Category: Finance

  • MIL-OSI: Crescent Capital BDC, Inc. Reports Fourth Quarter 2024 Earnings Results; Declares a First Quarter Base Dividend of $0.42 Per Share and Series of Special Dividends

    Source: GlobeNewswire (MIL-OSI)

    LOS ANGELES, Feb. 19, 2025 (GLOBE NEWSWIRE) — Crescent Capital BDC, Inc. (“Crescent BDC” or “Company”) (NASDAQ: CCAP) today reported net investment income of $2.40 per share and net income of $1.99 per share for the year ended December 31, 2024. For the quarter ended December 31, 2024, net investment income and net income per share were $0.55 and $0.27, respectively. Reported net asset value (NAV) per share was $19.98 at December 31, 2024. The Company announced that its Board of Directors (the “Board”) declared a first quarter 2025 regular cash dividend of $0.42 per share to stockholders of record as of March 31, 2025, payable on April 15, 2025, and a series of special cash dividends related to undistributed taxable income in the aggregate amount of $0.15 per share, to be paid in three equal quarterly installments of $0.05 per share.1 

    Selected Financial Highlights
    ($ in millions, except per share amounts)

      As of and for the three months ended    
      December 31, 2024     September 30, 2024     December 31, 2023    
    Investments, at fair value   $   1,598.9     $   1,591.4     $   1,582.1    
    Total assets   $   1,656.3     $   1,645.0     $   1,627.4    
    Total net assets   $   740.6     $   748.8     $   742.6    
    Net asset value per share   $   19.98     $   20.20     $   20.04    
                               
    Investment income   $   46.4     $   51.6     $   50.0    
    Net investment income   $   20.5     $   23.5     $   22.8    
    Net realized gains (losses), net of taxes   $   (3.2 )   $   3.8     $   (6.6 )  
    Net change in unrealized gains (losses), net of taxes   $   (7.3 )   $   (12.0 )   $   14.7    
    Net increase (decrease) in net assets resulting from operations   $   10.0     $   15.3     $   30.9    
                               
    Net investment income per share   $   0.55     $   0.64     $   0.61    
    Net realized gains (losses) per share, net of taxes   $   (0.09 )   $   0.10     $   (0.18 )  
    Net change in unrealized gains (losses) per share, net of taxes   $   (0.19 )   $   (0.32 )   $   0.40    
    Net increase (decrease) in net assets resulting from operations per share   $   0.27     $   0.41     $   0.83    
    Regular distributions paid per share   $   0.42     $   0.42     $   0.41    
    Supplemental distributions paid per share   $   0.07     $   0.09     $   0.09    
                               
    Weighted average yield on income producing securities (at cost)2       10.9 %       11.6 %       12.3 %  
    Percentage of debt investments at floating rates       97.3 %       97.4 %       98.7 %  


    Portfolio & Investment Activity

    As of December 31, 2024 and December 31, 2023, the Company had investments in 185 and 186 portfolio companies with an aggregate fair value of $1,598.9 and $1,582.1 million, respectively. The portfolio at fair value was comprised of the following asset types:

    Portfolio Asset Types:                                
        As of    
    $ in millions   December 31, 2024       December 31, 2023    
    Investment Type   Fair Value     Percentage       Fair Value     Percentage    
    Senior secured first lien   $   379.7       23.7   %   $   429.2       27.0   %
    Unitranche first lien3       1,044.1       65.3           973.9       61.5    
    Unitranche first lien – last out3       14.8       0.9           13.5       0.9    
    Senior secured second lien       38.5       2.4           58.2       3.7    
    Unsecured debt       17.5       1.1           4.1       0.3    
    Equity & other       64.9       4.1           50.1       3.2    
    LLC/LP equity interests       39.4       2.5           53.1       3.4    
    Total investments   $   1,598.9       100.0   %   $   1,582.1       100.0   %


    Full Year

    For the year ended December 31, 2024, the Company invested $395.0 million across 33 new portfolio companies, 30 existing portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $371.1 million in aggregate exits, sales and repayments. For the year ended December 31, 2023, the Company invested $200.7 million across 15 new portfolio companies, 18 existing portfolio companies and several follow-on revolver and delayed draw fundings. This excludes $335.0 million of assets at cost acquired in connection with the acquisition of First Eagle Alternative Capital BDC, Inc. (“FCRD”) in March 2023. The assets acquired through the FCRD transaction, at cost, were comprised of $185.1 million of senior secured first lien, $100.1 million of unitranche first lien, $2.8 million of equity investments and $47.0 million of LLC/LP equity interests. During this period, the Company had $231.2 million in aggregate exits, sales and repayments.

    Fourth Quarter

    For the quarter ended December 31, 2024, the Company invested $127.1 million across 14 new portfolio companies and several follow-on revolver and delayed draw fundings. During this period, the Company had $105.8 million in aggregate exits, sales and repayments. For the quarter ended September 30, 2024, the Company invested $72.7 million across six new portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $92.3 million in aggregate exits, sales and repayments.

    Results of Operations

    Full Year

    For the year ended December 31, 2024, investment income increased to $197.4 million from $184.1 million for the year ended December 31, 2023. Interest income, which includes amortization of upfront fees, increased to $183.0 million for the year ended December 31, 2024 from $169.8 million for the year ended December 31, 2023, due to the growth of our income producing portfolio and one-time non-recurring income. Included in interest from investments for the years ended December 31, 2024 and 2023 are $3.7 million and $1.8 million of accelerated accretion of OID related to paydown activity, respectively. Dividend income decreased to $11.3 million for the year ended December 31, 2024 from $13.3 million for the year ended December 31, 2023. Other income, which includes consent, waiver, amendment, agency, underwriting and arranger fees, was $3.1 million and $1.0 million for the years ended December 31, 2024 and 2023, respectively.

    For the years ended December 31, 2024 and 2023, total expenses, including income and excise taxes, totaled $108.4 million and $101.6 million, respectively. Interest and other debt financing costs increased from $58.8 million for the year ended December 31, 2023 to $62.8 million for the year ended December 31, 2024, due to higher weighted average debt outstanding.

    Fourth Quarter

    For the quarter ended December 31, 2024, investment income decreased to $46.4 million from $51.6 million for the quarter ended September 30, 2024, respectively. Interest income, which includes amortization of upfront fees, decreased to $43.4 million for the quarter ended December 31, 2024 from $47.8 million for the quarter ended September 30, 2024, primarily due to a decrease in benchmark rates. Included in interest from investments for the quarters ended December 31, 2024 and September 30, 2024 are $0.5 million and $1.4 million of accelerated accretion of OID related to paydown activity, respectively. Dividend income decreased to $2.4 million for the quarter ended December 31, 2024 from $3.0 million for the quarter ended September 30, 2024. Other income, which includes consent, waiver, amendment, agency, underwriting and arranger fees, was $0.6 million and $0.8 million for the quarter ended December 31, 2024 and September 30, 2024, respectively.

    For the three months ended December 31, 2024 and September 30, 2024, total net expenses, including income and excise taxes, totaled $25.9 million and $28.1 million, respectively.

    Liquidity and Capital Resources

    As of December 31, 2024, the Company had $39.4 million in cash and cash equivalents and restricted cash and $337.5 million of undrawn capacity on its credit facilities and December 2024 note issuances, subject to borrowing base and other limitations. The weighted average cost of debt on the Company’s debt outstanding as of December 31, 2024 was 6.38%.

    The Company’s debt to equity ratio was 1.19x as of December 31, 2024.

    Conference Call

    The Company will host a webcast/conference call on Thursday, February 20, 2025 at 12:00 p.m. (Eastern Time) to discuss its financial results for the quarter and year ended December 31, 2024. Please visit Crescent BDC’s webcast link located on the Events & Presentations page of the Investor Relations section of Crescent BDC’s website for a slide presentation that complements the earnings conference call. 

    All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Events & Presentations page of the Investor Resources section of Crescent BDC’s website at www.crescentbdc.com. Please visit the website to test your connection before the webcast. Participants are also invited to access the conference call by dialing the following number:

    Toll Free: (800) 715-9871
    Conference ID: 1217499

    All callers will need to reference the Conference ID once connected with the operator. An archived replay will be available via a webcast link located on the Investor Relations section of Crescent BDC’s website.

    Endnotes

    Note: Numbers may not sum due to rounding.

    1. The first special dividend will be paid on March 14, 2025 to stockholders of record as of February 28, 2025. The second special dividend will be paid on June 13, 2025 to stockholders of record as of May 30, 2025. The third special dividend will be paid on September 15, 2025 to stockholders of record as of August 29, 2025.
    2. Yield includes performing debt and other income producing investments (excluding investments on non-accrual).
    3. Unitranche loans are first lien loans that may extend deeper in a company’s capital structure than traditional first lien debt and may provide for a waterfall of cash flow priority among different lenders in the unitranche loan. In certain instances, the Company may find another lender to provide the “first out” portion of such loan and retain the “last out” portion of such loan, in which case, the “first out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last out” portion that the Company would continue to hold. In exchange for the greater risk of loss, the “last out” portion earns a higher interest rate.
    Crescent Capital BDC, Inc.
    Consolidated Statements of Assets and Liabilities
    (in thousands except share and per share data)
     
      As of
    December 31, 2024
        As of
    December 31, 2023
     
    Assets          
    Investments, at fair value          
    Non-controlled non-affiliated investments (cost of$1,511,386 and $1,469,251, respectively) $ 1,504,013     $ 1,465,537  
    Non-controlled affiliated investments (cost of $46,104 and $56,084, respectively)   46,793       52,619  
    Controlled investments (cost of $66,416 and $67,353, respectively)   48,051       63,919  
    Cash and cash equivalents   10,130       7,780  
    Restricted cash and cash equivalents   29,292       16,690  
    Interest and dividend receivable   11,008       14,000  
    Receivable from unsettled transactions   1,163       251  
    Unrealized appreciation on foreign currency forward contracts   4,815       5,128  
    Deferred tax assets   746       114  
    Other assets   263       1,341  
    Total assets $ 1,656,274     $ 1,627,379  
               
    Liabilities          
    Debt (net of deferred financing costs of $8,214 and $7,138) $ 875,837     $ 844,783  
    Distributions payable   15,566       15,195  
    Interest and other debt financing costs payable   10,408       10,900  
    Management fees payable   5,066       5,026  
    Incentive fees payable   4,305       4,770  
    Deferred tax liabilities   746       578  
    Unrealized depreciation on foreign currency forward contracts         84  
    Accrued expenses and other liabilities   3,709       3,449  
    Total liabilities $ 915,637     $ 884,785  
               
    Net assets          
    Preferred stock, par value $0.001  per share (10,000 shares authorized,
    zero outstanding, respectively)
    $     $  
    Common stock, par value $0.001 per share (200,000,000 shares authorized,
    37,061,547 shares issued and outstanding)
      37       37  
    Paid-in capital in excess of par value   959,098       965,895  
    Accumulated earnings (loss)   (218,498 )     (223,338 )
    Total net assets $ 740,637     $ 742,594  
    Total liabilities and net assets $ 1,656,274     $ 1,627,379  
    Net asset value per share $ 19.98     $ 20.04  
    Crescent Capital BDC, Inc.
    Consolidated Statements of Operations
    (in thousands except share and per share data)
     
        For the years ended December 31,  
          2024       2023       2022  
    Investment Income:                  
    From non-controlled non-affiliated investments:                  
    Interest income   $ 166,912     $ 162,089     $ 101,751  
    Paid-in-kind interest     9,592       3,191       1,564  
    Dividend income     497       438       127  
    Other income     3,056       658       540  
    From non-controlled affiliated investments:                  
    Interest income     3,834       2,974       1,625  
    Paid-in-kind interest     1,529       816       2,106  
    Dividend income     1,058       2,058       5,169  
    Other income     16       309        
    From controlled investments:                  
    Interest income     1,077       609       745  
    Paid-in-kind interest           192       732  
    Dividend income     9,784       10,800       2,358  
    Other income     8              
    Total investment income     197,363       184,134       116,717  
                       
    Expenses:                  
    Interest and other debt financing costs     62,761       58,742       31,880  
    Management fees     20,223       19,613       16,344  
    Income based incentive fees     18,855       17,451       11,214  
    Capital gains based incentive fees                 (6,324 )
    Professional fees     2,027       1,593       1,302  
    Directors’ fees     618       600       524  
    Other general and administrative expenses     2,561       2,753       2,660  
    Total expenses     107,045       100,752       57,600  
    Management fees waiver     (125 )     (190 )     (229 )
    Income based incentive fees waiver     (145 )     (276 )     (538 )
    Net expenses     106,775       100,286       56,833  
    Net investment income before taxes     90,588       83,848       59,884  
    (Benefit) provision for income and excise taxes     1,555       1,307       155  
    Net investment income     89,033       82,541       59,729  
    Net realized and unrealized gains (losses) on investments:                  
    Net realized gain (loss) on:                  
    Non-controlled non-affiliated investments     (6,969 )     (12,465 )     1,157  
    Non-controlled affiliated investments     (5,214 )           7,098  
    Controlled investments     6,443             (3,301 )
    Foreign currency transactions     (1,171 )     (1,435 )     (33 )
    Foreign currency forward contracts     3,223       1,021       24  
    Net change in unrealized appreciation (depreciation) on:                  
    Non-controlled non-affiliated investments and foreign currency translation     (1,154 )     21,772       (43,818 )
    Non-controlled affiliated investments     4,154       (4,505 )     (9,419 )
    Controlled investments     (14,931 )     (1,171 )     (1,600 )
    Foreign currency forward contracts     (229 )     (2,954 )     6,513  
    Net realized and unrealized gains (losses) on investments     (15,848 )     263       (43,379 )
    Benefit (provision) for taxes on realized gain on investments           132       (911 )
    Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments     464       901       105  
    Net increase (decrease) in net assets resulting from operations   $ 73,649     $ 83,837     $ 15,544  
                       
    Per common share data:                  
    Net increase (decrease) in net assets resulting from operations per share (basic and diluted):   $ 1.99     $ 2.33     $ 0.50  
    Net investment income per share (basic and diluted):   $ 2.40     $ 2.30     $ 1.93  
    Weighted average shares outstanding (basic and diluted):     37,061,547       35,928,203       30,887,360  


    About Crescent BDC

    Crescent BDC is a business development company that seeks to maximize the total return of its stockholders in the form of current income and capital appreciation by providing capital solutions to middle market companies with sound business fundamentals and strong growth prospects. Crescent BDC utilizes the extensive experience, origination capabilities and disciplined investment process of Crescent. Crescent BDC is externally managed by Crescent Cap Advisors, LLC, a subsidiary of Crescent. Crescent BDC has elected to be regulated as a business development company under the Investment Company Act of 1940. For more information about Crescent BDC, visit www.crescentbdc.com. However, the contents of such website are not and should not be deemed to be incorporated by reference herein.

    About Crescent Capital Group

    Crescent is a global credit investment manager with $45 billion of assets under management. For over 30 years, the firm has focused on below investment grade credit through strategies that invest in marketable and privately originated debt securities including senior bank loans, high yield bonds, as well as private senior, unitranche and junior debt securities. Crescent is headquartered in Los Angeles with offices in New York, Boston, Chicago and London with more than 230 employees globally. Crescent is a part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. For more information about Crescent, visit www.crescentcap.com. However, the contents of such website are not and should not be deemed to be incorporated by reference herein.

    Contact:

    Dan McMahon
    daniel.mcmahon@crescentcap.com        
    212-364-0149

    Forward-Looking Statements

    This press release, and other statements that Crescent BDC may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to Crescent BDC’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.

    Crescent BDC cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which may change over time. Forward-looking statements speak only as of the date they are made, and Crescent BDC assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

    In addition to factors previously disclosed in Crescent BDC’s SEC reports and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) our future operating results; (2) our business prospects and the prospects of our portfolio companies; (3) the impact of investments that we expect to make; (4) our contractual arrangements and relationships with third parties; (5) the dependence of our future success on the general economy and its impact on the industries in which we invest; (6) the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives; (7) our expected financings and investments; (8) the adequacy of our cash resources and working capital, including our ability to obtain continued financing on favorable terms; (9) the timing of cash flows, if any, from the operations of our portfolio companies; (10) the impact of increased competition; (11) the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments; (12) potential conflicts of interest in the allocation of opportunities between us and other investment funds managed by our investment adviser or its affiliates; (13) the ability of our investment adviser to attract and retain highly talented professionals; (14) changes in law and policy accompanying the new administration and uncertainty pending any such changes; (15) increased geopolitical unrest, terrorist attacks or acts of war, which may adversely affect the general economy, domestic and local financial and capital markets, or the specific industries of our portfolio companies; (16) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets; (17) the unfavorable resolution of legal proceedings; and (18) the impact of changes to tax legislation and, generally, our tax position.

    Crescent BDC’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC, identifies additional factors that can affect forward-looking statements.

    Other Information

    The information in this press release is summary information only and should be read in conjunction with Crescent BDC’s annual report on Form 10-K for the year ended December 31, 2024, which Crescent BDC filed with the U.S. Securities and Exchange Commission (the SEC) on February 19, 2024, as well as Crescent BDC’s other reports filed with the SEC. A copy of Crescent BDC’s annual report on Form 10-K for the year ended December 31, 2024, Crescent BDC’s quarterly reports on Form 10-Q and Crescent BDC’s other reports filed with the SEC can be found on Crescent BDC’s website at www.crescentbdc.com and the SEC’s website at www.sec.gov.

    The MIL Network

  • MIL-OSI: Vital Energy Reports Fourth-Quarter and Full-Year 2024 Financial and Operating Results

    Source: GlobeNewswire (MIL-OSI)

    Reports record total and oil production for 4Q-24 and FY-24

    Updates development inventory to >11 years of oil-weighted locations

    TULSA, OK, Feb. 19, 2025 (GLOBE NEWSWIRE) — Vital Energy, Inc. (NYSE: VTLE) (“Vital Energy” or the “Company”) today reported fourth-quarter and full-year 2024 financial and operating results and provided its 2025 outlook. Supplemental slides have been posted to the Company’s website and can be found at www.vitalenergy.com. A conference call to discuss results is planned for 7:30 a.m. CT, Thursday, February 20, 2025. A webcast will be available on the Company’s website.

    Fourth-Quarter 2024 Highlights

    • Successfully integrated Point Energy assets; acquired production exceeding expectations and operating cost reductions in-line with expectations
    • Reported a net loss of $359.4 million, Adjusted Net Income1 of $86.5 million and cash flows from operating activities of $257.2 million
    • Generated Consolidated EBITDAX1 of $383.5 million and Adjusted Free Cash Flow1 of $110.8 million
    • Produced Company-record 147.8 thousand barrels of oil equivalent per day (“MBOE/d”) and oil production of 69.8 thousand barrels of oil per day (“MBO/d”)
    • Reported lease operating expense (“LOE”) of $8.89 per BOE, below guidance of $9.35 per BOE
    • Reported capital investments of $226.1 million, excluding non-budgeted acquisitions and leasehold expenditures

    Full-Year 2024 Highlights

    • Increased oil-weighted inventory to ~925 locations, ~400 of which breakeven below $50 per barrel WTI
    • Issued an aggregate $1 billion of senior unsecured notes due 2032 at 7.875% and utilized the proceeds to repurchase higher coupon notes, resulting in annualized interest expense savings of $11 million
    • Reported a net loss of $173.5 million, Adjusted Net Income1 of $270.0 million and cash flows from operating activities of $1.0 billion
    • Generated Consolidated EBITDAX1 of $1.3 billion and Adjusted Free Cash Flow1 of $232.8 million
    • Reported year-end 2024 proved reserves of 455.3 million BOE, an increase of 12% versus prior year

    1Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release. 

