1.6 million in acquisition costs as a result of no acquisition costs during the current period.

For the three months ended September 30, 2024, the Company recorded a benefit for income taxes of $420,000 as compared to a provision for income taxes of $2.5 million for the three months ended September 30, 2023. The tax benefit was primarily due to the purchase during the quarter ended September 30, 2024, of alternative energy tax credits available under the Inflation Reduction Act of 2022, resulting in a gain of $2.3 million, which was partially offset by the $1.8 million provision for income taxes recorded on net income for the three months ended September 30, 2024. The Inflation Reduction Act of 2022 introduced several energy tax credits designed to promote clean energy investments, reduce carbon emissions, and accelerate the transition to renewable energy. The effective corporate income tax rates for the three months ended September 30, 2024 and 2023 were (4.3)% which was reduced by 2,300 basis points due to the energy tax credits discussed above, and 22.0%, respectively. The decrease in the effective corporate income tax rate, excluding the effects of the energy tax credits, was attributable to tax benefits derived from the exercises of employee stock options during the current quarter.

About FS Bancorp

FS Bancorp, Inc., a Washington corporation, is the holding company for 1st Security Bank of Washington. The Bank offers a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon. It operates through 27 bank branches, one headquarters office that provides loans and deposit services, and loan production offices in various suburban communities in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, also known as the Tri-Cities, and in Vancouver, Washington. Additionally, the Bank services home mortgage customers across the Northwest, focusing on markets in Washington State including the Puget Sound, Tri-Cities, and Vancouver.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management’s current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels; labor shortages, the effects of inflation, a recession or slowed economic growth; changes in the interest rate environment, including the increases and decrease in the Federal Reserve benchmark rate and duration at which such interest rate levels are maintained, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown; increased competitive pressures, changes in the interest rate environment, adverse changes in the securities markets, the Company’s ability to execute its plans to grow its residential construction lending, mortgage banking, and warehouse lending operations, and the geographic expansion of its indirect home improvement lending; challenges arising from expanding into new geographic markets, products, or services; secondary market conditions for loans and the Company’s ability to originate loans for sale and sell loans in the secondary market; volatility in the mortgage industry; fluctuations in deposits; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; legislative and regulatory changes, including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform critical processing functions for us; environmental, social and governance goals; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with or furnished to the SEC which are available on its website at http://www.fsbwa.com and on the SEC’s website at http://www.sec.gov.

Any of the forward-looking statements that the Company makes in this press release and in the other public statements are based upon management’s beliefs and assumptions at the time they are made and may turn out to be incorrect because of the inaccurate assumptions the Company might make, because of the factors illustrated above or because of other factors that cannot be foreseen by the Company. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share amounts) (Unaudited)

										Linked			Prior Year
	September 30,			June 30,			September 30,			Quarter			Quarter
	2024			2024			2023			% Change			% Change
ASSETS
Cash and due from banks	$	17,950		$	20,005		$	18,137			(10	)		(1	)
Interest-bearing deposits at other financial institutions		22,390			13,006			62,536			72			(64	)
Total cash and cash equivalents		40,340			33,011			80,673			22			(50	)
Certificates of deposit at other financial institutions		12,001			12,707			17,636			(6	)		(32	)
Securities available-for-sale, at fair value		228,199			221,182			251,917			3			(9	)
Securities held-to-maturity, net		8,455			8,455			8,455			—			—
Loans held for sale, at fair value		49,373			53,811			18,636			(8	)		165
Loans receivable, net		2,463,697			2,457,184			2,375,572			—			4
Accrued interest receivable		14,014			13,792			13,925			2			1
Premises and equipment, net		30,026			29,999			30,926			—			(3	)
Operating lease right-of-use		5,365			5,784			7,042			(7	)		(24	)
Federal Home Loan Bank stock, at cost		9,504			10,322			3,696			(8	)		157
Other real estate owned		—			—			570			—			(100	)
Deferred tax asset, net		4,222			4,590			7,424			(8	)		(43	)
Bank owned life insurance (“BOLI”), net		38,453			38,201			37,480			1			3
MSRs, held at the lower of cost or fair value		8,739			9,352			17,657			(7	)		(51	)
Goodwill		3,592			3,592			3,592			—			—
Core deposit intangible, net		14,586			15,483			18,323			(6	)		(20	)
Other assets		39,642			23,912			26,548			66			49
TOTAL ASSETS	$	2,970,208		$	2,941,377		$	2,920,072			1			2
LIABILITIES
Deposits:
Noninterest-bearing accounts	$	657,753		$	623,349		$	670,158			6			(2	)
Interest-bearing accounts		1,769,578			1,759,454			1,784,286			1			(1	)
Total deposits		2,427,331			2,382,803			2,454,444			2			(1	)
Borrowings		163,806			181,895			121,895			(10	)		34
Subordinated notes:
Principal amount		50,000			50,000			50,000			—			—
Unamortized debt issuance costs		(423	)		(439	)		(489	)		(4	)		(13	)
Total subordinated notes less unamortized debt issuance costs		49,577			49,561			49,511			—			—
Operating lease liability		5,548			5,979			7,269			(7	)		(24	)
Other liabilities		35,044			37,113			36,288			(6	)		(3	)
Total liabilities		2,681,306			2,657,351			2,669,407			1			—
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding		—			—			—			—			—
Common stock, $.01 par value; 45,000,000 shares authorized; 7,817,172 shares issued and outstanding at September 30, 2024, 7,742,607 at June 30, 2024, and 7,796,095 at September 30, 2023		78			77			78			1			—
Additional paid-in capital		55,264			55,834			57,464			(1	)		(4	)
Retained earnings		251,843			243,651			222,532			3			13
Accumulated other comprehensive loss, net of tax		(18,283	)		(15,536	)		(29,409	)		18			(38	)
Total stockholders’ equity		288,902			284,026			250,665			2			15
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,970,208		$	2,941,377		$	2,920,072			1			2

FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited)

	Three Months Ended									Linked			Prior Year
	September 30,			June 30,			September 30,			Quarter			Quarter
	2024			2024			2023			% Change			% Change
INTEREST INCOME
Loans receivable, including fees	$	43,800		$	42,406		$	39,874			3			10
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions		3,243			3,534			3,396			(8	)		(5	)
Total interest and dividend income		47,043			45,940			43,270			2			9
INTEREST EXPENSE
Deposits		13,486			13,252			10,462			2			29
Borrowings		1,828			1,801			1,689			1			8
Subordinated notes		485			486			485			—			—
Total interest expense		15,799			15,539			12,636			2			25
NET INTEREST INCOME		31,244			30,401			30,634			3			2
PROVISION FOR CREDIT LOSSES		1,513			1,077			548			40			176
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		29,731			29,324			30,086			1			(1	)
NONINTEREST INCOME
Service charges and fee income		2,482			2,479			2,882			—			(14	)
Gain on sale of loans		2,523			2,463			1,875			2			35
Gain on sale of MSRs		141			—			—			NM			NM
Gain on sale of investment securities, net		11			151			—			(93	)		NM
Earnings on cash surrender value of BOLI		252			242			233			4			8
Other noninterest income		558			533			(8	)		5			(7,075	)
Total noninterest income		5,967			5,868			4,982			2			20
NONINTEREST EXPENSE
Salaries and benefits		13,985			13,378			13,503			5			4
Operations		3,827			3,519			3,409			9			12
Occupancy		1,662			1,669			1,588			—			5
Data processing		2,156			2,058			1,841			5			17
Loan costs		666			653			564			2			18
Professional and board fees		1,223			888			666			38			84
FDIC insurance		533			450			561			18			(5	)
Marketing and advertising		377			377			452			—			(17	)
Amortization of core deposit intangible		897			919			1,002			(2	)		(10	)
Impairment (recovery) of servicing rights		506			(54	)		—			(1,037	)		NM
Total noninterest expense		25,832			23,857			23,586			8			10
INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES		9,866			11,335			11,482			(13	)		(14	)
(BENEFIT) PROVISION FOR INCOME TAXES		(420	)		2,376			2,529			(118	)		(117	)
NET INCOME	$	10,286		$	8,959		$	8,953			15			15
Basic earnings per share	$	1.32		$	1.15		$	1.15			15			15
Diluted earnings per share	$	1.29		$	1.13		$	1.13			14			14

	Nine Months Ended					Year
	September 30,			September 30,		Over Year
	2024			2023		% Change
INTEREST INCOME
Loans receivable, including fees	$	127,203		$	114,082		12
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions		10,660			8,667		23
Total interest and dividend income		137,863			122,749		12
INTEREST EXPENSE
Deposits		39,620			24,696		60
Borrowings		4,796			3,749		28
Subordinated note		1,456			1,456		—
Total interest expense		45,872			29,901		53
NET INTEREST INCOME		91,991			92,848		(1	)
PROVISION FOR CREDIT LOSSES		3,989			3,372		18
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		88,002			89,476		(2	)
NONINTEREST INCOME
Service charges and fee income		7,513			8,352		(10	)
Gain on sale of loans		6,824			5,298		29
Gain on sale of MSRs		8,356			—		NM
Loss on sale of investment securities, net		(7,836	)		—		NM
Earnings on cash surrender value of BOLI		734			681		8
Other noninterest income		1,355			703		93
Total noninterest income		16,946			15,034		13
NONINTEREST EXPENSE
Salaries and benefits		40,920			40,880		—
Operations		10,354			9,744		6
Occupancy		5,036			4,670		8
Data processing		6,172			5,092		21
Loan costs		1,904			2,077		(8	)
Professional and board fees		3,034			2,001		52
FDIC insurance		1,515			1,732		(13	)
Marketing and advertising		981			1,072		(8	)
Acquisition costs		—			1,562		100
Amortization of core deposit intangible		2,757			2,484		11
Impairment of servicing rights		545			—		NM
Total noninterest expense		73,218			71,314		3
INCOME BEFORE PROVISION FOR INCOME TAXES		31,730			33,196		(4	)
PROVISION FOR INCOME TAXES		4,088			6,915		(41	)
NET INCOME	$	27,642		$	26,281		5
Basic earnings per share	$	3.54		$	3.38		5
Diluted earnings per share	$	3.45		$	3.33		4

KEY FINANCIAL RATIOS AND DATA (Unaudited)

	At or For the Three Months Ended
	September 30,			June 30,			September 30,
	2024			2024			2023
PERFORMANCE RATIOS:
Return on assets (ratio of net income to average total assets) ⁽¹⁾		1.38	%		1.22	%		1.22	%
Return on equity (ratio of net income to average equity) ⁽¹⁾		14.08			12.72			13.81
Yield on average interest-earning assets ⁽¹⁾		6.56			6.48			6.13
Average total cost of funds ⁽¹⁾		2.39			2.38			1.92
Interest rate spread information – average during period		4.17			3.33			4.21
Net interest margin ⁽¹⁾		4.35			4.29			4.34
Operating expense to average total assets ⁽¹⁾		3.47			3.26			3.23
Average interest-earning assets to average interest-bearing liabilities ⁽¹⁾		144.28			166.25			145.14
Efficiency ratio ⁽²⁾		69.42			65.78			66.22
Common equity ratio (ratio of stockholders’ equity to total assets)		9.73			9.66			8.58
Tangible common equity ratio ⁽³⁾		9.17			9.07			7.89

	For the Nine Months Ended
	September 30,			September 30,
	2024			2023
PERFORMANCE RATIOS:
Return on assets (ratio of net income to average total assets) ⁽¹⁾		1.25	%		1.25	%
Return on equity (ratio of net income to average equity) ⁽¹⁾		13.05			14.13
Yield on average interest-earning assets ⁽¹⁾		6.44			6.03
Average total cost of funds ⁽¹⁾		2.33			1.58
Interest rate spread information – average during period		4.11			4.45
Net interest margin ⁽¹⁾		4.30			4.56
Operating expense to average total assets ⁽¹⁾		3.31			3.39
Average interest-earning assets to average interest-bearing liabilities		144.14			146.23
Efficiency ratio ⁽²⁾		67.21			66.10

	September 30,			June 30,			September 30,
	2024			2024			2023
ASSET QUALITY RATIOS AND DATA:
Nonperforming assets to total assets at end of period ⁽⁴⁾		0.36	%		0.39	%		0.21	%
Nonperforming loans to total gross loans (excluding loans HFS) ⁽⁵⁾		0.43			0.46			0.23
Allowance for credit losses – loans to nonperforming loans ⁽⁵⁾		290.07			273.95			493.46
Allowance for credit losses – loans to total gross loans (excluding loans HFS)		1.25			1.26			1.27

	At or For the Three Months Ended
	September 30,			June 30,			September 30,
	2024			2024			2023
PER COMMON SHARE DATA:
Basic earnings per share	$	1.32		$	1.15		$	1.15
Diluted earnings per share	$	1.29		$	1.13		$	1.13
Weighted average basic shares outstanding		7,676,102			7,688,246			7,667,981
Weighted average diluted shares outstanding		7,854,389			7,796,253			7,780,430
Common shares outstanding at end of period		7,713,359	⁽⁶⁾		7,644,463	⁽⁷⁾		7,693,951	⁽⁸⁾
Book value per share using common shares outstanding	$	37.45		$	37.15		$	32.58
Tangible book value per share using common shares outstanding ⁽³⁾	$	35.10		$	34.66		$	29.73

__________________________________

(1)		Annualized.
(2)		Total noninterest expense as a percentage of net interest income and total noninterest income.
(3)		Represents a non-GAAP financial measure. For a reconciliation to the most comparable GAAP financial measure, see “Non-GAAP Financial Measures” below.
(4)		Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), foreclosed real estate and other repossessed assets.
(5)		Nonperforming loans consist of nonaccruing loans and accruing loans 90 days or more past due.
(6)		Common shares were calculated using shares outstanding of 7,817,172 at September 30, 2024, less 103,813 unvested restricted stock shares.
(7)		Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.
(8)		Common shares were calculated using shares outstanding of 7,796,095 at September 30, 2023, less 102,144 unvested restricted stock shares.

(Dollars in thousands)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				Linked Qtr.			Prior Year Qtr.
Average Balances	2024		2023		2024		2023		$ Change			$ Change
Assets
Loans receivable, net ⁽¹⁾	$	2,536,106	$	2,423,691	$	2,504,129	$	2,362,885	$	112,415		$	141,244
Securities available-for-sale, at amortized cost		250,957		294,148		288,460		276,835		(43,191	)		11,625
Securities held-to-maturity		8,500		8,500		8,500		8,500		–			–
Interest-bearing deposits and certificates of deposit at other financial institutions		48,546		68,369		49,887		67,163		(19,823	)		(17,276	)
FHLB stock, at cost		10,739		4,626		6,666		5,190		6,113			1,476
Total interest-earning assets		2,854,848		2,799,334		2,857,642		2,720,573		55,514			137,069
Noninterest-earning assets		105,941		102,052		98,099		88,936		3,889			9,163
Total assets	$	2,960,789	$	2,901,386	$	2,955,741	$	2,809,509	$	59,403		$	146,232
Liabilities
Interest-bearing deposit accounts	$	1,737,793	$	1,741,257	$	1,788,324	$	1,703,688	$	(3,464	)	$	84,636
Borrowings		191,279		138,013		144,635		107,254		53,266			37,381
Subordinated notes		49,567		49,500		49,550		49,484		67			66
Total interest-bearing liabilities		1,978,639		1,928,770		1,982,509		1,860,426		49,869			122,083
Noninterest-bearing deposit accounts		650,852		676,000		648,345		664,319		(25,148	)		(15,974	)
Other noninterest-bearing liabilities		40,606		39,365		41,965		36,095		1,241			5,870
Total liabilities	$	2,670,097	$	2,644,135	$	2,672,819	$	2,560,840	$	25,962		$	111,979

__________________________________

(1)		Includes loans HFS.

Non-GAAP Financial Measures:

In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release presents non-GAAP financial measures that include tangible book value per share, and tangible common equity ratio. Management believes that providing the Company’s tangible book value per share and tangible common equity ratio is consistent with the capital treatment utilized by the investment community, which excludes intangible assets from the calculation of risk-based capital ratios and facilitates comparison of the quality and composition of the Company’s capital over time and to its competitors. Where applicable, the Company has also presented comparable GAAP information.

These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. They should not be considered in isolation or as a substitute for total stockholders’ equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Reconciliation of the GAAP book value per share and common equity ratio and the non-GAAP tangible book value per share and tangible common equity ratio is presented below.

(Dollars in thousands, except share and per share amounts)	September 30,			June 30,			September 30,
Tangible Book Value Per Share:	2024			2024			2023
Stockholders’ equity (GAAP)	$	288,902		$	284,026		$	250,665
Less: goodwill and core deposit intangible, net		(18,178	)		(19,075	)		(21,915	)
Tangible common stockholders’ equity (non-GAAP)	$	270,724		$	264,951		$	228,750

Common shares outstanding at end of period		7,713,359	⁽¹⁾		7,644,463	⁽²⁾		7,693,951	⁽³⁾

Book value per share (GAAP)	$	37.45		$	37.15		$	32.58
Tangible book value per share (non-GAAP)	$	35.10		$	34.66		$	29.73

Tangible Common Equity Ratio:
Total assets (GAAP)	$	2,970,208		$	2,941,377		$	2,920,072
Less: goodwill and core deposit intangible assets		(18,178	)		(19,075	)		(21,915	)
Tangible assets (non-GAAP)	$	2,952,030		$	2,922,302		$	2,898,157

Common equity ratio (GAAP)		9.73	%		9.66	%		8.58	%
Tangible common equity ratio (non-GAAP)		9.17			9.07			7.89

_________________________

(1)		Common shares were calculated using shares outstanding of 7,817,172 at September 30, 2024, less 103,813 unvested restricted stock shares.
(2)		Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.
(3)		Common shares were calculated using shares outstanding of 7,796,095 at September 30, 2023, less 102,144 unvested restricted stock shares.

Contacts:
Joseph C. Adams,
Chief Executive Officer
Matthew D. Mullet,
President/Chief Financial Officer
(425) 771-5299
http://www.FSBWA.com

The MIL Network –

January 24, 2025

MIL-OSI: Veritex Holdings, Inc. Reports Third Quarter 2024 Operating Results

Source: GlobeNewswire (MIL-OSI)

DALLAS, Oct. 22, 2024 (GLOBE NEWSWIRE) — Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2024.

“We are pleased to announce both our third quarter results and updates on our balance sheet transformation over the past 2 years,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “My team has remained focused on growing granular, attractively priced deposits, increasing capital, managing concentrations and reducing credit risk exposure all while continuing to grow a fortress balance sheet through full relationship banking. I could not be more proud of our team of nearly 900 employees who embraced the challenges we set forth back in 2022 and each day going forward.”

	Quarter to Date						Year to Date
*Financial Highlights*	Q3 2024			Q2 2024			Q3 2024			Q3 2023
	(Dollars in thousands, except per share data) (unaudited)
GAAP
Net income	$	31,001		$	27,202		$	82,359		$	104,762
Diluted EPS		0.56			0.50			1.50			1.92
Book value per common share		29.53			28.49			29.53			27.46
Return on average assets¹		0.96	%		0.87	%		0.87	%		1.14	%
Return on average equity¹		7.79			7.10			7.08			9.35
Net interest margin		3.30			3.29			3.28			3.55
Efficiency ratio		61.94			59.11			61.15			50.88
Non-GAAP²
Operating earnings	$	32,181		$	28,310		$	89,628		$	110,489
Diluted operating EPS		0.59			0.52			1.63			2.02
Tangible book value per common share		21.72			20.62			21.72			19.44
Pre-tax, pre-provision operating earnings		44,555			44,420			132,631			174,523
Pre-tax, pre-provision operating return on average assets¹		1.38	%		1.42	%		1.41	%		1.90	%
Pre-tax, pre-provision operating return on average loans¹		1.83			1.83			1.83			2.43
Operating return on average assets¹		1.00			0.91			0.95			1.20
Return on average tangible common equity¹		11.33			10.54			10.48			13.95
Operating return on average tangible common equity¹		11.74			10.94			11.34			14.68
Operating efficiency ratio		60.63			58.41			59.28			49.53

¹ Annualized ratio.
² Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“GAAP”) financial measures to their most directly comparable GAAP measures.

Other Third Quarter Financial, Credit and Company Highlights

Return on average assets (“ROAA”) increased 9 bps compared to June 30, 2024;
7.2% linked quarter revenue growth;
Nonperforming assets (“NPAs”) decreased 13 bps from the prior quarter to 0.52% of total assets;
Total deposits grew $311.2 million, or 11.60% annualized, compared to June 30, 2024;
Common equity tier 1 capital grew 37 bps from the prior quarter to 10.86%;
Net interest margin (“NIM”) expanded to 3.30%;
Loan to deposit ratio, excluding mortgage warehouse loans, decreased to 81.9% as of September 30, 2024, compared to 85.9% as of June 30, 2024 and 90.7% as of September 30, 2023;
Tangible book value per common share increased to $21.72;
Allowance for credit losses (“ACL”) to total loans held for investment (“LHI”) increased to 1.21%, compared to 1.16% as of June 30, 2024 and 1.14% as of September 30, 2023; and
Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on November 22, 2024.

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

Net Interest Income

For the three months ended September 30, 2024, net interest income before provision for credit losses was $100.1 million and NIM was 3.30% compared to $96.2 million and 3.29%, respectively, for the three months ended June 30, 2024. The approximately $3.8 million increase, or 4.0%, in net interest income before provision for credit losses was primarily due to a $4.8 million increase in interest income on deposits in financial institutions and fed funds sold, a $1.4 million decrease in interest expense on advances from the Federal Home Loan Bank (“FHLB”), a $422 thousand increase in interest income on debt securities and a $282 thousand increase in interest income on loans. The increase was partially offset by a $1.6 million increase in interest expense on transactions and savings deposits and a $1.4 million increase in interest expense on certificates and other time deposits, during the three months ended September 30, 2024. NIM increased 1 basis point compared to the three months ended June 30, 2024, primarily due to a decrease in funding costs on deposits during the three months ended September 30, 2024, partially offset by a decrease in loan yields and average balances.

Compared to the three months ended September 30, 2023, net interest income before provision for credit losses for the three months ended September 30, 2024 increased by $701 thousand, or 0.7%. The increase was primarily due to a $8.5 million decrease in interest expense on advances from the FHLB, a $5.4 million increase in interest income on deposits in financial institutions and fed funds sold and a $4.9 million increase in interest income on debt securities. The increase was partially offset by a $10.1 million increase in interest expense on certificates and other time deposits, a $7.3 million increase in interest expense on transaction and savings deposits and a $690 thousand decrease in interest income on equity securities and other investments. Compared to the three months ended September 30, 2023, NIM decreased 16 bps from 3.46% for the three months ended September 30, 2024. The decrease was primarily due to the increase in funding costs on deposits during the three months ended September 30, 2024, partially offset by an increase in loan yields and an increase in average balances and yields on debt securities.

Noninterest Income

Noninterest income for the three months ended September 30, 2024 was $13.1 million, an increase of $2.5 million, or 23.9%, compared to the three months ended June 30, 2024. The increase was primarily due to a $1.6 million increase in other income, driven by a $1.2 million increase in other real estate owned (“OREO”) income, a $1.1 million increase in loan fees and a $468 thousand increase in service charges and fees on deposits for the three months ended September 30, 2024. The increase was partially offset by a $540 thousand decrease in government guaranteed loan income.

Compared to the three months ended September 30, 2023, noninterest income for the three months ended September 30, 2024 increased by $3.4 million, or 35.5%. The increase was primarily due to a $2.2 million increase in other income, driven by a $1.2 million increase in OREO income, a $1.7 million increase in loan fees and a $283 thousand increase in service charges and fees on deposit accounts. The increase was partially offset by a $1.0 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s USDA sales.

Noninterest Expense

Noninterest expense was $70.1 million for the three months ended September 30, 2024, compared to $63.1 million for the three months ended June 30, 2024, an increase of $7.0 million, or 11.0%. The increase was primarily due to a $4.6 million increase in salaries and employee benefits primarily due to an increase in incentive accruals to 80% of target payout, a $1.9 million increase in other noninterest expense primarily driven by OREO expenses, a $805 thousand increase in marketing expenses and a $204 thousand increase in occupancy and equipment expense. The increase is partially offset by a decrease of $714 thousand in professional and regulatory fees compared to the three months ended June 30, 2024.

Compared to the three months ended September 30, 2023, noninterest expense for the three months ended September 30, 2024 increased by $10.7 million, or 18.0%. The increase was primarily due to a $6.4 million increase in salaries and employee benefits primarily due to the increase in incentive accruals aforementioned, a $5.6 million increase in other noninterest expense, a $727 thousand increase data processing and software expense, and a $428 thousand increase in marketing expenses. The increase was partially offset by a $2.4 million decrease in professional and regulatory fees compared to the three months ended September 30, 2023.

Financial Condition

Total LHI was $9.03 billion at September 30, 2024, a decrease of $180.5 million compared to June 30, 2024.

Total deposits were $11.04 billion at September 30, 2024, an increase of $311.2 million, or 11.6% linked quarter annualized. The increase was primarily the result of an increase of $227.2 million in noninterest bearing deposits and an increase of $225.3 million in interest-bearing transaction and savings deposits. The increase was partially offset by a decrease of $118.7 million in certificates and other time deposits and a decrease of $22.6 million in correspondent money market accounts.

Credit Quality

NPAs totaled $67.3 million, or 0.52% of total assets, of which $58.3 million represents LHI and $9.0 million represents OREO at September 30, 2024, compared to $83.0 million, or 0.65% of total assets, at June 30, 2024. The Company had net charge-offs of $269 thousand for the three months ended September 30, 2024. Annualized net charge-offs to average loans outstanding were 1bp, for the three months ended September 30, 2024, compared to 28 bps and 8 bps for the three months ended June 30, 2024 and September 30, 2023, respectively.

ACL as a percentage of LHI was 1.21%, 1.16% and 1.14% at September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The Company recorded a provision for credit losses of $4.0 million, $8.3 million and $8.6 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The recorded provision for credit losses for the three months ended September 30, 2024, compared to the three months ended June 30, 2024, was primarily attributable to an increase in general reserves as a result of changes in economic factors which now represents 97% of the total ACL as a percentage of LHI. The balance for unfunded commitments for the three months ended September 30, 2024 remained relatively stable compared to the three months ended June 30, 2024 and recorded no benefit or provision for unfunded commitments for the three months ended September 30, 2024. The Company recorded no benefit or provision for unfunded commitments for the three months ended June 30, 2024 and a $909 thousand benefit for unfunded commitments for the three months ended September 30, 2023.

Income Tax

Income tax expense for the three months ended September 30, 2024 totaled $8.1 million, a decrease of $154 thousand, or 1.9%, compared to the three months ended June 30, 2024. The Company’s effective tax rate was approximately 20.6% for the three months ended September 30, 2024. The decrease was primarily due a $941 thousand change in the Company’s valuation allowance slightly offset by a return to provision of $224 thousand and a net discrete tax expense of $501 thousand associated with the recognition of an excess tax expense realized on share-based payment awards.

Dividend Information

After the close of the market on Tuesday, October 22, 2024, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after November 22, 2024 to stockholders of record as of the close of business on November 8, 2024.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share of the Company; operating earnings; tangible common equity to tangible assets; return on average tangible common equity; pre-tax, pre-provision operating earnings; pre-tax, pre-provision operating return on average assets; pre-tax, pre-provision operating return on average loans; diluted operating earnings per share; operating return on average assets; operating return on average tangible common equity; and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will host an investor conference call and webcast to review the results on Wednesday, October 23, 2024, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting http://edge.media-server.com/mmc/p/99msavdf and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference: https://register.vevent.com/register/BI8a41df4f3f824d2888f9cf9a3e02c9b8. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex’s website.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit http://www.veritexbank.com.