    “We strengthened our business in 2024 through enhanced scale, optimized assets and a lengthened runway of high-quality inventory,” said Jason Pigott, President and Chief Executive Officer. “We successfully integrated our largest ever asset purchase in the Delaware Basin and early results positively impacted our operating and financial performance. Vital Energy continues to show that our talented people can capture important synergies from acquisitions while expanding inventory.”

    “In 2025, our primary goals are reducing costs, maximizing Adjusted Free Cash Flow generation, absolute debt reduction, and extending and enhancing our existing inventory,” continued Pigott. “Our inventory provides us with ample high-return development opportunities and a strong outlook for Adjusted Free Cash Flow generation. Recent operational achievements, like horseshoe wells, are creating new efficiencies and allowing us to develop highly productive, stranded leasehold. We will continue to focus on optimizing our asset base to achieve our cash flow and debt repayment targets.”

    Fourth-Quarter 2024 Financial and Operations Summary
    Financial Results. The Company reported a net loss of $359.4 million, or $(9.59) per diluted share, which included a non-cash pre-tax impairment loss on oil and gas properties of $481.3 million, and Adjusted Net Income of $86.5 million, or $2.30 per adjusted diluted share. Cash flows from operating activities were $257.2 million and Consolidated EBITDAX was $383.5 million.

    Production. Vital Energy’s total and oil production exceeded the high end of guidance, averaging 147,819 BOE/d and 69,827 BO/d, respectively. Volumes were driven by better-than-expected production from the Point Energy assets.

    Capital Investments. Total capital investments, excluding non-budgeted acquisitions and leasehold expenditures, were $226 million, including approximately $17 million of additional drilling and completions investments related to increased working interest and carried interest and $5 million from acceleration of activity into the fourth quarter.

    Investments included $190 million for drilling and completions, $22 million in infrastructure investments, $8 million in other capitalized costs and $6 million in land, exploration and data-related costs.

    Operating Expenses. LOE during the period was $8.89 per BOE, below guidance of $9.35 per BOE, as the Company integrated its Point Energy assets. Lower expenses were primarily related to reduced workover activity on the Point Energy assets during integration.

    General and Administrative Expenses. General and administrative expenses totaled $1.95 per BOE for fourth-quarter 2024, in line with guidance. General and administrative expenses, excluding long-term incentive plan (“LTIP”) and transaction expenses were $1.71 per BOE. Cash LTIP expenses were $0.02 per BOE and reflected the decrease in Vital Energy’s common stock price during the third quarter. Non-cash LTIP expenses were $0.22 per BOE.

    Liquidity. At December 31, 2024, the Company had $880 million drawn on its $1.5 billion senior secured credit facility and cash and cash equivalents of $40 million.

    2025 Outlook

    Vital Energy’s 2025 development plan is designed to maximize cash flow to facilitate debt repayment, supported by its robust hedge position. In comparison to the Company’s earlier projections, the finalized 2025 outlook has lower capital investment levels and slightly lower oil production. In 2025, the Company expects to generate approximately $330 million of Adjusted Free Cash Flow at $70 per barrel WTI.

    Capital Investments. Vital Energy plans to invest $825 – $925 million in 2025, excluding non-budgeted acquisitions and leasehold expenditures. Efficiencies and lower costs are driving capital investments approximately 3% lower than earlier projections while expecting to complete approximately the same net lateral feet as in 2024.

    Production. The Company expects total production of 134.0 – 140.0 MBOE/d and oil production of 62.5 – 66.5 MBO/d. Production is approximately 3% lower than earlier projections. The shortfall is related to operational delays and the underperformance of a seven-well development package in Upton County.

    Operating Expenses. The Company has made significant progress reducing operating expenses through integration of its Point Energy assets. Some workover expense was deferred from fourth-quarter 2024 into the first quarter of 2025. Average LOE for the two quarters is expected to be around $9.20 per BOE, putting the Company on pace to achieve LOE below $9.00 per BOE by the end of 2025.

    Oil-Weighted Inventory

    The Company has continued to extend and enhance its inventory of high-return development locations. At year-end 2024, Vital Energy had approximately 925 locations with an average breakeven WTI oil price of around $50 WTI. Approximately 400 of these locations breakeven below $50 per barrel WTI. Additionally, there are an additional approximately 250 locations that can be added to inventory pending successful delineation.

    2024 Proved Reserves

    Vital Energy’s total proved reserves at year-end 2024 were 455.3 MMBOE (40% oil, 70% developed). The standardized measure of discounted net cash flows was $4.22 billion and the PV-10 value was $4.51 billion utilizing SEC benchmark pricing of $75.48 per barrel WTI for oil ($76.76 per barrel average realized price) and $2.13 per MMBtu Henry Hub for natural gas ($0.85 per Mcf average realized price).

    First-Quarter 2025 Guidance

    The table below reflects the Company’s guidance for production and capital investments.

        1Q-25E
    Total production (MBOE/d)           135.0 – 141.0
    Oil production (MBO/d)           62.0 – 66.0
    Capital investments, excluding non-budgeted acquisitions ($ MM)           $230 – $260
         

    The table below reflects the Company’s guidance for select revenue and expense items.

        1Q-25E
    Average sales price realizations (excluding derivatives):    
    Oil (% of WTI)           101%
    NGL (% of WTI)           26%
    Natural gas (% of Henry Hub)           50%
         
    Net settlements received (paid) for matured commodity derivatives ($ MM):    
    Oil           $14
    NGL           ($2)
    Natural gas           $0
         
    Selected average costs & expenses:    
    Lease operating expenses ($ MM)           $115 – $120
    Production and ad valorem taxes (% of oil, NGL and natural gas sales revenues)           6.30%
    Oil transportation and marketing expenses ($ MM)           $11.5 – $12.5
    Gas gathering, processing and transportation expenses ($ MM)           $7.0 – $8.0
    General and administrative expenses (excluding LTIP and transaction expenses, $ MM)           $21.5 – $23.0
    General and administrative expenses (LTIP cash, $ MM)           $0.5 – $0.6
    General and administrative expenses (LTIP non-cash, $ MM)           $3.0 – $3.5
    Depletion, depreciation and amortization ($ MM)           $180 – $190
         

    Conference Call Details

    Vital Energy plans to host a conference call at 7:30 a.m. CT on Thursday, February 20, 2025, to discuss its fourth-quarter and full-year 2024 financial and operating results and its 2025 outlook. Supplemental slides will be posted to the Company’s website. Interested parties are invited to listen to the call via the Company’s website at www.vitalenergy.com, under the tab for “Investor Relations | News & Presentations | Upcoming Events.”

    About Vital Energy

    Vital Energy, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma. Vital Energy’s business strategy is focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas.

    Additional information about Vital Energy may be found on its website at www.vitalenergy.com.

    Forward-Looking Statements
    This press release and any oral statements made regarding the contents of this release, including in the conference call referenced herein, contain forward-looking statements as defined under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, that address activities that Vital Energy assumes, plans, expects, believes, intends, projects, indicates, enables, transforms, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. Such statements are not guarantees of future performance and involve risks, assumptions and uncertainties. General risks relating to Vital Energy include, but are not limited to, continuing and worsening inflationary pressures and associated changes in monetary policy that may cause costs to rise; changes in domestic and global production, supply and demand for commodities, including as a result of actions by the Organization of Petroleum Exporting Countries and other producing countries (“OPEC+”) and the Russian-Ukrainian or Israeli-Hamas military conflicts, the decline in prices of oil, natural gas liquids and natural gas and the related impact to financial statements as a result of asset impairments and revisions to reserve estimates, reduced demand due to shifting market perception towards the oil and gas industry; competition in the oil and gas industry; the ability of the Company to execute its strategies, including its ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to its financial results and to successfully integrate acquired businesses, assets and properties and its ability to successfully execute on its strategy to enhance well productivity, including by drilling long-lateral horseshoe wells, pipeline transportation and storage constraints in the Permian Basin, the effects and duration of the outbreak of disease, and any related government policies and actions, long-term performance of wells, drilling and operating risks, the possibility of production curtailment, the impact of new laws and regulations, including those regarding the use of hydraulic fracturing, and under the Inflation Reduction Act (the “IRA”), including those related to climate change, the impact of legislation or regulatory initiatives intended to address induced seismicity on our ability to conduct our operations; uncertainties in estimating reserves and production results; hedging activities, tariffs on steel, the impacts of severe weather, including the freezing of wells and pipelines in the Permian Basin due to cold weather, technological innovations and scientific developments, physical and transition risks associated with climate change, to ESG and sustainability-related matters, risks related to our public statements with respect to such matters that may be subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential sustainability-related benefits, risks regarding potentially conflicting anti-ESG initiatives from certain U.S. state or other governments, possible impacts of litigation and regulations, the impact of the Company’s transactions, if any, with its securities from time to time, the impact of new environmental, health and safety requirements applicable to the Company’s business activities, the possibility of the elimination of federal income tax deductions for oil and gas exploration and development and imposition of any additional taxes under the IRA or otherwise, and other factors, including those and other risks described in its Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”), subsequent Quarterly Reports on Form 10-Q and those set forth from time to time in other filings with the Securities and Exchange Commission (“SEC”). These documents are available through Vital Energy’s website at www.vitalenergy.com under the tab “Investor Relations” or through the SEC’s Electronic Data Gathering and Analysis Retrieval System at www.sec.gov. Any of these factors could cause Vital Energy’s actual results and plans to differ materially from those in the forward-looking statements. Therefore, Vital Energy can give no assurance that its future results will be as estimated. Any forward-looking statement speaks only as of the date on which such statement is made. Vital Energy does not intend to, and disclaims any obligation to, correct, update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

    This press release and any accompanying disclosures include financial measures that are not in accordance with generally accepted accounting principles (“GAAP”), such as Adjusted Free Cash Flow, Adjusted Net Income, Net Debt and Consolidated EBITDAX. While management believes that such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. For a reconciliation of such non-GAAP financial measures to the nearest comparable measure in accordance with GAAP, please see the supplemental financial information at the end of this press release.

    Unless otherwise specified, references to “average sales price” refer to average sales price excluding the effects of the Company’s derivative transactions.

    All amounts, dollars and percentages presented in this press release are rounded and therefore approximate.

    Vital Energy, Inc.
    Selected operating data

        Three months ended December 31,   Year ended December 31,
          2024     2023       2024     2023
        (unaudited)   (unaudited)
    Sales volumes:                
    Oil (MBbl)             6,424     4,881       22,585     16,894
    NGL (MBbl)              3,703     2,808       13,270     9,128
    Natural gas (MMcf)             20,836     16,644       78,794     55,404
    Oil equivalent (MBOE)(1)             13,599     10,465       48,987     35,256
    Average daily oil equivalent sales volumes (BOE/d)(1)             147,819     113,747       133,845     96,591
    Average daily oil sales volumes (Bbl/d)(1)             69,827     53,070       61,708     46,284
    Average sales prices(1):                
    Oil ($/Bbl)(2)           $ 70.80   $ 79.37     $ 76.55   $ 78.64
    NGL ($/Bbl)(2)           $ 16.75   $ 14.14     $ 14.38   $ 15.00
    Natural gas ($/Mcf)(2)           $ 0.59   $ 0.90     $ 0.20   $ 1.14
    Average sales price ($/BOE)(2)           $ 38.92   $ 42.26     $ 39.51   $ 43.36
    Oil, with commodity derivatives ($/Bbl)(3)           $ 76.08   $ 77.73     $ 76.56   $ 76.99
    NGL, with commodity derivatives ($/Bbl)(3)           $ 16.75   $ 14.14     $ 14.29   $ 15.00
    Natural gas, with commodity derivatives ($/Mcf)(3)           $ 1.25   $ 1.18     $ 0.95   $ 1.34
    Average sales price, with commodity derivatives ($/BOE)(3)           $ 42.42   $ 41.94     $ 40.70   $ 42.87
    Selected average costs and expenses per BOE sold(1):                
    Lease operating expenses           $ 8.89   $ 8.33     $ 9.15   $ 7.41
    Production and ad valorem taxes             2.43     2.27       2.41     2.64
    Oil transportation and marketing expenses             0.76     0.85       0.92     1.17
    Gas gathering, processing and transportation expenses             0.42     0.16       0.36     0.06
    General and administrative (excluding LTIP and transaction expenses)             1.71     2.12       1.75     2.26
    Total selected operating expenses           $ 14.21   $ 13.73     $ 14.59   $ 13.54
    General and administrative (LTIP):                
    LTIP cash           $ 0.02   $ (0.09 )   $ 0.05   $ 0.11
    LTIP non-cash           $ 0.22   $ 0.22     $ 0.27   $ 0.28
    General and administrative (transaction expenses)           $   $ 0.79     $ 0.01   $ 0.32
    Depletion, depreciation and amortization           $ 15.77   $ 14.58     $ 15.15   $ 13.14

    _______________________________________________________________________________

    (1) The numbers presented are calculated based on actual amounts and may not recalculate using the rounded numbers presented in the table above.
    (2) Price reflects the average of actual sales prices received when control passes to the purchaser/customer adjusted for quality, certain transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the delivery point.
    (3) Price reflects the after-effects of the Company’s commodity derivative transactions on its average sales prices. The Company’s calculation of such after-effects includes settlements of matured commodity derivatives during the respective periods.
       

    Vital Energy, Inc.
    Consolidated balance sheets

    (in thousands, except share data)   December 31, 2024   December 31, 2023
        (unaudited)
    Assets        
    Current assets:        
    Cash and cash equivalents           $ 40,179     $ 14,061  
    Accounts receivable, net             299,698       238,773  
    Derivatives             101,474       99,336  
    Other current assets             25,205       18,749  
    Total current assets             466,556       370,919  
    Property and equipment:        
    Oil and natural gas properties, full cost method:        
    Evaluated properties             13,587,040       11,799,155  
    Unevaluated properties not being depleted             242,792       195,457  
    Less: accumulated depletion and impairment             (8,966,200 )     (7,764,697 )
    Oil and natural gas properties, net             4,863,632       4,229,915  
    Midstream and other fixed assets, net             134,265       130,293  
    Property and equipment, net             4,997,897       4,360,208  
    Derivatives             34,564       51,071  
    Operating lease right-of-use assets             104,329       144,900  
    Deferred income taxes             239,685       188,836  
    Other noncurrent assets, net             35,915       33,647  
    Total assets           $ 5,878,946     $ 5,149,581  
    Liabilities and stockholders’ equity        
    Current liabilities:        
    Accounts payable and accrued liabilities           $ 185,115     $ 159,892  
    Accrued capital expenditures             95,593       91,937  
    Undistributed revenue and royalties             187,563       194,307  
    Operating lease liabilities             73,143       70,651  
    Other current liabilities             59,725       78,802  
    Total current liabilities             601,139       595,589  
    Long-term debt, net             2,454,242       1,609,424  
    Derivatives             5,814        
    Asset retirement obligations             82,941       81,680  
    Operating lease liabilities             26,733       71,343  
    Other noncurrent liabilities             7,506       6,288  
    Total liabilities             3,178,375       2,364,324  
    Commitments and contingencies        
    Stockholders’ equity:        
    Preferred stock, $0.01 par value, 50,000,000 shares authorized, and zero and 595,104 issued and outstanding as of December 31, 2024 and 2023, respectively                   6  
    Common stock, $0.01 par value, 80,000,000 shares authorized, and 38,144,248 and 35,413,551 issued and outstanding as of December 31, 2024 and December 31, 2023, respectively             381       354  
    Additional paid-in capital             3,823,241       3,733,775  
    Accumulated deficit             (1,123,051 )     (948,878 )
    Total stockholders’ equity             2,700,571       2,785,257  
    Total liabilities and stockholders’ equity           $ 5,878,946     $ 5,149,581  
                     

    Vital Energy, Inc.
    Consolidated statements of operations

        Three months ended December 31,   Year ended December 31,
    (in thousands, except per share data)     2024       2023       2024       2023  
        (unaudited)   (unaudited)
    Revenues:                
    Oil sales           $ 454,852     $ 387,536     $ 1,728,971     $ 1,328,518  
    NGL sales             62,023       39,705       190,775       136,901  
    Natural gas sales             12,394       14,954       15,544       63,214  
    Sales of purchased oil             3,759       121       12,745       14,313  
    Other operating revenues             1,342       2,205       4,279       4,658  
    Total revenues             534,370       444,521       1,952,314       1,547,604  
    Costs and expenses:                
    Lease operating expenses             120,922       87,190       448,078       261,129  
    Production and ad valorem taxes             33,010       23,726       117,947       93,224  
    Oil transportation and marketing expenses             10,366       8,893       44,843       41,284  
    Gas gathering, processing and transportation expenses             5,759       1,642       17,825       2,013  
    Costs of purchased oil             3,912       209       13,243       15,065  
    General and administrative             26,644       31,766       101,578       104,819  
    Organizational restructuring expenses             795       1,654       795       1,654  
    Depletion, depreciation and amortization             214,498       152,626       741,966       463,244  
    Impairment expense             481,305             481,305        
    Other operating expenses, net             3,434       1,685       8,799       6,223  
    Total costs and expenses             900,645       309,391       1,976,379       988,655  
    Gain on disposal of assets, net             508       132       1,513       672  
    Operating income (loss)             (365,767 )     135,262       (22,552 )     559,621  
    Non-operating income (expense):                
    Gain (loss) on derivatives, net             (43,924 )     229,105       38,140       96,230  
    Interest expense             (53,564 )     (50,431 )     (177,794 )     (149,819 )
    Loss on extinguishment of debt, net                   (4,039 )     (66,115 )     (4,039 )
    Other income, net             1,139       6,051       7,060       9,748  
    Total non-operating income (expense), net             (96,349 )     180,686       (198,709 )     (47,880 )
    Income (loss) before income taxes             (462,116 )     315,948       (221,261 )     511,741  
    Income tax benefit (expense)             102,724       (34,514 )     47,740       183,337  
    Net income (loss)              (359,392 )     281,434       (173,521 )     695,078  
    Preferred stock dividends                   (449 )     (652 )     (449 )
    Net income (loss) available to common stockholders           $ (359,392 )   $ 280,985     $ (174,173 )   $ 694,629  
    Net income (loss) per common share:                
    Basic           $ (9.59 )   $ 10.04     $ (4.74 )   $ 34.30  
    Diluted           $ (9.59 )   $ 9.44     $ (4.74 )   $ 33.44  
    Weighted-average common shares outstanding:                
    Basic             37,477       27,991       36,725       20,254  
    Diluted             37,477       29,813       36,725       20,783  
                                     