Forward-Looking Statements

This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; turmoil in the banking industry, responsive measures to mitigate and manage such turmoil and related supervisory and regulatory actions and costs; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2023 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at http://www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Sep 30, 2024			Sep 30, 2023
	(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS	$	0.57		$	0.50		$	0.44		$	0.06		$	0.60		$	1.51		$	1.93
Diluted EPS		0.56			0.50			0.44			0.06			0.60			1.50			1.92
Book value per common share		29.53			28.49			28.23			28.18			27.46			29.53			27.46
Tangible book value per common share¹		21.72			20.62			20.33			20.21			19.44			21.72			19.44
Dividends paid per common share outstanding²		0.20			0.20			0.20			0.20			0.20			0.60			0.60

Common Stock Data:
Shares outstanding at period end		54,446			54,350			54,496			54,338			54,305			54,446			54,305
Weighted average basic shares outstanding for the period		54,409			54,457			54,444			54,327			54,300			54,437			54,233
Weighted average diluted shares outstanding for the period		54,932			54,823			54,842			54,691			54,597			54,866			54,563

Summary of Credit Ratios:
ACL to total LHI		1.21	%		1.16	%		1.15	%		1.14	%		1.14	%		1.21	%		1.14	%
NPAs to total assets		0.52			0.65			0.82			0.77			0.65			0.52			0.65
NPAs to total loans and OREO		0.70			0.85			1.06			0.99			0.83			0.70			0.83
Net charge-offs to average loans outstanding³		0.01			0.28			0.22			0.39			0.08			0.17			0.20

Summary Performance Ratios:
Return on average assets³		0.96	%		0.87	%		0.79	%		0.11	%		1.06	%		0.87	%		1.14	%
Return on average equity³		7.79			7.10			6.33			0.92			8.58			7.08			9.35
Return on average tangible common equity^1,3		11.33			10.54			9.52			2.00			12.80			10.48			13.95
Efficiency ratio		61.94			59.11			62.45			77.49			54.49			61.15			50.88
Net interest margin		3.30			3.29			3.24			3.31			3.46			3.28			3.55

Selected Performance Metrics – Operating:
Diluted operating EPS¹	$	0.59		$	0.52		$	0.53		$	0.58		$	0.60		$	1.63		$	2.02
Pre-tax, pre-provision operating return on average assets^1,3		1.38	%		1.42	%		1.42	%		1.54	%		1.61	%		1.41	%		1.90	%
Pre-tax, pre-provision operating return on average loans^1,3		1.83			1.83			1.84			1.97			2.05			1.83			2.43
Operating return on average assets^1,3		1.00			0.91			0.95			1.02			1.06			0.95			1.20
Operating return on average tangible common equity^1,3		11.74			10.94			11.34			12.37			12.80			11.34			14.68
Operating efficiency ratio¹		60.63			58.41			58.73			55.50			54.49			59.28			49.53

Veritex Holdings, Inc. Capital Ratios:
Average stockholders’ equity to average total assets		12.31	%		12.26	%		12.43	%		12.27	%		12.30	%		12.33	%		12.21	%
Tangible common equity to tangible assets¹		9.37			9.14			9.02			9.18			8.86			9.37			8.86
Tier 1 capital to average assets (leverage)		10.06			10.06			10.12			10.03			10.10			10.06			10.10
Common equity tier 1 capital		10.86			10.49			10.37			10.29			10.11			10.86			10.11
Tier 1 capital to risk-weighted assets		11.13			10.75			10.63			10.56			10.37			11.13			10.37
Total capital to risk-weighted assets		13.91			13.45			13.33			13.18			12.95			13.91			12.95
Risk weighted assets	$	11,290,800		$	11,450,997		$	11,407,446		$	11,387,825		$	11,617,229		$	11,290,800		$	11,617,229

¹ Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
² Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
³Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (In thousands)

	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023
	(unaudited)			(unaudited)			(unaudited)						(unaudited)
ASSETS
Cash and cash equivalents	$	1,100,790		$	651,837		$	740,769		$	629,063		$	713,408
Debt securities, net		1,423,610			1,349,354			1,344,930			1,257,042			1,060,629
Other investments		71,257			75,885			76,788			76,238			80,869

Loans held for sale (“LHFS”)		48,496			57,046			64,762			79,072			41,313
LHI, mortgage warehouse (“MW”)		630,650			568,047			449,531			377,796			390,767
LHI, excluding MW		9,028,575			9,209,094			9,249,551			9,206,544			9,237,447
Total loans		9,707,721			9,834,187			9,763,844			9,663,412			9,669,527
ACL		(117,162	)		(113,431	)		(112,032	)		(109,816	)		(109,831	)
Bank-owned life insurance		84,776			84,233			85,359			84,833			84,867
Bank premises, furniture and equipment, net		114,202			105,222			105,299			105,727			106,118
Other real estate owned (“OREO”)		9,034			24,256			18,445			—			—
Intangible assets, net of accumulated amortization		32,825			35,817			38,679			41,753			44,294
Goodwill		404,452			404,452			404,452			404,452			404,452
Other assets		211,471			232,518			241,863			241,633			291,998
Total assets	$	13,042,976		$	12,684,330		$	12,708,396		$	12,394,337		$	12,346,331
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits	$	2,643,894		$	2,416,727		$	2,349,211		$	2,218,036		$	2,363,340
Interest-bearing transaction and savings deposits		4,204,708			3,979,454			4,220,114			4,348,385			3,936,070
Certificates and other time deposits		3,625,920			3,744,596			3,486,805			3,191,737			3,403,427
Correspondent money market deposits		561,489			584,067			597,690			580,037			493,681
Total deposits		11,036,011			10,724,844			10,653,820			10,338,195			10,196,518
Accounts payable and other liabilities		168,415			180,585			186,027			195,036			229,116
Advances from FHLB		—			—			100,000			100,000			200,000
Subordinated debentures and subordinated notes		230,536			230,285			230,034			229,783			229,531
Total liabilities		11,434,962			11,135,714			11,169,881			10,863,014			10,855,165
Commitments and contingencies
Stockholders’ equity:
Common stock		613			612			611			610			609
Additional paid-in capital		1,324,929			1,321,995			1,319,144			1,317,516			1,314,459
Retained earnings		493,921			473,801			457,499			444,242			451,513
Accumulated other comprehensive loss		(40,330	)		(76,713	)		(71,157	)		(63,463	)		(107,833	)
Treasury stock		(171,119	)		(171,079	)		(167,582	)		(167,582	)		(167,582	)
Total stockholders’ equity		1,608,014			1,548,616			1,538,515			1,531,323			1,491,166
Total liabilities and stockholders’ equity	$	13,042,976		$	12,684,330		$	12,708,396		$	12,394,337		$	12,346,331

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (In thousands, except per share data)

	For the Quarter Ended													For the Nine Months Ended
	Sep 30, 2024		Jun 30, 2024		Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Sep 30, 2024			Sep 30, 2023
	(unaudited)		(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Interest income:
Loans, including fees	$	167,261	$	166,979	$	161,942		$	165,443		$	167,368		$	496,182		$	482,802
Debt securities		15,830		15,408		13,695			12,282			10,928			44,933			32,082
Deposits in financial institutions and Fed Funds sold		12,571		7,722		8,050			8,162			7,128			28,343			20,169
Equity securities and other investments		1,001		1,138		900			1,717			1,691			3,039			4,217
Total interest income		196,663		191,247		184,587			187,604			187,115			572,497			539,270
Interest expense:
Transaction and savings deposits		47,208		45,619		46,784			46,225			39,936			139,611			102,750
Certificates and other time deposits		46,230		44,811		40,492			40,165			36,177			131,533			85,244
Advances from FHLB		47		1,468		1,391			2,581			8,523			2,906			38,443
Subordinated debentures and subordinated notes		3,116		3,113		3,114			3,100			3,118			9,343			9,252
Total interest expense		96,601		95,011		91,781			92,071			87,754			283,393			235,689
Net interest income		100,062		96,236		92,806			95,533			99,361			289,104			303,581
Provision for credit losses		4,000		8,250		7,500			9,500			8,627			19,750			33,012
(Benefit) provision for unfunded commitments		—		—		(1,541	)		(1,500	)		(909	)		(1,541	)		(541	)
Net interest income after provisions		96,062		87,986		86,847			87,533			91,643			270,895			271,110
Noninterest income:
Service charges and fees on deposit accounts		5,442		4,974		4,896			4,800			5,159			15,312			15,448
Loan fees		3,278		2,207		2,510			1,200			1,564			7,995			5,148
Loss on sales of debt securities		—		—		(6,304	)		—			—			(6,304	)		(5,321	)
Government guaranteed loan income, net		780		1,320		2,614			4,378			1,772			4,714			15,604
Equity method investment (loss) income		—		—		—			(29,417	)		(136	)		—			(1,172	)
Customer swap income		271		326		449			258			202			1,046			1,380
Other income		3,335		1,751		2,497			989			1,113			7,583			5,810
Total noninterest income (loss)		13,106		10,578		6,662			(17,792	)		9,674			30,346			36,897
Noninterest expense:
Salaries and employee benefits		37,370		32,790		33,365			30,606			30,949			103,525			91,464
Occupancy and equipment		4,789		4,585		4,677			4,670			4,881			14,051			14,681
Professional and regulatory fees		4,903		5,617		6,053			7,626			7,283			16,573			18,540
Data processing and software expense		5,268		5,097		4,856			4,569			4,541			15,221			13,970
Marketing		2,781		1,976		1,546			1,945			2,353			6,303			6,759
Amortization of intangibles		2,438		2,438		2,438			2,438			2,438			7,314			7,401
Telephone and communications		335		365		261			356			362			961			1,195
Other		12,216		10,273		8,920			8,028			6,607			31,409			19,216
Total noninterest expense		70,100		63,141		62,116			60,238			59,414			195,357			173,226
Income before income tax expense		39,068		35,423		31,393			9,503			41,903			105,884			134,781
Income tax expense		8,067		8,221		7,237			6,004			9,282			23,525			30,019
Net income	$	31,001	$	27,202	$	24,156		$	3,499		$	32,621		$	82,359		$	104,762

Basic EPS	$	0.57	$	0.50	$	0.44		$	0.06		$	0.60		$	1.51		$	1.93
Diluted EPS	$	0.56	$	0.50	$	0.44		$	0.06		$	0.60		$	1.50		$	1.92
Weighted average basic shares outstanding		54,409		54,457		54,444			54,327			54,300			54,437			54,233
Weighted average diluted shares outstanding		54,932		54,823		54,842			54,691			54,597			54,866			54,563

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)

	For the Quarter Ended
	September 30, 2024							June 30, 2024							September 30, 2023
	Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans¹	$	9,184,182		$	159,163	6.89	%	$	9,344,482		$	160,323	6.90	%	$	9,267,366		$	161,615	6.92	%
LHI, MW		477,592			8,098	6.75			420,946			6,656	6.36			357,639			5,753	6.38
Debt securities		1,384,835			15,830	4.55			1,352,293			15,408	4.58			1,121,716			10,928	3.87
Interest-bearing deposits in other banks		924,685			12,571	5.41			560,586			7,722	5.54			520,785			7,128	5.43
Equity securities and other investments		75,884			1,001	5.25			78,964			1,138	5.80			135,714			1,691	4.94
Total interest-earning assets		12,047,178			196,663	6.49			11,757,271			191,247	6.54			11,403,220			187,115	6.51
ACL		(115,510	)						(115,978	)						(105,320	)
Noninterest-earning assets		930,250							937,413							961,162
Total assets	$	12,861,918						$	12,578,706						$	12,259,062

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	4,700,196		$	47,208	4.00	%	$	4,570,329		$	45,619	4.01	%	$	4,168,876		$	39,936	3.80	%
Certificates and other time deposits		3,678,718			46,230	5.00			3,591,035			44,811	5.02			3,151,704			36,177	4.55
Advances from FHLB and Other		3,261			47	5.73			106,648			1,468	5.54			725,543			8,523	4.66
Subordinated debentures and subordinated notes		230,393			3,116	5.38			230,141			3,113	5.44			229,389			3,118	5.39
Total interest-bearing liabilities		8,612,568			96,601	4.46			8,498,153			95,011	4.50			8,275,512			87,754	4.21

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,486,676							2,346,908							2,272,207
Other liabilities		179,273							192,036							203,173
Total liabilities		11,278,517							11,037,097							10,750,892
Stockholders’ equity		1,583,401							1,541,609							1,508,170
Total liabilities and stockholders’ equity	$	12,861,918						$	12,578,706						$	12,259,062

Net interest rate spread²						2.03	%						2.04	%						2.30	%
Net interest income and margin³				$	100,062	3.30	%				$	96,236	3.29	%				$	99,361	3.46	%

¹ Includes average outstanding balances of LHFS of $54.3 million, $58.5 million and $28.3 million for the quarters ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (In thousands, except percentages)

	For the Nine Months Ended
	September 30, 2024							September 30, 2023
	Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate
Assets
Interest-earning assets:
Loans¹	$	9,270,510		$	477,071	6.87	%	$	9,231,814		$	467,101	6.76	%
LHI, MW		393,008			19,111	6.50			363,182			15,701	5.78
Debt securities		1,344,190			44,933	4.47			1,168,860			32,082	3.67
Interest-bearing deposits in other banks		692,434			28,343	5.47			527,805			20,169	5.11
Equity securities and other investments		77,035			3,039	5.27			132,895			4,217	4.24
Total interest-earning assets		11,777,177			572,497	6.49			11,424,556			539,270	6.31
ACL		(114,576	)						(100,228	)
Noninterest-earning assets		930,605							950,369
Total assets	$	12,593,206						$	12,274,697

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	4,636,889		$	139,611	4.02	%	$	4,079,436		$	102,750	3.37	%
Certificates and other time deposits		3,518,417			131,533	4.99			2,873,388			85,244	3.97
Advances from FHLB and Other		70,055			2,906	5.54			1,105,592			38,443	4.65
Subordinated debentures and subordinated notes		230,139			9,343	5.42			229,923			9,252	5.38
Total interest-bearing liabilities		8,455,500			283,393	4.48			8,288,339			235,689	3.80

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,396,629							2,305,745
Other liabilities		188,007							182,040
Total liabilities		11,040,136							10,776,124
Stockholders’ equity		1,553,070							1,498,573
Total liabilities and stockholders’ equity	$	12,593,206						$	12,274,697

Net interest rate spread²						2.01	%						2.51	%
Net interest income and margin³				$	289,104	3.28	%				$	303,581	3.55	%

¹ Includes average outstanding balances of LHFS of $55.5 million and $23.8 million for the nine months ended September 30, 2024 and 2023, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
Yield Trend

	For the Quarter Ended
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023
Average yield on interest-earning assets:
Loans¹		6.89	%		6.90	%		6.83	%		6.88	%		6.92	%
LHI, MW		6.75			6.36			6.27			5.82			6.38
Total Loans		6.89			6.88			6.81			6.85			6.90
Debt securities		4.55			4.58			4.25			4.10			3.87
Interest-bearing deposits in other banks		5.41			5.54			5.54			5.51			5.43
Equity securities and other investments		5.25			5.80			4.75			8.28			4.94
Total interest-earning assets		6.49	%		6.54	%		6.44	%		6.51	%		6.51	%

Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits		4.00	%		4.01	%		4.06	%		4.03	%		3.80	%
Certificates and other time deposits		5.00			5.02			4.96			4.85			4.55
Advances from FHLB		5.73			5.54			5.54			5.60			4.66
Subordinated debentures and subordinated notes		5.38			5.44			5.45			5.36			5.39
Total interest-bearing liabilities		4.46	%		4.50	%		4.47	%		4.43	%		4.21	%

Net interest rate spread²		2.03	%		2.04	%		1.97	%		2.08	%		2.30	%
Net interest margin³		3.30	%		3.29	%		3.24	%		3.31	%		3.46	%

¹Includes average outstanding balances of LHFS of $54.3 million, $58.5 million, $53.9 million, $31.2 million and $28.3 million for the three months ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

	For the Quarter Ended										For the Nine Months Ended
	Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023
Average cost of interest-bearing deposits	4.44	%	4.46	%	4.43	%	4.38	%	4.12	%	4.44	%	3.62	%
Average costs of total deposits, including noninterest-bearing	3.42		3.46		3.42		3.37		3.15		3.43		2.03

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)

LHI and Deposit Portfolio Composition

	Sep 30, 2024					Jun 30, 2024					Mar 31, 2024					Dec 31, 2023					Sep 30, 2023
	(Dollars in thousands)
LHI¹
Commercial and Industrial (“C&I”)	$	2,728,544		30.2	%	$	2,798,260		30.4	%	$	2,785,987		30.1	%	$	2,752,063		29.9	%	$	2,841,024		30.7	%
Real Estate:
Owner occupied commercial (“OOCRE”)		807,223		8.9			806,285		8.7			788,376		8.5			794,088		8.6			697,299		7.5
Non-owner occupied commercial (“NOOCRE”)		2,338,094		25.9			2,369,848		25.7			2,352,993		25.5			2,350,725		25.5			2,398,060		26.1
Construction and land		1,436,540		15.8			1,536,580		16.7			1,568,257		16.9			1,734,254		18.8			1,705,053		18.4
Farmland		32,254		0.4			30,512		0.3			30,979		0.3			31,114		0.3			59,684		0.6
1-4 family residential		944,755		10.5			917,402		10.0			969,401		10.5			937,119		10.2			933,225		10.1
Multi-family residential		738,090		8.2			748,740		8.1			751,607		8.1			605,817		6.6			603,395		6.5
Consumer		11,292		0.1			9,245		0.1			8,882		0.1			10,149		0.1			9,845		0.1
Total LHI	$	9,036,792		100	%	$	9,216,872		100	%	$	9,256,482		100	%	$	9,215,329		100	%	$	9,247,585		100	%

MW		630,650					568,047					449,531					377,796					390,767

Total LHI¹	$	9,667,442				$	9,784,919				$	9,706,013				$	9,593,125				$	9,638,352

Total LHFS		48,496					57,046					64,762					79,072					41,313

Total Loans	$	9,715,938				$	9,841,965				$	9,770,775				$	9,672,197				$	9,679,665

Deposits
Noninterest-bearing	$	2,643,894		24.0	%	$	2,416,727		22.5	%	$	2,349,211		22.1	%	$	2,218,036		21.5	%	$	2,363,340		23.2	%
Interest-bearing transaction		421,059		3.8			523,272		4.9			724,171		6.8			927,193		8.9			739,098		7.2
Money market		3,462,709		31.4			3,268,286		30.5			3,326,742		31.2			3,284,324		31.8			3,096,498		30.4
Savings		320,940		2.9			187,896		1.8			169,201		1.6			136,868		1.3			100,474		1.0
Certificates and other time deposits		3,625,920		32.8			3,744,596		34.9			3,486,805		32.7			3,191,737		30.9			3,403,427		33.4
Correspondent money market accounts		561,489		5.1			584,067		5.4			597,690		5.6			580,037		5.6			493,681		4.8
Total deposits	$	11,036,011		100	%	$	10,724,844		100	%	$	10,653,820		100	%	$	10,338,195		100	%	$	10,196,518		100	%

Total Loans to Deposits Ratio		88.0	%				91.8	%				91.7	%				93.6	%				94.9	%

Total Loans to Deposit Ratio, excluding MW loans and LHFS		81.9	%				85.9	%				86.9	%				89.1	%				90.7	%

¹ Total LHI does not include deferred fees of $8.2 million, $7.8 million, $6.9 million, $8.8 million and $10.1 million at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023 and September 30, 2023, respectively.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
Asset Quality

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Sep 30, 2024			Sep 30, 2023
	(Dollars in thousands)
NPAs:
Nonaccrual loans	$	55,335		$	58,537		$	75,721		$	79,133		$	65,676		$	55,335		$	65,676
Nonaccrual PCD loans¹		70			73			9,419			13,715			13,718			70			13,718
Accruing loans 90 or more days past due²		2,860			143			220			2,975			474			2,860			474
Total nonperforming loans held for investment (“NPLs”)		58,265			58,753			85,360			95,823			79,868			58,265			79,868
Other real estate owned		9,034			24,256			18,445			—			—			9,034			—
Total NPAs	$	67,299		$	83,009		$	103,805		$	95,823		$	79,868		$	67,299		$	79,868

Charge-offs:
1-4 family residential	$	—		$	(31	)	$	—		$	(21	)	$	—		$	(31	)	$	—
Multifamily		—			(198	)		—			(192	)		—			(198	)		—
OOCRE		—			—			(120	)		(364	)		(375	)		(120	)		(491	)
NOOCRE		—			(1,969	)		(4,293	)		(5,434	)		—			(6,262	)		(8,215	)
C&I		(2,259	)		(5,601	)		(946	)		(3,893	)		(1,929	)		(8,806	)		(6,520	)
Consumer		(54	)		(30	)		(71	)		(33	)		(49	)		(155	)		(203	)
Total charge-offs	$	(2,313	)	$	(7,829	)	$	(5,430	)	$	(9,937	)	$	(2,353	)	$	(15,572	)	$	(15,429	)

Recoveries:
1-4 family residential	$	3		$	—		$	1		$	1		$	—		$	4		$	2
OOCRE		—			120			—			—			—			120			—
NOOCRE		—			—			—			—			200			—			350
C&I		1,962			361			96			387			308			2,419			778
Mortgage Warehouse		46			—			—			—			—			46			—
Consumer		33			497			49			34			14			579			66
Total recoveries	$	2,044		$	978		$	146		$	422		$	522		$	3,168		$	1,196

Net charge-offs	$	(269	)	$	(6,851	)	$	(5,284	)	$	(9,515	)	$	(1,831	)	$	(12,404	)	$	(14,233	)

Provision for credit losses	$	4,000		$	8,250		$	7,500		$	9,500		$	8,627		$	19,750		$	33,012

ACL	$	117,162		$	113,431		$	112,032		$	109,816		$	109,831		$	117,162		$	109,831

Asset Quality Ratios:
NPAs to total assets		0.52	%		0.65	%		0.82	%		0.77	%		0.65	%		0.52	%		0.65	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.52			0.65			0.74			0.66			0.44			0.52			0.54
NPAs to total loans and OREO		0.70			0.85			1.06			0.99			0.83			0.70			0.83
NPLs to total LHI		0.60			0.60			0.88			1.00			0.83			0.60			0.83
NPLs, excluding nonaccrual PCD loans, to total LHI		0.60			0.60			0.78			0.86			0.69			0.60			0.69
ACL to total LHI		1.21			1.16			1.15			1.14			1.14			1.21			1.14
ACL to total loans, excluding MW and LHFS		1.30			1.23			1.21			1.19			1.19			1.30			1.19
Net charge-offs to average loans outstanding³		0.01			0.28			0.22			0.39			0.08			0.17			0.20

¹ Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments – Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
² Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
³ Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP, in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

	As of
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023
	(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders’ equity	$	1,608,014		$	1,548,616		$	1,538,515		$	1,531,323		$	1,491,166
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(21,182	)		(23,619	)		(26,057	)		(28,495	)		(30,933	)
Tangible common equity	$	1,182,380		$	1,120,545		$	1,108,006		$	1,098,376		$	1,055,781
Common shares outstanding		54,446			54,350			54,496			54,338			54,305

Book value per common share	$	29.53		$	28.49		$	28.23		$	28.18		$	27.46
Tangible book value per common share	$	21.72		$	20.62		$	20.33		$	20.21		$	19.44

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

	As of
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023
	(Dollars in thousands)
Tangible Common Equity
Total stockholders’ equity	$	1,608,014		$	1,548,616		$	1,538,515		$	1,531,323		$	1,491,166
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(21,182	)		(23,619	)		(26,057	)		(28,495	)		(30,933	)
Tangible common equity	$	1,182,380		$	1,120,545		$	1,108,006		$	1,098,376		$	1,055,781
Tangible Assets
Total assets	$	13,042,976		$	12,684,330		$	12,708,396		$	12,394,337		$	12,346,331
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(21,182	)		(23,619	)		(26,057	)		(28,495	)		(30,933	)
Tangible Assets	$	12,617,342		$	12,256,259		$	12,277,887		$	11,961,390		$	11,910,946
Tangible Common Equity to Tangible Assets		9.37	%		9.14	%		9.02	%		9.18	%		8.86	%

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Sep 30, 2024			Sep 30, 2023
	(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income	$	31,001		$	27,202		$	24,156		$	3,499		$	32,621		$	82,359		$	104,762
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,438			2,438			2,438			2,438			7,314			7,314
Less: Tax benefit at the statutory rate		512			512			512			512			512			1,536			1,536
Net income available for common stockholders adjusted for amortization of core deposit intangibles	$	32,927		$	29,128		$	26,082		$	5,425		$	34,547		$	88,137		$	110,540

Average Tangible Common Equity
Total average stockholders’ equity	$	1,583,401		$	1,541,609		$	1,533,868		$	1,510,286		$	1,508,170		$	1,553,070		$	1,498,573
Adjustments:
Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Average core deposit intangibles		(22,789	)		(25,218	)		(27,656	)		(30,093	)		(32,540	)		(25,212	)		(34,939	)
Average tangible common equity	$	1,156,160		$	1,111,939		$	1,101,760		$	1,075,741		$	1,071,178		$	1,123,406		$	1,059,182
Return on Average Tangible Common Equity (Annualized)		11.33	%		10.54	%		9.52	%		2.00	%		12.80	%		10.48	%		13.95	%

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, plus M&A expenses less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.

We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:

	For the Quarter Ended										For the Nine Months Ended
	Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023
	(Dollars in thousands, except per share data)
Operating Earnings
Net income	$	31,001	$	27,202	$	24,156	$	3,499	$	32,621	$	82,359	$	104,762
Plus: Severance payments¹		1,487		613		—		—		—		2,100		1,950
Plus: Loss on sale of AFS securities, net		—		—		6,304		—		—		6,304		5,321
Plus: Equity method investment write-down		—		—		—		29,417		—		—		—
Plus: FDIC special assessment		—		134		—		768		—		134		—
Operating pre-tax income		32,488		27,949		30,460		33,684		32,621		90,897		112,033
Less: Tax impact of adjustments		307		166		1,323		2,059		—		1,796		1,544
Plus: Nonrecurring tax adjustments		—		527		—		—		—		527		—
Operating earnings	$	32,181	$	28,310	$	29,137	$	31,625	$	32,621	$	89,628	$	110,489

Weighted average diluted shares outstanding		54,932		54,823		54,842		54,691		54,597		54,866		54,563
Diluted EPS	$	0.56	$	0.50	$	0.44	$	0.06	$	0.60	$	1.50	$	1.92
Diluted operating EPS	$	0.59	$	0.52	$	0.53	$	0.58	$	0.60	$	1.63	$	2.02

¹ Severance payments relate to certain restructurings made during the periods disclosed.

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Sep 30, 2024			Sep 30, 2023
	(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income	$	31,001		$	27,202		$	24,156		$	3,499		$	32,621		$	82,359		$	104,762
Plus: Provision for income taxes		8,067			8,221			7,237			6,004			9,282			23,525			30,019
Plus: Provision for credit losses and unfunded commitments		4,000			8,250			5,959			8,000			7,718			18,209			32,471
Plus: Severance payments		1,487			613			—			—			—			2,100			1,950
Plus: Loss on sale of AFS securities, net		—			—			6,304			—			—			6,304			5,321
Plus: Equity method investment write-down		—			—			—			29,417			—			—			—
Plus: FDIC special assessment		—			134			—			768			—			134			—
Pre-tax, pre-provision operating earnings	$	44,555		$	44,420		$	43,656		$	47,688		$	49,621		$	132,631		$	174,523

Average total assets	$	12,861,918		$	12,578,706		$	12,336,042		$	12,306,634		$	12,259,062		$	12,593,206		$	12,274,697
Pre-tax, pre-provision operating return on average assets¹		1.38	%		1.42	%		1.42	%		1.54	%		1.61	%		1.41	%		1.90	%

Average loans	$	9,661,774		$	9,765,428		$	9,563,372		$	9,581,784		$	9,625,005		$	9,663,518		$	9,594,996
Pre-tax, pre-provision operating return on average loans¹		1.83	%		1.83	%		1.84	%		1.97	%		2.05	%		1.83	%		2.43	%

Average total assets	$	12,861,918		$	12,578,706		$	12,336,042		$	12,306,634		$	12,259,062		$	12,593,206		$	12,274,697
Return on average assets¹		0.96	%		0.87	%		0.79	%		0.11	%		1.06	%		0.87	%		1.14	%
Operating return on average assets¹		1.00			0.91			0.95			1.02			1.06			0.95			1.20

Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings	$	32,181		$	28,310		$	29,137		$	31,625		$	32,621		$	89,628		$	110,489
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,438			2,438			2,438			2,438			7,314			7,314
Less: Tax benefit at the statutory rate		512			512			512			512			512			1,536			1,536
Operating earnings adjusted for amortization of core deposit intangibles	$	34,107		$	30,236		$	31,063		$	33,551		$	34,547		$	95,406		$	116,267

Average Tangible Common Equity
Total average stockholders’ equity	$	1,583,401		$	1,541,609		$	1,533,868		$	1,510,286		$	1,508,170		$	1,553,070		$	1,498,573
Adjustments:
Less: Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Less: Average core deposit intangibles		(22,789	)		(25,218	)		(27,656	)		(30,093	)		(32,540	)		(25,212	)		(34,939	)
Average tangible common equity	$	1,156,160		$	1,111,939		$	1,101,760		$	1,075,741		$	1,071,178		$	1,123,406		$	1,059,182
Operating return on average tangible common equity¹		11.74	%		10.94	%		11.34	%		12.37	%		12.80	%		11.34	%		14.68	%

Efficiency ratio		61.94	%		59.11	%		62.45	%		77.49	%		54.49	%		61.15	%		50.88	%
Operating efficiency ratio
Net interest income	$	100,062		$	96,236		$	92,806		$	95,533		$	99,361		$	289,104		$	303,581
Noninterest income		13,106			10,578			6,662			(17,792	)		9,674			30,346			36,897
Plus: Loss on sale of AFS securities, net		—			—			6,304			—			—			6,304			5,321
Plus: Equity method investment write-down		—			—			—			29,417			—			—			—
Operating noninterest income		13,106			10,578			12,966			11,625			9,674			36,650			42,218
Noninterest expense		70,100			63,141			62,116			60,238			59,414			195,357			173,226
Less: FDIC special assessment		—			134			—			768			—			134			—
Less: Severance payments		1,487			613			—			—			—			2,100			1,950
Operating noninterest expense	$	68,613		$	62,394		$	62,116		$	59,470		$	59,414		$	193,123		$	171,276
Operating efficiency ratio		60.63	%		58.41	%		58.73	%		55.50	%		54.49	%		59.28	%		49.53	%

¹ Annualized ratio for quarterly metrics.

The MIL Network –

January 24, 2025

MIL-OSI: First Busey Corporation Announces 2024 Third Quarter Earnings

Source: GlobeNewswire (MIL-OSI)

CHAMPAIGN, Ill., Oct. 22, 2024 (GLOBE NEWSWIRE) — First Busey Corporation (Nasdaq: BUSE)

Net Income of $32.0 million
Diluted EPS of $0.55

THIRD QUARTER 2024 HIGHLIGHTS

Adjusted net income¹ of $33.5 million, or $0.58 per diluted common share
Noninterest income of $36.0 million, or 30.5% of operating revenue¹
Record high quarterly revenue for the Wealth Management operating segment
Tangible book value per common share¹ of $18.19 at September 30, 2024, compared to $16.97 at June 30, 2024, and $15.07 at September 30, 2023, a year-over-year increase of 20.7%
Tangible common equity¹ increased to 8.96% of tangible assets at September 30, 2024, compared to 8.36% at June 30, 2024, and 7.06% at September 30, 2023
Announced transformative partnership with CrossFirst Bankshares

For additional information, please refer to the 3Q24 Earnings Investor Presentation.

MESSAGE FROM OUR CHAIRMAN & CEO

Third Quarter Financial Results

Net income for First Busey Corporation (“Busey,” “Company,” “we,” “us,” or “our”) was $32.0 million for the third quarter of 2024, or $0.55 per diluted common share, compared to $27.4 million, or $0.47 per diluted common share, for the second quarter of 2024, and $30.7 million, or $0.54 per diluted common share, for the third quarter of 2023. Adjusted net income¹, which excludes the impact of acquisition and restructuring expenses, was $33.5 million, or $0.58 per diluted common share, for the third quarter of 2024, compared to $29.0 million, or $0.50 per diluted common share, for the second quarter of 2024 and $30.7 million or $0.55 per diluted common share for the third quarter of 2023. Annualized return on average assets and annualized return on average tangible common equity¹ were 1.06% and 12.80%, respectively, for the third quarter of 2024. Annualized adjusted return on average assets¹ and annualized adjusted return on average tangible common equity¹ were 1.11% and 13.41%, respectively, for the third quarter of 2024.

Third quarter results included $0.8 million in net securities gains, nearly all of which were unrealized, as well as immaterial follow-on adjustments from the mortgage servicing rights sale previously announced in the first quarter of 2024. Excluding these items, adjusted noninterest income¹ was $35.1 million, or 29.9% of operating revenue¹, during the third quarter of 2024, compared to $33.9 million, or 29.1% of operating revenue, for the second quarter of 2024 and $31.3 million, or 28.7% of operating revenue, for the third quarter of 2023. Further adjusted net income¹ was $32.9 million for the third quarter of 2024 with these items excluded, equating to further adjusted earnings¹ of $0.57 per diluted common share.

Pre-provision net revenue¹ was $41.7 million for the third quarter of 2024, compared to $41.1 million for the second quarter of 2024 and $38.1 million for the third quarter of 2023. Pre-provision net revenue to average assets¹ was 1.38% for the third quarter of 2024, compared to 1.37% for the second quarter of 2024, and 1.24% for the third quarter of 2023. Adjusted pre-provision net revenue¹ was $44.1 million for the third quarter of 2024, compared to $42.6 million for the second quarter of 2024 and $40.5 million for the third quarter of 2023. Adjusted pre-provision net revenue to average assets¹ was 1.46% for the third quarter of 2024, compared to 1.42% for the second quarter of 2024 and 1.32% for the third quarter of 2023.

Our fee-based businesses continue to add revenue diversification. Total noninterest income was $36.0 million for the third quarter of 2024, compared to $33.8 million for the second quarter of 2024 and $31.0 million for the third quarter of 2023. Busey’s Wealth Management and FirsTech operating segments contributed $16.2 million and $5.6 million, respectively, to our noninterest income for the third quarter of 2024, representing 60.4% of noninterest income on a combined basis.

Busey views certain non-operating items, including acquisition-related expenses and restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles (“GAAP”). Non-operating pretax adjustments for acquisition and restructuring expenses¹ were $1.9 million in the third quarter of 2024. Busey believes that its non-GAAP measures (which are identified with the endnote labeled as 1) facilitate the assessment of its financial results and peer comparability. For more information and a reconciliation of these non-GAAP measures in tabular form, see “Non-GAAP Financial Information“.

We remain deliberate in our efforts to prudently manage our expense base and operating efficiency given the economic outlook. Noninterest expense was $75.9 million in the third quarter of 2024, compared to $75.5 million in the second quarter of 2024 and $70.9 million in the third quarter of 2023. Adjusted core expense¹, which excludes the amortization of intangible assets and new markets tax credits, acquisition and restructuring expenses, and the provision for unfunded commitments, was $71.0 million in the third quarter of 2024, compared to $71.1 million in the second quarter of 2024 and $66.0 million in the third quarter of 2023. The year-over-year comparable period growth in adjusted core expense can be attributed primarily to the acquisition of M&M and general inflationary pressures on compensation and benefits and to a lesser extent certain other expense categories.

Quarterly pre-tax expense synergies resulting from our acquisition of Merchants and Manufacturers Bank Corporation (the “M&M acquisition”) are anticipated to be $1.6 million to $1.7 million per quarter when fully realized. Quarterly run-rate savings are projected to be achieved by the first quarter of 2025. During the third quarter of 2024, we achieved approximately 79% of the full quarterly savings. We expect to continue to prudently manage our expenses and to realize increased rates of M&M acquisition synergies during the final quarter of 2024.

Planned Partnership with CrossFirst

On August 26, 2024, Busey and CrossFirst Bankshares, Inc. (“CrossFirst”) entered into an agreement and plan of merger (the “merger agreement”) pursuant to which CrossFirst will merge with and into Busey (the “merger”) and CrossFirst’s wholly-owned subsidiary, CrossFirst Bank, will merge with and into Busey Bank. This partnership will create a premier commercial bank in the Midwest, Southwest, and Florida, with 77 full-service locations across 10 states—Arizona, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, New Mexico, Oklahoma, and Texas—and approximately $20 billion in combined assets, $17 billion in total deposits, $15 billion in total loans, and $14 billion in wealth assets under care.