    Vital Energy, Inc.
    Consolidated statements of cash flows

        Three months ended December 31,   Year ended December 31,
    (in thousands)     2024       2023       2024       2023  
        (unaudited)   (unaudited)
    Cash flows from operating activities:                
    Net income (loss)           $ (359,392 )   $ 281,434     $ (173,521 )   $ 695,078  
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
    Share-settled equity-based compensation, net             3,398       2,592       14,646       10,994  
    Depletion, depreciation and amortization             214,498       152,626       741,966       463,244  
    Impairment expense             481,305             481,305        
    Mark-to-market on derivatives:                
    (Gain) loss on derivatives, net             43,924       (229,105 )     (38,140 )     (96,230 )
    Settlements received (paid) for matured derivatives, net             47,571       (3,328 )     58,322       (17,648 )
    Loss on extinguishment of debt, net                   4,039       66,115       4,039  
    Deferred income tax (benefit) expense             (102,474 )     31,089       (50,196 )     (189,060 )
    Other, net             8,055       5,672       27,663       13,983  
    Changes in operating assets and liabilities:                
    Accounts receivable, net             (74,978 )     (38,935 )     (61,163 )     (77,742 )
    Other current assets             1,211       6,835       (6,456 )     (2,754 )
    Other noncurrent assets, net             (315 )     (782 )     (1,151 )     484  
    Accounts payable and accrued liabilities             34,084       48,520       12,803       52,763  
    Undistributed revenue and royalties             (10,169 )     (32,106 )     (29,762 )     (31,907 )
    Other current liabilities             (23,572 )     7,190       (25,004 )     (5,656 )
    Other noncurrent liabilities             (5,972 )     (2,007 )     (17,097 )     (6,632 )
      Net cash provided by operating activities             257,174       233,734       1,000,330       812,956  
    Cash flows from investing activities:                
    Acquisitions of oil and natural gas properties, net             (19,686 )     (309,379 )     (850,911 )     (849,508 )
    Capital expenditures:                
    Oil and natural gas properties             (231,158 )     (162,351 )     (864,437 )     (617,397 )
    Midstream and other fixed assets             (6,711 )     (3,329 )     (23,341 )     (14,021 )
    Proceeds from dispositions of capital assets, net of selling costs             133       60       2,874       2,403  
    Other investing activities                   311       (1,776 )     2,393  
      Net cash used in investing activities             (257,422 )     (474,688 )     (1,737,591 )     (1,476,130 )
    Cash flows from financing activities:                
    Borrowings on Senior Secured Credit Facility             310,000       135,000       1,750,000       765,000  
    Payments on Senior Secured Credit Facility             (290,000 )           (1,005,000 )     (700,000 )
    Issuance of senior unsecured notes                         1,001,500       897,710  
    Extinguishment of debt                   (457,792 )     (952,214 )     (457,792 )
    Proceeds from issuance of common stock, net of offering costs                   220             161,223  
    Stock exchanged for tax withholding             (36 )     (21 )     (3,569 )     (3,077 )
    Payments for debt issuance costs             (340 )     (10,680 )     (22,078 )     (27,011 )
    Other, net             (1,389 )     (1,407 )     (5,260 )     (3,253 )
    Net cash provided by (used in) financing activities             18,235       (334,680 )     763,379       632,800  
    Net increase (decrease) in cash and cash equivalents             17,987       (575,634 )     26,118       (30,374 )
    Cash and cash equivalents, beginning of period             22,192       589,695       14,061       44,435  
    Cash and cash equivalents, end of period           $ 40,179     $ 14,061     $ 40,179     $ 14,061  
                                     

    Vital Energy, Inc.
    Supplemental reconciliations of GAAP to non-GAAP financial measures

    Non-GAAP financial measures

    The non-GAAP financial measures of Adjusted Free Cash Flow, Adjusted Net Income, Consolidated EBITDAX, Net Debt and Net Debt to Consolidated EBITDAX, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Furthermore, these non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP measures of liquidity or financial performance, but rather should be considered in conjunction with GAAP measures, such as net income or loss, operating income or loss or cash flows from operating activities.

    Adjusted Free Cash Flow

    Adjusted Free Cash Flow is a non-GAAP financial measure that the Company defines as net cash provided by operating activities (GAAP) before net changes in operating assets and liabilities and transaction expenses related to non-budgeted acquisitions, less capital investments, excluding non-budgeted acquisition costs. Management believes Adjusted Free Cash Flow is useful to management and investors in evaluating operating trends in its business that are affected by production, commodity prices, operating costs and other related factors. There are significant limitations to the use of Adjusted Free Cash Flow as a measure of performance, including the lack of comparability due to the different methods of calculating Adjusted Free Cash Flow reported by different companies.

    The following table presents a reconciliation of net cash provided by operating activities (GAAP) to Adjusted Free Cash Flow (non-GAAP) for the periods presented:

        Three months ended December 31,   Year ended December 31,
    (in thousands)     2024       2023       2024       2023  
        (unaudited)   (unaudited)
    Net cash provided by operating activities           $ 257,174     $ 233,734     $ 1,000,330     $ 812,956  
    Less:                
    Net changes in operating assets and liabilities             (79,711 )     (11,285 )     (127,830 )     (71,444 )
    General and administrative (transaction expenses)             19       (8,221 )     (548 )     (11,341 )
    Cash flows from operating activities before net changes in operating assets and liabilities and transaction expenses related to non-budgeted acquisitions              336,866       253,240       1,128,708       895,741  
    Less capital investments, excluding non-budgeted acquisition costs:                
    Oil and natural gas properties(1)(2)             221,033       179,696       873,637       663,025  
    Midstream and other fixed assets(1)             5,043       4,511       22,276       15,601  
    Total capital investments, excluding non-budgeted acquisition costs              226,076       184,207       895,913       678,626  
    Adjusted Free Cash Flow (non-GAAP)            $ 110,790     $ 69,033     $ 232,795     $ 217,115  

    _______________________________________________________________________________

    (1) Includes capitalized share-settled equity-based compensation and asset retirement costs.
    (2) For the three months and year ended December 31, 2024, capital investments for oil and natural gas properties, excluding non-budgeted acquisition costs, includes $16.8 million of additional drilling and completions investments related to increased working interest and carried interest.
       

    Adjusted Net Income

    Adjusted Net Income is a non-GAAP financial measure that the Company defines as net income or loss (GAAP) plus adjustments for mark-to-market on derivatives, premiums paid or received for commodity derivatives that matured during the period, organizational restructuring expenses, impairment expense, gains or losses on disposal of assets, income taxes, other non-recurring income and expenses and adjusted income tax expense. Management believes Adjusted Net Income helps investors in the oil and natural gas industry to measure and compare the Company’s performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors.

    The following table presents a reconciliation of net income (loss) (GAAP) to Adjusted Net Income (non-GAAP) for the periods presented:

        Three months ended December 31,   Year ended December 31,
    (in thousands, except per share data)     2024       2023       2024       2023  
        (unaudited)   (unaudited)
    Net income (loss)            $ (359,392 )   $ 281,434     $ (173,521 )   $ 695,078  
    Plus:                
    Mark-to-market on derivatives:                
    (Gain) loss on derivatives, net             43,924       (229,105 )     (38,140 )     (96,230 )
    Settlements received (paid) for matured derivatives, net             47,571       (3,328 )     58,322       (17,068 )
    Settlements received for contingent consideration                   311             1,813  
    Organizational restructuring expenses             795       1,654       795       1,654  
    Impairment expense             481,305             481,305        
    Gain on disposal of assets, net             (508 )     (132 )     (1,513 )     (672 )
    Loss on extinguishment of debt, net                   4,039       66,115       4,039  
    Income tax (benefit) expense             (102,724 )     34,514       (47,740 )     (183,337 )
    General and administrative (transaction expenses)             (19 )     8,221       548       11,341  
    Adjusted income before adjusted income tax expense             110,952       97,608       346,171       416,618  
    Adjusted income tax expense(1)             (24,410 )     (21,474 )     (76,158 )     (91,656 )
    Adjusted Net Income (non-GAAP)           $ 86,542     $ 76,134     $ 270,013     $ 324,962  
    Net income (loss) per common share:                
    Basic           $ (9.59 )   $ 10.04     $ (4.74 )   $ 34.30  
    Diluted           $ (9.59 )   $ 9.44     $ (4.74 )   $ 33.44  
    Adjusted Net Income per common share:                
    Basic           $ 2.31     $ 2.72     $ 7.35     $ 16.04  
    Diluted           $ 2.31     $ 2.55     $ 7.35     $ 15.64  
    Adjusted diluted           $ 2.30     $ 2.55     $ 7.21     $ 15.64  
    Weighted-average common shares outstanding:                
    Basic             37,477       27,991       36,725       20,254  
    Diluted             37,477       29,813       36,725       20,783  
    Adjusted diluted             37,670       29,813       37,445       20,783  

    _______________________________________________________________________________

    (1) Adjusted income tax expense is calculated by applying a statutory tax rate of 22% for each of the periods ended December 31, 2024 and 2023.
       

    Consolidated EBITDAX

    Consolidated EBITDAX is a non-GAAP financial measure defined in the Company’s Senior Secured Credit Facility as net income or loss (GAAP) plus adjustments for share-settled equity-based compensation, depletion, depreciation and amortization, impairment expense, organizational restructuring expenses, gains or losses on disposal of assets, mark-to-market on derivatives, accretion expense, interest expense, income taxes and other non-recurring income and expenses. Consolidated EBITDAX provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, working capital movement or tax position. Consolidated EBITDAX does not represent funds available for future discretionary use because it excludes funds required for debt service, capital expenditures, working capital, income taxes, franchise taxes and other commitments and obligations. However, management believes Consolidated EBITDAX is useful to an investor because this measure:

    • is used by investors in the oil and natural gas industry to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon accounting methods, the book value of assets, capital structure and the method by which assets were acquired, among other factors;
    • helps investors to more meaningfully evaluate and compare the results of the Company’s operations from period to period by removing the effect of the Company’s capital structure from the Company’s operating structure; and
    • is used by management for various purposes, including (i) as a measure of operating performance, (ii) as a measure of compliance under the Senior Secured Credit Facility, (iii) in presentations to the board of directors and (iv) as a basis for strategic planning and forecasting.

    There are significant limitations to the use of Consolidated EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company’s net income or loss and the lack of comparability of results of operations to different companies due to the different methods of calculating Consolidated EBITDAX, or similarly titled measures, reported by different companies. The Company is subject to financial covenants under the Senior Secured Credit Facility, one of which establishes a maximum permitted ratio of Net Debt, as defined in the Senior Secured Credit Facility, to Consolidated EBITDAX. See Note 7 in the 2024 Annual Report, to be filed with the SEC, for additional discussion of the financial covenants under the Senior Secured Credit Facility. Additional information on Consolidated EBITDAX can be found in the Company’s Eleventh Amendment to the Senior Secured Credit Facility, as filed with the SEC on September 13, 2023.

    The following table presents a reconciliation of net income (loss) (GAAP) to Consolidated EBITDAX (non-GAAP) for the periods presented:

        Three months ended December 31,   Year ended December 31,
    (in thousands)     2024       2023       2024       2023  
        (unaudited)   (unaudited)
    Net income (loss)            $ (359,392 )   $ 281,434     $ (173,521 )   $ 695,078  
    Plus:                
    Share-settled equity-based compensation, net             3,398       2,592       14,646       10,994  
    Depletion, depreciation and amortization             214,498       152,626       741,966       463,244  
    Impairment expense             481,305             481,305        
    Organizational restructuring expenses             795       1,654       795       1,654  
    Gain on disposal of assets, net             (508 )     (132 )     (1,513 )     (672 )
    Mark-to-market on derivatives:                
    (Gain) loss on derivatives, net             43,924       (229,105 )     (38,140 )     (96,230 )
    Settlements received (paid) for matured derivatives, net             47,571       (3,328 )     58,322       (17,068 )
    Settlements received for contingent consideration                   311             1,813  
    Accretion expense             1,107       988       4,209       3,703  
    Interest expense             53,564       50,431       177,794       149,819  
    Loss extinguishment of debt, net                   4,039       66,115       4,039  
    Income tax (benefit) expense             (102,724 )     34,514       (47,740 )     (183,337 )
    General and administrative (transaction expenses)             (19 )     8,221       548       11,341  
    Consolidated EBITDAX (non-GAAP)           $ 383,519     $ 304,245     $ 1,284,786     $ 1,044,378  
                                     

    The following table presents a reconciliation of net cash provided by operating activities (GAAP) to Consolidated EBITDAX (non-GAAP) for the periods presented:

        Three months ended December 31,   Year ended December 31,
    (in thousands)     2024       2023       2024       2023  
        (unaudited)   (unaudited)
    Net cash provided by operating activities           $ 257,174     $ 233,734     $ 1,000,330     $ 812,956  
    Plus:                
    Interest expense             53,564       50,431       177,794       149,819  
    Organizational restructuring expenses             795       1,654       795       1,654  
    Current income tax (benefit) expense             (250 )     3,425       2,456       5,723  
    Net changes in operating assets and liabilities             79,711       11,285       127,830       71,444  
    General and administrative (transaction expenses)             (19 )     8,221       548       11,341  
    Settlements received for contingent consideration                   311             1,813  
    Other, net             (7,456 )     (4,816 )     (24,967 )     (10,372 )
    Consolidated EBITDAX (non-GAAP)           $ 383,519     $ 304,245     $ 1,284,786     $ 1,044,378  
                                     

    Net Debt

    Net Debt is a non-GAAP financial measure defined in the Company’s Senior Secured Credit Facility as the face value of long-term debt plus any outstanding letters of credit, less cash and cash equivalents, where cash and cash equivalents are capped at $100 million when there are borrowings on the Senior Secured Credit Facility. Management believes Net Debt is useful to management and investors in determining the Company’s leverage position since the Company has the ability, and may decide, to use a portion of its cash and cash equivalents to reduce debt.

    Net Debt to Consolidated EBITDAX

    Net Debt to Consolidated EBITDAX is a non-GAAP financial measure defined in the Company’s Senior Secured Credit Facility as Net Debt divided by Consolidated EBITDAX for the previous four quarters, which requires various treatment of asset transaction impacts. Net Debt to Consolidated EBITDAX is used by the Company’s management for various purposes, including as a measure of operating performance, in presentations to its board of directors and as a basis for strategic planning and forecasting.

    PV-10

    PV-10 is a non-GAAP financial measure that is derived from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP financial measure. PV-10 is a computation of the standardized measure of discounted future net cash flows on a pre-tax basis. PV-10 is equal to the standardized measure of discounted future net cash flows at the applicable date, before deducting future income taxes, discounted at 10 percent. Management believes that the presentation of PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to the Company’s estimated proved reserves prior to taking into account future corporate income taxes, and it is a useful measure for evaluating the relative monetary significance of the Company’s proved oil, NGL and natural gas assets. Further, investors may utilize the measure as a basis for comparison of the relative size and value of proved reserves to other companies. The Company uses this measure when assessing the potential return on investment related to proved oil, NGL and natural gas assets. However, PV-10 is not a substitute for the standardized measure of discounted future net cash flows. The PV-10 measure and the standardized measure of discounted future net cash flows do not purport to present the fair value of the Company’s oil, NGL and natural gas reserves of the property.

    (in millions)   December 31, 2024
        (unaudited)
    Standardized measure of discounted future net cash flows           $ 4,215  
    Less: present value of future income taxes discounted at 10%             (295 )
    PV-10 (non-GAAP)           $ 4,510  

    Investor Contact:
    Ron Hagood
    918.858.5504
    ir@vitalenergy.com

    The MIL Network

  • MIL-OSI USA: Welch on Trump’s Cuts to Medicaid: “The number one agenda item for him is cutting taxes for billionaires, the families be damned.”

    US Senate News:

    Source: United States Senator Peter Welch (D-Vermont)
    Senate Republicans’ proposed budget would slash Medicare, Medicaid, and the Affordable Care Act funding, rip away health care and raise costs for millions
    WASHINGTON, D.C. — Today, U.S. Senator Peter Welch (D-Vt.) a member of the Senate Finance Committee, and U.S. Senator Tammy Baldwin (D-Wis.) hosted a press conference on Capitol Hill to slam President Trump and Republicans’ cruel and chaotic budget which would raise health care costs for millions of Americans and slash Medicaid in order to give tax handouts to the ultra-wealthy. TheSenators highlighted how drastic cuts to Medicaid and the Affordable Care Act (ACA) included in Republicans’ budget blueprint would kick tens of millions of people off of their health coverage, decimate state budgets, cut payments to health care providers, and increase costs for the more than 100 million people across the country who rely on these programs.  
    “When I talk to Vermonters, their heads are spinning. There’s no stable ground underneath them, and they wonder what he’s up to…the number one agenda item for Trump is cutting taxes for billionaires, the families be damned,” said Senator Welch. “We are here to say no. We are going to fight every way that we can to stop this travesty from occurring.” 
    Watch a livestream and view photos from the press conference below: 
    Read Senator Welch’s remarks as delivered here. 
    Sens. Welch and Baldwin were joined by Senators Catherine Cortez Masto (D-Nev.), Reverend Raphael Warnock (D-Ga.), Maggie Hassan (D-N.H.), Patty Murray (D-Wash.), and Senate Finance Committee Ranking Member Ron Wyden (D-Ore.). 

    MIL OSI USA News

  • MIL-OSI Security: U.S. Marshals Arrest Violent Felon

    Source: US Marshals Service

    Gallatin, TN – A U.S. Marshals task force in Tennessee, working a collateral lead from the USMS in Georgia, arrested a man wanted in Cobb County, Georgia for a slew of felony charges.

    Darzell Thaddeus Wester, 27, was charged with armed robbery, aggravated assault (deadly weapon), aggravated battery, exploitation/ intimidation of elder person, and possession of a firearm during commission of a crime, and a warrant for his arrest was issued in the Superior Court of Cobb County on Jun. 14, 2024.

    On Nov. 15, 2024, the Cobb County Sheriff’s Office requested the assistance of the U. S.  Marshals Service Southeast Regional Fugitive Task Force with locating and apprehending Wester.

    Upon developing information that Wester was residing in the Gallatin area, the Southeast Regional Fugitive Task Force requested the assistance of the U.S. Marshals Service Middle Tennessee Fugitive Task Force.

    The Middle Tennessee Task Force located Wester at a residence on Turner Way in Gallatin. Wester was arrested without incident and taken to the Sumner County Sheriff’s Office jail where he was booked as a fugitive from justice and will await extradition to Georgia.

    Additionally, Wester has three outstanding warrants from Coffee, Robertson, and Dickson Counties in Tennessee. These warrants are for driving under the influence of alcohol, larceny, and fraud, respectively.

    The U.S. Marshals Service is committed to protecting communities by apprehending dangerous fugitives.

    The U.S. Marshals Middle Tennessee Task Force is a multi-agency task force that serves the Middle District of Tennessee. Its membership is comprised of Deputy U.S. Marshals, Putnam, Rutherford, and Sumner County Sheriff’s Deputies, Metro Nashville Police Officers, Tennessee Bureau of Investigation and Tennessee Department of Correction Special Agents, and the Tennessee Highway Patrol.

    MIL Security OSI

  • MIL-OSI USA: Legislation considered under suspension of the Rules of the House of Representatives during the week of February 24, 2025

    Source: US Congressional Budget Office

    The Majority Leader of the House of Representatives announces bills that will be considered under suspension of the rules in that chamber. Under suspension, floor debate is limited, all floor amendments are prohibited, points of order against the bill are waived, and final passage requires a two-thirds majority vote.

    At the request of the Majority Leader and the House Committee on the Budget, CBO estimates the effects of those bills on direct spending and revenues. CBO has limited time to review the legislation before consideration. Although it is possible in most cases to determine whether the legislation would affect direct spending or revenues, time may be insufficient to estimate the magnitude of those effects. If CBO has prepared estimates for similar or identical legislation, a more detailed assessment of budgetary effects, including effects on spending subject to appropriation, may be included.