Under the terms of the merger agreement, CrossFirst stockholders will have the right to receive for each share of CrossFirst common stock 0.6675 of a share of Busey’s common stock. Upon completion of the transaction, Busey’s stockholders will own approximately 63.5% of the combined company and CrossFirst’s stockholders will own approximately 36.5% of the combined company, on a fully-diluted basis. Busey common stock will continue to trade on the Nasdaq under the “BUSE” stock ticker symbol.

Completion of the merger is subject to customary closing conditions, including the approval of both Busey and CrossFirst stockholders and the regulatory approvals for the merger and the bank merger. With approvals, the parties expect to close the merger in the first or second quarter of 2025. The combined holding company will continue to operate under the First Busey Corporation name and the combined bank will operate under the Busey Bank name. It is anticipated that CrossFirst Bank will merge with and into Busey Bank in mid-2025. At the time of the bank merger, CrossFirst Bank locations will become banking centers of Busey Bank. In connection with the merger, Busey incurred one-time pretax acquisition-related expenses of $1.3 million during the third quarter of 2024.

For further details on the merger, see Busey’s Current Report on Form 8‑K announcing the merger, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 27, 2024.

Busey’s Conservative Banking Strategy

Busey’s financial strength is built on a long-term conservative operating approach. That focus will not change now or in the future.

The quality of our core deposit franchise is a critical value driver of our institution. Our granular deposit base continues to position us well, with core deposits¹ representing 96.5% of our deposits as of September 30, 2024. Our retail deposit base was comprised of more than 253,000 accounts with an average balance of $22 thousand and an average tenure of 16.7 years as of September 30, 2024. Our commercial deposit base was comprised of more than 33,000 accounts with an average balance of $97 thousand and an average tenure of 12.6 years as of September 30, 2024. We estimate that 29% of our deposits were uninsured and uncollateralized² as of September 30, 2024, and we have sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of our customers.

Asset quality remains strong by both Busey’s historical and current industry trends. Non-performing assets decreased to $8.3 million during the third quarter of 2024, representing 0.07% of total assets. Busey’s results for the third quarter of 2024 include an insignificant provision expense for credit losses and a $0.4 million provision expense for unfunded commitments. The allowance for credit losses was $85.0 million as of September 30, 2024, representing 1.09% of total portfolio loans outstanding, and providing coverage of 10.34 times our non-performing loan balance. Busey recorded net charge-offs of $0.2 million in the third quarter of 2024. As of September 30, 2024, our commercial real estate loan portfolio of investor-owned office properties within Central Business District³ areas was minimal at $2.1 million. Our credit performance continues to reflect our highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with our company.

The strength of our balance sheet is also reflected in our capital foundation. In the third quarter of 2024, our Common Equity Tier 1 ratio⁴ was 13.78% and our Total Capital to Risk Weighted Assets ratio⁴ was 18.19%. Our regulatory capital ratios continue to provide a buffer of more than $580 million above levels required to be designated well-capitalized. Our Tangible Common Equity ratio¹ increased to 8.96% during the third quarter of 2024, compared to 8.36% for the second quarter of 2024 and 7.06% for the third quarter of 2023. Busey’s tangible book value per common share¹ increased to $18.19 at September 30, 2024, from $16.97 at June 30, 2024, and $15.07 at September 30, 2023, reflecting a 20.7% year-over-year increase. During the third quarter of 2024, we paid a common share dividend of $0.24.

Community Banking

In July 2024—based on their community involvement and academic achievements—Busey awarded 10 deserving students from across Busey’s footprint in Illinois, Missouri, Florida, and Indiana, a $2,500 scholarship to support their continuing education and bright futures. With 70 applications received, and a record number of eligible applicants, the students with the top scores, as determined by Busey’s Scholarship Committee, averaged a 4.16 GPA. Since the inception of the Busey Bank Bridge Scholarship program in 2022, Busey has awarded 30 scholarships to deserving students for a total $75,000. Full details on the scholarship’s eligibility criteria and application process can be found at https://www.busey.com/busey/busey-bank-bridge-scholarship.

As we build upon Busey’s forward momentum and our strategic growth plans, we are grateful for the opportunities to consistently earn the business of our customers, based on the contributions of our talented associates and the continued support of our loyal shareholders. With our strong capital position, an attractive core funding base, and a sound credit foundation, we remain confident that we are well positioned as we move into the final quarter of 2024 and into 2025. We are mindful of the evolving economic outlook and remain focused on balance sheet strength, profitability, and growth, in that order. The pending CrossFirst transaction fits with our acquisition strategy and we are excited to welcome our CrossFirst colleagues into the Busey family.

		Van A. Dukeman
		Chairman and Chief Executive Officer
		First Busey Corporation


SELECTED FINANCIAL HIGHLIGHTS *(unaudited)*
(dollars in thousands, except per share amounts)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
EARNINGS & PER SHARE AMOUNTS
Net income	$	32,004		$	27,357		$	30,666		$	85,586		$	96,816
Diluted earnings per common share		0.55			0.47			0.54			1.49			1.72
Cash dividends paid per share		0.24			0.24			0.24			0.72			0.72
Pre-provision net revenue^{1, 2}		41,744			41,051			38,139			129,168			125,593
Operating revenue²		117,688			116,311			109,084			343,676			336,146

Net income by operating segment:
Banking		33,221			26,697			31,189			86,410			98,689
FirsTech		(61	)		28			317			53			505
Wealth Management		5,618			5,561			4,781			16,177			14,571

AVERAGE BALANCES
Cash and cash equivalents	$	502,127		$	346,381		$	252,730		$	480,979		$	237,370
Investment securities		2,666,269			2,737,313			3,148,759			2,769,862			3,254,054
Loans held for sale		11,539			9,353			2,267			8,585			1,955
Portfolio loans		7,869,798			8,010,636			7,834,285			7,826,741			7,767,378
Interest-earning assets		10,936,611			10,993,907			11,118,167			10,976,660			11,142,780
Total assets		12,007,702			12,089,692			12,202,783			12,040,414			12,225,232

Noninterest-bearing deposits		2,706,858			2,816,293			2,925,244			2,743,777			3,082,884
Interest-bearing deposits		7,296,921			7,251,582			7,217,463			7,292,884			6,886,277
Total deposits		10,003,779			10,067,875			10,142,707			10,036,661			9,969,161

Federal funds purchased and securities sold under agreements to repurchase		132,688			144,370			190,112			151,835			207,014
Interest-bearing liabilities		7,731,459			7,725,832			7,864,355			7,762,867			7,748,218
Total liabilities		10,643,325			10,757,877			10,994,376			10,716,295			11,029,374
Stockholders’ equity – common		1,364,377			1,331,815			1,208,407			1,324,119			1,195,858
Tangible common equity²		994,657			955,591			850,382			957,788			835,204

PERFORMANCE RATIOS
Pre-provision net revenue to average assets^{1, 2, 3}		1.38	%		1.37	%		1.24	%		1.43	%		1.37	%
Return on average assets³		1.06	%		0.91	%		1.00	%		0.95	%		1.06	%
Return on average common equity³		9.33	%		8.26	%		10.07	%		8.63	%		10.82	%
Return on average tangible common equity^{2, 3}		12.80	%		11.51	%		14.31	%		11.94	%		15.50	%
Net interest margin^2, 4		3.02	%		3.03	%		2.80	%		2.94	%		2.93	%
Efficiency ratio²		62.15	%		62.32	%		62.38	%		60.87	%		59.97	%
Adjusted noninterest income to operating revenue²		29.86	%		29.13	%		28.69	%		29.95	%		27.91	%

NON-GAAP FINANCIAL INFORMATION
Adjusted pre-provision net revenue^1, 2	$	44,104		$	42,617		$	40,491		$	125,359		$	132,067
Adjusted net income²		33,533			29,016			30,730			89,080			96,889
Adjusted diluted earnings per share²		0.58			0.50			0.55			1.55			1.72
Adjusted pre-provision net revenue to average assets^{2, 3}		1.46	%		1.42	%		1.32	%		1.39	%		1.44	%
Adjusted return on average assets^{2, 3}		1.11	%		0.97	%		1.00	%		0.99	%		1.06	%
Adjusted return on average tangible common equity^{2, 3}		13.41	%		12.21	%		14.34	%		12.42	%		15.51	%
Adjusted net interest margin^2, 4		2.97	%		3.00	%		2.79	%		2.92	%		2.91	%
Adjusted efficiency ratio²		60.50	%		60.57	%		62.31	%		60.91	%		59.95	%

___________________________________________

Net interest income plus noninterest income, excluding securities gains and losses, less noninterest expense.
See “Non-GAAP Financial Information” for reconciliation.
For quarterly periods, measures are annualized.
On a tax-equivalent basis, assuming a federal income tax rate of 21%.


CONDENSED CONSOLIDATED BALANCE SHEETS *(unaudited)*
(dollars in thousands, except per share amounts)

	As of
	September 30, 2024			June 30, 2024			September 30, 2023
ASSETS
Cash and cash equivalents	$	553,709		$	285,269		$	337,919
Debt securities available for sale		1,818,117			1,829,896			2,182,841
Debt securities held to maturity		838,883			851,261			882,614
Equity securities		10,315			9,618			8,782
Loans held for sale		11,523			11,286			3,051

Commercial loans		5,631,281			5,799,214			5,824,800
Retail real estate and retail other loans		2,177,816			2,199,698			2,031,360
Portfolio loans		7,809,097			7,998,912			7,856,160

Allowance for credit losses		(84,981	)		(85,226	)		(91,710	)
Premises and equipment		120,279			121,647			122,538
Right of use asset		11,100			11,137			11,500
Goodwill and other intangible assets, net		368,249			370,580			356,343
Other assets		530,548			567,036			588,212
Total assets	$	11,986,839		$	11,971,416		$	12,258,250

LIABILITIES & STOCKHOLDERS’ EQUITY
Liabilities
Deposits:
Noninterest-bearing deposits	$	2,683,543		$	2,832,776		$	2,918,574
Interest-bearing checking, savings, and money market deposits		5,739,773			5,619,470			5,747,136
Time deposits		1,519,925			1,523,889			1,666,652
Total deposits		9,943,241			9,976,135			10,332,362

Securities sold under agreements to repurchase		128,429			140,283			183,702
Short-term borrowings		—			—			12,000
Long-term debt		227,482			227,245			243,666
Junior subordinated debt owed to unconsolidated trusts		74,754			74,693			71,946
Lease liability		11,470			11,469			11,783
Other liabilities		198,579			207,781			212,633
Total liabilities		10,583,955			10,637,606			11,068,092

Stockholders’ equity
Retained earnings		279,868			261,820			224,698
Accumulated other comprehensive income (loss)		(170,913	)		(220,326	)		(290,730	)
Other¹		1,293,929			1,292,316			1,256,190
Total stockholders’ equity		1,402,884			1,333,810			1,190,158
Total liabilities & stockholders’ equity	$	11,986,839		$	11,971,416		$	12,258,250

SHARE AND PER SHARE AMOUNTS
Book value per common share	$	24.67		$	23.50		$	21.51
Tangible book value per common share²	$	18.19		$	16.97		$	15.07
Ending number of common shares outstanding		56,872,241			56,746,937			55,342,017

___________________________________________

Net balance of common stock ($0.001 par value), additional paid-in capital, and treasury stock.
See “Non-GAAP Financial Information” for reconciliation.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME *(unaudited)*
(dollars in thousands, except per share amounts)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
INTEREST INCOME
Interest and fees on loans	$	111,336		$	109,641		$	99,844		$	320,302		$	284,423
Interest and dividends on investment securities		18,072			19,173			21,234			57,182			62,360
Other interest income		5,092			3,027			1,591			14,590			3,890
Total interest income	$	134,500		$	131,841		$	122,669		$	392,074		$	350,673

INTEREST EXPENSE
Deposits	$	46,634		$	43,709		$	37,068		$	134,311		$	78,576
Federal funds purchased and securities sold under agreements to repurchase		981			1,040			1,327			3,393			3,772
Short-term borrowings		26			418			1,964			676			12,527
Long-term debt		3,181			3,181			3,528			9,767			10,631
Junior subordinated debt owed to unconsolidated trusts		1,137			1,059			991			3,185			2,849
Total interest expense	$	51,959		$	49,407		$	44,878		$	151,332		$	108,355

Net interest income	$	82,541		$	82,434		$	77,791		$	240,742		$	242,318
Provision for credit losses		2			2,277			364			7,317			1,944
Net interest income after provision for credit losses	$	82,539		$	80,157		$	77,427		$	233,425		$	240,374

NONINTEREST INCOME
Wealth management fees	$	15,378		$	15,917		$	14,235		$	46,844		$	43,594
Fees for customer services		8,168			7,798			7,502			23,022			21,560
Payment technology solutions		5,265			5,915			5,226			16,889			15,772
Mortgage revenue		355			478			311			1,579			871
Income on bank owned life insurance		1,189			1,442			1,001			4,050			3,682
Realized net gains (losses) on the sale of mortgage servicing rights		(18	)		277			—			7,724			—
Net securities gains (losses)		822			(353	)		(285	)		(5,906	)		(2,960	)
Other noninterest income		4,792			2,327			3,018			10,550			8,349
Total noninterest income	$	35,951		$	33,801		$	31,008		$	104,752		$	90,868

NONINTEREST EXPENSE
Salaries, wages, and employee benefits	$	44,593		$	43,478		$	39,677		$	130,161		$	119,867
Data processing expense		6,910			7,100			5,930			20,560			17,472
Net occupancy expense of premises		4,633			4,590			4,594			13,943			13,896
Furniture and equipment expense		1,647			1,695			1,638			5,155			5,065
Professional fees		3,118			2,495			1,542			7,866			4,573
Amortization of intangible assets		2,548			2,629			2,555			7,586			7,953
Interchange expense		1,352			1,733			1,786			4,696			5,509
FDIC insurance		1,413			1,460			1,475			4,273			4,483
Other noninterest expense		9,712			10,357			11,748			27,992			31,735
Total noninterest expense	$	75,926		$	75,537		$	70,945		$	222,232		$	210,553

Income before income taxes	$	42,564		$	38,421		$	37,490		$	115,945		$	120,689
Income taxes		10,560			11,064			6,824			30,359			23,873
Net income	$	32,004		$	27,357		$	30,666		$	85,586		$	96,816

SHARE AND PER SHARE AMOUNTS
Basic earnings per common share	$	0.56		$	0.48		$	0.55		$	1.52		$	1.75
Diluted earnings per common share	$	0.55		$	0.47		$	0.54		$	1.49		$	1.72
Average common shares outstanding		57,033,359			56,919,025			55,486,700			56,458,430			55,441,980
Diluted average common shares outstanding		57,967,848			57,853,231			56,315,492			57,411,299			56,230,624

BALANCE SHEET STRENGTH

Our balance sheet remains a source of strength. Total assets were $11.99 billion as of September 30, 2024, compared to $11.97 billion as of June 30, 2024, and $12.26 billion as of September 30, 2023.

We remain steadfast in our conservative approach to underwriting and disciplined approach to pricing, particularly given our outlook for the economy in the coming quarters, and this approach has impacted loan growth as predicted. Portfolio loans totaled $7.81 billion at September 30, 2024, compared to $8.00 billion at June 30, 2024, and $7.86 billion at September 30, 2023.

Average portfolio loans were $7.87 billion for the third quarter of 2024, compared to $8.01 billion for the second quarter of 2024 and $7.83 billion for the third quarter of 2023. Average interest-earning assets were $10.94 billion for the third quarter of 2024, compared to $10.99 billion for the second quarter of 2024, and $11.12 billion for the third quarter of 2023.

Total deposits were $9.94 billion at September 30, 2024, compared to $9.98 billion at June 30, 2024, and $10.33 billion at September 30, 2023. Average deposits were $10.00 billion for the third quarter of 2024, compared to $10.07 billion for the second quarter of 2024 and $10.14 billion for the third quarter of 2023. Deposit fluctuations over the last several quarters were driven by a number of elements, including (1) seasonal factors, including ordinary course public fund flows and fluctuations in the normal course of business operations of certain core commercial customers, (2) the macroeconomic environment, including prevailing interest rates and inflationary pressures, (3) depositors moving some funds to accounts at competitors offering above-market rates, and (4) deposits moving within the Busey ecosystem between deposit accounts and our wealth management group. Core deposits¹ accounted for 96.5% of total deposits as of September 30, 2024. Cost of deposits was 1.85% in the third quarter of 2024, which represents an increase of 10 basis points from the second quarter of 2024. Excluding time deposits, Busey’s cost of deposits was 1.50% in the third quarter of 2024, an increase of 14 basis points from the second quarter of 2024. Non-maturity deposit cost of funds has increased as Busey Bank continues to offer savings account specials to customers with larger account balances, with the intention of migrating maturing CDs to these managed rate products. Pressure on non-interest bearing deposits along with some elevated balances of higher rate seasonal business and public funds accounts also contributed to increases in overall deposit funding cost during the quarter. Spot rates on total deposit costs, including noninterest bearing deposits, increased by 5 basis points from 1.75% at June 30, 2024, to 1.80% at September 30, 2024. Spot rates on interest bearing deposits increased by 1 basis point from 2.45% at June 30, 2024 to 2.46% at September 30, 2024.

There were no short term borrowings as of September 30 or June 30, 2024, compared to $12.0 million at September 30, 2023. We had no borrowings from the Federal Home Loan Bank (“FHLB”) at the end of the third quarter of 2024, the second quarter of 2024, or the third quarter of 2023. We have sufficient on- and off-balance sheet liquidity⁵ to manage deposit fluctuations and the liquidity needs of our customers. As of September 30, 2024, our available sources of on- and off-balance sheet liquidity totaled $6.37 billion. We have executed various deposit campaigns to attract term funding and savings accounts at a lower rate than our marginal cost of funds. New certificate of deposit production in the third quarter of 2024 had a weighted average term of 8.1 months at a rate of 4.18%, 67 basis points below our average marginal wholesale equivalent-term funding cost during the quarter. Furthermore, our balance sheet liquidity profile continues to be aided by the cash flows we expect from our relatively short-duration securities portfolio. Those cash flows were approximately $81.1 million in the third quarter of 2024. For the remainder of 2024, cash flows from our securities portfolio are expected to be approximately $97.1 million with a current book yield of 2.18%.

ASSET QUALITY

Credit quality continues to be strong. Loans 30-89 days past due totaled $10.1 million as of September 30, 2024, compared to $23.5 million as of June 30, 2024, and $5.9 million as of September 30, 2023. The decrease in loans that were 30-89 days past due is primarily attributable to a single commercial real estate loan in the second quarter that is no longer past due as of September 30, 2024. Non-performing loans were $8.2 million as of September 30, 2024, compared to $9.1 million as of June 30, 2024, and $12.0 million as of September 30, 2023. Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of 0.11% as of both September 30, 2024, and June 30, 2024, and 0.15% as of September 30, 2023. Non-performing assets were 0.07% of total assets for the third quarter of 2024, compared to 0.08% for the second quarter of 2024 and 0.10% for the third quarter of 2023. Our total classified assets were $89.0 million at September 30, 2024, compared to $95.8 million at June 30, 2024, and $59.6 million at September 30, 2023. Our ratio of classified assets to estimated bank Tier 1 capital⁴ and reserves remains low by historical standards, at 5.9% as of September 30, 2024, compared to 6.4% as of June 30, 2024, and 4.1% as of September 30, 2023.

Net charge-offs were $0.2 million for the third quarter of 2024, compared to $9.9 million for the second quarter of 2024, and $0.3 million for the third quarter of 2023. Charge-offs in the second quarter of 2024 were primarily in connection with a single commercial and industrial credit relationship that also experienced a partial charge-off during the first quarter of 2024. The allowance as a percentage of portfolio loans was 1.09% as of September 30, 2024, compared to 1.07% as of June 30, 2024, and 1.17% as of September 30, 2023. The ratio was impacted in 2024 by the acquisition of M&M’s Life Equity Loan^® portfolio, as Busey did not record an allowance for credit loss for these loans due to no expected credit loss at default, as permitted under the practical expedient provided within the Accounting Standards Codification 326-20-35-6. The allowance coverage for non-performing loans was 10.34 times as of September 30, 2024, compared to 9.36 times as of June 30, 2024, and 7.64 times as of September 30, 2023.

Busey maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment.


ASSET QUALITY *(unaudited)*
(dollars in thousands)

	As of
	September 30, 2024			June 30, 2024			September 30, 2023
Total assets	$	11,986,839		$	11,971,416		$	12,258,250
Portfolio loans		7,809,097			7,998,912			7,856,160
Loans 30 – 89 days past due		10,141			23,463			5,934
Non-performing loans:
Non-accrual loans		8,192			8,393			11,298
Loans 90+ days past due and still accruing		25			712			709
Non-performing loans	$	8,217		$	9,105		$	12,007
Non-performing loans, segregated by geography:
Illinois / Indiana	$	3,981		$	5,793		$	7,951
Missouri		3,530			3,089			3,747
Florida		706			222			309
Other non-performing assets		64			90			96
Non-performing assets	$	8,281		$	9,195		$	12,103

Allowance for credit losses	$	84,981		$	85,226		$	91,710

RATIOS
Non-performing loans to portfolio loans		0.11	%		0.11	%		0.15	%
Non-performing assets to total assets		0.07	%		0.08	%		0.10	%
Non-performing assets to portfolio loans and other non-performing assets		0.11	%		0.11	%		0.15	%
Allowance for credit losses to portfolio loans		1.09	%		1.07	%		1.17	%
Coverage ratio of the allowance for credit losses to non-performing loans	10.34 x			9.36 x			7.64 x

NET CHARGE-OFFS (RECOVERIES) AND PROVISION EXPENSE (RELEASE) *(unaudited)*
(dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net charge-offs (recoveries)	$	247	$	9,856	$	293	$	15,319	$	1,842
Provision expense (release)		2		2,277		364		7,317		1,944

NET INTEREST MARGIN AND NET INTEREST INCOME

Net interest margin¹ was 3.02% for the third quarter of 2024, compared to 3.03% for the second quarter of 2024 and 2.80% for the third quarter of 2023. Excluding purchase accounting accretion, adjusted net interest margin¹ was 2.97% for the third quarter of 2024, compared to 3.00% in the second quarter of 2024 and 2.79% in the third quarter of 2023. Net interest income was $82.5 million in the third quarter of 2024, compared to $82.4 million in the second quarter of 2024 and $77.8 million in the third quarter of 2023.

After raising federal funds rates by a total of 525 basis points between March 2022 and July 2023, the Federal Open Market Committee (“FOMC”) lowered rates by 50 basis points in September 2024. In anticipation of the FOMC pivot to an easing cycle, we limited our exposure to term funding structures and intentionally priced savings specials to encourage maturing CD balances to migrate to managed rate non-maturity products. During September we began lowering rates on special priced deposit accounts and other managed rate products to benefit from the FOMC rate cuts. In addition, approximately 6% of our deposit portfolio is indexed and immediately repriced with the rate cuts by the FOMC. With our short duration CD balances comprising only 15% of the deposit funding base, we also have the ability to quickly reprice the book at lower market rates. We continue to offer CD specials with shorter term structures as well as offering attractive premium savings rates to encourage rotation of maturing CD deposits into nimble pricing products. Components of the 1 basis point decrease in net interest margin¹ during the third quarter of 2024 include:

Increased cash and securities portfolio yield contributed +3 basis points
Increased loan portfolio and held for sale loan yields contributed +2 basis points
Increased purchase accounting contributed +2 basis points
Reduced borrowing expense +2 basis points
Reduced time deposit funding costs contributed +1 basis point
Increased non-maturity deposit funding costs contributed -11 basis points

Based on our most recent Asset Liability Management Committee (“ALCO”) model, a +100 basis point parallel rate shock is expected to increase net interest income by 2.1% over the subsequent twelve-month period. Busey continues to evaluate off-balance sheet hedging and balance sheet restructuring strategies as well as embedding rate protection in our asset originations to provide stabilization to net interest income in lower rate environments. Time deposit and savings specials have provided funding flows, and we had excess earning cash during the third quarter of 2024. Since the onset of the current FOMC tightening cycle that began in the first quarter of 2022, our cumulative interest-bearing non-maturity deposit beta peaked at 41%. Our total deposit beta for the completed tightening cycle was 34%. Deposit betas were calculated based on an average federal funds rate of 5.43% during the third quarter of 2024. The average federal funds rate decreased by 7 basis points compared to the average rate of 5.50% in the second quarter of 2024.

NONINTEREST INCOME

Noninterest income was $36.0 million for the third quarter of 2024, as compared to $33.8 million for the second quarter of 2024 and $31.0 million for the third quarter of 2023. Excluding the impact of net securities gains and losses and immaterial follow-on adjustments from the previously announced mortgage servicing rights sale, adjusted noninterest income¹ was $35.1 million, or 29.9% of operating revenue¹, during the third quarter of 2024, $33.9 million, or 29.1% of operating revenue, for the second quarter of 2024, and $31.3 million, or 28.7% of operating revenue, for the third quarter of 2023.

Consolidated wealth management fees were $15.4 million for the third quarter of 2024, compared to $15.9 million for the second quarter of 2024 and $14.2 million for the third quarter of 2023. Wealth management fees for the third quarter of 2024 declined by 3.4% compared to the second quarter of 2024 primarily based on seasonal tax preparation fees. On a segment basis, Wealth Management generated $16.2 million in revenue during the third quarter of 2024, a 12.7% increase over revenue of $14.4 million for the third quarter of 2023. Approximately $0.8 million of revenue attributed to the wealth segment is reported on a consolidated basis as part of other noninterest income. Third quarter of 2024 results marked a new record high reported quarterly revenue for the Wealth Management operating segment. The Wealth Management operating segment generated net income of $5.6 million in both the third quarter of 2024 and the second quarter of 2024, compared to $4.8 million in the third quarter of 2023. Busey’s Wealth Management division ended the third quarter of 2024 with $13.69 billion in assets under care, compared to $13.02 billion at the end of the second quarter of 2024 and $11.55 billion at the end of the third quarter of 2023. Our portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets and has outperformed its blended benchmark⁶ over the last three and five years.

Payment technology solutions revenue was $5.3 million for the third quarter of 2024, compared to $5.9 million for the second quarter of 2024 and $5.2 million for the third quarter of 2023. Excluding intracompany eliminations, the FirsTech operating segment generated revenue of $5.6 million during the third quarter of 2024, compared to $6.2 million in the second quarter of 2024 and $5.7 million in the third quarter of 2023.

Noninterest income generated from our Wealth Management and FirsTech operating segments comprised 60.4% of our total noninterest income for the quarter ended September 30, 2024, providing a balance to spread-based revenue from traditional banking activities.

Fees for customer services were $8.2 million for the third quarter of 2024, compared to $7.8 million in the second quarter of 2024 and $7.5 million in the third quarter of 2023.

Net securities gains were $0.8 million for the third quarter of 2024, comprised primarily of unrealized gains on equity securities.

Other noninterest income was $4.8 million in the third quarter of 2024, compared to $2.3 million in the second quarter of 2024 and $3.0 million in the third quarter of 2023. Revenue associated with certain wealth management activities reported as other noninterest income on a consolidated basis was $0.8 million for the third quarter of 2024, compared to $0.2 million for the second quarter of 2024 and $0.1 million for the third quarter of 2023. Fluctuations in other noninterest income are primarily attributable to increases in venture capital investments, referral fees, and swap origination fees, partially offset by decreases in commercial loan sales gains. Increases for the year also reflect the addition of Life Equity Loan^® servicing income beginning in the second quarter of 2024.

OPERATING EFFICIENCY

Noninterest expense was $75.9 million in the third quarter of 2024, compared to $75.5 million in the second quarter of 2024 and $70.9 million for the third quarter of 2023. The efficiency ratio¹ was 62.1% for the third quarter of 2024, compared to 62.3% for the second quarter of 2024, and 62.4% for the third quarter of 2023. Adjusted core expense¹ was $71.0 million in the third quarter of 2024, compared to $71.1 million in the second quarter of 2024 and $66.0 million in the third quarter of 2023. The adjusted core efficiency ratio¹ was 60.2% for the third quarter of 2024, compared to 60.9% for the second quarter of 2024, and 60.2% for the third quarter of 2023. We expect to continue to prudently manage our expenses and to realize increased rates of M&M acquisition synergies during the final quarter of 2024.

Noteworthy components of noninterest expense are as follows:

Salaries, wages, and employee benefits expenses were $44.6 million in the third quarter of 2024, compared to $43.5 million in the second quarter of 2024 and $39.7 million in the third quarter of 2023. Busey recorded $0.1 million of non-operating salaries, wages, and employee benefit expenses in the third quarter of 2024, compared to $1.1 million in the second quarter of 2024 and none in the third quarter of 2023. The increase in the third quarter of 2024 over the second quarter of 2024 was primarily attributable to performance metrics tied to bonus and equity compensation. Our associate-base consisted of 1,510 full-time equivalents as of September 30, 2024, compared to 1,520 as of June 30, 2024, and 1,484 as of September 30, 2023. The increase in our associate-base in the second quarter of 2024 was largely due to the M&M acquisition.
Data processing expense was $6.9 million in the third quarter of 2024, compared to $7.1 million in the second quarter of 2024 and $5.9 million in the third quarter of 2023. Busey recorded $0.1 million of non-operating data processing expenses in the third quarter of 2024, compared to $0.3 million in the second quarter of 2024 and none in the third quarter of 2023. Busey has continued to make investments in technology enhancements and has also experienced inflation-driven price increases.
Professional fees were $3.1 million in the third quarter of 2024, compared to $2.5 million in the second quarter of 2024 and $1.5 million in the third quarter of 2023. Busey recorded $1.4 million of non-operating professional fees in the third quarter of 2024, as compared to $0.4 million in the second quarter of 2024 and $0.1 million in the third quarter of 2023.
Other noninterest expense was $9.7 million for the third quarter of 2024, compared to $10.4 million in the second quarter of 2024 and $11.7 million in the third quarter of 2023. Busey recorded $0.4 million of non-operating costs in other noninterest expense in the third quarter of 2024, compared to $0.3 million in the second quarter of 2024 and none in the third quarter of 2023. In connection with Busey’s adoption of ASU 2023-02 on January 1, 2024, Busey began recording amortization of New Markets Tax Credits as income tax expense instead of other operating expense, which resulted in a decrease to other operating expenses of $2.3 million compared to the third quarter of 2023. Other items contributing to the fluctuations in other noninterest expense included the provision for unfunded commitments, mortgage servicing rights valuation expenses, fixed asset impairment, marketing, business development, and expenses related to recruiting and onboarding.

Busey’s effective tax rate for the third quarter of 2024 was 24.8%, which was lower than the combined federal and state statutory rate of approximately 28.0% due to the impact of tax exempt interest income, such as municipal bond interest, bank owned life insurance income, and investments in various federal and state tax credits.

Effective tax rates were higher in 2024, compared to 2023, due to the adoption of ASU 2023-02 in January 2024. Upon adoption of ASU 2023-02 Busey elected to use the proportional amortization method of accounting for equity investments made primarily for the purpose of receiving income tax credits. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense as opposed to being presented on a gross basis on the income statement as a component of noninterest expense and income tax expense.

CAPITAL STRENGTH

Busey’s strong capital levels, coupled with its earnings, have allowed the Company to provide a steady return to its stockholders through dividends. On October 25, 2024, Busey will pay a cash dividend of $0.24 per common share to stockholders of record as of October 18, 2024. Busey has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of September 30, 2024, Busey continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. Busey’s Common Equity Tier 1 ratio is estimated⁴ to be 13.78% at September 30, 2024, compared to 13.20% at June 30, 2024, and 12.52% at September 30, 2023. Our Total Capital to Risk Weighted Assets ratio is estimated⁴ to be 18.19% at September 30, 2024, compared to 17.50% at June 30, 2024, and 16.72% at September 30, 2023.

Busey’s tangible common equity¹ was $1.04 billion at September 30, 2024, compared to $970.9 million at June 30, 2024, and $841.2 million at September 30, 2023. Tangible common equity¹ represented 8.96% of tangible assets at September 30, 2024, compared to 8.36% at June 30, 2024, and 7.06% at September 30, 2023. Busey’s tangible book value per common share¹ increased to $18.19 at September 30, 2024, from $16.97 at June 30, 2024, and $15.07 at September 30, 2023, reflecting a 20.7% year-over-year increase. The ratios of tangible common equity to tangible assets¹ and tangible book value per common share have been impacted by the fair value adjustment of Busey’s securities portfolio as a result of the current rate environment, which is reflected in the accumulated other comprehensive income (loss) component of shareholder’s equity.

THIRD QUARTER EARNINGS INVESTOR PRESENTATION

For additional information on Busey’s financial condition and operating results, please refer to the Q3 2024 Earnings Investor Presentation furnished via Form 8-K on October 22, 2024, in connection with this earnings release.

CORPORATE PROFILE

As of September 30, 2024, First Busey Corporation (Nasdaq: BUSE) was an $11.99 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $11.95 billion as of September 30, 2024, and is headquartered in Champaign, Illinois. Busey Bank currently has 62 banking centers, with 21 in Central Illinois markets, 17 in suburban Chicago markets, 20 in the St. Louis Metropolitan Statistical Area, three in Southwest Florida, and one in Indianapolis. More information about Busey Bank can be found at busey.com.

Through Busey’s Wealth Management division, the Company provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations. Assets under care totaled $13.69 billion as of September 30, 2024. More information about Busey’s Wealth Management services can be found at busey.com/wealth-management.

Busey Bank’s wholly-owned subsidiary, FirsTech, specializes in the evolving financial technology needs of small and medium-sized businesses, highly regulated enterprise industries, and financial institutions. FirsTech provides comprehensive and innovative payment technology solutions, including online, mobile, and voice-recognition bill payments; money and data movement; merchant services; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments at retail agents. Additionally, FirsTech simplifies client workflows through integrations enabling support with billing, reconciliation, bill reminders, and treasury services. More information about FirsTech can be found at firstechpayments.com.

For the first time, Busey was named among the World’s Best Banks for 2024 by Forbes, earning a spot on the list among 68 U.S. banks and 403 banks worldwide. Additionally, Busey Bank was honored to be named among America’s Best Banks by Forbes magazine for the third consecutive year. Ranked 40th overall in 2024, Busey was the second-ranked bank headquartered in Illinois of the six that made this year’s list and the highest-ranked bank of those with more than $10 billion in assets. Busey is humbled to be named among the 2023 Best Banks to Work For by American Banker, the 2023 Best Places to Work in Money Management by Pensions and Investments, the 2024 Best Places to Work in Illinois by Daily Herald Business Ledger, the 2024 Best Places to Work in Indiana by the Indiana Chamber of Commerce, and the 2024 Best Companies to Work For in Florida by Florida Trend magazine. We are honored to be consistently recognized globally, nationally and locally for our engaged culture of integrity and commitment to community development.

For more information about us, visit busey.com.

Category: Financial
Source: First Busey Corporation

Contacts:

Jeffrey D. Jones, Chief Financial Officer
217-365-4130

NON-GAAP FINANCIAL INFORMATION

This earnings release contains certain financial information determined by methods other than GAAP. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of Busey’s performance and in making business decisions, as well as for comparison to Busey’s peers. Busey believes the adjusted measures are useful for investors and management to understand the effects of certain non-core and non-recurring noninterest items and provide additional perspective on Busey’s performance over time.

Below is a reconciliation to what management believes to be the most directly comparable GAAP financial measures—specifically, net interest income, total noninterest income, net security gains and losses, and total noninterest expense in the case of pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, and adjusted pre-provision net revenue to average assets; net income in the case of adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, average tangible common equity, return on average tangible common equity, adjusted return on average tangible common equity; net income and net security gains and losses in the case of further adjusted net income and further adjusted diluted earnings per share; net interest income in the case of adjusted net interest income and adjusted net interest margin; net interest income, total noninterest income, and total noninterest expense in the case of adjusted noninterest income, adjusted noninterest expense, noninterest expense excluding non-operating adjustments, adjusted core expense, efficiency ratio, adjusted efficiency ratio, and adjusted core efficiency ratio; net interest income, total noninterest income, net securities gains and losses, and net gains and losses on the sale of mortgage servicing rights in the case of operating revenue and adjusted noninterest income to operating revenue; total assets and goodwill and other intangible assets in the case of tangible assets; total stockholders’ equity in the case of tangible book value per common share; total assets and total stockholders’ equity in the case of tangible common equity and tangible common equity to tangible assets; and total deposits in the case of core deposits and core deposits to total deposits.

These non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for operating results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates, estimated federal income tax rates, or effective tax rates, as noted with the tables below.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue, Pre-Provision Net Revenue to Average Assets, and Adjusted Pre-Provision Net Revenue to Average Assets
(dollars in thousands)

		Three Months Ended									Nine Months Ended
		September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
PRE-PROVISION NET REVENUE
Net interest income		$	82,541		$	82,434		$	77,791		$	240,742		$	242,318
Total noninterest income			35,951			33,801			31,008			104,752			90,868
Net security (gains) losses			(822	)		353			285			5,906			2,960
Total noninterest expense			(75,926	)		(75,537	)		(70,945	)		(222,232	)		(210,553	)
Pre-provision net revenue			41,744			41,051			38,139			129,168			125,593
Non-GAAP adjustments:
Acquisition and restructuring expenses			1,935			2,212			79			4,555			91
Provision for unfunded commitments			407			(369	)		13			(640	)		(357	)
Amortization of New Markets Tax Credits			—			—			2,260			—			6,740
Realized (gain) loss on the sale of mortgage service rights			18			(277	)		—			(7,724	)		—
Adjusted pre-provision net revenue		$	44,104		$	42,617		$	40,491		$	125,359		$	132,067

Pre-provision net revenue, annualized	[a]	$	166,069		$	165,106		$	151,312		$	172,538		$	167,917
Adjusted pre-provision net revenue, annualized	[b]		175,457			171,405			160,644			167,450			176,573
Average total assets	[c]		12,007,702			12,089,692			12,202,783			12,040,414			12,225,232

Reported: Pre-provision net revenue to average total assets¹	[a÷c]		1.38	%		1.37	%		1.24	%		1.43	%		1.37	%
Adjusted: Pre-provision net revenue to average total assets¹	[b÷c]		1.46	%		1.42	%		1.32	%		1.39	%		1.44	%

___________________________________________

Annualized measure.


Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Average Tangible Common Equity, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity
(dollars in thousands, except per share amounts)

		Three Months Ended									Nine Months Ended
		September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS
Net income	[a]	$	32,004		$	27,357		$	30,666		$	85,586		$	96,816
Non-GAAP adjustments for non-operating expenses:
Acquisition expenses:
Salaries, wages, and employee benefits			73			1,137			—			1,210			—
Data processing			90			344			—			534			—
Professional fees, occupancy, furniture and fixtures, and other			1,772			731			79			2,688			91
Restructuring expenses:
Salaries, wages, and employee benefits			—			—			—			123			—
Acquisition and restructuring expenses			1,935			2,212			79			4,555			91
Related tax benefit¹			(406	)		(553	)		(15	)		(1,061	)		(18	)
Adjusted net income	[b]	$	33,533		$	29,016		$	30,730		$	89,080		$	96,889

DILUTED EARNINGS PER SHARE
Diluted average common shares outstanding	[c]		57,967,848			57,853,231			56,315,492			57,411,299			56,230,624

Reported: Diluted earnings per share	[a÷c]	$	0.55		$	0.47		$	0.54		$	1.49		$	1.72
Adjusted: Diluted earnings per share	[b÷c]	$	0.58		$	0.50		$	0.55		$	1.55		$	1.72

RETURN ON AVERAGE ASSETS
Net income, annualized	[d]	$	127,320		$	110,029		$	121,664		$	114,323		$	129,443
Adjusted net income, annualized	[e]		133,403			116,702			121,918			118,990			129,540
Average total assets	[f]		12,007,702			12,089,692			12,202,783			12,040,414			12,225,232

Reported: Return on average assets²	[d÷f]		1.06	%		0.91	%		1.00	%		0.95	%		1.06	%
Adjusted: Return on average assets²	[e÷f]		1.11	%		0.97	%		1.00	%		0.99	%		1.06	%

RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Average common equity		$	1,364,377		$	1,331,815		$	1,208,407		$	1,324,119		$	1,195,858
Average goodwill and other intangible assets, net			(369,720	)		(376,224	)		(358,025	)		(366,331	)		(360,654	)
Average tangible common equity	[g]	$	994,657		$	955,591		$	850,382		$	957,788		$	835,204

Reported: Return on average tangible common equity²	[d÷g]		12.80	%		11.51	%		14.31	%		11.94	%		15.50	%
Adjusted: Return on average tangible common equity²	[e÷g]		13.41	%		12.21	%		14.34	%		12.42	%		15.51	%

___________________________________________

Year-to-date tax benefits were calculated by multiplying year-to-date acquisition and restructuring expenses by the effective income tax rate for each year-to-date period, which for 2024 excludes a one-time deferred tax valuation adjustment resulting from a change in Illinois apportionment rate due to recently enacted regulations and deductibility of certain acquisition expenses. Tax rates used in these calculations were 23.3% and 19.8% for the nine months ended September 30, 2024 and 2023, respectively. Quarterly tax benefits were calculated as the year-to-date tax benefit amounts less the sum of amounts applied to previous quarters during the year, equating to tax rates of 21.0%, 25.0%, and 19.7% for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
Annualized measure.


Further Adjusted Net Income and Further Adjusted Diluted Earnings Per Share
(dollars in thousands, except per share amounts)

		Three Months Ended									Nine Months Ended
		September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Adjusted net income¹	[a]	$	33,533		$	29,016		$	30,730		$	89,080		$	96,889
Further non-GAAP adjustments:
Net securities (gains) losses			(822	)		353			285			5,906			2,960
Realized net (gains) losses on the sale of mortgage servicing rights			18			(277	)		—			(7,724	)		—
Tax effect for further non-GAAP adjustments²			199			(19	)		(52	)		453			(585	)
Tax effected further non-GAAP adjustments³			(605	)		57			233			(1,365	)		2,375
Further adjusted net income³	[b]	$	32,928		$	29,073		$	30,963		$	87,715		$	99,264
One-time deferred tax valuation adjustment⁴			—			1,446			—			1,446			—
Further adjusted net income, excluding one-time deferred tax valuation adjustment³	[c]	$	32,928		$	30,519		$	30,963		$	89,161		$	99,264

Diluted average common shares outstanding	[d]		57,967,848			57,853,231			56,315,492			57,411,299			56,230,624

Adjusted: Diluted earnings per share	[a÷d]	$	0.58		$	0.50		$	0.55		$	1.55		$	1.72
Further Adjusted: Diluted earnings per share³	[b÷d]	$	0.57		$	0.50		$	0.55		$	1.53		$	1.77
Further Adjusted, excluding one-time deferred tax valuation adjustment: Diluted earnings per share³	[c÷d]	$	0.57		$	0.53		$	0.55		$	1.55		$	1.77

___________________________________________

Adjusted net income is a non-GAAP measure. See the table on the previous page for a reconciliation to the nearest GAAP measure.
Tax effects for further non-GAAP adjustments were calculated by multiplying further non-GAAP adjustments by the effective income tax rate for each period. For the nine months ended September 30, 2024, the rate that we used excluded a one-time deferred tax valuation adjustment resulting from a change in Illinois apportionment rate due to recently enacted regulations. Effective income tax rates that we used to calculate the tax effect were 24.8%, 25.0%, and 18.2% for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively, and were 24.9% and 19.8% for the nine months ended September 30, 2024 and 2023, respectively.
Tax-effected measure.
An estimated one-time deferred tax valuation adjustment of $1.4 million resulted from a change to our Illinois apportionment rate due to recently enacted regulations.


Adjusted Net Interest Income and Adjusted Net Interest Margin
(dollars in thousands)

		Three Months Ended									Nine Months Ended
		September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Net interest income		$	82,541		$	82,434		$	77,791		$	240,742		$	242,318
Non-GAAP adjustments:
Tax-equivalent adjustment¹			396			402			553			1,247			1,672
Tax-equivalent net interest income			82,937			82,836			78,344			241,989			243,990
Purchase accounting accretion related to business combinations			(1,338	)		(812	)		(277	)		(2,354	)		(1,093	)
Adjusted net interest income		$	81,599		$	82,024		$	78,067		$	239,635		$	242,897

Tax-equivalent net interest income, annualized	[a]	$	329,945		$	333,165		$	310,821		$	323,241		$	326,214
Adjusted net interest income, annualized	[b]		324,622			329,899			309,722			320,096			324,752
Average interest-earning assets	[c]		10,936,611			10,993,907			11,118,167			10,976,660			11,142,780

Reported: Net interest margin²	[a÷c]		3.02	%		3.03	%		2.80	%		2.94	%		2.93	%
Adjusted: Net interest margin²	[b÷c]		2.97	%		3.00	%		2.79	%		2.92	%		2.91	%

___________________________________________

Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans.
Annualized measure.


Adjusted Noninterest Income, Operating Revenue, Adjusted Noninterest Income to Operating Revenue, Noninterest Expense Excluding Amortization of Intangible Assets, Adjusted Noninterest Expense, Adjusted Core Expense, Noninterest Expense Excluding Non-Operating Adjustments, Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio
(dollars in thousands)

		Three Months Ended									Nine Months Ended
		September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Net interest income	[a]	$	82,541		$	82,434		$	77,791		$	240,742		$	242,318
Non-GAAP adjustments:
Tax-equivalent adjustment¹			396			402			553			1,247			1,672
Tax-equivalent net interest income	[b]		82,937			82,836			78,344			241,989			243,990

Total noninterest income			35,951			33,801			31,008			104,752			90,868
Non-GAAP adjustments:
Net security (gains) losses			(822	)		353			285			5,906			2,960
Noninterest income excluding net securities gains and losses	[c]		35,129			34,154			31,293			110,658			93,828
Further adjustments:
Realized net (gains) losses on the sale of mortgage servicing rights			18			(277	)		—			(7,724	)		—
Adjusted noninterest income	[d]	$	35,147		$	33,877		$	31,293		$	102,934		$	93,828

Tax-equivalent revenue	[e = b+c]	$	118,066		$	116,990		$	109,637		$	352,647		$	337,818
Adjusted tax-equivalent revenue	[f = b+d]		118,084			116,713			109,637			344,923			337,818
Operating revenue	[g = a+d]		117,688			116,311			109,084			343,676			336,146

Adjusted noninterest income to operating revenue	[d÷g]		29.86	%		29.13	%		28.69	%		29.95	%		27.91	%

Total noninterest expense		$	75,926		$	75,537		$	70,945		$	222,232		$	210,553
Non-GAAP adjustments:
Amortization of intangible assets	[h]		(2,548	)		(2,629	)		(2,555	)		(7,586	)		(7,953	)
Noninterest expense excluding amortization of intangible assets	[i]		73,378			72,908			68,390			214,646			202,600
Non-operating adjustments:
Salaries, wages, and employee benefits			(73	)		(1,137	)		—			(1,333	)		—
Data processing			(90	)		(344	)		—			(534	)		—
Professional fees, occupancy, furniture and fixtures, and other			(1,772	)		(731	)		(79	)		(2,688	)		(91	)
Adjusted noninterest expense	[j]		71,443			70,696			68,311			210,091			202,509
Provision for unfunded commitments			(407	)		369			(13	)		640			357
Amortization of New Markets Tax Credits			—			—			(2,260	)		—			(6,740	)
Adjusted core expense	[k]	$	71,036		$	71,065		$	66,038		$	210,731		$	196,126

Noninterest expense, excluding non-operating adjustments	[j-h]	$	73,991		$	73,325		$	70,866		$	217,677		$	210,462

Reported: Efficiency ratio	[i÷e]		62.15	%		62.32	%		62.38	%		60.87	%		59.97	%
Adjusted: Efficiency ratio	[j÷f]		60.50	%		60.57	%		62.31	%		60.91	%		59.95	%
Adjusted: Core efficiency ratio	[k÷f]		60.16	%		60.89	%		60.23	%		61.10	%		58.06	%

___________________________________________

Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans.


Tangible Book Value and Tangible Book Value Per Common Share
(dollars in thousands, except per share amounts)

		As of
		September 30, 2024			June 30, 2024			September 30, 2023
Total stockholders’ equity		$	1,402,884		$	1,333,810		$	1,190,158
Non-GAAP adjustments:
Goodwill and other intangible assets, net			(368,249	)		(370,580	)		(356,343	)
Tangible book value	[a]	$	1,034,635		$	963,230		$	833,815

Ending number of common shares outstanding	[b]		56,872,241			56,746,937			55,342,017

Tangible book value per common share	[a÷b]	$	18.19		$	16.97		$	15.07


Tangible Assets, Tangible Common Equity, and Tangible Common Equity to Tangible Assets
(dollars in thousands)

		As of
		September 30, 2024			June 30, 2024			September 30, 2023
Total assets		$	11,986,839		$	11,971,416		$	12,258,250
Non-GAAP adjustments:
Goodwill and other intangible assets, net			(368,249	)		(370,580	)		(356,343	)
Tax effect of other intangible assets¹			7,178			7,687			7,354
Tangible assets²	[a]	$	11,625,768		$	11,608,523		$	11,909,261

Total stockholders’ equity		$	1,402,884		$	1,333,810		$	1,190,158
Non-GAAP adjustments:
Goodwill and other intangible assets, net			(368,249	)		(370,580	)		(356,343	)
Tax effect of other intangible assets¹			7,178			7,687			7,354
Tangible common equity²	[b]	$	1,041,813		$	970,917		$	841,169

Tangible common equity to tangible assets²	[b÷a]		8.96	%		8.36	%		7.06	%

___________________________________________

Net of estimated deferred tax liability, calculated using the estimated statutory tax rate of 28%.
Tax-effected measure.


Core Deposits, Core Deposits to Total Deposits, and Portfolio Loans to Core Deposits
(dollars in thousands)

		As of
		September 30, 2024			June 30, 2024			September 30, 2023
Portfolio loans	[a]	$	7,809,097		$	7,998,912		$	7,856,160

Total deposits	[b]	$	9,943,241		$	9,976,135		$	10,332,362
Non-GAAP adjustments:
Brokered deposits, excluding brokered time deposits of $250,000 or more			(13,089	)		(43,089	)		(6,055	)
Time deposits of $250,000 or more			(338,808	)		(314,461	)		(350,276	)
Core deposits	[c]	$	9,591,344		$	9,618,585		$	9,976,031

RATIOS
Core deposits to total deposits	[c÷b]		96.46	%		96.42	%		96.55	%
Portfolio loans to core deposits	[a÷c]		81.42	%		83.16	%		78.75	%

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to Busey’s financial condition, results of operations, plans, objectives, future performance, and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of Busey’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” “position,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and Busey undertakes no obligation to update any statement in light of new information or future events.

A number of factors, many of which are beyond Busey’s ability to control or predict, could cause actual results to differ materially from those in any forward-looking statements. These factors include, among others, the following: (1) risks related to the proposed transaction with CrossFirst, including (i) the possibility that the proposed transaction will not close when expected or at all because required regulatory, stockholder, or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); (ii) the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Busey and CrossFirst do business; (iii) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (iv) diversion of management’s attention from ongoing business operations and opportunities; (v) the possibility that Busey may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all, and to successfully integrate CrossFirst’s operations with those of Busey or that such integration may be more difficult, time consuming or costly than expected; (vi) revenues following the proposed transaction may be lower than expected; and (vii) shareholder litigation that could prevent or delay the closing of the proposed transaction or otherwise negatively impact our business and operations; (2) the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints); (3) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics, or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine and the conflict in the Middle East); (4) changes in state and federal laws, regulations, and governmental policies concerning Busey’s general business (including changes in response to the failures of other banks or as a result of the upcoming 2024 presidential election); (5) changes in accounting policies and practices; (6) changes in interest rates and prepayment rates of Busey’s assets (including the impact of sustained elevated interest rates); (7) increased competition in the financial services sector (including from non-bank competitors such as credit unions and fintech companies) and the inability to attract new customers; (8) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (9) the loss of key executives or associates; (10) changes in consumer spending; (11) unexpected results of other transactions (including the acquisition of M&M); (12) unexpected outcomes of existing or new litigation, investigations, or inquiries involving Busey (including with respect to Busey’s Illinois franchise taxes); (13) fluctuations in the value of securities held in Busey’s securities portfolio; (14) concentrations within Busey’s loan portfolio (including commercial real estate loans), large loans to certain borrowers, and large deposits from certain clients; (15) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (16) the level of non-performing assets on Busey’s balance sheets; (17) interruptions involving information technology and communications systems or third-party servicers; (18) breaches or failures of information security controls or cybersecurity-related incidents; and (19) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, blizzards, and droughts. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Additional information concerning Busey and its business, including additional factors that could materially affect Busey’s financial results, is included in Busey’s filings with the Securities and Exchange Commission.

ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND IT

Busey has filed a registration statement on Form S‑4 with the SEC to register the shares of Busey’s common stock that will be issued to CrossFirst stockholders in connection with the proposed transaction. The registration statement includes a preliminary joint proxy statement of Busey and CrossFirst, which also constitutes a prospectus of Busey. The definitive joint proxy statement/prospectus will be sent to the stockholders of each of Busey and CrossFirst seeking certain approvals related to the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BUSEY AND CROSSFIRST AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S‑4 AND THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S‑4 WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BUSEY, CROSSFIRST, AND THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copies of these documents, as well as other relevant documents filed with the SEC containing information about Busey and CrossFirst, without charge, at the SEC’s website (http://www.sec.gov). Copies of documents filed with the SEC by Busey will be made available free of charge in the “SEC Filings” section of Busey’s website, https://ir.busey.com. Copies of documents filed with the SEC by CrossFirst will be made available free of charge in the “Investor Relations” section of CrossFirst’s website, https://investors.crossfirstbankshares.com.

PARTICIPANTS IN SOLICITATION

Busey, CrossFirst, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding Busey’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 12, 2024, and certain other documents filed by Busey with the SEC. Information regarding CrossFirst’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 26, 2024, and certain other documents filed by CrossFirst with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed or to be filed with the SEC when they become available. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

END NOTES

1	Represents a non-GAAP financial measure. For a reconciliation to the most directly comparable financial measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”), see “Non-GAAP Financial Information.”
2	Estimated uninsured and uncollateralized deposits consist of account balances in excess of the $250 thousand FDIC insurance limit, less intercompany accounts and collateralized accounts (including preferred deposits).
3	Central Business District areas within Busey’s footprint include downtown St. Louis, downtown Indianapolis, and downtown Chicago.
4	Capital amounts and ratios for the third quarter of 2024 are not yet finalized and are subject to change.
5	On- and off-balance sheet liquidity is comprised of cash and cash equivalents, debt securities excluding those pledged as collateral, brokered deposits, and Busey’s borrowing capacity through its revolving credit facility, the FHLB, the Federal Reserve Bank, and federal funds purchased lines.
6	The blended benchmark consists of 60% MSCI All Country World Index and 40% Bloomberg Intermediate US Government/Credit Total Return Index.

The MIL Network –

January 24, 2025

MIL-OSI: Baker Hughes Company Announces Third-Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Third-quarter highlights

Orders of $6.7 billion, including $2.9 billion of IET orders.
RPO of $33.4 billion, including record IET RPO of $30.2 billion.
Revenue of $6.9 billion, up 4% year-over-year.
Attributable net income of $766 million.
GAAP diluted EPS of $0.77 and adjusted diluted EPS* of $0.67.
Adjusted EBITDA* of $1,208 million, up 23% year-over-year.
Cash flows from operating activities of $1,010 million and free cash flow* of $754 million.
Returns to shareholders of $361 million, including $152 million of share repurchases.

HOUSTON and LONDON, Oct. 22, 2024 (GLOBE NEWSWIRE) — Baker Hughes Company (Nasdaq: BKR) (“Baker Hughes” or the “Company”) announced results today for the third quarter of 2024.

“We delivered another quarter of record EBITDA, highlighted by exceptional operational performance across both segments. Our margins continue to improve at an accelerated pace, with total company EBITDA margins increasing to 17.5%. This marks the highest margin quarter since the company was formed. On the back of our solid third-quarter results and stable outlook, we remain confident in achieving our full-year EBITDA guidance midpoint,” said Lorenzo Simonelli, Baker Hughes Chairman and Chief Executive Officer.

“Orders remain at solid levels, with IET orders of $2.9 billion marking the eighth consecutive quarter at or above these levels. IET continued to demonstrate strong order momentum for gas infrastructure and FPSOs, booking the largest ever ICL compressor award from Dubai Petroleum Establishment for the Margham Gas storage facility and two FPSO awards with separate offshore operators.”

“Overall, our segments continue to make strong progress on their journey toward 20% EBITDA margins, with both segments achieving high-teen margins during the quarter. Our operational discipline and rigor continue to gain traction.”

“We are also benefiting from the life-cycle attributes of our service offerings and the breadth of our portfolio. With significant recurring IET service revenue, strong production-levered businesses, untapped market opportunities, and improved cost structure, we are becoming less cyclical and capable of generating more durable earnings and free cash flow across cycles.”

“We are successfully executing our strategy, and this is a testament to the strength of our people and the culture we are building,” concluded Simonelli.

* Non-GAAP measure. See reconciliations in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.”

	Three Months Ended						Variance
(in millions except per share amounts)	September 30, 2024		June 30, 2024		September 30, 2023		Sequential	Year-over-year
Orders	$	6,676	$	7,526	$	8,512	(11%)	(22%)
Revenue		6,908		7,139		6,641	(3%)	4%
Net income attributable to Baker Hughes		766		579		518	32%	48%
Adjusted net income attributable to Baker Hughes*		666		568		427	17%	56%
Operating income		930		833		714	12%	30%
Adjusted operating income*		930		847		716	10%	30%
Adjusted EBITDA*		1,208		1,130		983	7%	23%
Diluted earnings per share (EPS)		0.77		0.58		0.51	33%	51%
Adjusted diluted EPS*		0.67		0.57		0.42	18%	59%
Cash flow from operating activities		1,010		348		811	F	25%
Free cash flow*		754		106		592	F	27%

* Non-GAAP measure. See reconciliations in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.”

“F” is used when variance is above 100%. Additionally, “U” is used when variance is below (100)%.

Certain columns and rows in our tables and financial statements may not sum up due to the use of rounded numbers.

Quarter Highlights

Industrial & Energy Technology (“IET”) experienced a strong quarter for its Integrated Compressor Line (“ICL”) technology. In its largest ICL award to-date, and booked under Climate Technology Solutions (“CTS”), Baker Hughes will supply 10 units to Dubai Petroleum Establishment for the Margham Gas storage facility. These ICL units will support gas infrastructure, providing stability to Dubai’s energy supply by strengthening the system’s ability to switch between natural gas and solar power.

IET’s Gas Technology Equipment (“GTE”) was also awarded a significant contract to supply advanced compression solutions to Saipem for TotalEnergies’ all-electric Kaminho Floating Production Storage and Offloading (“FPSO”) project in Angola. Baker Hughes’ centrifugal BCL compressor and ICL technology were selected because of the capability to minimize greenhouse emissions and eliminate routine flaring by reinjecting associated gas into the reservoir for storage. Separately, IET was selected to provide electric motor-driven process compressors for an FPSO project in Latin America.

IET’s Gas Technology Services (“GTS”) secured a multi-decade agreement for an LNG facility in the Middle East. The scope encompasses extensive maintenance services and digital solutions, leveraging Baker Hughes’ iCenter™ Remote Monitoring and Diagnostics capabilities.

Oilfield Services & Equipment (“OFSE”) strengthened the Company’s relationship with Petrobras, receiving contracts to supply 43 miles of flexible pipe systems in Brazil’s Santos Basin. A significant portion of these risers and flowlines will be manufactured in-country at Baker Hughes’ Niteroi plant. The contracts, awarded through an open tender, include multi-year service agreements to support maintenance activities through the life of the project and demonstrate Baker Hughes’ dedication to providing equipment and services critical to help Petrobras achieve its strategic plan to expand operations.

In OFSE, mature assets solutions (“MAS”) delivered a strong order quarter, illustrating confidence in the Company’s full range of workflows and solutions to accelerate production and total recovery. OFSE won a MAS award to supply Santos Energy’s strategic and historic Cooper Basin Development in Australia with drilling fluids and wireline services, marking Baker Hughes’ return to the basin. Additionally, OFSE signed a multi-year contract extension with a customer in the Middle East for completions and well intervention.

Baker Hughes saw increased adoption of Leucipa™, the Company’s intelligent automated field production digital solution. A major global operator expanded the use of Leucipa across multiple fields in the Permian Basin, enabling the customer to optimize production through real-time field orchestration to generate lower-carbon, short-cycle barrels. Additionally, a new strategic collaboration was established early in the fourth quarter with Repsol, a major customer of Leucipa, to develop and deploy next-generation artificial intelligence capabilities for this digital solution. The companies will share knowledge and expertise to optimize and enhance production across Repsol’s global portfolio while creating new commercial opportunities for Baker Hughes.

Baker Hughes continues to innovate new digital technologies to support customers on their decarbonization journey. The Company launched CarbonEdge™, powered by Cordant™, an end-to-end, risk-based digital solution that delivers precise, real-time data and alerts on carbon dioxide (CO₂) flows across CCUS infrastructure from subsurface to surface. This solution enables operators to mitigate risk, improve decision-making, enhance operational efficiency, and simplify regulatory reporting across the entire project lifecycle.

Consolidated Revenue and Operating Income by Reporting Segment

(in millions)	Three Months Ended									Variance
	September 30, 2024			June 30, 2024			September 30, 2023			Sequential	Year-over-year
Oilfield Services & Equipment	$	3,963		$	4,011		$	3,951		(1%)	—%
Industrial & Energy Technology		2,945			3,128			2,691		(6%)	9%
Segment revenue		6,908			7,139			6,641		(3%)	4%

Oilfield Services & Equipment		547			493			465		11%	18%
Industrial & Energy Technology		474			442			346		7%	37%
Corporate⁽¹⁾		(91	)		(88	)		(95	)	(3%)	4%
Restructuring, impairment & other		—			(14	)		(2	)	F	F
Operating income		930			833			714		12%	30%
Adjusted operating income*		930			847			716		10%	30%
Depreciation & amortization		278			283			267		(2%)	4%
Adjusted EBITDA*	$	1,208		$	1,130		$	983		7%	23%

* Non-GAAP measure. See reconciliations in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.”

“F” is used when variance is above 100%. Additionally, “U” is used when variance is below (100)%.

⁽¹⁾Corporate costs are primarily reported in “Selling, general and administrative” in the condensed consolidated statements of income (loss).

Revenue for the quarter was $6,908 million, a decrease of 3% sequentially and an increase of 4% year-over-year. The increase in revenue year-over-year was driven by IET.

The Company’s total book-to-bill ratio in the quarter was 1.0; the IET book-to-bill ratio in the quarter was also 1.0.

Operating income as determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), for the third quarter of 2024 was $930 million. Operating income increased $97 million sequentially and increased $216 million year-over-year.

Adjusted operating income (a non-GAAP financial measure) for the third quarter of 2024 was $930 million. There were no adjustments to operating income in the third quarter. A list of the adjusting items and associated reconciliation from GAAP has been provided in Table 1a in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.” Adjusted operating income for the third quarter of 2024 was up 10% sequentially and up 30% year-over-year.

Depreciation and amortization for the third quarter of 2024 was $278 million.

Adjusted EBITDA (a non-GAAP financial measure) for the third quarter of 2024 was $1,208 million. There were no adjustments to EBITDA in the third quarter. See Table 1b in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.” Adjusted EBITDA for the third quarter was up 7% sequentially and up 23% year-over-year.

The sequential increase in adjusted operating income and adjusted EBITDA was driven by higher pricing in both segments and structural cost-out initiatives, partially offset by lower volume in both segments. The year-over-year increase in adjusted operating income and adjusted EBITDA was driven by higher pricing in both segments, higher volume in IET, and structural cost-out initiatives, partially offset by cost inflation in IET and unfavorable business mix in both segments.