    CBO’s estimates of the bills that have been posted for possible consideration under suspension of the rules during the week of February 24, 2025, include:

    • H.R. 250, To direct the Joint Committee on the Library to procure a statue of Benjamin Franklin for placement in the Capitol
    • H.R. 469, Semiquincentennial Congressional Time Capsule Act
    • H.R. 695, Medal of Honor Act, as amended
    • H.R. 754, Investing in Main Street Act of 2025
    • H.R. 788, DOE and SBA Research Act
    • H.R. 804, Rural Small Business Resilience Act
    • H.R. 818, SPUR Act
    • H.R. 825, Assisting Small Businesses Not Fraudsters Act
    • H.R. 828, SERV Act
    • H.R. 832, Small Business Advocacy Improvements Act of 2025

    MIL OSI USA News

  • MIL-OSI Security: Federal Grand Jury in Louisville Indicts 3 Illegal Aliens

    Source: Office of United States Attorneys

    Louisville, KY – A federal grand jury in Louisville, Kentucky, returned indictments on February 19, 2025, charging 3 illegal aliens with federal criminal offenses.   

    U.S. Attorney Michael A. Bennett of the Western District of Kentucky, Special Agent in Charge Michael E. Stansbury of the FBI Louisville Field Office, Special Agent in Charge Rana Saoud of Homeland Security Investigations, Nashville, Police Chief Mike Canon of the Calvert City Police Department, and Sam Olson, Field Office Director for Enforcement and Removal Operations (ERO) Chicago, U.S. Immigration Customs Enforcement made the announcement.

    According to the indictments:

    Juan Baltazar Felipe-Pedro, age 26, a citizen of Guatemala, was charged with reentry after deportation or removal. On or about January 23, 2025, Felipe-Pedro was an alien found in the United States after having been denied admission, excluded, deported, and removed from the United States on or about April 25, 2019. If convicted he faces a maximum sentence of 2 years in prison. This case is being investigated by HSI and ICE/ERO.

    Jhoandiris Jimenez-Barrio, age 26, and Yirvel Yonaker Rios-Castro, age 20, citizens of Venezuela, were indicted for conspiracy to commit bank larceny and attempted bank larceny. On or about January 31, 2025, they conspired with each other and others to break into and steal money from an automated teller machine (ATM). They traveled to a bank in Calvert City, Kentucky and attempted to open an ATM to steal money. Homeland Security Investigations verified that Jimenez-Barrio and Rios-Castro are Venezuelan and entered the United States illegally. If convicted, the men face a maximum sentence of 50 years in prison. The case is being investigated by the FBI, Calvert City Police Department, and HSI.

    A federal district court judge will determine any sentence after considering the sentencing guidelines and other statutory factors.

    There is no parole in the federal system.

    Assistant U.S. Attorneys A. Spencer McKiness, Seth Hancock, and Raymond McGee are prosecuting the cases.

    An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

    ###

    MIL Security OSI

  • MIL-OSI Security: New Orleans Man Guilty of Commodity Exchange Act Violation

    Source: Office of United States Attorneys

    NEW ORLEANS, LA – Acting U.S. Attorney Michael M. Simpson announced today that MICHAEL BRIAN DEPETRILLO, (“DEPETRILLO”), age 43, from New Orleans, pled guilty on February 18, 2025 to violating the Commodity Exchange Act, in violation of Title 7, United States Code, Section 13(a). DEPETRILLO faces up to ten (10) years imprisonment, up to three (3) years of supervised release, up to a $1,000,000.00 fine, plus the amount of any proceeds, and a mandatory $100 special assessment fee.

    According to court documents, DEPETRILLO was not properly registered as a Commodity Pool Operator (“CPO”) or an Associated Person (“AP”) of a CPO with the United States Commodity Futures Trading Commission (“CFTC”). DEPETRILLO, through various companies including, Meteor, LLC; NOLA FX Capital Management, LLC; ELC Enterprise Solutions, LLC; and Argosapolis, LLC, acted as a CPO and AP of a CPO and embezzled client funds in violation of federal law.     DEPETRILLO, while acting as an AP of unregistered CPOs, represented to victim investors that their funds would be pooled and invested in the NOLA FX FUND, that, in turn, would be used to trade foreign currency pairs on a leveraged, margined, or financed basis (“retail forex”).

    DEPETRILLO told investors that pooling their funds would be beneficial to them.  DEPETRILLO further represented, to certain investors, that either METEOR or NOLA FX CAPITAL managed the NOLA FX FUND.  In at least one representation, however, DEPETRILLO identified “NOLA FX Capital,” not the NOLA FX FUND, as the pooled investment vehicle.  DEPETRILLO lured investors by claiming he was investing their funds by trading in the foreign currency exchange, gold futures options, stocks, and cryptocurrency.  Instead of trading as promised, DEPETRILLO misappropriated pool funds.  DEPETRILLO then used these misappropriated pool funds to pay approximately $3,700,000 in “returns” to prior investors; approximately $575,000 on his own personal investments; approximately $425,000 on rent; approximately $200,000 on private air travel; and approximately $300,000 on online gambling, among other personal expenses.  To conceal DEPETRILLO’s misappropriation, he created and issued fictitious account statements in the names NOLA FX FUND and NOLA FX CAPITAL.  The fictitious account statements purported to show that: (1) DEPETRILLO had traded forex using pool participant funds, and (2) the NOLA FX FUND and NOLA FX CAPITAL had achieved significant trading returns for pool participants because of his profitable forex trading.  In fact, DEPETRILLO never deposited pool participant funds into trading accounts belonging to NOLA FX FUND or NOLA FX CAPITAL, and he never achieved the trading returns represented on the false account statements.  DEPETRILLO also did not set up the forex pool in the manner required by the regulations, did not receive pool participant funds in the name of the forex pool, and commingled pool participant funds with his own funds.  DEPETRILLO took in approximately $9.2 million in investor funds from approximately 55 victim investors during a seven-year period.

    Sentencing in this matter is scheduled for May 25, 2025, before United States District Judge Jay C. Zainey.

    The case is being investigated by the Federal Bureau of Investigation (“FBI”).  The FBI is seeking information that may help identify potential victims of DEPETRILLO’s fraudulent scheme.  FBI encourages the public to report any information to http://fbi.gov/depetrillovictims.

    The prosecution of this case is being handled by Assistant United States Attorneys Kathryn McHugh of the Financial Crimes Unit and Brian M. Klebba, Chief of the Financial Crimes Unit.

    MIL Security OSI

  • MIL-OSI Security: Lake Station Man Sentenced to 360 Months in Prison

    Source: Office of United States Attorneys

    HAMMOND – Matthew A. Bugielski, 26 years old, of Lake Station, Indiana, was sentenced by United States District Court Judge Gretchen S. Lund after pleading guilty to Sexual Exploitation of Children, announced Acting United States Attorney Tina L. Nommay.

    Bugielski was sentenced to 360 months in prison, followed by 15 years of supervised release, and ordered to pay restitution to the victim of the offense.

    According to documents in the case, on or about June 19, 2023, Bugielski produced a sexually explicit image of a minor by employing, using, and inducing the minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct. Further, Bugielski distributed that sexually explicit image to others over the internet. On occasions separate from June 19, 2023, Bugielski distributed other images and videos of child sexual abuse materials over the internet to others.

    This case was investigated by Homeland Security Investigations, with assistance from the Indiana Internet Crimes Against Children Task Force, the Indiana State Police, the Indiana State Police Digital Forensics Unit, the Roanoke Police Department, the Huntington County Sheriff’s Office, the Indianapolis Metropolitan Police Department, the Lake Station Police Department, and the New Chicago Police Department. The case was prosecuted by Assistant United States Attorney Emily Morgan.

    The case was brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

    MIL Security OSI

  • MIL-OSI Security: Detroit Man Sentenced To Over Four Years in Federal Prison For Participating In Multi-State Pandemic Unemployment Insurance Fraud Scheme

    Source: Office of United States Attorneys

    DETROIT – A man from Detroit, Michigan was sentenced today for his role in a multi-state, million-dollar unemployment insurance fraud scheme aimed at defrauding the U.S. government and the states of Michigan, Pennsylvania, and Maryland, of funds earmarked for unemployment assistance during the COVID-19 pandemic, announced Acting United States Attorney Julie A. Beck.

    Joining in the announcement were Special Agent in Charge Cheyvoryea Gibson, Federal Bureau of Investigation, Special Agent in Charge Charles Miller, Internal Revenue Service-Criminal Investigation, and Megan Howell, Acting Special Agent in Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.

    Tracey Dotson, 49, was sentenced to 51 months in prison and ordered to pay more than $900,000 in restitution in the sentence handed down by United States District Judge Matthew F. Leitman.

    According to court records, Dotson and a co-defendant conspired to, and did, defraud the federal government and the states of Michigan, Pennsylvania, and Maryland of roughly $1 million in funds intended to support individuals who had lost their jobs during the COVID-19 pandemic. The pair committed their crimes through the use of interstate wires and the unauthorized possession and use of social security numbers and other means of identification belonging to other individuals.

    Dotson pleaded guilty to wire fraud and conspiracy to commit wire fraud in April 2024. Dotson and his co-defendant, using stolen personal identification, filed hundreds of false unemployment claims with state unemployment insurance agencies in Michigan, Pennsylvania, and Maryland in the names of other individuals without their knowledge or consent.   The defendants then received hundreds of Bank of America prepaid debit cards in the names of those individuals loaded with roughly $1 million in Pandemic Unemployment Assistance funds at addresses in Michigan and Pennsylvania. Dotson, his co-defendant, and their accomplices then successfully unloaded more than $930,000 from the cards via cash withdrawals and purchases that included high-end jewelry, designer fashion accessories by Gucci and Louis Vuitton, drugs, at least one vehicle, and at least one firearm.

    “Taxpayer unemployment assistance funds diverted to the pockets of criminals during the pandemic resulted in fewer resources that were available for those genuinely in need at that challenging time,” said Acting U.S. Attorney Julie Beck. “Our office is steadfast in its commitment to bringing those to justice who used a global health crisis as a means to illegally line their own pockets at the expense of taxpayers. “

    “This sentence underscores the FBI’s commitment to investigating complex financial crimes,” said Cheyvoryea Gibson, Special Agent in Charge of the FBI in Michigan. “We will not tolerate the greed and selfish conduct demonstrated by those who chose to defraud the unemployment insurance system, especially when we faced an unprecedented global pandemic. The FBI and our federal partners remain steadfast in holding criminals accountable and protecting government assistance programs. The pandemic may be in our rearview mirrors, but our investigations continue to move forward in the name of justice.”

    “Individuals who commit such blatant unemployment insurance fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law,” said Charles Miller, Special Agent in Charge, Detroit Field Office, IRS Criminal Investigation.  “Tracey Dotson and his co-conspirator took advantage of a program intended to help those in need get through a devastating global pandemic, exposed personal identity information of many, and caused immeasurable hardship to innocent victims. IRS Criminal Investigation remains committed to the pursuit of pandemic fraud and identity theft, together with our partners at the U.S. Attorney’s Office, we will hold those who engage in similar conduct accountable.”

    “Tracey Dotson and his co-conspirator defrauded multiple state workforce agencies by using stolen identities to obtain unemployment insurance (UI) benefits. As a result, he stole vital taxpayer resources intended for unemployed American workers in dire need of UI benefits. Today’s sentencing affirms the Office of Inspector General’s commitment to work with our law enforcement partners to investigate and bring to justice those who exploit this critical benefit program,” said Megan Howell, Acting Special Agent-in-Charge, Great Lakes Region, U.S. Department of Labor, Office of Inspector General.

    This case was prosecuted by Assistant United States Attorneys Carl D. Gilmer-Hill and Jessica A. Nathan. The investigation was conducted jointly by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigation, and Department of Labor, Office of Inspector General.

    MIL Security OSI

  • MIL-OSI Security: Financial TV News Analyst-Turned-Fugitive Agrees to Plead Guilty to Federal Charge for Conning Investors Out of Millions of Dollars

    Source: Office of United States Attorneys

    LOS ANGELES – A former San Gabriel Valley resident – who was a frequent guest on financial television news programs then became a fugitive from justice after being accused of scamming investors – has agreed to plead guilty to defrauding his victims out of at least $2.7 million, the Justice Department announced today.

    James Arthur McDonald Jr., 53, formerly of Arcadia, has agreed to plead guilty to one count of securities fraud, a felony that carries a statutory maximum sentence of 20 years in federal prison.

    McDonald has been in federal custody since June 2024, when he was arrested in a residence in Port Orchard, Washington, after being a fugitive since November 2021, when he failed to appear before the United States Securities and Exchange Commission (SEC) to testify after allegations arose that he had defrauded investors. 

    According to his plea agreement, at McDonald’s Washington state hideout, law enforcement found, among other things, a fake Washington, D.C., driver’s license bearing McDonald’s photograph and the name “Brian Thomas.”

    McDonald was the CEO and chief investment officer of two companies headquartered in Los Angeles: Hercules Investments LLC and Index Strategy Advisors Inc. (ISA). He frequently appeared as an analyst on the CNBC financial television news network.

    In late 2020, McDonald lost tens of millions of dollars of Hercules client money after adopting a risky short position that effectively bet against the health of the United States economy in the aftermath of the U.S. presidential election. McDonald projected that the COVID-19 pandemic and the election would result in major selloffs that would cause the stock market to drop. When the market decline didn’t occur, Hercules clients lost between $30 million and $40 million. By December 2020, Hercules clients were complaining to company employees about the losses in their accounts, according to court documents.

    In early 2021, McDonald solicited millions of dollars’ worth of funds from investors in the form of a purported capital raise for Hercules but misrepresented how the funds would be used and failed to disclose the massive losses Hercules previously sustained. As part of the capital raise, McDonald obtained $675,000 in investment funds from one victim group on March 9, 2021. He misappropriated most of those funds in various ways, including spending $174,610 at a Porsche dealership and transferring $109,512 to the landlord of a home McDonald was renting in Arcadia.

    McDonald also defrauded clients of ISA, his other firm, using less than half of the approximately $3.6 million he raised for trading purposes. Instead, McDonald frequently commingled ISA client funds with funds from his personal bank account, which he used to purchase luxury cars and to pay rent on his home, personal credit card charges, and Hercules operating expenses and to make Ponzi-like payments to ISA clients — that is, paying some ISA clients using funds from other clients. 

    In total, McDonald caused losses of between approximately $2,745,892 and approximately $3,025,892, according to his plea agreement.

    The FBI and IRS Criminal Investigation are investigating this matter.

    In September 2022, the SEC filed a civil complaint charging McDonald and Hercules with violations of federal securities law. In April 2024, United States District Judge Percy Anderson found McDonald and Hercules liable and ordered that they pay several million dollars in disgorgement and civil penalties.

    Assistant United States Attorneys Alexander B. Schwab and Nisha Chandran of the Corporate and Securities Fraud Strike Force are prosecuting this case.

    MIL Security OSI

  • MIL-OSI: “Is mediocrity good enough?” – ZimCal asks Medallion Financial stockholders

    Source: GlobeNewswire (MIL-OSI)

    • 4Q24 Medallion Bank earnings continue disturbing downward trend
    • Consolidated Medallion Financial Corp earnings have not yet been released
    • Due to lower Bank earnings, Medallion Financial may struggle to pay dividends, operating expenses and a possible SEC penalty with existing cash
    • Medallion Financial and Andrew Murstein face a looming SEC settlement
    • Despite predictable down-trending results, executives were paid record compensation in 2023
    • ZimCal believes that Medallion Financial Corp has huge upside with the right governance and leadership
    • ZimCal previously provided MFIN with versions of its “5 Steps to Improvement” plan that anticipated current risks and negative trends and urges management to take decisive, proactive action

    Full analysis with graphs can be accessed here.

    MINNEAPOLIS, Feb. 19, 2025 (GLOBE NEWSWIRE) —

    Medallion Bank (the “Bank”) recently released its 4Q24 earnings. Medallion Financial Corp (“MFIN” or the “Company”) will be releasing consolidated earnings shortly, along with important updates on a possible SEC settlement involving fraud and touting charges against Andrew Murstein, President and Board Member of MFIN, that has cost shareholders an estimated $8 million in legal fees to defend.

    The Bank represents approximately 95%i of MFIN’s consolidated revenues. On almost all metrics, financial performance is down. Frustratingly, MFIN has lagged in areas that ZimCal Asset Management LLC (“ZimCal”, “We”, “Our”) predicted almost 16 months ago.

    ZimCal remains one of MFIN’s largest investors and has been invested for 4 years. Had MFIN and its board listened to us in 2023 and taken proactive steps to mitigate risk, enhance its operations, resolve the SEC complaint and numerous other detailed suggestions ZimCal offered to increase enterprise value, we believe MFIN would be trading at a substantial premium to its current value.  

    Against the backdrop of healthy consumer data, and booming stock and credit markets, we ask MFIN stockholders – are you happy with such glaring underperformance or do you think the Company can do better? Are you satisfied with MFIN’s President being sued by the SEC for alleged fraud and yet earning tens of millions in compensation even as MFIN’s stock is down, and its unadjusted and core returns are at their worst in over 4 yearsii?  

    We will withhold our full analysis until MFIN’s earnings are released, but we note a few key points about the Bank’s earnings – divided into positives and negatives.

    Full analysis with graphs can be accessed here.

    POSITIVES IN 4Q24 MEDALLION BANK EARNINGS

    1. Asset growth is flat
    If this is driven by a reluctance on the Bank’s part to lower underwriting standards simply to increase growth this is positive. Chasing returns by recklessly opening the credit box would be a mistake. If this is driven by constraints on lending because the Bank’s capital ratio of 15.6% is just above the 15% mandatory minimum, then this is problematic. For similar reasons, we support a robust loan origination and sale or securitization strategy to augment interest income, but we think the 1Q25 loan sales are problematic if they are driven by an effort to juice near-term earnings and avoid breaching the Bank’s minimum leverage ratio.

    2. Allowance for credit losses (ACL) has been increased to cover future losses, driven by Recreation ACL
    ACL for Recreation loans specifically increased to 5.00% at 4Q24 from 4.31% at 4Q23. Since 2024, charge-offs have also increased, indicating an effort by the Bank to better recognize the threats of future charge-offs and provision accordingly. We felt that the Bank under-provisioned in the last crisis to artificially boost earnings; we are supportive of their decision to avoid doing so now.

    NEGATIVES IN 4Q24 MEDALLION BANK EARNINGS

    1. Consumer credit quality continues to decline, driven by Recreation
    Recreation loans made up ~65% of total loans at 4Q24. Subprime Recreation was an estimated 35% of Recreation loans or ~$550 million at 4Q24. This borrower demographic will be more stressed by higher for longer rates, inflation and a potentially softening labor market. Despite the Bank’s increased loss allowances, we remain concerned about quarterly consumer charge-offs, which are now at their highest since 2010 and well above the most recent peak in 2019 (Figure 1 below or here). We are concerned that this could get worse. We have beaten our head against the wall for 16 months urging MFIN to proactively mitigate these risks (see letter here from October 2023) but without success.

    2. Net Interest Margin (NIM) continues to be pressured by expensive funding costs
    Quarterly NIM declined to 8.28% at 4Q24 from 8.75% a year ago at 4Q23. This is the lowest quarterly NIM since 2019 when we started tracking this for the Bank. This was mainly driven by higher funding costs and an inability to materially raise loan yields. As predicted, the Bank’s cost of funds (almost entirely CD deposits) continued to trend higher and reached an estimated 3.95% at 4Q24iii. We have noted that a Bank CD portfolio with a 1.8 year weighted average maturity and 36% of CDs maturing in 2024 as of 12/31/23iv, would have rates that would lag benchmark rate increases on the way up (boosting NIM) but would also lag benchmarks on the way down (hurting NIM). We have tracked brokered CD rates through one of the largest platforms since September 2024 and note that while short-term CD (less than 1-year) rates are down, 1, 2 and 5-year CD rates are UP since 09/30/24 and 12/31/24. (See Figure 2 below or here). This shows that NIM pressure will persist.

    3. Earnings have declined YoY despite being boosted by a “noisy” allowance release
    Core net earnings available to common stockholders were $10.3 million in 4Q24 after eliminating $3.9 million in provision reversals and $900,000 in non-core Taxi Medallion recoveries (adjustment to earnings is after taxes). Unadjusted earnings were $14 million. If the Bank were a standalone entity, this would be mediocre but manageable. But when you pile on high holding company expenses and debt service, this is unsustainable. The Bank paid a dividend of $6MM to the holding company in 4Q24 leaving only $4.3MM in core earnings to boost capital levels and fund future loan growth. As we noted in our last earnings commentary, quarterly earnings for MFIN in 2024 are the lowest they have been on an unadjusted and adjusted basis since the last stages of the Taxi Medallion implosion in 2020. Bank ROAA and core ROAA (excluding non-core Taxi Medallion recoveries) we calculated at 2.50% and 1.65% respectively at 4Q24. This core ROAA is dangerously low for a consumer lender and leaves little room for error. Lowered earnings are one of the reasons the Bank’s parent company (MFIN) had to borrow $10 million in 2024 to pay $9.5 million in dividends and share buybacks through 3Q24. The Bank continues to “carry” the weight of its parent, which is reliant on the Bank for upstreamed dividends to fund its expenses and pay its expensive debt.

    We believe that Medallion Bank (and MFIN) have tremendous upside but only with the right Board and leadership. We encourage investors to review www.restoretheshine.com for details on the 2024 proxy contest to replace 2 incumbent directors, where, despite insider ownership that gave MFIN a 44% leadv, ZimCal still earned 22% of stockholder votes with over 1 in 4 stockholders voting against MFIN’s compensation plan. We believe that MFIN’s board of directors (the “Board”) has shown weak governance and is beholden to the Murstein family rather than to all stockholdersvi. We also believe that MFIN’s management team is overpaid and must be improvedvii. We believe that it is ludicrous to pay MFIN’s President $6.5 million or 19% of MFIN’s core earningsviii at FYE23, significantly higher than all but one of MFIN’s self-selected peersix and comparable to the highest paid Wall Street hedge fund managers. Until we see positive changes, we will work to hold MFIN’s Board and management team accountable and believe the potential for the Company is extraordinary.

    Visit www.restoretheshine.com for more information or read our 5 Steps to Improvement.
    ZimCal will issue ongoing press releases with updates and details on its plan to “Restore the Shine” to Medallion Financial Corp.

    About ZimCal Asset Management, LLC
    ZimCal Asset Management is an alternative investment firm focused primarily on niche, illiquid and complex credit investment opportunities.

    ZimCal Asset Management partners with both healthy and distressed borrowers or issuers and provides customized solutions that meet their unique needs and circumstances. Over the last 15 years, the founder of ZimCal Asset Management has developed a specialization investing in FDIC-insured institutions and has partnered with over 120 bank lenders through investments on both sides of the balance sheet.

    ZimCal usually works in collaboration with bank leadership teams if required, but on very rare occasions, must insert itself more forcefully if it believes that leadership is underwhelming and threatens to undermine stakeholder investments. ZimCal prides itself on performing extensive, rigorous financial analysis and research to fully understand the risks of any investment.

    Important Information and Disclaimer
    ZimCal Asset Management, LLC, and its affiliates BIMIZCI Fund, LLC, Warnke Investments LLC and Stephen Hodges (collectively, “ZimCal” or “we”), are, directly or indirectly, owners of securities of Medallion Financial Corp. (the “Company”). ZimCal currently has combined investment exposure of $15,604,000 million to the Company, comprised of $15 million par value of Trust Preferred Securities (backed by the Company’s issued debt), and 76,122 shares of the Company. We are not currently engaged in any solicitation of proxies from stockholders of the Company. ZimCal intends to monitor the performance and corporate governance of the Company, as well as the actions of the Company’s management and board. As ZimCal deems necessary, ZimCal will assert its stockholder rights.

    Except as otherwise set forth herein, the views expressed reflect ZimCal’s opinions and are based on publicly available information with respect to the Company. We recognize that there may be confidential information in the possession of the Company that could lead it or others to disagree with our conclusions. ZimCal reserves the right to change any of its opinions expressed herein at any time as it deems appropriate and disclaims any obligation to notify the market or any other party of any such change, except as required by law. We disclaim any obligation to update the information or opinions contained herein.

    The information herein is being provided merely as information and is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security.

    Some of the information herein may contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that depend on future events are forward-looking. The words “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. There can be no assurance that any forward-looking statements will prove to be accurate and therefore actual results could differ materially from those set forth in, contemplated by, or underlying these forward-looking statements. In light of the significant uncertainties inherent in forward-looking statements, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and strategic initiatives expressed or implied by such forward-looking statements will be achieved.


    i Source: MFIN 10K/Qs
    ii See www.restoretheshine.com and MFIN 10K/10Qs
    iii Source: Medallion Bank 4Q24 8K. This is based on the Bank’s annual average CD rate of 3.57% at 4Q24.
    iv Source; MFIN 2024 10K
    v Source: MFIN DEF14A. Insider ownership derived from recent disclosures by MFIN. Insiders owned ~7 million shares and total votes cast were 16 million. We have assumed that all insiders voted and voted against ZimCal. See here for full SEC filing on stockholder meeting voting results.
    vi See www.restoretheshine.com for why we believe the Board is not fulfilling its fiduciary responsibilities to stockholders. Also see Section 1 and Section 2 of the plan for further examples.
    vii See www.restoretheshine.com for why we believe Management, specifically Andrew Murstein, is overpaid relative to bank peers, proxy peers and in terms of absolute performance. Also see Section 1 of the plan for further examples.
    viii See www.restoretheshine.com for comparisons to larger, top performing banks and proxy peers selected by MFIN
    ix See viii above.

    The MIL Network

  • MIL-OSI: Nokia Corporation: Repurchase of own shares on 19.02.2025

    Source: GlobeNewswire (MIL-OSI)

    Nokia Corporation
    Stock Exchange Release
    19 February 2025 at 22:30 EET

    Nokia Corporation: Repurchase of own shares on 19.02.2025

    Espoo, Finland – On 19 February 2025 Nokia Corporation (LEI: 549300A0JPRWG1KI7U06) has acquired its own shares (ISIN FI0009000681) as follows:

    Trading venue (MIC Code) Number of shares Weighted average price / share, EUR*
    XHEL 1,396,657 4.74
    CEUX
    BATE
    AQEU
    TQEX
    Total 1,396,657 4.74

    * Rounded to two decimals

    On 22 November 2024, Nokia announced that its Board of Directors is initiating a share buyback program to offset the dilutive effect of new Nokia shares issued to the shareholders of Infinera Corporation and certain Infinera Corporation share-based incentives. The repurchases in compliance with the Market Abuse Regulation (EU) 596/2014 (MAR), the Commission Delegated Regulation (EU) 2016/1052 and under the authorization granted by Nokia’s Annual General Meeting on 3 April 2024 started on 25 November 2024 and end by 31 December 2025 and target to repurchase 150 million shares for a maximum aggregate purchase price of EUR 900 million.

    Total cost of transactions executed on 19 February 2025 was EUR 6,621,272. After the disclosed transactions, Nokia Corporation holds 253,189,663 treasury shares.

    Details of transactions are included as an appendix to this announcement.

    On behalf of Nokia Corporation

    BofA Securities Europe SA

    About Nokia
    At Nokia, we create technology that helps the world act together.

    As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs which is celebrating 100 years of innovation.

    With truly open architectures that seamlessly integrate into any ecosystem, our high-performance networks create new opportunities for monetization and scale. Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.

    Inquiries:

    Nokia Communications
    Phone: +358 10 448 4900
    Email: press.services@nokia.com
    Maria Vaismaa, Global Head of External Communications

    Nokia Investor Relations
    Phone: +358 931 580 507
    Email: investor.relations@nokia.com

    Attachment

    The MIL Network

  • MIL-OSI: Liberty Northwest Bancorp, Inc. Reports 2024 Fourth Quarter and Full Year Financial Results

    Source: GlobeNewswire (MIL-OSI)

    2024 Fourth Quarter Financial Highlights:

    • Total assets were $186.9 million at year end.
    • Net interest income of $1.00 million for the fourth quarter.
    • Net interest margin of 2.30% for the fourth quarter and 2.36% for the year.
    • Total deposits increased 3% to $145.8 million at December 31, 2024, compared to $142.2 million a year ago, with non-interest bearing demand deposits representing 25% of total deposits.
    • Net loans were $141.6 million at December 31, 2024, compared to $142.8 million a year ago.
    • Asset quality remains pristine.
    • Tangible book value per share increased to $7.80 at year end, compared to $7.58 a year ago.

    POULSBO, Wash., Feb. 19, 2025 (GLOBE NEWSWIRE) — Liberty Northwest Bancorp, Inc. (OTCQX: LBNW) (the “Company”) and its wholly-owned subsidiary Liberty Bank today announced a net loss of $43 thousand for the fourth quarter ended December 31, 2024. This compared to net income of $25 thousand for the third quarter ended September 30, 2024, and $1 thousand for the fourth quarter ended December 31, 2023. For the twelve months ended December 31, 2024, net income was $3 thousand, compared to $35 thousand the same period in 2023.

    Total assets were $186.9 million as of December 31, 2024, compared to $184.7 million at December 31, 2023. Net loans totaled $141.6 million as of December 31, 2024, a 1% increase compared to $140.0 million at September 30, 2024, and a 1% decrease compared to $142.8 million a year ago. Loan demand was muted during the quarter largely due to the elevated interest rate environment.

    Asset quality remained pristine during the fourth quarter. The allowance for credit losses totaled $1.16 million as of December 31, 2024, and was 0.81% of total loans outstanding. The Company recorded net loan recoveries of $31 thousand during the quarter. The Company has one non-performing loan of $235 thousand as of December 31, 2024.

    Due to strong credit quality metrics and muted loan growth, the Company recorded a $40 thousand reversal to its provision for credit losses in the fourth quarter of 2024. This compared to a $95 thousand reversal to its provision for credit losses in the third quarter of 2024 and a $60 thousand reversal to its provision for credit losses in the fourth quarter of 2023.

    Total deposits increased 3% to $145.8 million at December 31, 2024, compared to $142.2 million at December 31, 2023, and decreased modestly compared to $146.4 million three months earlier. Non-interest bearing demand accounts represented 25%, interest bearing demand represented 30%, money market and savings accounts comprised 18%, and certificates of deposit made up 27% of the total deposit portfolio at December 31, 2024.

    “The vibrant Pacific Northwest markets that we operate in continue to fuel our deposit base and loan pipeline,” said Rick Darrow, Liberty Northwest Bancorp, Inc. President and Chief Executive Officer. “During the fourth quarter, loan growth moderated, as we remain selective with the loans we are putting on the balance sheet. As we look to 2025, we anticipate an increase in growth opportunities, especially if interest rates continue to stabilize.

    “The challenging interest rate environment continues to impact net interest income growth with higher interest expense on deposits and borrowings, which affected our operating performance for the fourth quarter of 2024,” said Darrow. Net interest income, before the provision for loan losses, was $1.00 million for the fourth quarter of 2024, compared to $1.07 million in the fourth quarter of 2023. For the year, net interest income was $4.11 million, compared to $4.44 million for 2023.

    “While our yields on earning assets remained stable during the quarter, they were more than offset by the increase in cost of funds, resulting in net interest margin compression during the quarter,” said Darrow. The Company’s net interest margin was 2.30% for the fourth quarter of 2024, compared to 2.37% for the preceding quarter, and 2.48% for the fourth quarter of 2023. For the full year 2024, the net interest margin was 2.36%, compared to 2.59% for 2023.

    Total non-interest income increased 6% to $82 thousand for the fourth quarter of 2024, compared to $78 thousand for the fourth quarter a year ago. For the year, non-interest income was $308 thousand, compared to $449 thousand for 2023. The decrease in 2024 compared to the prior year was primarily due to higher referral fee income earned in 2023.

    Total noninterest expense was $1.18 million for the fourth quarter of 2024, a decrease of $43 thousand, or 3%, from the fourth quarter a year ago. Compensation and benefits costs decreased by $55 thousand, or 8%, over the year ago quarter, while occupancy costs decreased by $51 thousand, or 34% from the same quarter a year ago. For the year, total noninterest expense decreased $275 thousand, or 6%, to $4.68 million, over 2023.

    “We remain focused on enhancing revenue generation and driving cost efficiencies to improve our operational effectiveness,” said Darrow. “Our operating performance is expected to continue to improve, as we improve our margin, while keeping operating expenses in line. We are well positioned for continued growth in our core business operations and remain focused on creating value for all of our customers, employees and shareholders.”

    Capital ratios continue to exceed regulatory requirements, with a total risk-based capital ratio at 15.81% at December 31, 2024, substantially above well-capitalized regulatory requirements. The tangible book value per share was $7.80 at year end, compared to $7.58 a year earlier.

    Near the end of the second quarter of 2024, the Company completed the issuance of $1.2 million of Preferred Stock. Under the terms of the transaction, the Preferred Stock will convert to Common Stock within a 2 year time period.

    “We are deploying the proceeds from this offering to further strengthen our capital position and to support continued loan growth in our vibrant Pacific Northwest markets,” said Darrow.

    About Liberty Northwest Bancorp, Inc.
    Liberty Northwest Bancorp, Inc. is the bank holding company for Liberty Bank, a commercial bank chartered in the State of Washington. The Bank began operations June 11, 2009, and operates a full-service branch in Poulsbo, WA. The Bank provides loan and deposit services to predominantly small and middle-sized businesses and individuals in and around Kitsap and King counties. The Bank is subject to regulation by the State of Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC). For more information, please visit www.libertybanknw.com. Liberty Northwest Bancorp, Inc. (OTCQX: LBNW), qualified to trade on the OTCQX® Best Market in June 2022. For information related to the trading of LBNW, please visit www.otcmarkets.com.

    For further discussion, please contact:
    Rick Darrow, Chief Executive Officer | 360-394-4750

    Forward-Looking Statement Safe Harbor: This news release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Forward-looking statements describe Liberty Northwest Bancorp, Inc.’s projections, estimates, plans and expectations of future results and can be identified by words such as “believe,” “intend,” “estimate,” “likely,” “anticipate,” “expect,” “looking forward,” and other similar expressions. They are not guarantees of future performance. Actual results may differ materially from the results expressed in these forward-looking statements, which because of their forward-looking nature, are difficult to predict. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including but not limited to the degree of competition by traditional and nontraditional competitors, declines in real estate markets, an increase in unemployment or sustained high levels of unemployment; changes in interest rates; greater than expected costs to integrate acquisitions, adverse changes in local, national and international economies; changes in the Federal Reserve’s actions that affect monetary and fiscal policies; changes in legislative or regulatory actions or reform, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act; demand for products and services; changes to the quality of the loan portfolio and our ability to succeed in our problem-asset resolution efforts; the impact of technological advances; changes in tax laws; and other risk factors. Liberty Northwest Bancorp, Inc. undertakes no obligation to publicly update or clarify any forward-looking statement to reflect the impact of events or circumstances that may arise after the date of this release.

    STATEMENTS OF INCOME (Unaudited)                                
    (Dollars in thousands)                                
          Quarter Ended Dec 31, 2024   Quarter Ended Sept 30, 2024   Three Month Change   Quarter Ended Dec 31, 2023   Quarter over Quarter – One Year Change   Year to Date Dec 31, 2024   Year to Date Dec 30, 2023   One Year Change
    Interest Income                                
      Loans   $ 1,932     $ 1,994     -3 %   $ 1,890     2 %   $ 7,807     $ 7,173     9 %
      Interest bearing deposits in banks     142       83     70 %     101     41 %     365       323     13 %
      Securities     108       114     -5 %     140     -23 %     461       483     -5 %
      Total interest income     2,182       2,192     -0 %     2,112     3 %     8,632       7,979     8 %
                                       
    Interest Expense                                
      Deposits     928       903     3 %     656     41 %     3,298       2,141     54 %
      Other Borrowings     252       283     -11 %     384     -34 %     1,226       1,396     -12 %
      Total interest expense     1,179       1,186     -1 %     1,040     13 %     4,524       3,537     28 %
                                       
    Net Interest Income     1,003       1,005     -0 %     1,072     -7 %     4,109       4,442     -8 %
      Provision for Loan Losses     (40 )     (95 )   -58 %     (60 )   -33 %     (265 )     (105 )   152 %
    Net interest income after provision for loan losses     1,043       1,100     -5 %     1,132     -8 %     4,374       4,547     -4 %
                                       
    Non-Interest Income                                
      Service charges on deposit accounts     28       28     -0 %     17     61 %     104       67     55 %
      Other non-interest income     55       46     19 %     61     -10 %     204       382     -47 %
      Total non-interest income     82       74     12 %     78     6 %     308       449     -31 %
                                       
    Non-Interest Expense                                
      Salaries and employee benefits     650       668     -3 %     705     -8 %     2,596       2,854     -9 %
      Occupancy and equipment expenses     100       88     14 %     151     -34 %     429       595     -28 %
      Other operating expenses     429       387     11 %     367     17 %     1,652       1,503     10 %
      Total non-interest expenses     1,180       1,143     3 %     1,223     -3 %     4,677       4,952     -6 %
                                       
    Net Income Before Income Tax     (55 )     31     -275 %     2     -3027 %     4       44     -90 %
    Provision for Income Tax     (12 )     7     -275 %     0     -3027 %     1       9     -90 %
    Net Income     (43 )   $ 25     -275 %   $ 1     -3027 %   $ 3     $ 35     -90 %
                                       
    BALANCE SHEETS (Unaudited)                    
    (Dollars in thousands)                    
          Dec 31, 2024   Sept 30, 2024   Three Month Change   Dec 31, 2023   One Year Change
    Assets                    
      Cash and due from Banks   $ 1,655     $ 2,408     -31 %   $ 1,817     -9 %
      Interest bearing deposits in banks     14,341       11,262     27 %     7,896     82 %
      Securities     20,586       21,225     -3 %     23,034     -11 %
                           
      Loans     142,720       141,206     1 %     143,913     -1 %
      Allowance for loan losses     (1,158 )     (1,167 )   -1 %     (1,150 )   1 %
      Net Loans     141,561       140,038     1 %     142,763     -1 %
                           
      Premises and fixed assets     6,101       6,161     -1 %     6,418     -5 %
      Accrued Interest receivable     681       668     2 %     765     -11 %
      Intangible assets     11       19     -43 %     39     -72 %
      Other assets     1,949       2,262     21 %     1,992     -2 %
                           
      Total Assets   $ 186,884     $ 183,678     2 %   $ 184,724     1 %
                           
                           
    Liabilities and Shareholders’ Equity                    
      Deposits                    
      Demand, non-interest bearing   $ 35,845     $ 39,669     -10 %   $ 42,803     -16 %
      Interest Bearing Demand     44,149       40,764     8 %     23,528     88 %
      Money Market and Savings     26,495       27,419     -3 %     26,667     -1 %
      Certificates of Deposit     39,345       38,507     2 %     49,200     -20 %
      Total Deposits     145,833       146,359     -0 %     142,198     3 %
                           