Other Financial Items

Remaining Performance Obligations (“RPO”) in the third quarter ended at $33.4 billion, a decrease of $0.1 billion from the second quarter of 2024. OFSE RPO was $3.2 billion, down 5% sequentially, while IET RPO was $30.2 billion, up $44 million sequentially. Within IET RPO, GTE RPO was $11.9 billion and GTS RPO was $14.8 billion.

Income tax expense in the third quarter of 2024 was $235 million.

Other non-operating income in the third quarter of 2024 was $134 million. Included in other non-operating income were net mark-to-market gains in fair value for certain equity investments of $99 million.

GAAP diluted earnings per share was $0.77. Adjusted diluted earnings per share (a non-GAAP financial measure) was $0.67. Excluded from adjusted diluted earnings per share were all items listed in Table 1c in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.”

Cash flow from operating activities was $1,010 million for the third quarter of 2024. Free cash flow (a non-GAAP financial measure) for the quarter was $754 million. A reconciliation from GAAP has been provided in Table 1d in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.”

Capital expenditures, net of proceeds from disposal of assets, were $256 million for the third quarter of 2024, of which $182 million for OFSE and $62 million for IET.

Results by Reporting Segment

The following segment discussions and variance explanations are intended to reflect management’s view of the relevant comparisons of financial results on a sequential or year-over-year basis, depending on the business dynamics of the reporting segments.

Oilfield Services & Equipment

(in millions)	Three Months Ended									Variance
Segment results	September 30, 2024			June 30, 2024			September 30, 2023			Sequential	Year-over-year
Orders	$	3,807		$	4,068		$	4,178		(6%)	(9%)
Revenue	$	3,963		$	4,011		$	3,951		(1%)	—%
Operating income	$	547		$	493		$	465		11%	18%
Operating margin		13.8	%		12.3	%		11.8	%	1.5pts	2pts
Depreciation & amortization	$	218		$	223		$	206		(2%)	6%
EBITDA*	$	765		$	716		$	670		7%	14%
EBITDA margin*		19.3	%		17.8	%		17.0	%	1.5pts	2.3pts

(in millions)	Three Months Ended						Variance
Revenue by Product Line	September 30, 2024		June 30, 2024		September 30, 2023		Sequential	Year-over-year
Well Construction	$	1,050	$	1,090	$	1,128	(4%)	(7%)
Completions, Intervention & Measurements		1,009		1,118		1,085	(10%)	(7%)
Production Solutions		983		958		967	3%	2%
Subsea & Surface Pressure Systems		921		845		770	9%	20%
Total Revenue	$	3,963	$	4,011	$	3,951	(1%)	—%

(in millions)	Three Months Ended						Variance
Revenue by Geographic Region	September 30, 2024		June 30, 2024		September 30, 2023		Sequential	Year-over-year
North America	$	971	$	1,023	$	1,064	(5%)	(9%)
Latin America		648		663		695	(2%)	(7%)
Europe/CIS/Sub-Saharan Africa		933		827		695	13%	34%
Middle East/Asia		1,411		1,498		1,497	(6%)	(6%)
Total Revenue	$	3,963	$	4,011	$	3,951	(1%)	—%

North America	$	971	$	1,023	$	1,064	(5%)	(9%)
International		2,992		2,988		2,887	—%	4%

* Non-GAAP measure. See reconciliations in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.” EBITDA margin is defined as EBITDA divided by revenue.

OFSE orders of $3,807 million for the third quarter decreased by $261 million sequentially. Subsea and Surface Pressure Systems orders were $776 million, down 13% sequentially, and down 23% year-over-year.

OFSE revenue of $3,963 million for the third quarter was down 1% sequentially, and up $12 million year-over-year.

North America revenue was $971 million, down 5% sequentially. International revenue was $2,992 million, an increase of $4 million sequentially, driven by growth in Europe/CIS/Sub-Saharan Africa regions partially offset by decline in Middle East/Asia.

Segment operating income for the third quarter was $547 million, an increase of $54 million, or 11%, sequentially. Segment EBITDA for the third quarter was $765 million, an increase of $49 million, or 7% sequentially. The sequential increase in segment operating income and EBITDA was driven by positive price and productivity, partially offset by pressure from negative business mix and lower volume.

Industrial & Energy Technology

(in millions)	Three Months Ended									Variance
Segment results	September 30, 2024			June 30, 2024			September 30, 2023			Sequential	Year-over-year
Orders	$	2,868		$	3,458		$	4,334		(17%)	(34%)
Revenue	$	2,945		$	3,128		$	2,691		(6%)	9%
Operating income	$	474		$	442		$	346		7%	37%
Operating margin		16.1	%		14.1	%		12.9	%	2pts	3.2pts
Depreciation & amortization	$	54		$	55		$	57		(2%)	(6%)
EBITDA*	$	528		$	497		$	403		6%	31%
EBITDA margin*		17.9	%		15.9	%		15.0	%	2pts	2.9pts

(in millions)	Three Months Ended						Variance
Orders by Product Line	September 30, 2024		June 30, 2024		September 30, 2023		Sequential	Year-over-year
Gas Technology Equipment	$	1,088	$	1,493	$	2,813	(27%)	(61%)
Gas Technology Services		778		769		724	1%	7%
Total Gas Technology		1,866		2,261		3,537	(17%)	(47%)
Industrial Products		494		524		477	(6%)	4%
Industrial Solutions		293		281		271	4%	8%
Total Industrial Technology		787		805		748	(2%)	5%
Climate Technology Solutions		215		392		49	(45%)	F
Total Orders	$	2,868	$	3,458	$	4,334	(17%)	(34%)

(in millions)	Three Months Ended						Variance
Revenue by Product Line	September 30, 2024		June 30, 2024		September 30, 2023		Sequential	Year-over-year
Gas Technology Equipment	$	1,281	$	1,539	$	1,227	(17%)	4%
Gas Technology Services		697		691		637	1%	9%
Total Gas Technology		1,978		2,230		1,865	(11%)	6%
Industrial Products		520		509		520	2%	—%
Industrial Solutions		257		262		243	(2%)	6%
Total Industrial Technology		777		770		763	1%	2%
Climate Technology Solutions		191		128		63	49%	F
Total Revenue	$	2,945	$	3,128	$	2,691	(6%)	9%

* Non-GAAP measure. See reconciliations in the section titled “Reconciliation of GAAP to non-GAAP Financial Measures.” EBITDA margin is defined as EBITDA divided by revenue.

“F” is used when variance is above 100%. Additionally, “U” is used when variance is below (100)%.

IET orders of $2,868 million for the third quarter decreased by $1,465 million, or 34% year-over-year. The decrease was driven primarily by GTE orders which were down $1,725 million or 61% year-over-year.

IET revenue of $2,945 million for the quarter increased $254 million, or 9% year-over-year. The increase was driven primarily by Climate Technology Solutions, up favorably year-over-year, and by Gas Technology, up 6% year-over-year.

Segment operating income for the quarter was $474 million, up 37% year-over-year. Segment EBITDA for the quarter was $528 million, up $125 million, or 31% year-over-year. The year-over-year increase in segment operating income and EBITDA was primarily driven by higher volume, pricing and productivity, partially offset by cost inflation.

Reconciliation of GAAP to non-GAAP Financial Measures

Management provides non-GAAP financial measures because it believes such measures are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance (including adjusted operating income; EBITDA; EBITDA margin; adjusted EBITDA; adjusted net income attributable to Baker Hughes; and adjusted diluted earnings per share) and liquidity (free cash flow) and that these measures may be used by investors to make informed investment decisions. Management believes that the exclusion of certain identified items from several key operating performance measures enables us to evaluate our operations more effectively, to identify underlying trends in the business, and to establish operational goals for certain management compensation purposes. Management also believes that free cash flow is an important supplemental measure of our cash performance but should not be considered as a measure of residual cash flow available for discretionary purposes, or as an alternative to cash flow from operating activities presented in accordance with GAAP.

Table 1a. Reconciliation of GAAP and Adjusted Operating Income

	Three Months Ended
(in millions)	September 30, 2024		June 30, 2024		September 30, 2023
Operating income (GAAP)	$	930	$	833	$	714
Restructuring, impairment & other		—		14		2
Total operating income adjustments		—		14		2
Adjusted operating income (non-GAAP)	$	930	$	847	$	716

Table 1a reconciles operating income, which is the directly comparable financial result determined in accordance with GAAP, to adjusted operating income. Adjusted operating income excludes the impact of certain identified items.

Table 1b. Reconciliation of Net Income Attributable to Baker Hughes to EBITDA and Adjusted EBITDA

	Three Months Ended
(in millions)	September 30, 2024			June 30, 2024			September 30, 2023
Net income attributable to Baker Hughes (GAAP)	$	766		$	579		$	518
Net income attributable to noncontrolling interests		8			2			6
Provision for income taxes		235			243			235
Interest expense, net		55			47			49
Other non-operating income, net		(134	)		(38	)		(94	)
Operating income (GAAP)		930			833			714

Depreciation & amortization		278			283			267
EBITDA (non-GAAP)		1,208			1,116			981
Total operating income adjustments⁽¹⁾		—			14			2
Adjusted EBITDA (non-GAAP)	$	1,208		$	1,130		$	983

⁽¹⁾See Table 1a for the identified adjustments to operating income.

Table 1b reconciles net income attributable to Baker Hughes, which is the directly comparable financial result determined in accordance with GAAP, to EBITDA. Adjusted EBITDA excludes the impact of certain identified items.

Table 1c. Reconciliation of Net Income Attributable to Baker Hughes to Adjusted Net Income Attributable to Baker Hughes

	Three Months Ended
(in millions, except per share amounts)	September 30, 2024			June 30, 2024			September 30, 2023
Net income attributable to Baker Hughes (GAAP)	$	766		$	579		$	518
Total operating income adjustments⁽¹⁾		—			14			2
Other adjustments (non-operating)⁽²⁾		(99	)		(19	)		(95	)
Tax adjustments⁽³⁾		(1	)		(6	)		2
Total adjustments, net of income tax		(100	)		(11	)		(91	)
Less: adjustments attributable to noncontrolling interests		—			—			—
Adjustments attributable to Baker Hughes		(100	)		(11	)		(91	)
Adjusted net income attributable to Baker Hughes (non-GAAP)	$	666		$	568		$	427


Denominator:
Weighted-average shares of Class A common stock outstanding diluted		999			1,001			1,017
Adjusted earnings per share – diluted (non-GAAP)	$	0.67		$	0.57		$	0.42

⁽¹⁾See Table 1a for the identified adjustments to operating income.

⁽²⁾All periods primarily reflect the net gain or loss on changes in fair value for certain equity investments.

⁽³⁾All periods reflect the tax associated with the other operating and non-operating adjustments.

Table 1c reconciles net income attributable to Baker Hughes, which is the directly comparable financial result determined in accordance with GAAP, to adjusted net income attributable to Baker Hughes. Adjusted net income attributable to Baker Hughes excludes the impact of certain identified items.

Table 1d. Reconciliation of Net Cash Flows From Operating Activities to Free Cash Flow

	Three Months Ended
(in millions)	September 30, 2024			June 30, 2024			September 30, 2023
Net cash flows from operating activities (GAAP)	$	1,010		$	348		$	811
Add: cash used for capital expenditures, net of proceeds from disposal of assets		(256	)		(242	)		(219	)
Free cash flow (non-GAAP)	$	754		$	106		$	592

Table 1d reconciles net cash flows from operating activities, which is the directly comparable financial result determined in accordance with GAAP, to free cash flow. Free cash flow is defined as net cash flows from operating activities less expenditures for capital assets plus proceeds from disposal of assets.

Financial Tables (GAAP)

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions, except per share amounts)		2024			2023			2024			2023
Revenue	$	6,908		$	6,641		$	20,465		$	18,671
Costs and expenses:
Cost of revenue		5,366			5,298			16,155			14,867
Selling, general and administrative		612			627			1,873			1,977
Restructuring, impairment and other		—			2			21			161
Total costs and expenses		5,978			5,927			18,049			17,005
Operating income		930			714			2,416			1,666
Other non-operating income, net		134			94			200			638
Interest expense, net		(55	)		(49	)		(143	)		(171	)
Income before income taxes		1,009			759			2,473			2,133
Provision for income taxes		(235	)		(235	)		(656	)		(614	)
Net income		774			524			1,817			1,519
Less: Net income attributable to noncontrolling interests		8			6			17			16
Net income attributable to Baker Hughes Company	$	766		$	518		$	1,800		$	1,503

Per share amounts:
Basic income per Class A common stock	$	0.77		$	0.51		$	1.81		$	1.49
Diluted income per Class A common stock	$	0.77		$	0.51		$	1.80		$	1.48

Weighted average shares:
Class A basic		993			1,009			996			1,010
Class A diluted		999			1,017			1,001			1,016

Cash dividend per Class A common stock	$	0.21		$	0.20		$	0.63		$	0.58

Condensed Consolidated Statements of Financial Position

(Unaudited)

(In millions)	September 30, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	2,664	$	2,646
Current receivables, net		6,920		7,075
Inventories, net		5,254		5,094
All other current assets		1,730		1,486
Total current assets		16,568		16,301
Property, plant and equipment, less accumulated depreciation		5,150		4,893
Goodwill		6,167		6,137
Other intangible assets, net		3,995		4,093
Contract and other deferred assets		1,904		1,756
All other assets		3,746		3,765
Total assets	$	37,530	$	36,945
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	4,431	$	4,471
Short-term and current portion of long-term debt		52		148
Progress collections and deferred income		5,685		5,542
All other current liabilities		2,622		2,830
Total current liabilities		12,790		12,991
Long-term debt		5,984		5,872
Liabilities for pensions and other postretirement benefits		991		978
All other liabilities		1,422		1,585
Equity		16,343		15,519
Total liabilities and equity	$	37,530	$	36,945

Outstanding Baker Hughes Company shares:
Class A common stock		989		998

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended September 30,			Nine Months Ended September 30,
(In millions)		2024			2024			2023
Cash flows from operating activities:
Net income	$	774		$	1,817		$	1,519
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		278			844			813
Stock-based compensation cost		53			154			148
Gain on equity securities		(99	)		(171	)		(639	)
Provision for deferred income taxes		2			35			68
Other asset impairments		—			—			43
Working capital		(21	)		(57	)		19
Other operating items, net		23			(480	)		159
Net cash flows provided by operating activities		1,010			2,142			2,130
Cash flows from investing activities:
Expenditures for capital assets		(300	)		(925	)		(868	)
Proceeds from disposal of assets		44			145			150
Proceeds from sale of equity securities		—			21			372
Proceeds from business dispositions		—			—			293
Net cash paid for acquisitions		—			—			(301	)
Other investing items, net		(13	)		(40	)		(149	)
Net cash flows used in investing activities		(269	)		(799	)		(503	)
Cash flows from financing activities:
Repayment of long-term debt		(9	)		(134	)		—
Dividends paid		(209	)		(628	)		(586	)
Repurchase of Class A common stock		(152	)		(476	)		(219	)
Other financing items, net		6			(55	)		(56	)
Net cash flows used in financing activities		(364	)		(1,293	)		(861	)
Effect of currency exchange rate changes on cash and cash equivalents		3			(32	)		(53	)
Increase in cash and cash equivalents		380			18			713
Cash and cash equivalents, beginning of period		2,284			2,646			2,488
Cash and cash equivalents, end of period	$	2,664		$	2,664		$	3,201
Supplemental cash flows disclosures:
Income taxes paid, net of refunds	$	397		$	733		$	463
Interest paid	$	49		$	199		$	205

Supplemental Financial Information

Supplemental financial information can be found on the Company’s website at: investors.bakerhughes.com in the Financial Information section under Quarterly Results.

Conference Call and Webcast

The Company has scheduled an investor conference call to discuss management’s outlook and the results reported in today’s earnings announcement. The call will begin at 9:30 a.m. Eastern time, 8:30 a.m. Central time on Wednesday, October 23, 2024, the content of which is not part of this earnings release. The conference call will be broadcast live via a webcast and can be accessed by visiting the Events and Presentations page on the Company’s website at: investors.bakerhughes.com. An archived version of the webcast will be available on the website for one month following the webcast.

Forward-Looking Statements

This news release (and oral statements made regarding the subjects of this release) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (each a “forward-looking statement”). Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “would,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target”, “goal” or other similar words or expressions. There are many risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These forward-looking statements are also affected by the risk factors described in the Company’s annual report on Form 10-K for the annual period ended December 31, 2023 and those set forth from time to time in other filings with the Securities and Exchange Commission (“SEC”). The documents are available through the Company’s website at: http://www.investors.bakerhughes.com or through the SEC’s Electronic Data Gathering and Analysis Retrieval system at: http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

Our expectations regarding our business outlook and business plans; the business plans of our customers; oil and natural gas market conditions; cost and availability of resources; economic, legal and regulatory conditions, and other matters are only our forecasts regarding these matters.

These forward-looking statements, including forecasts, may be substantially different from actual results, which are affected by many risks, along with the following risk factors and the timing of any of these risk factors:

Economic and political conditions – the impact of worldwide economic conditions and rising inflation; the effect that declines in credit availability may have on worldwide economic growth and demand for hydrocarbons; foreign currency exchange fluctuations and changes in the capital markets in locations where we operate; and the impact of government disruptions and sanctions.
Orders and RPO – our ability to execute on orders and RPO in accordance with agreed specifications, terms and conditions and convert those orders and RPO to revenue and cash.
Oil and gas market conditions – the level of petroleum industry exploration, development and production expenditures; the price of, volatility in pricing of, and the demand for crude oil and natural gas; drilling activity; drilling permits for and regulation of the shelf and the deepwater drilling; excess productive capacity; crude and product inventories; liquefied natural gas supply and demand; seasonal and other adverse weather conditions that affect the demand for energy; severe weather conditions, such as tornadoes and hurricanes, that affect exploration and production activities; Organization of Petroleum Exporting Countries (“OPEC”) policy and the adherence by OPEC nations to their OPEC production quotas.
Terrorism and geopolitical risks – war, military action, terrorist activities or extended periods of international conflict, particularly involving any petroleum-producing or consuming regions, including Russia and Ukraine; and the recent conflict in the Middle East; labor disruptions, civil unrest or security conditions where we operate; potentially burdensome taxation, expropriation of assets by governmental action; cybersecurity risks and cyber incidents or attacks; epidemic outbreaks.

About Baker Hughes:

Baker Hughes (Nasdaq: BKR) is an energy technology company that provides solutions for energy and industrial customers worldwide. Built on a century of experience and conducting business in over 120 countries, our innovative technologies and services are taking energy forward – making it safer, cleaner and more efficient for people and the planet. Visit us at bakerhughes.com

For more information, please contact:

Investor Relations

Chase Mulvehill
+1 346-297-2561
investor.relations@bakerhughes.com

Media Relations

Adrienne Lynch
+1 713-906-8407
adrienne.lynch@bakerhughes.com

The MIL Network –

January 24, 2025

MIL-OSI New Zealand: Resetting the Emissions Trading Scheme annual charge for post-1989 forestry participants

Source: Ministry for Primary Industries

Your views sought

We want your feedback on 2 proposals relating to cost recovery settings for forestry Emissions Trading Scheme (ETS) participants. We anticipate that changes would be made by early 2025.

Proposal 1: A reduced annual charge for post-1989 forestry ETS participants.
Proposal 2: Amending the Climate Change (Forestry) Regulations 2022 for the field measurement approach during the 2023–25 reporting period.

As part of this consultation, we are holding 2 webinars and an online hui.

Summaries of the proposals are on this page and full details are in the discussion paper.

Submissions are open from 23 October until 5pm on 13 November 2024.

About Proposal 1

If you have post-1989 forest land in the ETS, the per hectare annual charge is calculated for the financial year. It’s based on the amount of land you have in the ETS on 1 July.

We are proposing to reduce the per hectare annual charge from $30.25 to $14.90, starting in the 2024–25 financial year.

About Proposal 2

Forestry participants with at least 100 hectares of post-1989 forest land in the ETS have to use the field measurement approach to calculate carbon stored in their forests for their emissions returns.

When the previous (2023) cost recovery regulations were enacted, they imposed a service fee. The fee resulted in additional costs for those who could use their existing field measurement approach data or use default carbon tables to calculate carbon stock, during the shorter 2023–25 reporting period.

To address this issue, we are proposing to update the regulations. This means, that for any emissions return that covers all or part of the shorter 2023–25 reporting period, people using the field measurement approach can calculate carbon stock using:

the default carbon tables (in regulations) if they do not have field measurement approach participant specific tables, or
existing participant specific tables if they have them.

Discussion paper

Resetting the Emissions Trading Scheme annual charge for post-1989 forestry participants [doc: 65715]

Webinars on the proposals

To support this consultation, we are running 2 webinars and an online hui. These sessions will provide an opportunity for you to ask questions and discuss the proposals. The online hui is a dedicated session for whenua Māori to give feedback on the proposals. You must register to attend the webinars or hui.

Times and dates of the webinars and the hui

Webinar 1: 4pm on Thursday 31 October 2024.

Register to attend Webinar 1 – Connect

Webinar 2: 12pm on Thursday 7 November 2024.

Register to attend Webinar 2 – Connect

Online hui: 12pm on Monday 4 November 2024.

Register to attend the online hui – Connect

Making your submission

Send us your feedback on the proposals in the consultation document by 5pm on 13 November 2024.

We would prefer if you made a submission electronically – either by using the online form or by email. However, we will also accept written submissions sent by post.

You are welcome to make your submission on the whole discussion document, or you can choose the areas relevant to you. Provide supporting evidence with your submission where possible.

Online

Online submission form – Alchemer

Email

If you are sending us a submission by email, we encourage you to use the submission template which has the same questions as the online form.

Submission template [doc: 65718]

The email address is etsforestrychanges@mpi.govt.nz

Post

If you prefer to make your submission in writing, send it to:

NZ ETS Cost Recovery
Forestry System Directorate
Ministry for Primary Industries
PO Box 2526
Wellington 6140.

Submissions are public information

Note that all, part, or a summary of your submission may be published on this website. Most often this happens when we issue a document that reviews the submissions received.

People can also ask for copies of submissions under the Official Information Act 1982 (OIA). The OIA says we must make the content of submissions available unless we have good reason for withholding it. Those reasons are detailed in sections 6 and 9 of the OIA.

If you think there are grounds to withhold specific information from publication, make this clear in your submission or contact us. Reasons may include that it discloses commercially sensitive or personal information. However, any decision MPI makes to withhold details can be reviewed by the Ombudsman, who may direct us to release it.

Official Information Act 1982 – NZ Legislation

MIL OSI New Zealand News –

January 24, 2025

MIL-Evening Report: Let’s tax carbon: Ross Garnaut on why the time is right for a second shot at carbon pricing

Source: The Conversation (Au and NZ) – By Ross Garnaut, Professorial Research Fellow in Economics, The University of Melbourne

Damitha Jayawardena/Shutterstock

Australia now has a government and parliament wanting timely transition to net zero. We have a government and parliament wanting to build Australia as the renewable energy superpower of the zero-carbon world economy. For the time being, we have favourable international settings for using our opportunity.

The government of Australia has embraced this superpower narrative, taken some big steps towards supporting its emergence, and articulated sound principles for guiding further policy development.

But Australians in business and the community wanting to make large efforts to turn opportunity into reality find themselves in a tangle of policy uncertainty and contradiction.

The source of the problem is the abolition of carbon pricing in 2014. Since then, the Commonwealth government has worked within constraints that rule out success.

We can make a start towards net zero and becoming a renewable energy superpower without moving the constraints, but we can’t get far. This is a problem for any government of Australia, and not only for the current Labor government. We will not rise sustainably out of the post-pandemic dog days until we get energy policy right.

Striking the right balance

Striking the right balance between state intervention and market exchange is always essential for successful economic development, in all places.

The market generally delivers goods and services more cost-effectively than the state where there is genuine competition among suppliers and purchasers of goods and services.

The difference is especially large and important at a time of structural change and uncertainty. State decisions inevitably tend towards continuation on established paths and slow response to new opportunities.

Australia will not make use of more than a small fraction of the superpower opportunities available to it without immense contributions from an innovative, competitive private business sector.

So we have to design energy and related markets that provide the widest possible scope for competition among enterprises within clear rules understood in advance of investment decisions by all market participants.

The state has to do well the things that only the state can do. Because government capacity is a finite resource, it is much more likely that it will do the essential things well if it doesn’t try to do the things that markets do well.

The state must define the boundaries between the services that it delivers and those to be delivered by the market.

In the electricity sector, government must take responsibility for design of the market rules and compliance with them. It must provide the natural monopoly services of electricity transmission and hydrogen transportation and storage. It must take ultimate responsibility for system security and reliability.

For any market to work, individual market participants must be blocked by regulation from damaging others through their business decisions, or subject to a tax equal to the costs they impose on others. And they must be rewarded for large benefits that they confer on others.

This is essential economics. Its understatement in Productivity Commission and financial media commentary on energy and climate policy discussion over the past decade reveals the debasement of Australian political culture that gave us the dog days.

It has been politically incorrect to tell the truth out loud.

It’s time for carbon pricing

A crucial element of post-2030 market design is introduction of a green premium for zero-carbon energy.

It is obviously necessary for low-cost decarbonisation and expansion of the electricity sector and building Australia as a renewable energy superpower. The green premium is crucial for securing international market access for the zero-carbon export industries.

One of the dog days constraints on policy is that there should be no mandatory demands on private investors. Those constraints must be broken for the green premium to reflect the social cost of carbon, as it must if we are to achieve net zero by 2050 and build Australia as the renewable energy superpower.

The economically efficient way of achieving the premium is carbon pricing. It would be most efficient within an economy-wide system, although it could be introduced initially for the electricity sector and extended to other industries later.

Investors now need to know soon that there will be a premium reasonably related to the social cost of carbon after the Renewable Energy Target ends in 2030.

What matters for the superpower industries is the green premiums for which they are eligible in other countries. Pending the emergence of appropriate premiums, the Commonwealth is proposing payments from the budget.

That is appropriate. It can get the early movers started. It would be expensive if it continued for long. The superpower industries will grow rapidly if they have access to premiums corresponding to the social cost of carbon. Over time, payments from the Australian budget will be replaced by market premiums in destination countries.

There are several possible forms of carbon pricing. The system operating in Australia from 2012 to 2014 was economically and environmentally efficient.

It would have been linked to the EU Emissions Trading System from July 1 2014 if it had not been abolished the day before. The Australian carbon price would be equal to the European price. We would be introducing a European-type Carbon Border Adjustment Mechanism to ensure that Australian producers were not disadvantaged by competition in the domestic market from suppliers who were not subject to similar carbon constraints. The ETS (emissions trading scheme) would be contributing around 2% of GDP to public revenues – going a substantial part of the way to answering the daunting budget challenge to restoration of Australian prosperity.

Part of that increased revenue could support payments to power users to ensure there was no increase in power prices to users until expansion of renewable generation and storage had brought costs down – along the lines of the A$300 per household introduced in the 2024 budget, but larger.

The arrangements would provide automatic access for zero-carbon Australian goods to the high-priced European market. There would be no need to provide for a green premium for sales to Europe from the Australian market. The green premiums in other markets would at first need to be covered, as they are now, from the Australian public revenue.

A carbon solutions levy

Rod Sims (former chair of the Australian Competition and Consumer Commission) and I have suggested a carbon solutions levy. It is administratively simpler than the ETS. It would initially raise much more revenue.

We propose exemption for coal and gas exports to countries in which Australian zero-carbon exports attract a premium comparable to the EU carbon price, even if it is not generated through an ETS.

We would hope that if the carbon solutions levy were to be introduced from 2030, our major trading partners would by that time have introduced green premiums that justify exemption from the levy for coal and gas exports to those countries.

The European Union would be exempt from the beginning. The Northeast Asian economies are moving towards eventual justification of exemption. China now has a country-wide emissions trading system.

The carbon price in July 2024 is about A$21 per tonne, having increased by 50% since early in the year. The price is expected to continue rising until it is playing a major role in transformation of Chinese industry.

Incidentally, China undertook to the United Nations Framework Convention on Climate Change that its emissions would peak by 2030, but its rapid expansion of renewable energy generation, electric vehicles and zero-carbon industrial technologies suggest that the peak may have come in 2023.

Japan is working on direct budgetary support for importers of zero-carbon products which could pass through into a premium for zero-carbon exports from Australia.

During a visit in April 2024, I was advised that the Japanese government is working towards issue of “green bonds” to pay for the premium. A carbon tax from 2035 would meet the cost of servicing and retiring the bonds.

Korea and Taiwan are introducing their own mechanisms for supporting premiums for zero-carbon imports.

One initial criticism of the carbon solutions levy is that it would cause leakage of Australian exports to competing suppliers of gas and coal. There would be some leakage, alongside substantial transfers from rents to the public revenues, and for metallurgical coal in particular, some increase in export prices.

The price increase would introduce an element of green premium for Australian green iron exports. The Superpower Institute (a non-profit research organisation founded by Sims and I) has commissioned the Centre of Policy Studies at Victoria University to quantify the extent of leakage, transfers from rent and higher export prices. The results will be available for public discussion early in 2025. The study will also calculate the effect of the levy on Australian public finances, real incomes and real consumption.

Regional considerations

Australia’s main competitor in regional coal markets is Indonesia. Its main competitors in gas markets are Papua New Guinea, East Timor, Indonesia, Brunei and the Middle East petroleum producers.

No informed person would suggest that there could be an economic problem with leakage to the Middle East: Saudi Arabia and the small Gulf states extract revenue from petroleum exports at much higher rates per dollar than Australia would after imposition of the levy.

There is a case in the Australian national interest for not seeing expansion of export sales from Papua New Guinea and East Timor as being entirely a waste.

But in their national interest and ours, I suggest that we seek to negotiate a four-way agreement on climate and energy with Indonesia, East Timor and Papua New Guinea.

We would all impose carbon solutions levy-type levies at similar rates. This would be a major source of revenue for all of us.

Participation of Indonesia removes leakage of coal exports. Indonesia already has an emissions trading scheme, although it generates a carbon price of only a few dollars per tonne.

It may choose to remove other imposts on fossil carbon exports at the time of introduction of new carbon-related measures – such as the requirement to make 35% of coal exports available at prices well below international prices for domestic power generation.

Participation of the four countries removes the leakage issue for gas. The four neighbours would cooperate in major development programs based on expansion of zero-carbon energy supply and goods production.

There is active discussion in Indonesia of archipelago-wide electricity transmission infrastructure to allow the superior renewable energy resources of the outer islands – Papua, Nusa Tenggara, Sulawesi, Kalimantan, Sumatra – to contribute to decarbonisation and growth of zero-carbon industry everywhere, including in the Java heartland.

The Indonesian grid would run close to neighbouring Australia, Papua New Guinea, East Timor, East and West Malaysia and the Philippines. It would be the geopolitically practical means of linking Australia and Singapore, as envisaged in the SunCable project in the Northern Territory.

The Indonesian national grid could link to the Australian Sungrid discussed in my book The Superpower Transformation in Darwin and the Pilbara.

The alternatives to carbon pricing are weak

The alternatives to economy-wide carbon pricing are likely to turn out to be short-lived expedients that lead sooner rather than later to the return of today’s incoherence and underperformance in energy and climate policy and performance.

The state must provide reliability of power supply to the general population.

The Commonwealth government can do this without distorting competitive electricity markets by establishing an energy reserve I have proposed in my book The Superpower Transformation.

The superpower industries depend on electricity and hydrogen markets operating efficiently and embodying carbon prices. Otherwise the market design issues relevant to their development are similar to those for electricity.

Negative carbon externalities need to be corrected by taxation or alternative carbon pricing mechanisms. Positive externalities from innovation should be rewarded.

Positive innovation externalities are important in the introduction of new industries, technologies and business models for the zero-carbon economy.

Economy-wide carbon pricing at the social cost of carbon is essential to getting the balance right between state intervention and market exchange.

Once it is in place with fiscal rewards for innovation, the government can let businesses decide which new industries and technologies warrant investment.

Once carbon pricing is known to be coming into place reasonably soon, there is no further need for government underwriting of investment in power generation.

There is no need to include a climate trigger in assessment of a project of any kind: if it emits carbon, it will pay for the climate damage it does.

There is no need for government to take a view on climate grounds about the merits of nuclear power generation. It is zero-emissions generation and, like renewable energy, not subject to the carbon price. If it can compete with other forms of generation, it will find a place in private investment decisions on the energy mix.

There is no need for government investment in nuclear power generation. Private investors will have the same incentives to invest in nuclear as in other zero-carbon generation technologies.

There will be no need for the government to take a view on incentives for carbon capture and storage. If it is effective and emissions are actually reduced, carbon payments will be correspondingly reduced.

The carbon price will allow private investors to get on with the job of expanding renewable energy supply at a rapid pace and decarbonising the economy more generally.

This is an edited extract from Ross Garnaut’s new book, Let’s Tax Carbon: And Other Ideas for a Better Australia.

Ross Garnaut is a Director and shareholder of Zen Energy. Together with Rod Sims, Ross is a co-founder and Director of The Superpower Institute, a not for profit think tank.

– ref. Let’s tax carbon: Ross Garnaut on why the time is right for a second shot at carbon pricing – https://theconversation.com/lets-tax-carbon-ross-garnaut-on-why-the-time-is-right-for-a-second-shot-at-carbon-pricing-241806

MIL OSI Analysis – EveningReport.nz –

January 24, 2025

MIL-OSI: Capital City Bank Group, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

TALLAHASSEE, Fla., Oct. 22, 2024 (GLOBE NEWSWIRE) — Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income attributable to common shareowners of $13.1 million, or $0.78 per diluted share, for the third quarter of 2024 compared to $14.2 million, or $0.83 per diluted share, for the second quarter of 2024, and $12.7 million, or $0.74 per diluted share, for the third quarter of 2023.

QUARTER HIGHLIGHTS (3^rdQuarter 2024 versus 2^ndQuarter 2024)

Income Statement

Tax-equivalent net interest income totaled $40.3 million compared to $39.3 million for the prior quarter
- Net interest margin increased 10 basis points to 4.12% (earning asset yield up 7 basis points and total deposit cost down 3 basis points to 92 basis points)
Stable credit quality metrics and credit loss provision – net loan charge-offs were 19 basis points (annualized) of average loans – allowance coverage ratio increased to 1.11% at September 30, 2024
Noninterest income remained stable, decreasing $0.1 million, or 0.5%, and reflected a $0.4 million decline in mortgage banking revenues partially offset by a $0.3 million increase in wealth management fees
Noninterest expense increased $2.5 million, or 6.1%, due to increases in compensation (annual merit and health care) and other expenses (professional and processing). Other expense also included a $0.5 million expense related to a counterparty payment for our VISA Class B share swap

Balance Sheet

Loan balances decreased $33.2 million, or 1.2% (average), and declined $7.1 million, or 0.3% (end of period)
Deposit balances decreased by $69.0 million, or 1.9% (average), and decreased $29.5 million, or 0.8% (end of period), reflecting the seasonal decline in our public fund balances
Tangible book value per diluted share (non-GAAP financial measure) increased $0.91, or 4.2%

Commenting on the company’s results, William G. Smith, Jr., Capital City Bank Group Chairman, President, and CEO, said, “I am pleased with what we accomplished in the quarter to enhance shareowner value – 4.2% growth in tangible book value per share and a 9.5% increase in the dividend. Earnings for the quarter remained stable driven by margin expansion, stable credit, and core deposit growth. Looking ahead, I remain optimistic about our full year financial performance and beyond, driven by our balance sheet flexibility, revenue diversification, and focus on continuous improvement.”

Discussion of Operating Results

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the third quarter of 2024 totaled $40.2 million, compared to $39.3 million for the second quarter of 2024, and $39.3 million for the third quarter of 2023. Compared to the second quarter of 2024, the increase was primarily due to increases in loan and investment interest income and a decrease in deposit interest expense, partially offset by a decrease in overnight funds interest income. One additional calendar day also contributed to the increase. Favorable repricing of existing adjustable/fixed rate loans at higher rates drove the increase in loan interest income. The increase in investment interest income was due to the reinvestment of maturing securities at higher rates. The decrease in deposit interest expense was attributable to lower average NOW account balances and average rate, in addition to lower rates on promotional deposit products.

Compared to the third quarter of 2023, the $0.9 million increase was primarily driven by an increase in loan interest income and to a lesser extent overnight funds interest income, partially offset by an increase in deposit interest expense. For the first nine months of 2024, tax-equivalent net interest income totaled $118.0 million compared to $120.1 million for the same period of 2023 with the decrease primarily attributable to an increase in deposit interest expense and a decrease in investment interest income, partially offset by an increase in loan interest income.

Our net interest margin for the third quarter of 2024 was 4.12%, an increase of 10 basis points over the second quarter of 2024 and an increase of nine basis points over the third quarter of 2023. For the month of September 2024, our net interest margin was 4.16%. For the first nine months of 2024, our net interest margin was 4.05% compared to 4.04% for the same period of 2023. The increase over the second quarter of 2024 reflected favorable loan and investment repricing, partially offset by a lower overnight funds rate. The increase over both prior year periods reflected higher loan rates partially offset by a higher cost of deposits. For the third quarter of 2024, our cost of funds was 93 basis points, a decrease of four basis points from the second quarter of 2024 and an increase of 27 basis points over the third quarter of 2023. Our cost of deposits (including noninterest bearing accounts) was 92 basis points, 95 basis points, and 58 basis points, respectively, for the same periods.

Provision for Credit Losses

We recorded a provision expense for credit losses of $1.2 million for the third quarter of 2024, comparable to the second quarter of 2024 and a $1.2 million decrease from the third quarter of 2023. The provision expense for the third quarter of 2024 reflected a $0.7 million increase in the provision for loans held for investment (“HFI”), a $0.6 million provision benefit for unfunded loan commitments, and a $0.1 million provision benefit for debt securities. The increase in the provision for loans HFI was primarily due to loan grade migration and slightly higher loss rates partially offset by lower loan balances. A lower level of commitments drove the provision benefit for unfunded loan commitments. For the first nine months of 2024, we recorded a provision expense for credit losses of $3.3 million compared to $7.7 million for the same period of 2023 with the decrease driven primarily by lower new loan volume in 2024. We discuss the allowance for credit losses further below.

Noninterest Income and Noninterest Expense

Noninterest income for the third quarter of 2024 totaled $19.5 million compared to $19.6 million for the second quarter of 2024 and $16.7 million for the third quarter of 2023. The slight decrease from the second quarter of 2024 reflected a $0.4 million decrease in mortgage banking revenues partially offset by a $0.3 million increase in wealth management fees. Compared to the third quarter of 2023, the $2.8 million increase was primarily attributable to a $2.1 million increase in mortgage banking revenues driven by a higher gain on sale margin, and a $0.8 million increase in wealth management fees.

For the first nine months of 2024, noninterest income totaled $57.2 million compared to $54.5 million for the same period of 2023, primarily attributable to a $3.2 million increase in mortgage banking revenues and a $1.8 million increase in wealth management fees, partially offset by a $2.1 million decrease in other income. The increase in mortgage banking revenues was due to a higher gain on sale margin. The increase in wealth management fees was primarily driven by higher retail brokerage fees and to a lesser extent trust fees, primarily attributable to both new account growth and higher account values driven by higher market returns. The decrease in other income was primarily attributable to a $1.4 million gain from the sale of mortgage servicing rights in the second quarter of 2023, and to a lesser extent a decrease in vendor bonus income and miscellaneous income.

Noninterest expense for the third quarter of 2024 totaled $42.9 million compared to $40.4 million for the second quarter of 2024 and $39.1 million for the third quarter of 2023. The $2.5 million increase over the second quarter of 2024 was primarily due to a $1.4 million increase in compensation and a $1.0 million increase in other expense. The increase in compensation reflected higher salary expense of $0.9 million and associate benefit expense of $0.5 million. The increase in salary expense was driven by annual merit adjustments, and the increase in other associate benefit expense was primarily attributable to higher health insurance cost, and to a lesser extent higher stock-based compensation expense. The increase in other expense was primarily due to a $0.5 million increase in professional fees, processing fees of $0.3 million, and higher miscellaneous expense which included a $0.5 million payment to the counterparty for our VISA Class B share swap due to revision to the share conversion rate related to additional funding by VISA of the merchant litigation reserve. Compared to the third quarter of 2023, the $3.8 million increase was primarily attributable to a $2.8 million increase in compensation expense and a $0.9 million increase in other expense. The unfavorable variance in compensation expense reflected higher salary expense of $2.2 million and associate benefit expense of $0.6 million, with the salary variance driven by merit adjustments and the associate benefit expense variance reflective of higher health insurance cost. Further, salary expense was unfavorably impacted by lower realized loan cost (credit offset to salary expense) of $1.0 million which reflected lower loan volume in 2024. The increase in other expense was attributable to a $0.6 million increase in professional fees and higher miscellaneous expense due to the aforementioned $0.5 million share swap payment in the third quarter of 2024.

For the first nine months of 2024, noninterest expense totaled $123.5 million compared to $117.1 million for the same period of 2023 with the $6.4 million increase primarily attributable to increases in compensation expense of $4.6 million, occupancy expense of $0.5 million, and other expense of $1.3 million. The increase in compensation expense reflected a $3.9 million increase in salary expense and a $0.7 million increase in associate benefit expense. The increase in salary expense was primarily due to a lower level of realized loan cost (credit offset to salary expense) of $2.9 million (lower new loan volume) and higher base salary expense of $1.9 million (primarily annual merit raises), partially offset by lower commission expense of $1.3 million (lower residential mortgage volume). The increase in occupancy was primarily attributable to an increase in maintenance agreement expense (security upgrades and addition of interactive teller machines). The increase in other expense reflected a $1.8 million gain from the sale of a banking office in the first quarter of 2023 and higher miscellaneous expense due to the aforementioned $0.5 million share swap payment in 2024, that was partially offset by lower pension plan expense (service cost) of $1.0 million.

Income Taxes

We realized income tax expense of $3.0 million (effective rate of 19.1%) for the third quarter of 2024 compared to $3.2 million (effective rate of 18.5%) for the second quarter of 2024 and $3.0 million (effective rate of 20.7%) for the third quarter of 2023. For the first nine months of 2024, we realized income tax expense of $9.7 million (effective rate of 20.1%) compared to $10.1 million (effective rate of 20.5%) for the same period of 2023. The decrease in our effective tax rate from both prior year periods was primarily due to a higher level of tax benefit accrued from investments in solar tax credit equity funds. Absent discrete items, we expect our annual effective tax rate to approximate 20-21% for 2024.

Discussion of Financial Condition

Earning Assets

Average earning assets totaled $3.883 billion for the third quarter of 2024, a decrease of $51.9 million, or 1.3%, from the second quarter of 2024, and an increase of $59.4 million, or 1.6%, over the fourth quarter of 2023. The change for both prior periods was driven by variances in deposit balances (see below – Deposits). Compared to the second quarter of 2024, the change in the earning asset mix reflected a $33.2 million decrease in loans HFI, a $11.4 million decline in investment securities, and a $5.6 million decrease increase in overnight funds sold. Compared to the fourth quarter of 2023, the change in the earning asset mix reflected a $157.1 million increase in overnight funds that was partially offset by a $17.7 million decrease in loans HFI, a $54.7 million decrease in investment securities and a $25.2 million decline in loans held for sale.

Average loans HFI decreased $33.2 million, or 1.2%, from the second quarter of 2024 and decreased $17.7 million, or 0.7%, from the fourth quarter of 2023. Compared to the second quarter of 2024, the decrease was driven by a $19.4 million decrease in consumer loans (primarily indirect auto), commercial loans of $13.2 million, and commercial real estate loans of $7.7 million, partially offset by a $7.4 million increase in residential real estate loans. Compared to the fourth quarter of 2023, the decrease was primarily attributable to a $54.5 million decrease in consumer loans (primarily indirect auto) and commercial loans of $24.2 million (primarily tax-exempt loans) that was partially offset by a $59.2 million increase in residential real estate loans.

Period end loans HFI decreased $7.1 million, or 0.3%, from the second quarter of 2024 and decreased $50.8 million, or 1.9%, from the fourth quarter of 2023. Compared to the second quarter of 2024, the decline reflected a $20.9 million decrease in consumer loans (primarily indirect auto), a $10.4 million decrease in commercial loans, and a $3.2 million decline in commercial real estate loans, partially offset by a $10.9 million increase in residential real estate loans and a $18.1 million increase in construction loans. The decrease from the fourth quarter of 2023 was primarily attributable to a $57.7 million decrease in consumer loans (primarily indirect auto), a $30.6 million decline in commercial loans, and a $5.5 million decrease in commercial real estate loans, partially offset by a $22.2 million increase in residential real estate loans and a $22.8 million increase in construction real estate loans.

Allowance for Credit Losses

At September 30, 2024, the allowance for credit losses for loans HFI totaled $29.8 million compared to $29.2 million at June 30, 2024 and $29.9 million at December 31, 2023. Activity within the allowance is provided on Page 9. The increase in the allowance over June 30, 2024 was primarily attributable to slightly higher forecasted unemployment rate utilized in calculating loan loss rates and loan grade migration (see above – Provision for Credit Losses). Net loan charge-offs were 19 basis points of average loans for the third quarter of 2024 versus 18 basis points for the second quarter of 2024. At September 30, 2024, the allowance represented 1.11% of loans HFI compared to 1.09% at June 30, 2024, and 1.10% at December 31, 2023.

Credit Quality

Nonperforming assets (nonaccrual loans and other real estate) totaled $7.2 million at September 30, 2024 compared to $6.2 million at June 30, 2024 and $6.2 million at December 31, 2023. At September 30, 2024, nonperforming assets as a percent of total assets equaled 0.17%, compared to 0.15% at June 30, 2024 and 0.15% at December 31, 2023. Nonaccrual loans totaled $6.6 million at September 30, 2024, a $1.1 million increase over June 30, 2024 and a $0.3 million increase over December 31, 2023. Further, classified loans totaled $25.5 million at September 30, 2024, a $0.1 million decrease from June 30, 2024 and a $3.3 million increase over December 31, 2023.

Deposits

Average total deposits were $3.572 billion for the third quarter of 2024, a decrease of $69.0 million, or 1.9%, from the second quarter of 2024 and an increase of $23.5 million, or 0.7%, over the fourth quarter of 2023. Compared to the second quarter of 2024, the decrease was primarily attributable to lower NOW account balances primarily due to the seasonal decline in our public fund balances. The increase over the fourth quarter of 2023 reflected growth in both money market and certificate of deposit balances which reflected a combination of balances migrating from savings and noninterest bearing accounts, in addition to receiving new deposits from existing and new clients via various deposit strategies.

At September 30, 2024, total deposits were $3.579 billion, a decrease of $29.5 million, or 0.8%, from June 30, 2024, and a decrease of $122.7 million, or 3.3%, from December 31, 2023. The decrease from June 30, 2024 was primarily due to lower noninterest bearing, money market, and savings account balances. The decrease from December 31, 2023 was primarily due to lower NOW account balances, primarily due to the seasonal decline in our public funds, partially offset by higher money market and certificate of deposit balances from both new and existing clients. Total public funds balances were $516.2 million at September 30, 2024, $575.0 million at June 30, 2024, and $709.8 million at December 31, 2023.

Liquidity

The Bank maintained an average net overnight funds (i.e., deposits with banks plus FED funds sold less FED funds purchased) sold position of $256.9 million in the third quarter of 2024 compared to $262.4 million in the second quarter of 2024 and $99.8 million in the fourth quarter of 2023. Compared to the second quarter of 2024, the decrease reflected lower average deposits (primarily seasonal public funds) that was substantially offset by a decline in average loans. Compared to the fourth quarter of 2023, the increase was primarily driven by higher average deposits and lower average investments.

At September 30, 2024, we had the ability to generate approximately $1.522 billion (excludes overnight funds position of $262 million) in additional liquidity through various sources including various federal funds purchased lines, Federal Home Loan Bank borrowings, the Federal Reserve Discount Window, and brokered deposits.

We also view our investment portfolio as a liquidity source as we have the option to pledge securities in our portfolio as collateral for borrowings or deposits, and/or to sell selected securities in our portfolio. Our portfolio consists of debt issued by the U.S. Treasury, U.S. governmental agencies, municipal governments, and corporate entities. At September 30, 2024, the weighted-average maturity and duration of our portfolio were 2.51 years and 2.17 years, respectively, and the available-for-sale portfolio had a net unrealized after-tax loss of $15.5 million.

Capital

Shareowners’ equity was $476.5 million at September 30, 2024 compared to $461.0 million at June 30, 2024 and $440.6 million at December 31, 2023. For the first nine months of 2024, shareowners’ equity was positively impacted by net income attributable to shareowners of $39.8 million, a $8.7 million decrease in the net unrealized loss on available for sale securities, net adjustments totaling $0.9 million related to transactions under our stock compensation plans, and stock compensation accretion of $1.1 million. Shareowners’ equity was reduced by a common stock dividend of $11.0 million ($0.65 per share), the repurchase of common stock of $2.3 million (82,540 shares), a $0.6 million increase in the fair value of the interest rate swap related to subordinated debt, and a $0.7 million reclassification to temporary equity.

At September 30, 2024, our total risk-based capital ratio was 17.97% compared to 17.50% at June 30, 2024 and 16.57% at December 31, 2023. Our common equity tier 1 capital ratio was 14.88%, 14.44%, and 13.52%, respectively, on these dates. Our leverage ratio was 10.89%, 10.51%, and 10.30%, respectively, on these dates. At September 30, 2024, all our regulatory capital ratios exceeded the thresholds to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio (non-GAAP financial measure) was 9.28% at September 30, 2024 compared to 8.91% and 8.26% at June 30, 2024 and December 31, 2023, respectively. If our unrealized held-to-maturity securities losses of $12.9 million (after-tax) were recognized in accumulated other comprehensive loss, our adjusted tangible capital ratio would be 9.00%.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $4.2 billion in assets. We provide a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, securities brokerage services and financial advisory services, including the sale of life insurance, risk management and asset protection services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 63 banking offices and 105 ATMs/ITMs in Florida, Georgia and Alabama. For more information about Capital City Bank Group, Inc., visit http://www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “vision,” “goal,” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our actual results to differ: our ability to successfully manage credit risk, interest rate risk, liquidity risk, and other risks inherent to our industry; the effects of changes in the level of checking or savings account deposits and the competition for deposits on our funding costs, net interest margin and ability to replace maturing deposits and advances; legislative or regulatory changes; adverse developments in the financial services industry; inflation, interest rate, market and monetary fluctuations; uncertainty in the pricing of residential mortgage loans that we sell, as well as competition for the mortgage servicing rights related to these loans; interest rate risk and price risk resulting from retaining mortgage servicing rights and the effects of higher interest rates on our loan origination volumes; changes in monetary and fiscal policies of the U.S. Government; the cost and effects of cybersecurity incidents or other failures, interruptions, or security breaches of our systems or those of our customers or third-party providers; the effects of fraud related to debit card products; the accuracy of our financial statement estimates and assumptions; changes in accounting principles, policies, practices or guidelines; the frequency and magnitude of foreclosure of our loans; the effects of our lack of a diversified loan portfolio; the strength of the local economies in which we operate; our ability to declare and pay dividends; structural changes in the markets for origination, sale and servicing of residential mortgages; our ability to retain key personnel; the effects of natural disasters (including hurricanes), widespread health emergencies (including pandemics), military conflict, terrorism, civil unrest or other geopolitical events; our ability to comply with the extensive laws and regulations to which we are subject; the impact of the restatement of our previously issued consolidated statements of cash flows; any deficiencies in the processes undertaken to effect these restatements and to identify and correct all errors in our historical financial statements that may require restatement; any inability to implement and maintain effective internal control over financial reporting and/or disclosure control or inability to remediate our existing material weaknesses in our internal controls deemed ineffective; the willingness of clients to accept third-party products and services rather than our products and services; technological changes; the outcomes of litigation or regulatory proceedings; negative publicity and the impact on our reputation; changes in consumer spending and saving habits; growth and profitability of our noninterest income; the limited trading activity of our common stock; the concentration of ownership of our common stock; anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws; other risks described from time to time in our filings with the Securities and Exchange Commission; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as amended, and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov). Forward-looking statements in this Press Release speak only as of the date of the Press Release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ, except as may be required by law.

USE OF NON-GAAP FINANCIAL MEASURES
Unaudited

We present a tangible common equity ratio and a tangible book value per diluted share that removes the effect of goodwill and other intangibles resulting from merger and acquisition activity. We believe these measures are useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry.

The GAAP to non-GAAP reconciliations are provided below.

(Dollars in Thousands, except per share data)		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023		Sep 30, 2023
Shareowners’ Equity (GAAP)		$	476,499	$	460,999	$	448,314	$	440,625	$	419,706
Less: Goodwill and Other Intangibles (GAAP)			92,813		92,853		92,893		92,933		92,973
Tangible Shareowners’ Equity (non-GAAP)	A		383,686		368,146		355,421		347,692		326,733
Total Assets (GAAP)			4,225,316		4,225,695		4,259,922		4,304,477		4,138,287
Less: Goodwill and Other Intangibles (GAAP)			92,813		92,853		92,893		92,933		92,973
Tangible Assets (non-GAAP)	B	$	4,132,503	$	4,132,842	$	4,167,029	$	4,211,544	$	4,045,314
Tangible Common Equity Ratio (non-GAAP)	A/B		9.28%		8.91%		8.53%		8.26%		8.08%
Actual Diluted Shares Outstanding (GAAP)	C		16,980,686		16,970,228		16,947,204		17,000,758		16,997,886
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	22.60	$	21.69	$	20.97	$	20.45	$	19.22

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
*Unaudited*

		Three Months Ended						Nine Months Ended
(Dollars in thousands, except per share data)		Sep 30, 2024		Jun 30, 2024		Sep 30, 2023		Sep 30, 2024		Sep 30, 2023
EARNINGS
Net Income Attributable to Common Shareowners	$	13,118	$	14,150	$	12,655	$	39,825	$	40,539
Diluted Net Income Per Share	$	0.78	$	0.83	$	0.74	$	2.35	$	2.38
PERFORMANCE
Return on Average Assets (annualized)		1.24	%	1.33	%	1.19	%	1.26	%	1.26	%
Return on Average Equity (annualized)		10.87		12.23		11.74		11.39		13.00
Net Interest Margin		4.12		4.02		4.03		4.05		4.04
Noninterest Income as % of Operating Revenue		32.67		33.30		29.87		32.69		31.25
Efficiency Ratio		71.81	%	68.61	%	69.88	%	70.49	%	67.07	%
CAPITAL ADEQUACY
Tier 1 Capital		16.77	%	16.31	%	15.11	%	16.77	%	15.11	%
Total Capital		17.97		17.50		16.30		17.97		16.30
Leverage		10.89		10.51		9.98		10.89		9.98
Common Equity Tier 1		14.88		14.44		13.26		14.88		13.26
Tangible Common Equity ⁽¹⁾		9.28		8.91		8.08		9.28		8.08
Equity to Assets		11.28	%	10.91	%	10.14	%	11.28	%	10.14	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		452.64	%	529.79	%	619.58	%	452.64	%	619.58	%
Allowance as a % of Loans HFI		1.11		1.09		1.08		1.11		1.08
Net Charge-Offs as % of Average Loans HFI		0.19		0.18		0.17		0.20		0.16
Nonperforming Assets as % of Loans HFI and OREO		0.27		0.23		0.17		0.27		0.17
Nonperforming Assets as % of Total Assets		0.17	%	0.15	%	0.11	%	0.17	%	0.11	%
STOCK PERFORMANCE
High	$	36.67	$	28.58	$	33.44	$	36.67	$	36.86
Low		26.72		25.45		28.64		25.45		28.03
Close	$	35.29	$	28.44	$	29.83	$	35.29	$	29.83
Average Daily Trading Volume		37,151		29,861		26,774		32,720		33,936

⁽¹⁾ Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
*Unaudited*

	2024										2023
(Dollars in thousands)	Third Quarter				Second Quarter			First Quarter			Fourth Quarter			Third Quarter
ASSETS
Cash and Due From Banks	$	83,431		$	75,304		$	73,642		$	83,118		$	72,379
Funds Sold and Interest Bearing Deposits		261,779			272,675			231,047			228,949			95,119
Total Cash and Cash Equivalents		345,210			347,979			304,689			312,067			167,498

Investment Securities Available for Sale		336,187			310,941			327,338			337,902			334,052
Investment Securities Held to Maturity		561,480			582,984			603,386			625,022			632,076
Other Equity Securities		6,976			2,537			3,445			3,450			3,585
Total Investment Securities		904,643			896,462			934,169			966,374			969,713

Loans Held for Sale		31,251			24,022			24,705			28,211			34,013

Loans Held for Investment (“HFI”):
Commercial, Financial, & Agricultural		194,625			204,990			218,298			225,190			221,704
Real Estate – Construction		218,899			200,754			202,692			196,091			197,526
Real Estate – Commercial		819,955			823,122			823,690			825,456			828,234
Real Estate – Residential		1,023,485			1,012,541			1,012,791			1,001,257			966,512
Real Estate – Home Equity		210,988			211,126			214,617			210,920			203,606
Consumer		213,305			234,212			254,168			270,994			285,122
Other Loans		461			2,286			3,789			2,962			1,401
Overdrafts		1,378			1,192			1,127			1,048			1,076
Total Loans Held for Investment		2,683,096			2,690,223			2,731,172			2,733,918			2,705,181
Allowance for Credit Losses		(29,836	)		(29,219	)		(29,329	)		(29,941	)		(29,083	)
Loans Held for Investment, Net		2,653,260			2,661,004			2,701,843			2,703,977			2,676,098

Premises and Equipment, Net		81,876			81,414			81,452			81,266			81,677
Goodwill and Other Intangibles		92,813			92,853			92,893			92,933			92,973
Other Real Estate Owned		650			650			1			1			1
Other Assets		115,613			121,311			120,170			119,648			116,314
Total Other Assets		290,952			296,228			294,516			293,848			290,965
Total Assets	$	4,225,316		$	4,225,695		$	4,259,922		$	4,304,477		$	4,138,287
LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	1,330,715		$	1,343,606		$	1,361,939		$	1,377,934		$	1,472,165
NOW Accounts		1,174,585			1,177,180			1,212,452			1,327,420			1,092,996
Money Market Accounts		401,272			413,594			398,308			319,319			304,323
Savings Accounts		507,604			514,560			530,782			547,634			571,003
Certificates of Deposit		164,901			159,624			151,320			129,515			99,958
Total Deposits		3,579,077			3,608,564			3,654,801			3,701,822			3,540,445

Repurchase Agreements		29,339			22,463			23,477			26,957			22,910
Other Short-Term Borrowings		7,929			3,307			8,409			8,384			18,786
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		794			1,009			265			315			364
Other Liabilities		71,974			69,987			65,181			66,080			75,585
Total Liabilities		3,742,000			3,758,217			3,805,020			3,856,445			3,710,977

Temporary Equity		6,817			6,479			6,588			7,407			7,604
SHAREOWNERS’ EQUITY
Common Stock		169			169			169			170			170
Additional Paid-In Capital		36,070			35,547			34,861			36,326			36,182
Retained Earnings		454,342			445,959			435,364			426,275			418,030
Accumulated Other Comprehensive Loss, Net of Tax		(14,082	)		(20,676	)		(22,080	)		(22,146	)		(34,676	)
Total Shareowners’ Equity		476,499			460,999			448,314			440,625			419,706
Total Liabilities, Temporary Equity and Shareowners’ Equity	$	4,225,316		$	4,225,695		$	4,259,922		$	4,304,477		$	4,138,287
OTHER BALANCE SHEET DATA
Earning Assets	$	3,880,769		$	3,883,382		$	3,921,093		$	3,957,452		$	3,804,026
Interest Bearing Liabilities		2,339,311			2,344,624			2,377,900			2,412,431			2,163,227
Book Value Per Diluted Share	$	28.06		$	27.17		$	26.45		$	25.92		$	24.69
Tangible Book Value Per Diluted Share⁽¹⁾		22.60			21.69			20.97			20.45			19.22
Actual Basic Shares Outstanding		16,944			16,942			16,929			16,950			16,958
Actual Diluted Shares Outstanding		16,981			16,970			16,947			17,001			16,998
⁽¹⁾ Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
*Unaudited*

		2024						2023				Nine Months Ended September 30,
(Dollars in thousands, except per share data)		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		2024		2023
INTEREST INCOME
Loans, including Fees	$	41,659	$	41,138	$	40,683	$	40,407	$	39,344	$	123,480	$	111,845
Investment Securities		4,155		4,004		4,244		4,392		4,561		12,403		14,300
Federal Funds Sold and Interest Bearing Deposits		3,514		3,624		1,893		1,385		1,848		9,031		8,741
Total Interest Income		49,328		48,766		46,820		46,184		45,753		144,914		134,886
INTEREST EXPENSE
Deposits		8,223		8,579		7,594		5,872		5,214		24,396		11,710
Repurchase Agreements		221		217		201		199		190		639		314
Other Short-Term Borrowings		52		68		39		310		440		159		1,228
Subordinated Notes Payable		610		630		628		627		625		1,868		1,800
Other Long-Term Borrowings		11		3		3		5		4		17		15
Total Interest Expense		9,117		9,497		8,465		7,013		6,473		27,079		15,067
Net Interest Income		40,211		39,269		38,355		39,171		39,280		117,835		119,819
Provision for Credit Losses		1,206		1,204		920		2,025		2,393		3,330		7,689
Net Interest Income after Provision for Credit Losses		39,005		38,065		37,435		37,146		36,887		114,505		112,130
NONINTEREST INCOME
Deposit Fees		5,512		5,377		5,250		5,304		5,456		16,139		16,021
Bank Card Fees		3,624		3,766		3,620		3,713		3,684		11,010		11,205
Wealth Management Fees		4,770		4,439		4,682		4,276		3,984		13,891		12,061
Mortgage Banking Revenues		3,966		4,381		2,878		2,327		1,839		11,225		8,072
Other		1,641		1,643		1,667		1,537		1,765		4,951		7,093
Total Noninterest Income		19,513		19,606		18,097		17,157		16,728		57,216		54,452
NONINTEREST EXPENSE
Compensation		25,800		24,406		24,407		23,822		23,003		74,613		69,965
Occupancy, Net		7,098		6,997		6,994		7,098		6,980		21,089		20,562
Other		10,023		9,038		8,770		9,038		9,122		27,831		26,539
Total Noninterest Expense		42,921		40,441		40,171		39,958		39,105		123,533		117,066
OPERATING PROFIT		15,597		17,230		15,361		14,345		14,510		48,188		49,516
Income Tax Expense		2,980		3,189		3,536		2,909		3,004		9,705		10,130
Net Income		12,617		14,041		11,825		11,436		11,506		38,483		39,386
Pre-Tax Loss Attributable to Noncontrolling Interest		501		109		732		284		1,149		1,342		1,153
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	13,118	$	14,150	$	12,557	$	11,720	$	12,655	$	39,825	$	40,539
PER COMMON SHARE
Basic Net Income	$	0.77	$	0.84	$	0.74	$	0.69	$	0.75	$	2.35	$	2.38
Diluted Net Income		0.78		0.83		0.74		0.70		0.74		2.35		2.38
Cash Dividend	$	0.23	$	0.21	$	0.21	$	0.20	$	0.20	$	0.65	$	0.56
AVERAGE SHARES
Basic		16,943		16,931		16,951		16,947		16,985		16,942		17,001
Diluted		16,979		16,960		16,969		16,997		17,025		16,966		17,031

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR CREDIT LOSSES (“ACL”)
AND CREDIT QUALITY
*Unaudited*