      Total Borrowing     26,461       22,454     18 %     29,430     -10 %
      Accrued interest payable     173       238     -27 %     335     -48 %
      Other liabilities     286       704     133 %     214     34 %
      Total Liabilities     172,753       169,756     2 %     172,177     0 %
                           
      Shareholders’ Equity                    
      Preferred Stock     1,242       1,242     0 %       ***
      Common Stock     1,656       1,650     0 %     1,650     0 %
      Additional paid in capital     13,149       13,138     0 %     13,108     0 %
      Retained Earnings     (1,490 )     (1,447 )   -3 %     (1,493 )   0 %
      Other Comprehensive Income     (426 )     (661 )   36 %     (718 )   41 %
      Total Shareholders’ Equity     14,131       13,922     1 %     12,547     13 %
      Total Liabilities and Shareholders’ Equity   $ 186,884     $ 183,678     2 %   $ 184,724     1 %
       
            Quarter Ended Dec 31, 2024   Quarter Ended Sept 30, 2024   Quarter Ended Dec 31, 2023   YTD 2024   YTD 2023  
    Financial Ratios                        
      Return on Average Assets     -0.09 %     0.06 %     0.00 %     0.00 %     0.02 %  
      Return on Average Equity     -1.23 %     0.70 %     0.03 %     0.03 %     0.28 %  
      Efficiency Ratio     108.7 %     105.9 %     106.4 %     105.9 %     101.2 %  
      Net Interest Margin     2.30 %     2.37 %     2.48 %     2.36 %     2.59 %  
      Loan to Deposits     97.9 %     96.5 %     101.2 %          
                               
      Tangible Book Value per Share $ 7.80     $ 7.67     $ 7.58            
      Book Value per Share   $ 7.81     $ 7.68     $ 7.60            
      Earnings per Share   $ (0.03 )   $ 0.01     $     $ 0.03     $ 0.02    
                               
      Asset Quality                        
      Net Loan Charge-offs (recoveries) $ (31 )   $ 4     $            
      Nonperforming Loans   $ 235     $ 235     $            
      Nonperforming Assets to Total Assets   0.13 %     0.13 %     0.00 %          
      Allowance for Loan Losses to Total Loans   0.81 %     0.83 %     0.80 %          
      Other Real Estate Owned                          
                               
      CAPITAL (Bank only)                      
      Tier 1 leverage ratio     9.98 %     10.23 %     9.56 %          
      Tier 1 risk-based capital ratio   14.87 %     15.00 %     14.16 %          
      Total risk based capital ratio   15.81 %     15.97 %     15.09 %          
                               

    The MIL Network

  • MIL-Evening Report: Collateral damage: how the war on ‘woke banking’ could backfire on New Zealand

    Source: The Conversation (Au and NZ) – By Martien Lubberink, Associate Professor of Accounting and Capital, Te Herenga Waka — Victoria University of Wellington

    Getty Images

    It would be hard to think of an industry less obviously “woke” than banking, but that’s how coalition partner NZ First has characterised certain practices within the finance sector.

    The party’s tortuously titled Financial Markets (Conduct of Institutions) Amendment (Duty to Provide) Amendment Bill – dubbed the “woke banking” bill – takes aim at efforts to build sustainability concepts into investment practices.

    Known as the “environmental, social and governance (ESG) framework”, such policies are designed to guide how a bank manages risks and opportunities beyond basic profit and loss.

    NZ First’s bill seeks to ensure no New Zealand business can be denied banking services unless the decision is grounded in law. Its proponents argue it will prevent ESG standards from perpetuating “woke ideology” in the banking sector, driven by what they describe as “unelected, globalist, climate radicals”.

    Prime Minister Christopher Luxon has supported the bill’s aims, recently calling it “utterly unacceptable” that petrol stations and mines were being denied banking services due to banks’ commitment to climate change goals.

    Coalition partner ACT similarly called for the end of “banking wokery”. And last week the Finance and Expenditure Committee announced an extension of its inquiry into banking competition to include, among other issues, the “debanking of legitimate sectors”.

    Risk management isn’t ‘woke’

    Much of this is largely politically performative, however. A broader international trend has for, some time now, seen financial institutions increasingly aligning their lending practices with ESG criteria.

    In Europe, for example, data from the European Banking Authority show banks have halved their exposures to mining firms since 2020, reflecting that global shift towards sustainability and risk management.

    This is about more than “woke” agendas and is unlikely to reverse, given current global efforts to decarbonise. Encouraging or forcing banks to invest in carbon-emitting industries introduces financial risk. If those assets lose value, it constitutes irresponsible lending.

    While the current US administration may be embracing fossil fuel industries, consumer and investor demand for sustainable policies is still strong. When banks such as the BNZ prepare for an orderly exit from declining industries, they are simply engaging in risk management.

    Banks also manage regulatory risk. While the current government may enact the bill and force banks to invest in carbon-emitting industries, a future government could reverse that policy. This undermines long-term investment strategies.

    Regulatory uncertainty

    There is also a danger New Zealand is perceived internationally as not being serious about business and investment. In particular, the prime minister’s pressure on bank lending policies cuts across his stated commitment to the Paris Agreement on climate change.

    The resulting regulatory uncertainty is counterproductive: it potentially deters international investors at a time when the government aims to attract foreign investment.

    Ultimately, if bank lending policies lead to poor outcomes, it is ordinary New Zealanders who will likely bear the costs through higher interest rates or even bank failures.

    In its eagerness to boost lending, the government is also encroaching on the Reserve Bank’s territory by directing it to prioritise competition, including reviewing risk weightings and capital thresholds (designed to build buffers against failure) for new entrants to the market.

    But history shows that before the 2007-2009 global financial crisis, similar bank-friendly initiatives – often labelled “principles-based” – led to bad debt accumulation and increased economic vulnerability.

    Institutional failure

    The shift towards what we might call populist banking policies is not confined to New Zealand. Globally, there is a declining political interest in financial stability and prudential regulation.

    For example, agreement on the “Basel III” reforms – developed in response to the global financial crisis and aimed at strengthening the regulation, supervision and risk management of banks – will likely be delayed by the Trump administration.

    This will have ripple effects in Europe, Britain and the rest of the world, signalling a softening of global capital requirements. As Erik Thedéen, chair of the Basel Committee on Banking Supervision, described this:

    Shaving off a few basis points of capital will not unlock a wave of new lending, but it will weaken your resilience. More generally, being well capitalised is a competitive advantage for banks and their shareholders. It ensures they can continue to grow and invest in profitable projects across the financial cycle.

    Politicians need to be very careful when interfering with bank supervision policies in general. They risk undermining the independence of crucial institutions, with real consequences.

    Last year’s Nobel Prize for economics went to Daron Acemoglu, Simon Johnson and James A. Robinson for their “studies of how institutions are formed and affect prosperity”. Their warning is that institutional failure can lead to the failure of nations.

    A resilient banking system

    While New Zealand isn’t in such imminent danger, political leaders need to be aware that populist appeals to certain voter segments can lead to policies that undermine the banking system and economic growth, and disproportionately affect the most vulnerable.

    As Stelios Haji-Ioannou, founder of low-cost airline EasyJet, once remarked: “if you think safety is expensive, try an accident”.

    New Zealand needs to focus on policies that promote long-term financial stability, enhance productivity and sustainable economic growth. Globally, there needs to be a recommitment to prudential regulation to ensure the lessons of the global financial crisis are not forgotten.

    Only by doing so can we build a resilient banking system that serves the interests of all, not just a privileged few.

    Martien Lubberink does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    ref. Collateral damage: how the war on ‘woke banking’ could backfire on New Zealand – https://theconversation.com/collateral-damage-how-the-war-on-woke-banking-could-backfire-on-new-zealand-249930

    MIL OSI AnalysisEveningReport.nz

  • MIL-Evening Report: The prime minister earns $607,000 a year. Why does his top public servant earn more than $1 million?

    Source: The Conversation (Au and NZ) – By Chris Wallace, Professor, School of Politics Economics & Society, Faculty of Business Government & Law, University of Canberra

    Tasmanian Senator Jacqui Lambie represents the lowest-income Australians, with median weekly earnings of $1,208 a week. In the Australian Capital Territory, where the nation’s highest median weekly earners live, including the brains trust of the Australian Public Service, it’s $1,688 a week – 40% higher.

    As a federal politician, Lambie shuttles between these two starkly different earnings worlds and is not happy about the disparity.

    Of course, Lambie herself is on a reasonable wicket. Parliamentarians’ base salaries are $233,660 a year, according to an Instagram post she made this month drawing attention to the issue.

    At a time of considerable financial stress for Australians hit by the combination of inflation, high interest rates and housing shortages, Lambie struck a nerve with her post, which listed a range of public roles drawing big six figure-plus annual salaries.

    In doing so, Lambie underlined the far higher salaries paid to senior public servants compared to the ministers to whom they’re responsible.

    Department of Prime Minister and Cabinet Secretary Glyn Davis earns $1,011,410 a year, 66% more than the man he serves, Prime Minister Anthony Albanese, who earns $607,516.

    Treasury Secretary Steven Kennedy’s salary is more than double that of Treasurer Jim Chalmers, who is paid $438,112. Another three departmental secretaries each earn $960,840.

    Lambie’s Instagram post drew hundreds of comments including:

    How does a public servant earn more than the prime minister? That’s wrong!!

    Politicians get flak about their salaries from belligerent constituents, but also keenly feel the injustice of earning far less than senior public servants.

    Higher pay for higher risk

    The salaries of both politicians and public servants have long and specific histories. Without an income, only the rich could afford to be politicians, so publicly paid allowances and salaries have historically been an important equity and inclusion measure. They remain so today.

    The original framers of the public service component of our Westminster system of government believed that to prevent conflicts of interest that drive corruption, the bureaucracy ought to be staffed by “permanent officers” with job security. In exchange for what, barring wrongdoing, was going to be a lifetime career, public service pay was historically adequate but not extravagant.

    This nexus was broken when, in exchange for higher pay, the Keating government introduced five-year contracts for departmental secretaries in March 1994. Three departmental secretaries refused contracts and continued as “permanent officers”. The rest took the money and the increased employment risk that went with it.

    Two years later, the Keating government lost office and incoming Prime Minister John Howard summarily fired nearly a third of departmental secretaries, fatally eroding the “frank and fearless” tradition of public service advice underpinned by security of employment.

    Compromised advice

    Contract employment for secretaries, who effectively can now be fired at will, not only created pressure for public servants to tell ministers what they wanted to hear, but also untethered their salaries from historical norms. Higher pay reflected that insecurity. The flow-on effect meant other salaries in the senior executive service also floated upwards.

    Contracts for secretaries have also been central to the revolving door that’s developed between the top of the public service and large consulting firms, creating conflicts of interest unknown in the traditional Westminster public service.

    The big four consulting firms are attractive alternative employers for highly paid and insecure departmental secretaries.

    Little wonder, then, that a quasi-privatisation of public service advice through consultancy contracts to those firms occurred, at vast expense to taxpayers – something Finance Minister Katy Gallagher has made strong efforts to reverse.

    Lambie’s push for answers

    Lambie has introduced the Remuneration Tribunal Amendment (There for the Public Service, Not Profit) Bill 2025 to cap senior APS pay at $430,000. It’s a bid to address remuneration which has raced far beyond ministerial salaries, and well beyond reasonable public expectations.

    The Lambie bill has been referred to a Senate committee, which presents an opportunity to evolve debate on the deeper reasons for what has gone awry in the public service and to devise a response that gets to the root of the problem.

    The precarity of contract employment for departmental secretaries, which is used to justify high salaries, is both unnecessary and harmful to the quality of public policy and administration in Australia.

    The intrinsic interest and challenge of working for the nation and the betterment of its citizens has always paid well in terms of a “psychic wage” on top of senior public servants’ actual salaries. If the complaint is that an executive could make much more in the private sector, they’re probably not the right person to work in the public service anyway.

    One reply to Lambie’s Insta post summed up the situation:

    It’s the pollies that made this mess.

    Politicians are the ones who are going to have to clean it up.

    It is neither likely nor plausible that highly paid public service leaders will cut their own salaries in return for an end to the five year contract system for secretaries.

    But that is what a return to good public service governance – and to frank and fearless advice in the national interest – now requires.

    Chris Wallace has received funding from the Australian Research Council.

    ref. The prime minister earns $607,000 a year. Why does his top public servant earn more than $1 million? – https://theconversation.com/the-prime-minister-earns-607-000-a-year-why-does-his-top-public-servant-earn-more-than-1-million-250045

    MIL OSI AnalysisEveningReport.nz

  • MIL-OSI USA: CISA and Partners Release Advisory on Ghost (Cring) Ransomware

    News In Brief – Source: US Computer Emergency Readiness Team

    Today, CISA—in partnership with the Federal Bureau of Investigation (FBI) and Multi-State Information Sharing and Analysis Center (MS-ISAC)—released a joint Cybersecurity Advisory, #StopRansomware: Ghost (Cring) Ransomware. This advisory provides network defenders with indicators of compromise (IOCs), tactics, techniques, and procedures (TTPs), and detection methods associated with Ghost ransomware activity identified through FBI investigations.

    Ghost actors conduct these widespread attacks targeting and compromising organizations with outdated versions of software and firmware on their internet facing services. These malicious ransomware actors are known to use publicly available code to exploit Common Vulnerabilities and Exposures (CVEs) where available patches have not been applied to gain access to internet facing servers. The known CVEs are CVE-2018-13379, CVE-2010-2861, CVE-2009-3960, CVE-2021-34473, CVE-2021-34523, CVE-2021-31207.

    CISA encourages network defenders to review this advisory and apply the recommended mitigations. See #StopRansomware and the #StopRansomware Guide for additional guidance on ransomware protection, detection, and response. Visit CISA’s Cross-Sector Cybersecurity Performance Goals for more information on the CPGs, including added recommended baseline protections.

    MIL OSI USA News

  • MIL-OSI USA: #StopRansomware: Ghost (Cring) Ransomware

    News In Brief – Source: US Computer Emergency Readiness Team

    Summary

    Note: This joint Cybersecurity Advisory is part of an ongoing #StopRansomware effort to publish advisories for network defenders that detail various ransomware variants and ransomware threat actors. These #StopRansomware advisories include recently and historically observed tactics, techniques, and procedures (TTPs) and indicators of compromise (IOCs) to help organizations protect against ransomware. Visit stopransomware.gov to see all #StopRansomware advisories and to learn more about other ransomware threats and no-cost resources.

    The Federal Bureau of Investigation (FBI), Cybersecurity and Infrastructure Security Agency (CISA), and the Multi-State Information Sharing and Analysis Center (MS-ISAC) are releasing this joint advisory to disseminate known Ghost (Cring)—(“Ghost”)—ransomware IOCs and TTPs identified through FBI investigation as recently as January 2025.

    Beginning early 2021, Ghost actors began attacking victims whose internet facing services ran outdated versions of software and firmware. This indiscriminate targeting of networks containing vulnerabilities has led to the compromise of organizations across more than 70 countries, including organizations in China. Ghost actors, located in China, conduct these widespread attacks for financial gain. Affected victims include critical infrastructure, schools and universities, healthcare, government networks, religious institutions, technology and manufacturing companies, and numerous small- and medium-sized businesses.

    Ghost actors rotate their ransomware executable payloads, switch file extensions for encrypted files, modify ransom note text, and use numerous ransom email addresses, which has led to variable attribution of this group over time. Names associated with this group include Ghost, Cring, Crypt3r, Phantom, Strike, Hello, Wickrme, HsHarada, and Rapture. Samples of ransomware files Ghost used during attacks are: Cring.exe, Ghost.exe, ElysiumO.exe, and Locker.exe.

    Ghost actors use publicly available code to exploit Common Vulnerabilities and Exposures (CVEs) and gain access to internet facing servers. Ghost actors exploit well known vulnerabilities and target networks where available patches have not been applied.

    The FBI, CISA, and MS-ISAC encourage organizations to implement the recommendations in the Mitigations section of this advisory to reduce the likelihood and impact of Ghost ransomware incidents.

    Download the PDF version of this report:

    For a downloadable copy of IOCs, see:

    Technical Details

    Note: This advisory uses the MITRE ATT&CK® Matrix for Enterprise framework, version 16.1. See the MITRE ATT&CK Tactics and Techniques section of this advisory for a table of the threat actors’ activity mapped to MITRE ATT&CK tactics and techniques.

    Initial Access

    The FBI has observed Ghost actors obtaining initial access to networks by exploiting public facing applications that are associated with multiple CVEs [T1190]. Their methodology includes leveraging vulnerabilities in Fortinet FortiOS appliances (CVE-2018-13379), servers running Adobe ColdFusion (CVE-2010-2861 and CVE-2009-3960), Microsoft SharePoint (CVE-2019-0604), and Microsoft Exchange (CVE-2021-34473, CVE-2021-34523, and CVE-2021-31207— commonly referred to as the ProxyShell attack chain).

    Execution

    Ghost actors have been observed uploading a web shell [T1505.003] to a compromised server and leveraging Windows Command Prompt [T1059.003] and/or PowerShell [T1059.001] to download and execute Cobalt Strike Beacon malware [T1105] that is then implanted on victim systems. Despite Ghost actors’ malicious implementation, Cobalt Strike is a commercially available adversary simulation tool often used for the purposes of testing an organization’s security controls.

    Persistence

    Persistence is not a major focus for Ghost actors, as they typically only spend a few days on victim networks. In multiple instances, they have been observed proceeding from initial compromise to the deployment of ransomware within the same day. However, Ghost actors sporadically create new local [T1136.001] and domain accounts [T1136.002] and change passwords for existing accounts [T1098]. In 2024, Ghost actors were observed deploying web shells [T1505.003] on victim web servers.

    Privilege Escalation

    Ghost actors often rely on built in Cobalt Strike functions to steal process tokens running under the SYSTEM user context to impersonate the SYSTEM user, often for the purpose of running Beacon a second time with elevated privileges [T1134.001].

    Ghost actors have been observed using multiple open-source tools in an attempt at privilege escalation through exploitation [T1068] such as “SharpZeroLogon,” “SharpGPPPass,” “BadPotato,” and “GodPotato.” These privilege escalation tools would not generally be used by individuals with legitimate access and credentials. 

    See Table 1 for a descriptive listing of tools.

    Credential Access

    Ghost actors use the built in Cobalt Strike function “hashdump” or Mimikatz [T1003] to collect passwords and/or password hashes to aid them with unauthorized logins and privilege escalation or to pivot to other victim devices.

    Defense Evasion

    Ghost actors used their access through Cobalt Strike to display a list of running processes [T1057] to determine which antivirus software [T1518.001] is running so that it can be disabled [T1562.001]. Ghost frequently runs a command to disable Windows Defender on network connected devices. Options used in this command are: Set-MpPreference -DisableRealtimeMonitoring 1 -DisableIntrusionPreventionSystem 1 -DisableBehaviorMonitoring 1 -DisableScriptScanning 1 -DisableIOAVProtection 1 -EnableControlledFolderAccess Disabled -MAPSReporting Disabled -SubmitSamplesConsent NeverSend.

    Discovery

    Ghost actors have been observed using other built-in Cobalt Strike commands for domain account discovery [T1087.002], open-source tools such as “SharpShares” for network share discovery [T1135], and “Ladon 911” and “SharpNBTScan” for remote systems discovery [T1018]. Network administrators would be unlikely to use these tools for network share or remote systems discovery.