		2024								2023					Nine Months Ended September 30,
(Dollars in thousands, except per share data)		Third Quarter			Second Quarter		First Quarter			Fourth Quarter			Third Quarter		2024			2023
ACL – HELD FOR INVESTMENT LOANS
Balance at Beginning of Period	$	29,219		$	29,329	$	29,941		$	29,083		$	28,243	$	29,941		$	25,068
Transfer from Other (Assets) Liabilities		–			–		(50	)		66			–		(50	)		–
Provision for Credit Losses		1,879			1,129		932			2,354			1,993		3,940			7,175
Net Charge-Offs (Recoveries)		1,262			1,239		1,494			1,562			1,153		3,995			3,160
Balance at End of Period	$	29,836		$	29,219	$	29,329		$	29,941		$	29,083	$	29,836		$	29,083
As a % of Loans HFI		1.11%			1.09%		1.07%			1.10%			1.08%		1.11%			1.08%
As a % of Nonperforming Loans		452.64%			529.79%		431.46%			479.70%			619.58%		452.64%			619.58%
ACL – UNFUNDED COMMITMENTS
Balance at Beginning of Period		3,139		$	3,121	$	3,191		$	3,502		$	3,120	$	3,191		$	2,989
Provision for Credit Losses		(617	)		18		(70	)		(311	)		382		(669	)		513
Balance at End of Period⁽¹⁾		2,522			3,139		3,121			3,191			3,502		2,522			3,502
ACL – DEBT SECURITIES
Provision for Credit Losses	$	(56	)	$	57	$	58		$	(18	)	$	18	$	59		$	1
CHARGE-OFFS
Commercial, Financial and Agricultural	$	331		$	400	$	282		$	217		$	76	$	1,013		$	294
Real Estate – Construction		–			–		–			–			–		–			–
Real Estate – Commercial		3			–		–			–			–		3			120
Real Estate – Residential		–			–		17			79			–		17			–
Real Estate – Home Equity		23			–		76			–			–		99			39
Consumer		1,315			1,061		1,550			1,689			1,340		3,926			4,065
Overdrafts		611			571		638			602			659		1,820			2,187
Total Charge-Offs	$	2,283		$	2,032	$	2,563		$	2,587		$	2,075	$	6,878		$	6,705
RECOVERIES
Commercial, Financial and Agricultural	$	176		$	59	$	41		$	83		$	28	$	276		$	194
Real Estate – Construction		–			–		–			–			–		–			2
Real Estate – Commercial		5			19		204			16			17		228			36
Real Estate – Residential		88			23		37			34			30		148			219
Real Estate – Home Equity		59			37		24			17			53		120			209
Consumer		405			313		410			433			418		1,128			1,503
Overdrafts		288			342		353			442			376		983			1,382
Total Recoveries	$	1,021		$	793	$	1,069		$	1,025		$	922	$	2,883		$	3,545
NET CHARGE-OFFS (RECOVERIES)	$	1,262		$	1,239	$	1,494		$	1,562		$	1,153	$	3,995		$	3,160
Net Charge-Offs as a % of Average Loans HFI⁽²⁾		0.19%			0.18%		0.22%			0.23%			0.17%		0.20%			0.16%
CREDIT QUALITY
Nonaccruing Loans	$	6,592		$	5,515	$	6,798		$	6,242		$	4,694
Other Real Estate Owned		650			650		1			1			1
Total Nonperforming Assets (“NPAs”)	$	7,242		$	6,165	$	6,799		$	6,243		$	4,695

Past Due Loans 30-89 Days	$	9,388		$	5,672	$	5,392		$	6,855		$	5,577
Classified Loans		25,501			25,566		22,305			22,203			21,812

Nonperforming Loans as a % of Loans HFI		0.25%			0.21%		0.25%			0.23%			0.17%
NPAs as a % of Loans HFI and Other Real Estate		0.27%			0.23%		0.25%			0.23%			0.17%
NPAs as a % of Total Assets		0.17%			0.15%		0.16%			0.15%			0.11%

⁽¹⁾Recorded in other liabilities
⁽²⁾Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES
*Unaudited*

		Third Quarter 2024							Second Quarter 2024							First Quarter 2024							Fourth Quarter 2023							Third Quarter 2023							Sep 2024 YTD							Sep 2023 YTD
(Dollars in thousands)		Average Balance			Interest	Average Rate			Average Balance			Interest	Average Rate			Average Balance			Interest	Average Rate			Average Balance			Interest	Average Rate			Average Balance			Interest	Average Rate			Average Balance			Interest	Average Rate			Average Balance			Interest	Average Rate
ASSETS:
Loans Held for Sale	$	24,570		$	720	7.49	%	$	26,281		$	517	5.26	%	$	27,314		$	563	5.99	%	$	49,790			817	6.50	%	$	62,768		$	971	6.14	%	$	26,050		$	1,800	6.22	%	$	57,438		$	2,416	5.62	%
Loans Held for Investment⁽¹⁾		2,693,533			40,985	6.09			2,726,748			40,683	6.03			2,728,629			40,196	5.95			2,711,243			39,679	5.81			2,672,653			38,455	5.71			2,716,220			121,864	6.02			2,637,911			109,688	5.56

Investment Securities
Taxable Investment Securities		907,610			4,148	1.82			918,989			3,998	1.74			952,328			4,239	1.78			962,322			4,389	1.81			1,002,547			4,549	1.80			926,241			12,385	1.78			1,034,825			14,265	1.84
Tax-Exempt Investment Securities⁽¹⁾		846			10	4.33			843			9	4.36			856			9	4.34			862			7	4.32			2,456			17	2.66			848			28	4.34			2,649			50	2.49

Total Investment Securities		908,456			4,158	1.82			919,832			4,007	1.74			953,184			4,248	1.78			963,184			4,396	1.82			1,005,003			4,566	1.81			927,089			12,413	1.78			1,037,474			14,315	1.84

Federal Funds Sold and Interest Bearing Deposits		256,855			3,514	5.44			262,419			3,624	5.56			140,488			1,893	5.42			99,763			1,385	5.51			136,556			1,848	5.37			220,056			9,031	5.48			237,987			8,741	4.91

Total Earning Assets		3,883,414		$	49,377	5.06	%		3,935,280		$	48,831	4.99	%		3,849,615		$	46,900	4.90	%		3,823,980		$	46,277	4.80	%		3,876,980		$	45,840	4.69	%		3,889,415		$	145,108	4.98	%		3,970,810		$	135,160	4.55	%

Cash and Due From Banks		70,994							74,803							75,763							76,681							75,941							73,843							75,483
Allowance for Credit Losses		(29,905	)						(29,564	)						(30,030	)						(29,998	)						(29,172	)						(29,833	)						(27,581	)
Other Assets		291,359							291,669							295,275							296,114							295,106							292,762							297,688

Total Assets	$	4,215,862						$	4,272,188						$	4,190,623						$	4,166,777						$	4,218,855						$	4,226,187						$	4,316,400

LIABILITIES:
Noninterest Bearing Deposits	$	1,332,305						$	1,346,546						$	1,344,188						$	1,416,825						$	1,474,574						$	1,340,981						$	1,538,268
NOW Accounts		1,145,544		$	4,087	1.42	%		1,207,643		$	4,425	1.47	%		1,201,032		$	4,497	1.51	%		1,138,461		$	3,696	1.29	%		1,125,171		$	3,489	1.23	%		1,184,596		$	13,009	1.47	%		1,184,453		$	8,679	0.98	%
Money Market Accounts		418,625			2,694	2.56			407,387			2,752	2.72			353,591			1,985	2.26			318,844			1,421	1.77			322,623			1,294	1.59			393,294			7,431	2.52			293,089			2,249	1.03
Savings Accounts		512,098			180	0.14			519,374			176	0.14			539,374			188	0.14			557,579			202	0.14			579,245			200	0.14			523,573			544	0.14			603,643			396	0.09
Time Deposits		163,462			1,262	3.07			160,078			1,226	3.08			138,328			924	2.69			116,797			553	1.88			95,203			231	0.96			153,991			3,412	2.96			90,970			386	0.57
Total Interest Bearing Deposits		2,239,729			8,223	1.46			2,294,482			8,579	1.50			2,232,325			7,594	1.37			2,131,681			5,872	1.09			2,122,242			5,214	0.97			2,255,454			24,396	1.44			2,172,155			11,710	0.72
Total Deposits		3,572,034			8,223	0.92			3,641,028			8,579	0.95			3,576,513			7,594	0.85			3,548,506			5,872	0.66			3,596,816			5,214	0.58			3,596,435			24,396	0.91			3,710,423			11,710	0.42
Repurchase Agreements		27,126			221	3.24			26,999			217	3.24			25,725			201	3.14			26,831			199	2.94			25,356			190	2.98			26,619			639	3.21			17,588			314	2.39
Other Short-Term Borrowings		2,673			52	7.63			6,592			68	4.16			3,758			39	4.16			16,906			310	7.29			24,306			440	7.17			4,334			159	4.88			26,586			1,228	6.17
Subordinated Notes Payable		52,887			610	4.52			52,887			630	4.71			52,887			628	4.70			52,887			627	4.64			52,887			625	4.62			52,887			1,868	4.64			52,887			1,800	4.49
Other Long-Term Borrowings		795			11	5.55			258			3	4.31			281			3	4.80			336			5	4.72			387			4	4.73			447			17	5.16			433			15	4.78
Total Interest Bearing Liabilities		2,323,210		$	9,117	1.56	%		2,381,218		$	9,497	1.60	%		2,314,976		$	8,465	1.47	%		2,228,641		$	7,013	1.25	%		2,225,178		$	6,473	1.15	%		2,339,741		$	27,079	1.55	%		2,269,649		$	15,067	0.89	%

Other Liabilities		73,767							72,634							68,295							78,772							83,099							71,574							82,877

Total Liabilities		3,729,282							3,800,398							3,727,459							3,724,238							3,782,851							3,752,296							3,890,794
Temporary Equity		6,443							6,493							7,150							7,423							8,424							6,694							8,719

SHAREOWNERS’ EQUITY:		480,137							465,297							456,014							435,116							427,580							467,197							416,887

Total Liabilities, Temporary Equity and Shareowners’ Equity	$	4,215,862						$	4,272,188						$	4,190,623						$	4,166,777						$	4,218,855						$	4,226,187						$	4,316,400

Interest Rate Spread				$	40,260	3.49	%				$	39,334	3.38	%				$	38,435	3.43	%				$	39,264	3.55	%				$	39,367	3.54	%				$	118,029	3.43	%				$	120,093	3.66	%

Interest Income and Rate Earned⁽¹⁾					49,377	5.06						48,831	4.99						46,900	4.90						46,277	4.80						45,840	4.69						145,108	4.98						135,160	4.55
Interest Expense and Rate Paid⁽²⁾					9,117	0.93						9,497	0.97						8,465	0.88						7,013	0.73						6,473	0.66						27,079	0.93						15,067	0.51

Net Interest Margin				$	40,260	4.12	%				$	39,334	4.02	%				$	38,435	4.01	%				$	39,264	4.07	%				$	39,367	4.03	%				$	118,029	4.05	%				$	120,093	4.04	%

⁽¹⁾Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate.
⁽²⁾Rate calculated based on average earning assets.

For Information Contact:
Jep Larkin
Executive Vice President and Chief Financial Officer
850.402. 8450

The MIL Network –

January 24, 2025

MIL-OSI: Dime Community Bancshares, Inc. Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Acceleration in Core Deposit Growth Drives Increase in Quarterly Net Interest Margin to 2.50%

Balance Sheet Well Positioned to Benefit From Federal Reserve Rate Cuts

HAUPPAUGE, N.Y., Oct. 22, 2024 (GLOBE NEWSWIRE) — Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the “Company” or “Dime”), the parent company of Dime Community Bank (the “Bank”), today reported net income available to common stockholders of $11.5 million for the quarter ended September 30, 2024, or $0.29 per diluted common share, compared to $16.7 million, or $0.43 per diluted common share, for the quarter ended June 30, 2024, and $13.2 million, or $0.34 per diluted common share for the quarter ended September 30, 2023.

Stuart H. Lubow, President and Chief Executive Officer (“CEO”) of the Company, stated, “Strong growth in low-cost core deposits drove a significant linked quarter expansion in the Net Interest Margin. Importantly, following the recent 50 basis point reduction in the Federal Funds rate, we lowered deposit costs and expect to benefit from these actions in the fourth quarter and beyond. Since the Federal Reserve rate cut in mid-September, the spread between the weighted average rate on loans and core deposits has improved by approximately 15 basis points. We anticipate the full quarter impact of this spread improvement to drive continued Net Interest Margin expansion in the fourth quarter.”

Mr. Lubow commented, “During the third quarter, our Business loan portfolio increased by over $120 million and we continue to have strong pipelines in our Middle Market and Healthcare verticals. Compared to the prior quarter, the level of net charge-offs and criticized and classified loans remained stable and we continued to prudently build our allowance for credit losses to total loans and risk-based capital levels. In conclusion, I am extremely proud of our employees for their unwavering focus on our customers and enabling us to be the premier business bank on Greater Long Island.”

Highlights for the Third Quarter of 2024 Included:

Total deposits increased $389 million compared to the second quarter of 2024;
Core deposits (excluding brokered and time deposits) increased $505 million compared to the second quarter of 2024;
The ratio of average non-interest-bearing deposits to average total deposits for the third quarter was 29% compared to 28% for the second quarter of 2024;
The cost of total deposits declined by 4 basis point versus the prior quarter;
The net interest margin increased to 2.50% for the third quarter of 2024 compared to 2.41% for the prior quarter;
The loan to deposit ratio declined to 95.4% at the end of the third quarter compared to 98.2% for the prior quarter;
Net charge-offs to average loans was 0.15% for the third quarter of 2024 compared to 0.14% for prior quarter;
The allowance for credit losses to total loans increased to 0.78% at the end of the third quarter compared to 0.72% for the prior quarter; and
The Company’s total risk based capital ratio increased to 14.76% at the end of the third quarter compared to 14.46% for the prior quarter.

Management’s Discussion of Quarterly Operating Results

Net Interest Income

Net interest income for the third quarter of 2024 was $79.9 million compared to $75.5 million for the second quarter of 2024 and $76.5 million for the third quarter of 2023.

The table below provides a reconciliation of the reported net interest margin (“NIM”) and adjusted NIM excluding the impact of purchase accounting accretion on the loan portfolio.


(Dollars in thousands)	Q3 2024				Q2 2024				Q3 2023
Net interest income	$	79,924			$	75,502			$	76,479
Purchase accounting amortization (accretion) on loans (“PAA”)		(266	)			(101	)			186
Adjusted net interest income excluding PAA on loans (non-GAAP)	$	79,658			$	75,401			$	76,665

Average interest-earning assets	$	12,734,246			$	12,624,556			$	12,984,061

NIM ⁽¹⁾		2.50		%		2.41		%		2.34	%
Adjusted NIM excluding PAA on loans (non-GAAP) ⁽²⁾		2.49		%		2.40		%		2.34	%

⁽¹⁾NIM represents net interest income divided by average interest-earning assets.
⁽²⁾Adjusted NIM excluding PAA on loans represents adjusted net interest income, which excludes PAA amortization on acquired loans divided by average interest-earning assets.

During the quarter ended June 30, 2024, there was a recovery of interest income from a loan that was previously on non-accrual status in the amount of $1.3 million. Excluding the impact of this item, the second quarter NIM was 2.37%.

Loan Portfolio

The ending WAR on the total loan portfolio was 5.40% at September 30, 2024, a 1 basis point increase compared to the ending WAR of 5.39% on the total loan portfolio at June 30, 2024.

Outlined below are loan balances and WARs for the quarter ended as indicated.


	September 30, 2024				June 30, 2024				September 30, 2023
(Dollars in thousands)	Balance		WAR ⁽¹⁾		Balance		WAR ⁽¹⁾		Balance		WAR ⁽¹⁾
Loans held for investment balances at period end:
Business loans ⁽²⁾	$	2,653,624	6.82	%	$	2,530,896	6.92	%	$	2,271,768	6.72	%
One-to-four family residential, including condominium and cooperative apartment		934,209	4.65			906,949	4.55			892,869	4.39
Multifamily residential and residential mixed-use ⁽³⁾⁽⁴⁾		3,866,931	4.60			3,920,354	4.59			4,102,024	4.45
Non-owner-occupied commercial real estate		3,281,923	5.25			3,315,100	5.25			3,374,281	5.09
Acquisition, development, and construction		149,299	8.46			144,860	8.96			203,402	8.92
Other loans		6,058	10.71			6,699	3.39			6,267	6.28
Loans held for investment	$	10,892,044	5.40	%	$	10,824,858	5.39	%	$	10,850,611	5.20	%

⁽¹⁾ WAR is calculated by aggregating interest based on the current loan rate from each loan in the category, adjusted for non-accrual loans, divided by the total balance of loans in the category.
⁽²⁾ Business loans include commercial and industrial loans and owner-occupied commercial real estate loans.
⁽³⁾ Includes loans underlying multifamily cooperatives.
⁽⁴⁾ While the loans within this category are often considered “commercial real estate” in nature, multifamily and loans underlying cooperatives are reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.

Outlined below are the loan originations, for the quarter ended as indicated.


(Dollars in millions)	Q3 2024		Q2 2024		Q3 2023
Loan originations	$	122.7	$	162.4	$	153.4

Deposits and Borrowed Funds

Period end total deposits (including mortgage escrow deposits) at September 30, 2024 were $11.42 billion, compared to $11.03 billion at June 30, 2024 and $10.53 billion at December 31, 2023.

Total Federal Home Loan Bank advances were $508.0 million at September 30, 2024 compared to $633.0 million at June 30, 2024 and $1.31 billion at December 31, 2023.

Mr. Lubow commented, “During the third quarter of 2024, we continued our strategy of utilizing core deposit growth to reduce our wholesale funding position.”

Non-Interest Income

Non-interest income was $7.6 million during the third quarter of 2024, $11.8 million during the second quarter of 2024, and $7.9 million during the third quarter of 2023. Included in non-interest income for the second quarter of 2024, was income related to the sale of premises of approximately $3.7 million.

Non-Interest Expense

Total non-interest expense was $57.7 million during the third quarter of 2024, $55.7 million during the second quarter of 2024, and $59.5 million during the third quarter of 2023. Excluding the impact of the loss on extinguishment of debt, amortization of other intangible assets and severance expense, adjusted non-interest expense was $57.4 million during the third quarter of 2024, $55.4 million during the second quarter of 2024, and $50.6 million during the third quarter of 2023 (see “Non-GAAP Reconciliation” tables at the end of this news release).

Mr. Lubow commented, “As we have communicated previously, the increase in non-interest expense has been due to the significant investments and hires in the Private and Commercial Bank and the Middle Market C&I Lending operations. Third quarter results reflected a fully-loaded run-rate for these initiatives and we expect to keep our expense base relatively flat in the fourth quarter of 2024.”

The ratio of non-interest expense to average assets was 1.71% during the third quarter of 2024, compared to 1.66% during the linked quarter and 1.73% for the third quarter of 2023. Excluding the impact of the loss on extinguishment of debt, amortization of other intangible assets and severance expense, the ratio of adjusted non-interest expense to average assets was 1.70% during the third quarter of 2024, compared to 1.65% during the linked quarter and 1.48% for the third quarter of 2023 (see “Non-GAAP Reconciliation” tables at the end of this news release).

The efficiency ratio was 65.9% during the third quarter of 2024, compared to 63.8% during the linked quarter and 70.5% during the third quarter of 2023. Excluding the impact of net (gain) loss on sale of securities and other assets, fair value change in equity securities and loans held for sale, severance expense, loss on extinguishment of debt and amortization of other intangible assets the adjusted efficiency ratio was 65.6% during the third quarter of 2024, compared to 65.9% during the linked quarter and 59.7% during the third quarter of 2023 (see “Non-GAAP Reconciliation” tables at the end of this news release).

Income Tax Expense

The reported effective tax rate for the third quarter of 2024 was 26.9% compared to 29.0% for the second quarter of 2024, and 35.1% for the third quarter of 2023.

Credit Quality

Non-performing loans were $49.5 million at September 30, 2024, compared to $24.8 million for the prior quarter.

A credit loss provision of $11.6 million was recorded during the third quarter of 2024, compared to a credit loss provision of $5.6 million during the second quarter of 2024, and a credit loss provision of $1.8 million during the third quarter of 2023.

Capital Management

The Company’s and the Bank’s regulatory capital ratios continued to be in excess of all applicable regulatory requirements as of September 30, 2024. All risk-based regulatory capital ratios increased in the third quarter of 2024.

Dividends per common share were $0.25 during the third and second quarters of 2024, respectively.

Book value per common share was $29.31 at September 30, 2024 compared to $28.97 at June 30, 2024.

Tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by the number of shares outstanding) was $25.22 at September 30, 2024 compared to $24.87 at June 30, 2024 (see “Non-GAAP Reconciliation” tables at the end of this news release).

Earnings Call Information

The Company will conduct a conference call at 9:00 a.m. (ET) on Tuesday, October 22, 2024, during which CEO Lubow will discuss the Company’s third quarter 2024 financial performance, with a question-and-answer session to follow.

Participants may access the conference call via webcast using this link: https://edge.media-server.com/mmc/p/hfnjf6ym. To participate via telephone, please register in advance using this link: https://register.vevent.com/register/BI017781a02def49c0ad228b72ba201600. Upon registration, all telephone participants will receive a one-time confirmation email detailing how to join the conference call, including the dial-in number along with a unique PIN that can be used to access the call. All participants are encouraged to dial-in 10 minutes prior to the start time.

A replay of the conference call and webcast will be available on-demand for 12 months at https://edge.media-server.com/mmc/p/hfnjf6ym.

ABOUT DIME COMMUNITY BANCSHARES, INC.
Dime Community Bancshares, Inc. is the holding company for Dime Community Bank, a New York State-chartered trust company with over $13.7 billion in assets and the number one deposit market share among community banks on Greater Long Island⁽¹⁾.

⁽¹⁾ Aggregate deposit market share for Kings, Queens, Nassau & Suffolk counties for community banks with less than $20 billion in assets.

This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by use of words such as “annualized,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions.

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may affect demand for our products and reduce interest margins and the value of our investments; changes in deposit flows, the cost of funds, loan demand or real estate values may adversely affect the business of the Company; changes in the quality and composition of the Company’s loan or investment portfolios or unanticipated or significant increases in loan losses may negatively affect the Company’s financial condition or results of operations; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations; general socio-economic conditions, public health emergencies, international conflict, inflation, and recessionary pressures, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates and may adversely affect our customers, our financial results and our operations; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; there may be difficulties or unanticipated expense incurred in the consummation of new business initiatives or the integration of any acquired entities; and litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections entitled “Forward-Looking Statements” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and updates set forth in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Contact: Avinash Reddy
Senior Executive Vice President – Chief Financial Officer
718-782-6200 extension 5909

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands)

	September 30,			June 30,			December 31,
	2024			2024			2023
Assets:
Cash and due from banks	$	626,056		$	413,983		$	457,547
Securities available-for-sale, at fair value		774,608			819,222			886,240
Securities held-to-maturity		592,414			588,000			594,639
Loans held for sale		13,098			14,766			10,159
Loans held for investment, net:
Business loans ⁽¹⁾		2,653,624			2,530,896			2,310,379
One-to-four family and cooperative/condominium apartment		934,209			906,949			889,236
Multifamily residential and residential mixed-use ⁽²⁾⁽³⁾		3,866,931			3,920,354			4,017,703
Non-owner-occupied commercial real estate		3,281,923			3,315,100			3,381,842
Acquisition, development and construction		149,299			144,860			168,513
Other loans		6,058			6,699			5,755
Allowance for credit losses		(85,221	)		(77,812	)		(71,743	)
Total loans held for investment, net		10,806,823			10,747,046			10,701,685
Premises and fixed assets, net		35,066			36,054			44,868
Premises held for sale		—			—			905
Restricted stock		64,235			68,445			98,750
Bank Owned Life Insurance (“BOLI”)		372,367			354,761			349,816
Goodwill		155,797			155,797			155,797
Other intangible assets		4,181			4,467			5,059
Operating lease assets		48,537			51,703			52,729
Derivative assets		105,636			134,489			122,132
Accrued interest receivable		54,578			55,588			55,666
Other assets		93,133			104,442			100,013
Total assets	$	13,746,529		$	13,548,763		$	13,636,005
Liabilities:
Non-interest-bearing checking (excluding mortgage escrow deposits)	$	3,231,160		$	3,012,481		$	2,884,378
Interest-bearing checking		938,070			633,721			515,987
Savings (excluding mortgage escrow deposits)		1,845,266			2,340,222			2,335,354
Money market		3,898,509			3,607,090			3,125,996
Certificates of deposit		1,416,467			1,382,271			1,607,683
Deposits (excluding mortgage escrow deposits)		11,329,472			10,975,785			10,469,398
Non-interest-bearing mortgage escrow deposits		87,841			52,647			61,121
Interest-bearing mortgage escrow deposits		5			2			136
Total mortgage escrow deposits		87,846			52,649			61,257
FHLBNY advances		508,000			633,000			1,313,000
Subordinated debt, net		272,300			262,814			200,196
Derivative cash collateral		68,960			130,090			108,100
Operating lease liabilities		51,362			54,530			55,454
Derivative liabilities		98,108			122,567			121,265
Other liabilities		66,552			66,732			81,110
Total liabilities		12,482,600			12,298,167			12,409,780
Stockholders’ equity:
Preferred stock, Series A		116,569			116,569			116,569
Common stock		416			416			416
Additional paid-in capital		488,607			488,760			494,454
Retained earnings		827,690			826,080			813,007
Accumulated other comprehensive loss (“AOCI”), net of deferred taxes		(72,970	)		(82,780	)		(91,579	)
Unearned equity awards		(10,111	)		(12,023	)		(8,622	)
Treasury stock, at cost		(86,272	)		(86,426	)		(98,020	)
Total stockholders’ equity		1,263,929			1,250,596			1,226,225
Total liabilities and stockholders’ equity	$	13,746,529		$	13,548,763		$	13,636,005

⁽¹⁾ Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and Paycheck Protection Program (“PPP”) loans.
⁽²⁾ Includes loans underlying multifamily cooperatives.

⁽³⁾ While the loans within this category are often considered “commercial real estate” in nature, multifamily and loans underlying cooperatives are here reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands except share and per share amounts)

	Three Months Ended								Nine Months Ended
	September 30,		June 30,			September 30,			September 30,			September 30,
	2024		2024			2023			2024			2023
Interest income:
Loans	$	151,828	$	147,099		$	142,995		$	442,492		$	409,744
Securities		7,766		7,907			7,916			23,553			24,261
Other short-term investments		4,645		4,412			6,930			18,621			16,599
Total interest income		164,239		159,418			157,841			484,666			450,604
Interest expense:
Deposits and escrow		74,025		72,878			62,507			219,972			152,395
Borrowed funds		8,764		9,033			16,925			32,494			50,855
Derivative cash collateral		1,526		2,005			1,930			5,244			4,904
Total interest expense		84,315		83,916			81,362			257,710			208,154
Net interest income		79,924		75,502			76,479			226,956			242,450
Provision (recovery) for credit losses		11,603		5,585			1,806			22,398			(950	)
Net interest income after provision (recovery)		68,321		69,917			74,673			204,558			243,400
Non-interest income:
Service charges and other fees		4,267		3,972			3,963			12,783			12,633
Title fees		190		294			291			617			829
Loan level derivative income		132		1,085			783			1,623			6,353
BOLI income		2,606		2,484			2,317			7,551			7,332
Gain on sale of Small Business Administration (“SBA”) loans		19		113			335			385			1,061
Gain on sale of residential loans		38		27			21			142			103
Fair value change in equity securities and loans held for sale		39		(416	)		(299	)		(1,219	)		(1,079	)
Net loss on sale of securities		—		—			—			—			(1,447	)
Gain (loss) on sale of other assets		2		3,695			(22	)		6,665			(22	)
Other		338		554			539			1,359			1,571
Total non-interest income		7,631		11,808			7,928			29,906			27,334
Non-interest expense:
Salaries and employee benefits		36,132		32,184			30,520			100,353			87,054
Severance		—		—			8,562			42			9,068
Occupancy and equipment		7,448		7,409			7,277			22,225			21,794
Data processing costs		4,544		4,405			4,309			13,262			12,744
Marketing		1,629		1,637			2,079			4,763			5,016
Professional services		2,036		2,766			1,277			6,269			4,876
Federal deposit insurance premiums		2,105		2,250			1,866			6,594			5,613
Loss on extinguishment of debt		1		—			—			454			—
Amortization of other intangible assets		286		285			349			878			1,075
Other		3,548		4,758			3,284			11,094			11,944
Total non-interest expense		57,729		55,694			59,523			165,934			159,184
Income before taxes		18,223		26,031			23,078			68,530			111,550
Income tax expense		4,896		7,552			8,093			19,033			31,764
Net income		13,327		18,479			14,985			49,497			79,786
Preferred stock dividends		1,822		1,822			1,822			5,465			5,465
Net income available to common stockholders	$	11,505	$	16,657		$	13,163		$	44,032		$	74,321
Earnings per common share (“EPS”):
Basic	$	0.29	$	0.43		$	0.34		$	1.13		$	1.92
Diluted	$	0.29	$	0.43		$	0.34		$	1.13		$	1.92

Average common shares outstanding for diluted EPS		38,366,619		38,329,485			38,203,961			38,317,223			38,177,704

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED SELECTED FINANCIAL HIGHLIGHTS (Dollars in thousands except per share amounts)

	At or For the Three Months Ended									At or For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Per Share Data:
Reported EPS (Diluted)	$	0.29		$	0.43		$	0.34		$	1.13		$	1.92
Cash dividends paid per common share		0.25			0.25			0.25			0.75			0.74
Book value per common share		29.31			28.97			28.03			29.31			28.03
Tangible common book value per share ⁽¹⁾		25.22			24.87			23.87			25.22			23.87
Common shares outstanding		39,152			39,148			38,811			39,152			38,811
Dividend payout ratio		86.21	%		58.14	%		73.53	%		66.37	%		38.54	%

Performance Ratios (Based upon Reported Net Income):
Return on average assets		0.39	%		0.55	%		0.44	%		0.49	%		0.78	%
Return on average equity		4.19			5.88			4.91			5.24			8.78
Return on average tangible common equity ⁽¹⁾		4.70			6.88			5.69			6.06			10.73
Net interest margin		2.50			2.41			2.34			2.37			2.52
Non-interest expense to average assets		1.71			1.66			1.73			1.63			1.56
Efficiency ratio		65.9			63.8			70.5			64.6			59.0
Effective tax rate		26.87			29.01			35.07			27.77			28.48

Balance Sheet Data:
Average assets	$	13,502,753		$	13,418,441		$	13,759,493		$	13,571,710		$	13,623,570
Average interest-earning assets		12,734,246			12,624,556			12,984,061			12,791,233			12,853,701
Average tangible common equity ⁽¹⁾		996,578			979,611			943,805			981,614			933,072
Loan-to-deposit ratio at end of period ⁽²⁾		95.4			98.2			102.0			95.4			102.0

Capital Ratios and Reserves – Consolidated: ⁽³⁾
Tangible common equity to tangible assets ⁽¹⁾		7.27	%		7.27	%		6.87	%
Tangible equity to tangible assets ⁽¹⁾		8.13			8.14			7.73
Tier 1 common equity ratio		10.16			10.06			9.67
Tier 1 risk-based capital ratio		11.28			11.17			10.76
Total risk-based capital ratio		14.76			14.46			13.33
Tier 1 leverage ratio		8.76			8.78			8.38
Consolidated CRE concentration ratio ⁽⁴⁾		487			499			547
Allowance for credit losses/ Total loans		0.78			0.72			0.67
Allowance for credit losses/ Non-performing loans		172.29			313.21			311.16

⁽¹⁾ See “Non-GAAP Reconciliation” tables for reconciliation of tangible equity, tangible common equity, and tangible assets.
⁽²⁾ Total deposits include mortgage escrow deposits, which fluctuate seasonally.
⁽³⁾ September 30, 2024 ratios are preliminary pending completion and filing of the Company’s regulatory reports.