    Lateral Movement

    Ghost actors used elevated access and Windows Management Instrumentation Command-Line (WMIC) [T1047] to run PowerShell commands on additional systems on the victim network— often for the purpose of initiating additional Cobalt Strike Beacon infections. The associated encoded string is a base 64 PowerShell command that always begins with: powershell -nop -w hidden -encodedcommand JABzAD0ATgBlAHcALQBPAGIAagBlAGMAdAAgAEkATwAuAE0AZQBtAG8AcgB5AFMAdAByAGUAYQBtACgALABbAEMAbwBuAHYAZQByAHQAXQA6ADoARgByAG8AbQBCAGEAcwBlADYANABTAHQAcgBpAG4AZwAoACIA… [T1132.001][T1564.003].

    This string decodes to “$s=New-Object IO.MemoryStream(,[Convert]::FromBase64String(“” and is involved with the execution of Cobalt Strike in memory on the target machine.

    In cases where lateral movement attempts are unsuccessful, Ghost actors have been observed abandoning an attack on a victim.

    Exfiltration

    Ghost ransom notes often claim exfiltrated data will be sold if a ransom is not paid. However, Ghost actors do not frequently exfiltrate a significant amount of information or files, such as intellectual property or personally identifiable information (PII), that would cause significant harm to victims if leaked. The FBI has observed limited downloading of data to Cobalt Strike Team Servers [T1041]. Victims and other trusted third parties have reported limited uses of Mega.nz [T1567.002] and installed web shells for similar limited data exfiltration. Note: The typical data exfiltration is less than hundreds of gigabytes of data.

    Command and Control

    Ghost actors rely heavily on Cobalt Strike Beacon malware and Cobalt Strike Team Servers for command and control (C2) operations, which function using hypertext transfer protocol (HTTP) and hypertext transfer protocol secure (HTTPS) [T1071.001]. Ghost rarely registers domains associated with their C2 servers. Instead, connections made to a uniform resource identifier (URI) of a C2 server, for the purpose of downloading and executing Beacon malware, directly reference the C2 server’s IP address. For example, http://xxx.xxx.xxx.xxx:80/Google.com where xxx.xxx.xxx.xxx represents the C2 server’s IP address.

    For email communication with victims, Ghost actors use legitimate email services that include traffic encryption features. [T1573] Some examples of emails services that Ghost actors have been observed using are Tutanota, Skiff, ProtonMail, Onionmail, and Mailfence.

    Note: Table 2 contains a list of Ghost ransom email addresses.

    Impact and Encryption

    Ghost actors use Cring.exe, Ghost.exe, ElysiumO.exe, and Locker.exe, which are all ransomware executables that share similar functionality. Ghost variants can be used to encrypt specific directories or the entire system’s storage [T1486]. The nature of executables’ operability is based on command line arguments used when executing the ransomware file. Various file extensions and system folders are excluded during the encryption process to avoid encrypting files that would render targeted devices inoperable.

    These ransomware payloads clear Windows Event Logs [T1070.001], disable the Volume Shadow Copy Service, and delete shadow copies to inhibit system recovery attempts [T1490]. Data encrypted with Ghost ransomware variants cannot be recovered without the decryption key. Ghost actors hold the encrypted data for ransom and typically demand anywhere from tens to hundreds of thousands of dollars in cryptocurrency in exchange for decryption software [T1486].

    The impact of Ghost ransomware activity varies widely on a victim-to-victim basis. Ghost actors tend to move to other targets when confronted with hardened systems, such as those where proper network segmentation prevents lateral moment to other devices.

    Indicators of Compromise (IOC)

    Table 1 lists several tools and applications Ghost actors have used for their operations. The use of these tools and applications on a network should be investigated further.

    Note: Authors of these tools generally state that they should not be used in illegal activity.

    Table 1: Tools Leveraged by Ghost Actors
    Name Description Source
    Cobalt Strike Cobalt Strike is penetration testing software. Ghost actors  use an unauthorized version of Cobalt Strike. N/A
    IOX Open-source proxy, used to establish a reverse proxy to a Ghost C2 server from an internal victim device. github[.]com/EddieIvan01/iox
    SharpShares.exe SharpShares.exe is used to enumerate accessible network shares in a domain. Ghost actors use this primarily for host discovery. github[.]com/mitchmoser/SharpShares
    SharpZeroLogon.exe SharpZeroLogon.exe attempts to exploit CVE-2020-1472 and is run against a target Domain Controller. github[.]com/leitosama/SharpZeroLogon
    SharpGPPPass.exe SharpGPPPass.exe attempts to exploit CVE-2014-1812 and targets XML files created through Group Policy Preferences that may contain passwords. N/A
    SpnDump.exe SpnDump.exe is used to list service principal name identifiers, which Ghost actors use for service and hostname enumeration. N/A
    NBT.exe A compiled version of SharpNBTScan, a NetBIOS scanner. Ghost actors use this tool for hostname and IP address enumeration. github[.]com/BronzeTicket/SharpNBTScan
    BadPotato.exe BadPotato.exe is an exploitation tool used for privilege escalation. github[.]com/BeichenDream/BadPotato
    God.exe God.exe is a compiled version of GodPotato and is used for privilege escalation. github[.]com/BeichenDream/GodPotato
    HFS (HTTP File Server) A portable web server program that Ghost actors use to host files for remote access and exfiltration. rejitto[.]com/hfs
    Ladon 911 A multifunctional scanning and exploitation tool, often used by Ghost actors with the MS17010 option to scan for SMB vulnerabilities associated with CVE-2017-0143 and CVE-2017-0144. github[.]com/k8gege/Ladon
    Web Shell A backdoor installed on a web server that allows for the execution of commands and facilitates persistent access. Slight variation of github[.]com/BeichenDream/Chunk-Proxy/blob/main/proxy.aspx
    Table 2: MD5 File Hashes Associated with Ghost Ransomware Activity
    File name MD5 File Hash
    Cring.exe c5d712f82d5d37bb284acd4468ab3533
    Ghost.exe

    34b3009590ec2d361f07cac320671410

    d9c019182d88290e5489cdf3b607f982

    ElysiumO.exe

    29e44e8994197bdb0c2be6fc5dfc15c2

    c9e35b5c1dc8856da25965b385a26ec4

    d1c5e7b8e937625891707f8b4b594314

    Locker.exe ef6a213f59f3fbee2894bd6734bbaed2
    iex.txt, pro.txt (IOX) ac58a214ce7deb3a578c10b97f93d9c3
    x86.log (IOX)

    c3b8f6d102393b4542e9f951c9435255

    0a5c4ad3ec240fbfd00bdc1d36bd54eb

    sp.txt (IOX) ff52fdf84448277b1bc121f592f753c5
    main.txt (IOX) a2fd181f57548c215ac6891d000ec6b9
    isx.txt (IOX) 625bd7275e1892eac50a22f8b4a6355d
    sock.txt (IOX) db38ef2e3d4d8cb785df48f458b35090

    Ransom Email Addresses

    Table 3 is a subset of ransom email addresses that have been included in Ghost ransom notes.

    Table 3: Ransom Email Addresses
    Email Addresses
    asauribe@tutanota.com ghostbackup@skiff.com rainbowforever@tutanota.com
    cringghost@skiff.com ghosts1337@skiff.com retryit1998@mailfence.com
    crptbackup@skiff.com ghosts1337@tuta.io retryit1998@tutamail.com
    d3crypt@onionmail.org ghostsbackup@skiff.com rsacrpthelp@skiff.com
    d3svc@tuta.io hsharada@skiff.com rsahelp@protonmail.com
    eternalnightmare@tutanota.com just4money@tutanota.com sdghost@onionmail.org
    evilcorp@skiff.com kellyreiff@tutanota.com shadowghost@skiff.com
    fileunlock@onionmail.org kev1npt@tuta.io shadowghosts@tutanota.com
    fortihooks@protonmail.com lockhelp1998@skiff.com summerkiller@mailfence.com
    genesis1337@tutanota.com r.heisler@skiff.com summerkiller@tutanota.com
    ghost1998@tutamail.com rainbowforever@skiff.com webroothooks@tutanota.com

    Ransom Notes

    Starting approximately in August 2024, Ghost actors began using TOX IDs in ransom notes as an alternative method for communicating with victims. For example: EFE31926F41889DBF6588F27A2EC3A2D7DEF7D2E9E0A1DEFD39B976A49C11F0E19E03998DBDA and E83CD54EAAB0F31040D855E1ED993E2AC92652FF8E8742D3901580339D135C6EBCD71002885B.

    MITRE ATT&CK Tactics and Techniques

    See Table 4 to Table 13 for all referenced threat actor tactics and techniques in this advisory. For assistance with mapping malicious cyber activity to the MITRE ATT&CK framework, version 16.1, see CISA and MITRE ATT&CK’s Best Practices for MITRE ATT&CK Mapping and CISA’s Decider Tool.

    Table 4: Initial Access
    Technique Title  ID Use
    Exploit Public-Facing Application T1190 Ghost actors exploit multiple vulnerabilities in public-facing systems to gain initial access to servers.
    Table 5: Execution
    Technique Title  ID Use
    Windows Management Instrumentation T1047 Ghost actors abuse WMI to run PowerShell scripts on other devices, resulting in their infection with Cobalt Strike Beacon malware.
    PowerShell T1059.001 Ghost actors use PowerShell for various functions including to deploy Cobalt Strike.
    Windows Command Shell T1059.003 Ghost actors use the Windows Command Shell to download malicious content on to victim servers.
    Table 6: Persistence
    Technique Title  ID Use
    Account Manipulation T1098 Ghost actors change passwords for already established accounts.
    Local Account T1136.001 Ghost actors create new accounts or makes modifications to local accounts.
    Domain Account T1136.002 Ghost actors create new accounts or makes modifications to domain accounts.
    Web Shell T1505.003 Ghost actors upload web shells to victim servers to gain access and for persistence.
    Table 7: Privilege Escalation
    Technique Title  ID Use
    Exploitation for Privilege Escalation T1068 Ghost actors use a suite of open source tools in an attempt to gain elevated privileges through exploitation of vulnerabilities.
    Token Impersonation/Theft T1134.001 Ghost actors use Cobalt Strike to steal process tokens of processes running at a higher privilege.
    Table 8: Defense Evasion
    Technique Title  ID Use
    Application Layer Protocol: Web Protocols T1071.001 Ghost actors use HTTP and HTTPS protocols while conducting C2 operations. 
    Impair Defenses: Disable or Modify Tools T1562.001 Ghost actors disable antivirus products.
    Hidden Window T1564.003 Ghost actors use PowerShell to conceal malicious content within legitimate appearing command windows.
    Table 9: Credential Access
    Technique Title  ID Use
    OS Credential Dumping T1003 Ghost actors use Mimikatz and the Cobalt Strike “hashdump” command to collect passwords and password hashes.
    Table 10: Discovery
    Technique Title  ID Use
    Remote System Discovery T1018 Ghost actors use tools like Ladon 911 and ShapNBTScan for remote systems discovery.
    Process Discovery T1057 Ghost actors run a ps command to list running processes on an infected device.
    Domain Account Discovery T1087.002 Ghost actors run commands such as net group “Domain Admins” /domain to discover a list of domain administrator accounts.
    Network Share Discovery T1135 Ghost actors use various tools for network share discovery for the purpose of host enumeration.
    Software Discovery T1518 Ghost actors use their access to determine which antivirus software is running.
    Security Software Discovery T1518.001 Ghost actors run Cobalt Strike to enumerate running antivirus software.
    Table 11: Exfiltration
    Technique Title  ID Use
    Exfiltration Over C2 Channel T1041 Ghost actors use both web shells and Cobalt Strike to exfiltrate limited data.
    Exfiltration to Cloud Storage T1567.002 Ghost actors sometimes use legitimate cloud storage providers such as Mega.nz for malicious exfiltration operations.
    Table 12: Command and Control
    Technique Title  ID Use
    Web Protocols T1071.001 Ghost actors use Cobalt Strike Beacon malware and Cobalt Strike Team Servers which communicate over HTTP and HTTPS.
    Ingress Tool Transfer T1105 Ghost actors use Cobalt Strike Beacon malware to deliver ransomware payloads to victim servers.
    Standard Encoding T1132.001 Ghost actors use PowerShell commands to encode network traffic which reduces their likelihood of being detected during lateral movement.
    Encrypted Channel T1573 Ghost actors use encrypted email platforms to facilitate communications. 
    Table 13: Impact
    Technique Title  ID Use
    Data Encrypted for Impact T1486 Ghost actors use ransomware variants Cring.exe, Ghost.exe, ElysiumO.exe, and Locker.exe to encrypt victim files for ransom.
    Inhibit System Recovery T1490 Ghost actors delete volume shadow copies.

    Mitigations

    The FBI, CISA, and MS-ISAC recommend organizations reference their #StopRansomware Guide and implement the mitigations below to improve cybersecurity posture on the basis of the Ghost ransomware activity. These mitigations align with the Cross-Sector Cybersecurity Performance Goals (CPGs) developed by CISA and the National Institute of Standards and Technology (NIST). The CPGs provide a minimum set of practices and protections that CISA and NIST recommend all organizations implement. CISA and NIST based the CPGs on existing cybersecurity frameworks and guidance to protect against the most common and impactful threats, tactics, techniques, and procedures. Visit CISA’s CPGs webpage for more information on the CPGs, including additional recommended baseline protections.

    • Maintain regular system backups that are known-good and stored offline or are segmented from source systems [CPG 2.R]. Ghost ransomware victims whose backups were unaffected by the ransomware attack were often able to restore operations without needing to contact Ghost actors or pay a ransom.
    • Patch known vulnerabilities by applying timely security updates to operating systems, software, and firmware within a risk-informed timeframe [CPG 1.E].
    • Segment networks to restrict lateral movement from initial infected devices and other devices in the same organization [CPG 2.F].
    • Require Phishing-Resistant MFA for access to all privileged accounts and email services accounts.
    • Train users to recognize phishing attempts.
    • Monitor for unauthorized use of PowerShell. Ghost actors leverage PowerShell for malicious purposes, although it is often a helpful tool that is used by administrators and defenders to manage system resources. For more information, visit NSA and CISA’s joint guidance on PowerShell best practices.
      • Implement the principle of least privilege when granting permissions so that employees who require access to PowerShell are aligned with organizational business requirements.
    • Implement allowlisting for applications, scripts, and network traffic to prevent unauthorized execution and access [CPG 3.A].
    • Identify, alert on, and investigate abnormal network activity. Ransomware activity generates unusual network traffic across all phases of the attack chain. This includes running scans to discover other network connected devices, running commands to list, add, or alter administrator accounts, using PowerShell to download and execute remote programs, and running scripts not usually seen on a network. Organizations that can successfully identify and investigate this activity are better able to interrupt malicious activity before ransomware is executed [CPG 3.A].
      • Ghost actors run a significant number of commands, scripts, and programs that IT administrators would have no legitimate reason for running. Victims who have identified and responded to this unusual behavior have successfully prevented Ghost ransomware attacks.
    • Limit exposure of services by disabling unused ports such as, RDP 3398, FTP 21, and SMB 445, and restricting access to essential services through securely configured VPNs or firewalls.
    • Enhance email security by implementing advanced filtering, blocking malicious attachments, and enabling DMARC, DKIM, and SPF to prevent spoofing [CPG 2.M].

    Validate Security Controls

    In addition to applying mitigations, the FBI, CISA, and MS-ISAC recommend exercising, testing, and validating your organization’s security program against the threat behaviors mapped to the MITRE ATT&CK for Enterprise framework in this advisory.

    To get started:

    1. Select an ATT&CK technique described in this advisory (see Table 3 to Table 13).
    2. Align your security technologies against the technique.
    3. Test your technologies against the technique.
    4. Analyze your detection and prevention technologies’ performance.
    5. Repeat the process for all security technologies to obtain a set of comprehensive performance data.
    6. Tune your security program, including people, processes, and technologies, based on the data generated by this process.

    Reporting

    Your organization has no obligation to respond or provide information back to the FBI in response to this joint advisory. If, after reviewing the information provided, your organization decides to provide information to the FBI, reporting must be consistent with applicable state and federal laws.

    The FBI is interested in any information that can be shared, to include logs showing communication to and from foreign IP addresses, a sample ransom note, communications with threat actors, Bitcoin wallet information, and/or decryptor files.

    Additional details of interest include a targeted company point of contact, status and scope of infection, estimated loss, operational impact, date of infection, date detected, initial attack vector, and host and network-based indicators.

    The FBI, CISA, and MS-ISAC do not encourage paying ransom as payment does not guarantee victim files will be recovered. Furthermore, payment may also embolden adversaries to target additional organizations, encourage other criminal actors to engage in the distribution of ransomware, and/or fund illicit activities. Regardless of whether you or your organization have decided to pay the ransom, the FBI and CISA urge you to promptly report ransomware incidents to FBI’s Internet Crime Complain Center (IC3), a local FBI Field Office, or CISA via the agency’s Incident Reporting System or its 24/7 Operations Center (report@cisa.gov) or by calling 1-844-Say-CISA (1-844-729-2472).

    Disclaimer

    The information in this report is being provided “as is” for informational purposes only. The FBI, CISA, and MS-ISAC do not endorse any commercial entity, product, company, or service, including any entities, products, or services linked within this document. Any reference to specific commercial entities, products, processes, or services by service mark, trademark, manufacturer, or otherwise, does not constitute or imply endorsement, recommendation, or favoring by the FBI, CISA, and the MS-ISAC.

    Version History

    February 19, 2025: Initial version.

    MIL OSI USA News

  • MIL-OSI USA: Governor Newsom proposes $125 million in mortgage relief to benefit victims of recent natural disasters

    Source: US State of California 2

    Feb 19, 2025

    Survivors of the Park Fire, Franklin Fire, and the recent Palisades and Eaton fires would be eligible for direct mortgage relief

    What you need to know: Governor Newsom is proposing an over $125 million package that includes disaster mortgage relief for homeowners whose homes have been damaged or destroyed by natural disasters since 2023 and are at risk of foreclosure, as well as mortgage counseling services.

    LOS ANGELES — Governor Newsom today announced a new proposal to create an over $125 million mortgage relief program to assist homeowners whose homes were destroyed or severely damaged by recent natural disasters, placing them at risk of foreclosure. The proposal also includes funding to extend an existing counseling services program which would help affected homeowners navigate their recovery. The package would utilize existing mortgage settlement funding, and would not impact the proposed 2025-2026 budget. 

    “As survivors heal from the trauma of recent disasters, the threat of foreclosure should be the last thing on their minds. This disaster mortgage relief program would help lift this burden and give families more time to focus on recovery.”

    Governor Gavin Newsom

    The package will be administered by the California Housing Finance Agency (CalFHA) and includes over $100 million in direct mortgage assistance, with an additional $25 million to extend an existing program that provides mortgage counseling and serves survivors by offering guidance on FEMA disaster assistance and other related needs. The program will provide mortgage relief for homeowners at risk of foreclosure and whose property was destroyed or substantially damaged as a result of declared emergencies since January 1, 2023. The proposal will be considered at CalHFA’s next meeting on February 20. Survivors of natural disasters since 2023, including those affected by the Park Fire, Franklin Fire, and the recent Palisades and Eaton Fires, would be eligible for mortgage assistance. Once approved, the direct assistance program and eligibility criteria will be developed and announced in more detail.

    The Governor last month announced that five major lenders (Bank of America, Citi, JPMorgan Chase, U.S. Bank, and Wells Fargo) and recently announced that there are now 420 state-chartered banks, credit unions, and mortgage lenders who have committed to offering impacted homeowners a 90-day forbearance of their mortgage payments, without reporting these payments to credit reporting agencies, and the opportunity for additional relief.