⁽⁴⁾The Consolidated CRE concentration ratio is calculated using the sum of commercial real estate, excluding owner-occupied commercial real estate, multifamily, and acquisition, development, and construction, divided by consolidated capital. The September 30, 2024 ratio is preliminary pending completion and filing of the Company’s regulatory reports.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME (Dollars in thousands)

	Three Months Ended
	September 30, 2024						June 30, 2024						September 30, 2023
					Average						Average						Average
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Interest-earning assets:
Business loans ⁽¹⁾	$	2,609,934	$	46,656	7.11	%	$	2,400,219	$	42,933	7.19	%	$	2,260,203	$	38,384	6.74	%
One-to-four family residential, including condo and coop		924,150		11,024	4.75			886,037		9,968	4.52			879,688		9,165	4.13
Multifamily residential and residential mixed-use		3,902,220		45,790	4.67			3,958,617		45,775	4.65			4,114,476		46,099	4.45
Non-owner-occupied commercial real estate		3,297,760		44,804	5.40			3,359,004		44,728	5.36			3,382,927		44,184	5.18
Acquisition, development, and construction		147,875		3,505	9.43			164,283		3,638	8.91			222,039		5,075	9.07
Other loans		4,891		49	3.99			5,100		57	4.50			6,156		88	5.67
Securities		1,493,492		7,766	2.07			1,537,487		7,907	2.07			1,619,960		7,916	1.94
Other short-term investments		353,924		4,645	5.22			313,809		4,412	5.65			498,612		6,930	5.51
Total interest-earning assets		12,734,246		164,239	5.13	%		12,624,556		159,418	5.08	%		12,984,061		157,841	4.82	%
Non-interest-earning assets		768,507						793,885						775,432
Total assets	$	13,502,753					$	13,418,441					$	13,759,493

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking ⁽²⁾	$	798,024	$	4,635	2.31	%	$	631,403	$	1,499	0.95	%	$	786,892	$	2,896	1.46	%
Money market		3,771,562		36,841	3.89			3,495,989		33,193	3.82			2,975,267		24,275	3.24
Savings ⁽²⁾		2,102,282		19,492	3.69			2,336,202		23,109	3.98			2,342,424		20,316	3.44
Certificates of deposit		1,232,984		13,057	4.21			1,393,678		15,077	4.35			1,494,491		15,020	3.99
Total interest-bearing deposits		7,904,852		74,025	3.73			7,857,272		72,878	3.73			7,599,074		62,507	3.26
FHLBNY advances		528,652		4,455	3.35			671,242		6,429	3.85			1,250,717		14,370	4.56
Subordinated debt, net		271,450		4,307	6.31			202,232		2,604	5.18			200,232		2,553	5.06
Other short-term borrowings		131		2	6.07			—		—	—			120		2	6.61
Total borrowings		800,233		8,764	4.36			873,474		9,033	4.16			1,451,069		16,925	4.63
Derivative cash collateral		91,305		1,526	6.65			145,702		2,005	5.53			156,795		1,930	4.88
Total interest-bearing liabilities		8,796,390		84,315	3.81	%		8,876,448		83,916	3.80	%		9,206,938		81,362	3.51	%
Non-interest-bearing checking ⁽²⁾		3,209,502						3,042,382						3,065,186
Other non-interest-bearing liabilities		223,546						242,980						265,559
Total liabilities		12,229,438						12,161,810						12,537,683
Stockholders’ equity		1,273,315						1,256,631						1,221,810
Total liabilities and stockholders’ equity	$	13,502,753					$	13,418,441					$	13,759,493
Net interest income			$	79,924					$	75,502					$	76,479
Net interest rate spread					1.32	%					1.28	%					1.31	%
Net interest margin					2.50	%					2.41	%					2.34	%
Deposits (including non-interest-bearing checking accounts) ⁽²⁾	$	11,114,354	$	74,025	2.65	%	$	10,899,654	$	72,878	2.69	%	$	10,664,260	$	62,507	2.33	%

⁽¹⁾ Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and PPP loans.
⁽²⁾ Includes mortgage escrow deposits.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED SCHEDULE OF NON-PERFORMING ASSETS (Dollars in thousands)

	At or For the Three Months Ended
	September 30,			June 30,			September 30,
Asset Quality Detail	2024			2024			2023
Non-performing loans (“NPLs”)
Business loans ⁽¹⁾	$	25,411		$	20,287		$	19,555
One-to-four family residential, including condominium and cooperative apartment		3,880			3,884			2,874
Multifamily residential and residential mixed-use		—			—			—
Non-owner-occupied commercial real estate		19,509			15			15
Acquisition, development, and construction		657			657			657
Other loans		6			—			219
Total Non-accrual loans	$	49,463		$	24,843		$	23,320
Total Non-performing assets (“NPAs”)	$	49,463		$	24,843		$	23,320

Total loans 90 days delinquent and accruing (“90+ Delinquent”)	$	—		$	—		$	—

NPAs and 90+ Delinquent	$	49,463		$	24,843		$	23,320

NPAs and 90+ Delinquent / Total assets		0.36	%		0.18	%		0.17	%
Net charge-offs (“NCOs”)	$	4,199		$	3,640		$	4,864
NCOs / Average loans ⁽²⁾		0.15	%		0.14	%		0.18	%

⁽¹⁾ Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and PPP loans.
⁽²⁾ Calculated based on annualized NCOs to average loans, excluding loans held for sale.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(Dollars in thousands except per share amounts)

The following tables below provide a reconciliation of certain financial measures calculated under generally accepted accounting principles (“GAAP”) (as reported) and non-GAAP measures. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United States. The Company’s management believes the presentation of non-GAAP financial measures provides investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.

The following non-GAAP financial measures exclude pre-tax income and expenses associated with the fair value change in equity securities and loans held for sale, net (gain) loss on sale of securities and other assets, severance, the FDIC special assessment and loss on extinguishment of debt:


	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2024				2024				2023				2024				2023
Reconciliation of Reported and Adjusted (non-GAAP) Net Income Available to Common Stockholders
Reported net income available to common stockholders	$	11,505			$	16,657			$	13,163			$	44,032			$	74,321
Adjustments to net income ^(1):
Fair value change in equity securities and loans held for sale		(39	)			416				299				1,219				1,079
Net (gain) loss on sale of securities and other assets		(2	)			(3,695	)			22				(6,665	)			1,469
Severance		—				—				8,562				42				9,068
Loss on extinguishment of debt		1				—				—				454				—
Income tax effect of adjustments		13				1,043				(176	)			1,574				(985	)
Adjusted net income available to common stockholders (non-GAAP)	$	11,478			$	14,421			$	21,870			$	40,656			$	84,952

Adjusted Ratios (Based upon Adjusted (non-GAAP) Net Income as calculated above)
Adjusted EPS (Diluted)	$	0.29			$	0.37			$	0.56			$	1.04			$	2.19
Adjusted return on average assets		0.39		%		0.48		%		0.69		%		0.45		%		0.88		%
Adjusted return on average equity		4.18				5.17				7.76				4.89				9.95
Adjusted return on average tangible common equity		4.69				5.97				9.38				5.60				12.25
Adjusted non-interest expense to average assets		1.70				1.65				1.48				1.62				1.46
Adjusted efficiency ratio		65.6				65.9				59.7				65.5				54.7

⁽¹⁾ Adjustments to net income are taxed at the Company’s approximate statutory tax rate.

The following table presents a reconciliation of operating expense as a percentage of average assets (as reported) and adjusted operating expense as a percentage of average assets (non-GAAP):


	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2024			2024			2023			2024			2023
Operating expense as a % of average assets – as reported	1.71		%	1.66		%	1.73		%	1.63		%	1.56		%
Loss on extinguishment of debt	—			—			—			—			—
Severance	—			—			(0.25	)		—			(0.09	)
Amortization of other intangible assets	(0.01	)		(0.01	)		—			(0.01	)		(0.01	)
Adjusted operating expense as a % of average assets (non-GAAP)	1.70		%	1.65		%	1.48		%	1.62		%	1.46		%

The following table presents a reconciliation of efficiency ratio (non-GAAP) and adjusted efficiency ratio (non-GAAP):


	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2024				2024				2023				2024				2023
Efficiency ratio – as reported (non-GAAP) ⁽¹⁾		65.9		%		63.8		%		70.5		%		64.6		%		59.0		%
Non-interest expense – as reported	$	57,729			$	55,694			$	59,523			$	165,934			$	159,184
Severance		—				—				(8,562	)			(42	)			(9,068	)
Loss on extinguishment of debt		(1	)			—				—				(454	)			—
Amortization of other intangible assets		(286	)			(285	)			(349	)			(878	)			(1,075	)
Adjusted non-interest expense (non-GAAP)	$	57,442			$	55,409			$	50,612			$	164,560			$	149,041
Net interest income – as reported	$	79,924			$	75,502			$	76,479			$	226,956			$	242,450
Non-interest income – as reported	$	7,631			$	11,808			$	7,928			$	29,906			$	27,334
Fair value change in equity securities and loans held for sale		(39	)			416				299				1,219				1,079
Net (gain) loss on sale of securities and other assets		(2	)			(3,695	)			22				(6,665	)			1,469
Adjusted non-interest income (non-GAAP)	$	7,590			$	8,529			$	8,249			$	24,460			$	29,882
Adjusted total revenues for adjusted efficiency ratio (non-GAAP)	$	87,514			$	84,031			$	84,728			$	251,416			$	272,332
Adjusted efficiency ratio (non-GAAP) ⁽²⁾		65.6		%		65.9		%		59.7		%		65.5		%		54.7		%

⁽¹⁾The reported efficiency ratio is a non-GAAP measure calculated by dividing GAAP non-interest expense by the sum of GAAP net interest income and GAAP non-interest income.
⁽²⁾The adjusted efficiency ratio is a non-GAAP measure calculated by dividing adjusted non-interest expense by the sum of GAAP net interest income and adjusted non-interest income.

The following table presents the tangible common equity to tangible assets, tangible equity to tangible assets, and tangible common book value per share calculations (non-GAAP):


	September 30,				June 30,				September 30,
	2024				2024				2023
Reconciliation of Tangible Assets:
Total assets	$	13,746,529			$	13,548,763			$	13,651,405
Goodwill		(155,797	)			(155,797	)			(155,797	)
Other intangible assets		(4,181	)			(4,467	)			(5,409	)
Tangible assets (non-GAAP)	$	13,586,551			$	13,388,499			$	13,490,199

Reconciliation of Tangible Common Equity – Consolidated:
Total stockholders’ equity	$	1,263,929			$	1,250,596			$	1,204,344
Goodwill		(155,797	)			(155,797	)			(155,797	)
Other intangible assets		(4,181	)			(4,467	)			(5,409	)
Tangible equity (non-GAAP)		1,103,951				1,090,332				1,043,138
Preferred stock, net		(116,569	)			(116,569	)			(116,569	)
Tangible common equity (non-GAAP)	$	987,382			$	973,763			$	926,569

Common shares outstanding		39,152				39,148				38,811

Tangible common equity to tangible assets (non-GAAP)		7.27		%		7.27		%		6.87		%
Tangible equity to tangible assets (non-GAAP)		8.13				8.14				7.73

Book value per common share	$	29.31			$	28.97			$	28.03
Tangible common book value per share (non-GAAP)		25.22				24.87				23.87

The MIL Network –

January 24, 2025

MIL-OSI: First Financial Corporation Reports Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

TERRE HAUTE, Ind., Oct. 22, 2024 (GLOBE NEWSWIRE) — First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2024. During the quarter, the Corporation closed its acquisition of SimplyBank, Dayton, Tennessee. The quarter was impacted by purchase accounting adjustments and charges, which are reflected in the results.

Net income was $8.7 million compared to $16.3 million reported for the same period of 2023;
Diluted net income per common share of $0.74 compared to $1.37 for the same period of 2023;
Return on average assets was 0.64% compared to 1.35% for the three months ended September 30, 2023;
Credit loss provision was $9.4 million compared to provision of $1.2 million for the third quarter 2023; and
Pre-tax, pre-provision net income was $19.9 million compared to $20.5 million for the same period in 2023.¹

The Corporation further reported results for the nine months ended September 30, 2024:

Net income was $31.0 million compared to $48.3 million reported for the same period of 2023;
Diluted net income per common share of $2.63 compared to $4.02 for the same period of 2023;
Return on average assets was 0.82% compared to 1.33% for the nine months ended September 30, 2023;
Credit loss provision was $14.2 million compared to provision of $4.8 million for the nine months ended September 30, 2023; and
Pre-tax, pre-provision net income was $51.1 million compared to $63.1 million for the same period in 2023.¹

________________
¹Non-GAAP financial measure that Management believes is useful for investors and management to understand pre-tax profitability before giving effect to credit loss expense and to provide additional perspective on the Corporation’s performance over time as well as comparison to the Corporation’s peers and evaluating the financial results of the Corporation – please refer to the Non GAAP reconciliations contained in this release.

Average Total Loans

Average total loans for the third quarter of 2024 were $3.71 billion versus $3.15 billion for the comparable period in 2023, an increase of $558 million or 17.74%. On a linked quarter basis, average loans increased $508 million or 15.89% from $3.20 billion as of June 30, 2024. Increases in average loans over both periods were mostly a result of the acquisition of SimplyBank as further detailed in Total Loans Outstanding section below.

Total Loans Outstanding

Total loans outstanding as of September 30, 2024, were $3.72 billion compared to $3.12 billion as of September 30, 2023, an increase of $598 million or 19.17%. On a linked quarter basis, total loans increased $511 million or 15.96% from $3.20 billion as of June 30, 2024. The main driver of the increase was $467 million in loans acquired in the SimplyBank acquisition. Organic growth was primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans.

Norman D. Lowery, President and Chief Executive Officer, commented, “During the quarter, we closed the acquisition of SimplyBank, which gives us access to very attractive markets in Southeast Tennessee and Northwest Georgia. We also experienced another sound quarter of loan and net interest income growth. During the quarter our net interest margin expanded, and we expect continued improvement in coming quarters.”

Average Total Deposits

Average total deposits for the quarter ended September 30, 2024, were $4.71 billion versus $4.00 billion as of September 30, 2023, an increase of $705 million or 17.63%. Increases in average deposits over both periods were mostly a result of the acquisition of SimplyBank as further detailed in Total Deposits section below.

Total Deposits

Total deposits were $4.72 billion as of September 30, 2024, compared to $4.04 billion as of September 30, 2023, a $676 million increase, or 16.74%. On a linked quarter basis, total deposits increased $585.2 million, or 14.16%. $622 million in deposits were acquired in the SimplyBank acquisition. Non-interest bearing deposits were $831.6 million, and time deposits were $791.1 million as of September 30, 2024, compared to $770.5 million and $471.6 million, respectively for the same period of 2023.

Shareholders’ Equity

Shareholders’ equity at September 30, 2024, was $566.0 million compared to $470.2 million on September 30, 2023. During the last twelve months, the Corporation has not repurchased any shares of its common stock. 518,860 shares remain available for repurchase under the current repurchase authorization. The Corporation paid a $0.45 per share quarterly dividend in July and declared a $0.45 quarterly dividend, which was paid on October 15, 2024.

Book Value Per Share

Book Value per share was $47.93 as of September 30, 2024, compared to $40.00 as of September 30, 2023, an increase of $7.93 per share, or 19.82%. Tangible Book Value per share was $37.84 as of September 30, 2024, compared to $32.10 as of September 30, 2023, an increase of $5.74 per share, or 17.88%.

Tangible Common Equity to Tangible Asset Ratio

The Corporation’s tangible common equity to tangible asset ratio was 8.33% at September 30, 2024, compared to 8.04% at September 30, 2023.

Net Interest Income

Net interest income for the third quarter of 2024 was $47.2 million, compared to $41.2 million reported for the same period of 2023, an increase of $6.0 million, or 14.63%.

Net Interest Margin

The net interest margin for the quarter ended September 30, 2024, was 3.78% compared to the 3.74% reported at September 30, 2023. On a linked quarterly basis, the net interest margin increased 21 basis points from 3.57% at June 30, 2024.

Nonperforming Loans

Nonperforming loans as of September 30, 2024, were $14.1 million versus $12.6 million as of September 30, 2023. The increase was due primarily to the SimplyBank acquisition. The ratio of nonperforming loans to total loans and leases was 0.38% as of September 30, 2024, versus 0.40% as of September 30, 2023.

Credit Loss Provision

The provision for credit losses for the three months ended September 30, 2024, was $9.4 million, compared to $1.2 million for the third quarter 2023. The Corporation recorded $5.5 million in provision for the acquisition of SimplyBank. The increase in provision was also related to one previously identified credit, reflecting further deterioration in collateral values during the quarter.

Net Charge-Offs

Third quarter net charge-offs were $4.6 million compared to $2.1 million in the same period of 2023.

Allowance for Credit Losses

The Corporation’s allowance for credit losses as of September 30, 2024, was $46.2 million compared to $39.0 million as of September 30, 2023. The allowance for credit losses as a percent of total loans was 1.24% as of September 30, 2024, compared to 1.25% as of September 30, 2023. On a linked quarter basis, the allowance for credit losses as a percent of total loans increased 4 basis points from 1.20% as of June 30, 2024. The Corporation recorded $8.5 million in allowance for the acquisition of SimplyBank, which included $3 million to record purchased credit deteriorated (“PCD”) reserves.

Non-Interest Income

Non-interest income for the three months ended September 30, 2024 and 2023 was $11.2 million and $11.6 million, respectively.

Non-Interest Expense

Non-interest expense for the three months ended September 30, 2024, was $38.6 million compared to $32.3 million in 2023. This includes $844 thousand of acquisition-related expenses during the quarter, as well as an overall increase in operating expenses as a result of the acquisition.

Efficiency Ratio

The Corporation’s efficiency ratio was 64.43% for the quarter ending September 30, 2024, versus 59.57% for the same period in 2023.

Income Taxes

Income tax expense for the three months ended September 30, 2024, was $1.7 million versus $3.0 million for the same period in 2023. The effective tax rate for 2024 was 16.44% compared to 17.37% for 2023.

About First Financial Corporation

First Financial Corporation (NASDAQ:THFF) is the holding company for First Financial Bank N.A., which is the fifth oldest national bank in the United States, operating 83 banking centers in Illinois, Indiana, Kentucky, Tennessee, and Georgia. Additional information is available at http://www.first-online.bank.

Investor Contact:
Rodger A. McHargue
Chief Financial Officer
P: 812-238-6334
E: rmchargue@first-online.com


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
END OF PERIOD BALANCES
Assets	$	5,483,351	$	4,891,068	$	4,784,806	$	5,483,351	$	4,784,806
Deposits	$	4,717,489	$	4,132,327	$	4,040,995	$	4,717,489	$	4,040,995
Loans, including net deferred loan costs	$	3,715,235	$	3,204,009	$	3,117,626	$	3,715,235	$	3,117,626
Allowance for Credit Losses	$	46,169	$	38,334	$	39,034	$	46,169	$	39,034
Total Equity	$	565,951	$	530,670	$	470,168	$	565,951	$	470,168
Tangible Common Equity ^(a)	$	446,786	$	438,569	$	377,367	$	446,786	$	377,367

AVERAGE BALANCES
Total Assets	$	5,483,572	$	4,813,308	$	4,814,251	$	5,033,748	$	4,828,165
Earning Assets	$	5,165,520	$	4,556,839	$	4,575,996	$	4,762,940	$	4,590,258
Investments	$	1,342,037	$	1,279,278	$	1,351,433	$	1,309,879	$	1,384,941
Loans	$	3,705,779	$	3,197,695	$	3,147,317	$	3,361,207	$	3,104,623
Total Deposits	$	4,705,614	$	4,113,826	$	4,000,302	$	4,288,426	$	4,124,520
Interest-Bearing Deposits	$	4,403,454	$	3,413,752	$	3,222,633	$	3,714,432	$	3,309,111
Interest-Bearing Liabilities	$	157,227	$	152,303	$	309,948	$	176,985	$	197,142
Total Equity	$	546,912	$	517,890	$	493,764	$	529,174	$	494,428

INCOME STATEMENT DATA
Net Interest Income	$	47,170	$	39,294	$	41,150	$	125,384	$	127,672
Net Interest Income Fully Tax Equivalent ^(b)	$	48,630	$	40,673	$	42,539	$	129,600	$	131,774
Provision for Credit Losses	$	9,400	$	2,966	$	1,200	$	14,166	$	4,800
Non-interest Income	$	11,223	$	9,905	$	11,627	$	30,559	$	31,455
Non-interest Expense	$	38,564	$	32,651	$	32,265	$	104,637	$	95,932
Net Income	$	8,741	$	11,369	$	16,285	$	31,034	$	48,252

PER SHARE DATA
Basic and Diluted Net Income Per Common Share	$	0.74	$	0.96	$	1.37	$	2.63	$	4.02
Cash Dividends Declared Per Common Share	$	0.45	$	0.45	$	—	$	1.35	$	0.54
Book Value Per Common Share	$	47.93	$	44.92	$	40.00	$	47.93	$	40.00
Tangible Book Value Per Common Share ^(c)	$	36.22	$	36.04	$	33.69	$	37.84	$	32.10
Basic Weighted Average Common Shares Outstanding		11,808		11,814		11,901		11,809		11,993

________________
(a) Tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible common equity by excluding goodwill and other intangible assets from shareholder’s equity.
(b) Net interest income fully tax equivalent is a non-GAAP financial measure derived from GAAP-based amounts. We calculate net interest income fully tax equivalent by adding back the tax equivalent factor of tax exempt income to net interest income. We calculate the tax equivalent factor of tax exempt income by dividing tax exempt income by the net of tax rate of 75%.
(c) Tangible book value per common share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the factor by dividing average tangible common equity by average shares outstanding. We calculate average tangible common equity by excluding average intangible assets from average shareholder’s equity.


Key Ratios	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
Return on average assets	0.64	%	0.94	%	1.35	%	0.82	%	1.33	%
Return on average common shareholder’s equity	6.39	%	8.78	%	13.19	%	7.80	%	12.98	%
Efficiency ratio	64.43	%	64.56	%	59.57	%	65.33	%	58.77	%
Average equity to average assets	9.97	%	10.76	%	10.26	%	10.51	%	10.24	%
Net interest margin ^(a)	3.78	%	3.57	%	3.74	%	3.63	%	3.83	%
Net charge-offs to average loans and leases	0.49	%	0.59	%	0.24	%	0.43	%	0.24	%
Credit loss reserve to loans and leases	1.24	%	1.20	%	1.25	%	1.24	%	1.25	%
Credit loss reserve to nonperforming loans	326.65	%	240.85	%	310.19	%	326.65	%	310.19	%
Nonperforming loans to loans and leases	0.38	%	0.50	%	0.40	%	0.38	%	0.40	%
Tier 1 leverage	10.25	%	12.14	%	11.72	%	10.25	%	11.72	%
Risk-based capital – Tier 1	13.63	%	14.82	%	14.61	%	13.63	%	14.61	%

________________
(a) Net interest margin is calculated on a tax equivalent basis.



Asset Quality	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2024		2024		2023		2024		2023
Accruing loans and leases past due 30-89 days	$	16,391	$	14,913	$	15,961	$	16,391	$	15,961
Accruing loans and leases past due 90 days or more	$	1,517	$	1,353	$	1,370	$	1,517	$	1,370
Nonaccrual loans and leases	$	12,617	$	14,563	$	11,214	$	12,617	$	11,214
Other real estate owned	$	169	$	170	$	63	$	169	$	63
Nonperforming loans and other real estate owned	$	14,303	$	16,086	$	12,647	$	14,303	$	12,647
Total nonperforming assets	$	17,179	$	18,978	$	15,671	$	17,179	$	15,671
Gross charge-offs	$	6,936	$	6,091	$	3,601	$	16,219	$	11,520
Recoveries	$	2,365	$	1,414	$	1,528	$	5,449	$	5,975
Net charge-offs/(recoveries)	$	4,571	$	4,677	$	2,073	$	10,770	$	5,545


Non-GAAP Reconciliations	Three Months Ended September 30,
	2024		2023
($in thousands, except EPS)
Income before Income Taxes	$	10,429	$	19,312
Provision for credit losses		9,400		1,200
Provision for unfunded commitments		100		—
Pre-tax, Pre-provision Income	$	19,929	$	20,512


Non-GAAP Reconciliations	Nine Months Ended September 30,
	2024			2023
($ in thousands, except EPS)
Income before Income Taxes	$	37,140		$	58,395
Provision for credit losses		14,166			4,800
Provision for unfunded commitments		(200	)		(100	)
Pre-tax, Pre-provision Income	$	51,106		$	63,095


CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except per share data)

	September 30,			December 31,
	2024			2023
	(unaudited)
ASSETS
Cash and due from banks	$	77,312		$	76,759
Federal funds sold		1,356			282
Securities available-for-sale		1,271,992			1,259,137
Loans:
Commercial		2,112,738			1,817,526
Residential		924,276			695,788
Consumer		671,353			646,758
		3,708,367			3,160,072
(Less) plus:
Net deferred loan costs		6,868			7,749
Allowance for credit losses		(46,169	)		(39,767	)
		3,669,066			3,128,054
Restricted stock		15,366			15,364
Accrued interest receivable		25,386			24,877
Premises and equipment, net		82,213			67,286
Bank-owned life insurance		128,242			114,122
Goodwill		93,363			86,985
Other intangible assets		25,802			5,586
Other real estate owned		169			107
Other assets		93,084			72,587
TOTAL ASSETS	$	5,483,351		$	4,851,146

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	831,575		$	750,335
Interest-bearing:
Certificates of deposit exceeding the FDIC insurance limits		159,618			92,921
Other interest-bearing deposits		3,726,296			3,246,812
		4,717,489			4,090,068
Short-term borrowings		84,363			67,221
FHLB advances		30,456			108,577
Other liabilities		85,092			57,304
TOTAL LIABILITIES		4,917,400			4,323,170

Shareholders’ equity
Common stock, $.125 stated value per share;
Authorized shares-40,000,000
Issued shares-16,165,023 in 2024 and 16,137,220 in 2023
Outstanding shares-11,808,304 in 2024 and 11,795,024 in 2023		2,016			2,014
Additional paid-in capital		144,785			144,152
Retained earnings		677,155			663,726
Accumulated other comprehensive income/(loss)		(102,800	)		(127,087	)
Less: Treasury shares at cost-4,356,719 in 2024 and 4,342,196 in 2023		(155,205	)		(154,829	)
TOTAL SHAREHOLDERS’ EQUITY		565,951			527,976
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,483,351		$	4,851,146


CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Dollar amounts in thousands, except per share data)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024		2023			2024		2023
						(unaudited)
INTEREST INCOME:
Loans, including related fees	$	61,367	$	49,146		$	162,878	$	140,220
Securities:
Taxable		6,319		6,164			18,083		18,631
Tax-exempt		2,715		2,661			7,919		7,937
Other		1,294		752			2,989		2,864
TOTAL INTEREST INCOME		71,695		58,723			191,869		169,652
INTEREST EXPENSE:
Deposits		22,197		13,627			59,622		35,111
Short-term borrowings		993		1,923			2,928		4,025
Other borrowings		1,335		2,023			3,935		2,844
TOTAL INTEREST EXPENSE		24,525		17,573			66,485		41,980
NET INTEREST INCOME		47,170		41,150			125,384		127,672
Provision for credit losses		9,400		1,200			14,166		4,800
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		37,770		39,950			111,218		122,872
NON-INTEREST INCOME:
Trust and financial services		1,251		1,140			3,903		3,642
Service charges and fees on deposit accounts		8,139		7,099			21,576		20,971
Other service charges and fees		191		213			700		613
Securities gains (losses), net		103		—			104		—
Interchange income		177		—			490		47
Loan servicing fees		274		447			957		997
Gain on sales of mortgage loans		411		321			886		811
Other		677		2,407			1,943		4,374
TOTAL NON-INTEREST INCOME		11,223		11,627			30,559		31,455
NON-INTEREST EXPENSE:
Salaries and employee benefits		18,521		17,159			53,231		51,263
Occupancy expense		2,556		2,389			7,116		7,120
Equipment expense		4,280		3,580			12,736		10,404
FDIC Expense		558		613			1,721		1,977
Other		12,649		8,524			29,833		25,168
TOTAL NON-INTEREST EXPENSE		38,564		32,265			104,637		95,932
INCOME BEFORE INCOME TAXES		10,429		19,312			37,140		58,395
Provision for income taxes		1,688		3,027			6,106		10,143
NET INCOME		8,741		16,285			31,034		48,252
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes		31,628		(34,934	)		24,067		(36,504	)
Change in funded status of post retirement benefits, net of taxes		73		146			220		440
COMPREHENSIVE INCOME (LOSS)	$	40,442	$	(18,503	)	$	55,321	$	12,188
PER SHARE DATA
Basic and Diluted Earnings per Share	$	0.74	$	1.37		$	2.63	$	4.02
Weighted average number of shares outstanding (in thousands)		11,808		11,901			11,809		11,993

The MIL Network –

January 24, 2025

MIL-OSI Asia-Pac: PRESIDENT OF INDIA MEETS PRESIDENT OF MALAWI; LEADS DELEGATION LEVEL-TALKS

Source: Government of India (2)

PRESIDENT OF INDIA MEETS PRESIDENT OF MALAWI; LEADS DELEGATION LEVEL-TALKS

WITNESSES SIGNING OF MoUs ON ARTS & CULTURE, YOUTH MATTERS, SPORTS AND PHARMACEUTICAL COOPERATION

ADDRESSED INDIAN COMMUNITY IN MALAWI YESTERDAY

Posted On: 18 OCT 2024 7:46PM by PIB Delhi

On the second day (October 18, 2024) of her visit to Malawi, the President of India, Smt Droupadi Murmu, visited the State House, Lilongwe where she was warmly received by H.E. Dr Lazarus McCarthy Chakwera, the President of the Republic of Malawi. Both leaders held productive discussions on a wide range of issues to further deepen the India-Malawi relationship.

The President witnessed the signing of MoUs on Arts & Culture, Youth Matters, Sports and Pharmaceutical cooperation. She also witnessed the symbolic handing over of 1000 MT of rice as humanitarian assistance from India to Malawi and the handing over of the Bhabhatron cancer treating machine to Malawi. She announced the Government of India’s support in setting up of a permanent Artificial Limb Fitment Centre (Jaipur Foot) in Malawi.

Earlier this morning, the President visited the National War Memorial in Lilongwe and paid floral tribute to the soldiers and civilians who laid down their lives during the First and Second World Wars and other military operations. She also laid a wreath at the Kamuzu Mausoleum – the resting place of the first President of Malawi Dr Hastings Kamuzu Banda.

Yesterday evening (October 17, 2024), the President addressed the members of the Indian Community in Malawi at a Reception hosted by the High Commissioner of India to Malawi.

Speaking on the occasion, the President said that India values its partnership with Africa based on the principles of mutual trust, equality, and mutual benefit. The main pillars of our cooperation are development partnership, capacity building, trade and economic cooperation, defence and security, and people-to-people contacts. Each pillar is important to India-Africa relations.

The President said that India had played an important role in making the African Union a permanent member of the G20 organization. As a leading member of the Global South, India would continue to share its experiences and capabilities with countries of the Global South.

The President said that our diaspora is an integral part of the transformational journey of India. She urged the members of the Indian community to join this journey and take forward the development agenda of India.

Tomorrow (October 19, 2024), the President will perform Arati and Puja at Shree Radha Krishna Mandir in Lilongwe as well as visit Lake Malawi before leaving for New Delhi on the completion of three-nation State visits to Algeria, Mauritania and Malawi.

Please click here to see the President’s Speech –

***

MJPS/SR

(Release ID: 2066206) Visitor Counter : 85

MIL OSI Asia Pacific News –

January 24, 2025

Category: Emissions Trading

Éowyn’s place in history

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The role of climate change

Your views sought

About Proposal 1

About Proposal 2

Discussion paper

Webinars on the proposals

Times and dates of the webinars and the hui

Making your submission

Online

Email

Post

Submissions are public information

Striking the right balance

It’s time for carbon pricing

A carbon solutions levy

Regional considerations

The alternatives to carbon pricing are weak

PRESIDENT OF INDIA MEETS PRESIDENT OF MALAWI; LEADS DELEGATION LEVEL-TALKSWITNESSES SIGNING OF MoUs ON ARTS & CULTURE, YOUTH MATTERS, SPORTS AND PHARMACEUTICAL COOPERATION

PRESIDENT OF INDIA MEETS PRESIDENT OF MALAWI; LEADS DELEGATION LEVEL-TALKS

WITNESSES SIGNING OF MoUs ON ARTS & CULTURE, YOUTH MATTERS, SPORTS AND PHARMACEUTICAL COOPERATION