    Funding for the mortgage relief program comes from settlement funds California secured from big banks resolving allegations of misconduct during the mortgage crisis.

    This adds to the Governor’s work to provide tax and mortgage relief to those impacted by the Los Angeles area firestorms. California postponed the individual tax filing deadline to October 15 for Los Angeles County taxpayers. Additionally, the state extended the January 31, 2025, sales and use tax filing deadline for Los Angeles County taxpayers until April 30 — providing critical tax relief for businesses. Governor Newsom suspended penalties and interest on late property tax payments for a year, effectively extending the state property tax deadline. The Governor also worked with state– and federally-chartered banks that have committed to providing mortgage relief for survivors in certain zip codes.

    Historic recovery and rebuilding efforts — faster than ever before 

    As the Los Angeles community recovers from the firestorm disaster, Governor Newsom is removing barriers and helping survivors quickly by: 

    • Cutting red tape to help rebuild Los Angeles faster and stronger. Governor Newsom issued an executive order to streamline the rebuilding of homes and businesses destroyed — suspending permitting and review requirements under the California Environmental Quality Act (CEQA) and the California Coastal Act. The Governor also issued an executive order further cutting red tape by reiterating that permitting requirements under the California Coastal Act are suspended for rebuilding efforts and directing the Coastal Commission not to issue guidance or take any action that interferes with or conflicts with the Governor’s executive orders. The Governor also issued an executive order removing bureaucratic barriers, extending deadlines, and providing critical regulatory relief to help fire survivors rebuild, access essential services, and recover more quickly.
    • Fast-tracking temporary housing and protecting tenants. To help provide necessary shelter for those immediately impacted by the firestorms, the Governor issued an executive order to make it easier to streamline construction of accessory dwelling units, allow for more temporary trailers and other housing, and suspend fees for mobile home parks. Governor Newsom also issued an executive order that prohibits landlords in Los Angeles County from evicting tenants for sharing their rental with survivors displaced by the Los Angeles-area firestorms.
    • Mobilizing debris removal and cleanup. With an eye toward recovery, the Governor directed fast action on debris removal work and mitigating the potential for mudslides and flooding in areas burned. He also signed an executive order to allow expert federal hazmat crews to start cleaning up properties as a key step in getting people back to their properties safely. The Governor also issued an executive order to help mitigate risk of mudslides and flooding and protect communities by hastening efforts to remove debris, bolster flood defenses, and stabilize hillsides in affected areas. 

    • Safeguarding survivors from price gouging. Governor Newsom expanded restrictions to protect survivors from illegal price hikes on rent, hotel and motel costs, and building materials or construction. Report violations to the Office of the Attorney General here.

    • Directing immediate state relief. The Governor signed legislation providing over $2.5 billion to immediately support ongoing emergency response efforts and to jumpstart recovery efforts for Los Angeles. California quickly launched CA.gov/LAfires as a single hub of information and resources to support those impacted and bolsters in-person Disaster Recovery Centers. The Governor also launched LA Rises, a unified recovery initiative that brings together private sector leaders to support rebuilding efforts. Governor Newsom announced that individuals and families directly impacted by the recent fires living in certain zip codes may be eligible to receive Disaster CalFresh food benefits.

    • Getting kids back in the classroom. Governor Newsom signed an executive order to quickly assist displaced students in the Los Angeles area and bolster schools affected by the firestorms.

    • Protecting survivors from real estate speculators. The Governor issued an executive order to protect firestorm survivors from predatory land speculators making aggressive and unsolicited cash offers to purchase their property.

    • Helping businesses and workers get back on their feet. The Governor issued an executive order to support small businesses and workers, by providing relief to help businesses recover quickly by deferring annual licensing fees and waiving other requirements that may impose barriers to recovery.

    •  

    Press Releases, Recent News

    Recent news

    News State continues raising awareness of dangerous drug  What you need to know: California is using a multifaceted approach to tackle illicit fentanyl, including seizing nearly $300 million of illicit fentanyl since 2023 and increasing public education in schools…

    News SACRAMENTO – Governor Gavin Newsom today announced the following appointments:Melissa Stone, of Elk Grove, has been appointed Chief Deputy Director at the Department of Child Support Services. Stone has been Deputy Director of the Disability Insurance Branch at…

    News What you need to know: California’s work to pre-deploy resources ahead of this week’s major storms paid off with successful rescue efforts and no major damage reported. SACRAMENTO — Governor Gavin Newsom today praised the proactive emergency response efforts that…

    Feb 19, 2025

    What you need to know: The passage of Proposition 1 by California voters adds rocket fuel to Governor Gavin Newsom’s transformational overhaul of the state’s behavioral health system. These reforms refocus existing funds to prioritize Californians with the most serious mental health and substance use issues, who are too often experiencing homelessness. They also fund more than 11,150 new behavioral health beds and supportive housing units and 26,700 outpatient treatment slots.

    Los Angeles, California – California took a major step forward in correcting the damage from 50 years of neglect to the state’s mental health system with the passage of Proposition 1. This historic measure — a signature priority of Governor Gavin Newsom — adds rocket fuel to California’s overhaul of the state’s behavioral health systems. It provides a full range of mental health and substance abuse care, with new accountability metrics to ensure local governments deliver for their communities.

    This is the biggest reform of the California mental health system in decades and will finally equip partners to deliver the results all Californians need and deserve. Treatment centers will prioritize mental health and substance use support in the community like never before. Now, it’s time to roll up our sleeves and begin implementing this critical reform – working closely with city and county leaders to ensure we see results.

    Governor Gavin Newsom

    newsom-news-template
    IMG_3682-min
    contact-governor-landing
    workers-FxAJ5fkakAAtVI3
    priorities-and-progress-image
    economy-F-isBKpbsAAxdab
    gun-violence-San Diego Guns Package 2.18.22_2

    What they’re saying: 

    • Sacramento Mayor Darrell Steinberg, original author of the Mental Health Services Act: “Twenty years ago, I never could have dreamed that we would have the strong leadership we have today, committing billions and making courageous policy changes that question the conventional wisdom on mental health. Now, with the passage of Proposition 1. California is delivering on decades old promises to help people living with brain-based illnesses, to live better lives, to live independently and to live with dignity in our communities. This is a historic moment and the hard work is ahead of us.“
    • Senator Susan Eggman (D-Stockton), author of Senate Bill 326: “Today marks a day of hope for thousands of Californians who are struggling with mental illness – many of whom are living unhoused. I am tremendously grateful to my fellow Californian’s for passing this important measure.  And I am very appreciative of this Governor’s leadership to transform our behavioral health care system!”
    • Assemblymember Jacqui Irwin (D-Thousand Oaks), author of Assembly Bill 531: “This started as an audacious proposal to address the root cause of homelessness and today, Californians can be proud to know that they did the right thing by passing Proposition 1. Now, it’s time for all of us to get to work, and make sure these reforms are implemented and that we see results.”

    Bigger picture: Transforming the Mental Health Services Act into the Behavioral Health Services Act and building more community mental health treatment sites and supportive housing is the last main pillar of Governor Newsom’s Mental Health Movement – pulling together significant recent reforms like 988 crisis line, CalHOPE, CARE Court, conservatorship reform, CalAIM behavioral health expansion (including mobile crisis care and telehealth), Medi-Cal expansion to all low-income Californians, Children and Youth Behavioral Health Initiative (including expanding services in schools and on-line), Older Adult Behavioral Health Initiative, Veterans Mental Health Initiative, Behavioral Health Community Infrastructure Program, Behavioral Health Bridge Housing, Health Care Workforce for All and more.

    More details on next step here

    Press Releases, Recent News

    Recent news

    News State continues raising awareness of dangerous drug  What you need to know: California is using a multifaceted approach to tackle illicit fentanyl, including seizing nearly $300 million of illicit fentanyl since 2023 and increasing public education in schools…

    News SACRAMENTO – Governor Gavin Newsom today announced the following appointments:Melissa Stone, of Elk Grove, has been appointed Chief Deputy Director at the Department of Child Support Services. Stone has been Deputy Director of the Disability Insurance Branch at…

    News What you need to know: California’s work to pre-deploy resources ahead of this week’s major storms paid off with successful rescue efforts and no major damage reported. SACRAMENTO — Governor Gavin Newsom today praised the proactive emergency response efforts that…

    Feb 19, 2025

    What you need to know: The passage of Proposition 1 by California voters adds rocket fuel to Governor Gavin Newsom’s transformational overhaul of the state’s behavioral health system. These reforms refocus existing funds to prioritize Californians with the most serious mental health and substance use issues, who are too often experiencing homelessness. They also fund more than 11,150 new behavioral health beds and supportive housing units and 26,700 outpatient treatment slots.

    Los Angeles, California – California took a major step forward in correcting the damage from 50 years of neglect to the state’s mental health system with the passage of Proposition 1. This historic measure — a signature priority of Governor Gavin Newsom — adds rocket fuel to California’s overhaul of the state’s behavioral health systems. It provides a full range of mental health and substance abuse care, with new accountability metrics to ensure local governments deliver for their communities.

    This is the biggest reform of the California mental health system in decades and will finally equip partners to deliver the results all Californians need and deserve. Treatment centers will prioritize mental health and substance use support in the community like never before. Now, it’s time to roll up our sleeves and begin implementing this critical reform – working closely with city and county leaders to ensure we see results.

    Governor Gavin Newsom

    newsom-news-template
    IMG_3682-min
    contact-governor-landing
    workers-FxAJ5fkakAAtVI3
    priorities-and-progress-image
    economy-F-isBKpbsAAxdab
    gun-violence-San Diego Guns Package 2.18.22_2

    What they’re saying: 

    • Sacramento Mayor Darrell Steinberg, original author of the Mental Health Services Act: “Twenty years ago, I never could have dreamed that we would have the strong leadership we have today, committing billions and making courageous policy changes that question the conventional wisdom on mental health. Now, with the passage of Proposition 1. California is delivering on decades old promises to help people living with brain-based illnesses, to live better lives, to live independently and to live with dignity in our communities. This is a historic moment and the hard work is ahead of us.“
    • Senator Susan Eggman (D-Stockton), author of Senate Bill 326: “Today marks a day of hope for thousands of Californians who are struggling with mental illness – many of whom are living unhoused. I am tremendously grateful to my fellow Californian’s for passing this important measure.  And I am very appreciative of this Governor’s leadership to transform our behavioral health care system!”
    • Assemblymember Jacqui Irwin (D-Thousand Oaks), author of Assembly Bill 531: “This started as an audacious proposal to address the root cause of homelessness and today, Californians can be proud to know that they did the right thing by passing Proposition 1. Now, it’s time for all of us to get to work, and make sure these reforms are implemented and that we see results.”

    Bigger picture: Transforming the Mental Health Services Act into the Behavioral Health Services Act and building more community mental health treatment sites and supportive housing is the last main pillar of Governor Newsom’s Mental Health Movement – pulling together significant recent reforms like 988 crisis line, CalHOPE, CARE Court, conservatorship reform, CalAIM behavioral health expansion (including mobile crisis care and telehealth), Medi-Cal expansion to all low-income Californians, Children and Youth Behavioral Health Initiative (including expanding services in schools and on-line), Older Adult Behavioral Health Initiative, Veterans Mental Health Initiative, Behavioral Health Community Infrastructure Program, Behavioral Health Bridge Housing, Health Care Workforce for All and more.

    More details on next step here

    Press Releases, Recent News

    Recent news

    News State continues raising awareness of dangerous drug  What you need to know: California is using a multifaceted approach to tackle illicit fentanyl, including seizing nearly $300 million of illicit fentanyl since 2023 and increasing public education in schools…

    News SACRAMENTO – Governor Gavin Newsom today announced the following appointments:Melissa Stone, of Elk Grove, has been appointed Chief Deputy Director at the Department of Child Support Services. Stone has been Deputy Director of the Disability Insurance Branch at…

    News What you need to know: California’s work to pre-deploy resources ahead of this week’s major storms paid off with successful rescue efforts and no major damage reported. SACRAMENTO — Governor Gavin Newsom today praised the proactive emergency response efforts that…

    MIL OSI USA News

  • MIL-OSI Economics: DG Okonjo-Iweala to members: Use the WTO as a platform to engage

    Source: World Trade Organization

    “It is imperative that we continue to strengthen the multilateral trading system, ensuring that it remains a source of stability and opportunity for all members,” DG Okonjo-Iweala said. “The WTO was created precisely to manage times like these — to provide a space for dialogue, prevent conflicts from spiralling, and support an open, predictable trading environment.”

    “Let us make full use of this platform to engage with one another in good faith, address concerns constructively and calmly, and explore cooperative solutions that uphold and enhance the balance of global trade relations.”

    A total of 32 members took the floor following the Director-General’s remarks. Overall, members emphasized the importance of the WTO in fostering global economic growth and development, particularly for developing and least developed countries. Many who took the floor called for restraint in actions that could undermine the system and stressed the importance of upholding the WTO’s principles and rules.

    DG Okonjo-Iweala said she has been meeting with WTO members to discuss the broader geopolitical landscape and explore how the organization can approach the situation. “The key message I have shared is that amid the current uncertainties, we must maintain cool heads and remain open to dialogue,” she said.

    She informed members that Secretariat staff is upgrading the WTO’s Tariff Analysis Online database based on member feedback. The new database, to be called WTO Tariff And Trade Data, will be launched in the WTO’s Committee On Market Access on 4 March.

    “This will be a much more user-friendly system that will facilitate tariff and trade analysis,” she said. As you consider today’s emerging tariff issues, the Secretariat is there to assist any member requiring assistance in analysing the tariff situation.”

    In her intervention, DG Okonjo-Iweala underlined the importance of using the current situation to push ahead with reform of the WTO.

    “I encourage all of you to view this moment as an inflection point — an opportunity to think more strategically and purposefully about what we want from this organization and how we can make it more results-driven,” she added.

    DG Okonjo-Iweala said leaders, ministers and stakeholders she has met with in recent weeks “expect the WTO to address longstanding issues and respond to today’s global trade landscape … it’s time to return to the negotiating table in earnest.”

    This means making substantial progress in the agriculture negotiations a top priority. It also means members should use early 2025 to ensure the entry into force of the Agreement on Fisheries Subsidies; make a concerted effort to wrap up the second wave of the fisheries subsidies negotiations; reach a mutually agreeable solution regarding the incorporation of the plurilateral Investment Facilitation for Development Agreement (IFDA) and the Agreement on Electronic Commerce into the WTO legal framework; continue progress on dispute settlement reform; and move ahead on development issues, DG Okonjo-Iweala said.

    “The world has changed,” DG Okonjo-Iweala said. “We cannot come here to continue doing the same things we’ve been doing.”

    Share

    MIL OSI Economics

  • MIL-OSI Economics: Somalia successfully kick-starts its WTO accession process

    Source: WTO

    Headline: Somalia successfully kick-starts its WTO accession process

    Somalia’s Deputy Prime Minister Salah Ahmed Jama led the high-level delegation in Geneva. Several government officials from a wide range of ministries and agencies joined virtually from Mogadishu. Mr Jama said that Somalia’s first Working Party meeting marks “a historic moment in the country’s journey toward economic recovery, integration into the global trading system, and the realization of the nation’s aspirations for sustainable development and prosperity.
    “Somalia today is a nation on the rise, one that departed with the challenges of the past and has keenly focused on a prosperous future. Our government, under the leadership of His Excellency President Hassan Sheikh Mahamoud, has indeed embarked on very transformational changes,” he said.
    “For Somalia, WTO membership is not merely an end goal but a vital mechanism to achieve sustainable economic growth, attract investment, and create meaningful opportunities for our people. We are dedicated to aligning our trade policies with global standards, enhancing institutional capacity, and ensuring that our economic transformation is inclusive and equitable, benefiting all segments of society,” he added.
    Sadiq Abdikarim Haji Ibrahim, WTO Chief Trade Negotiator, recognized WTO accession as a rigorous process requiring transparency, policy coherence, and sustained engagement. He said that Somalia approaches this process with openness and a constructive spirit. “We are ready to work closely with WTO members to address concerns, provide necessary clarifications, and reaffirm our commitment to a rules-based trading system,” he stated.
    WTO Deputy Director-General Xiangchen Zhang highlighted Somalia’s strong political will and commitment to moving the accession process forward. “Today is a historical moment for Somalia, but it is just the beginning of a journey where I am sure Somalia will make its own history, as Comoros and Timor-Leste did recently. They are both least developed countries and fragile and conflict-affected states, who can serve as a good model and inspiration for Somalia.” His statement is available here.
    The Chair of the Working Party on the Accession of Somalia, Ambassador Nina Tornberg of Sweden, stated that Somalia has advanced technical work and stepped up its political engagement in the past few years, recalling her meeting with President Hassan Sheikh Mohamud in June 2024.
    She added that the Working Party noted Somalia’s strong commitment to economic integration, both at the multilateral and regional level. “As Somalia joined the East African Community (EAC) in 2024, it is crucial to ensure coordination at all levels between EAC membership and WTO accession, to enable Somalia to focus on priority reforms and reinforce its economic resilience,” she said.
    Members welcomed Somalia’s renewed commitment to joining the WTO, emphasizing the importance of the accession for the country’s integration into global trade and for its stability. Delegations acknowledged Somalia’s constraints as an LDC and committed to supporting Somalia’s accession process. Members said they are looking forward to discussing Somalia’s efforts to align its regulations with WTO rules, while providing support and guidance throughout the accession process.
    Moving forward, Ambassador Tornberg invited the WTO Secretariat to prepare a Factual Summary of Points Raised based on the exchanges held, which will guide the continued examination of Somalia’s trade regime. Somalia was requested to submit a comprehensive set of negotiating inputs before the next Working Party meeting. The Chair said that, given Somalia’s interest in advancing its accession process, the aim would be for the next meeting to take place towards the end of the year, subject to the availability of the required inputs.
    The Working Party meeting took place immediately before the 4th edition of the Trade for Peace Week, which has featured several sessions focused on Somalia and has discussed the private sector’s role for sustainable peace and stability.  
    The Working Party meeting was followed on 18 February by a Round Table on Technical Assistance for Somalia’s WTO Accession. The round table was attended by several members and developing partners, including the East African Community Secretariat, the European Investment Fund (EIF), the International Trade Centre (ITC), UN Trade and Development (UNCTAD) and the World Bank, which provide capacity-building support to Somalia. The discussions aimed at presenting Somalia’s accession-related needs in terms of technical assistance and capacity building and coordinating available and future support.
    Background
    Somalia has the longest coastline on the African continent and a population of approximately 18 million. With an economy highly dependent on livestock production, the government has committed itself over recent years to developing key sectors of the Somali economy, with special emphasis on economic enablers such as energy, transportation and financial markets.
    Somalia submitted its application for WTO accession, signed by President Hassan Sheikh Mohamud, in December 2015 during the 10th Ministerial Conference (MC10) in Nairobi, Kenya. The General Council established the Working Party on 7 December 2016. Somalia was a central part of the g7+ WTO Accessions Group launch during the 11th Ministerial Conference in Buenos Aires in 2017, inspiring the vision for the creation of the Trade for Peace Programme.
    More information on this accession is available here.

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    MIL OSI Economics

  • MIL-OSI United Nations: Experts of the Committee on Economic, Social and Cultural Rights Welcome the Philippines’ Human Rights Commitments , Ask about Attacks on Human Rights Defenders, Indigenous Land Rights and Drug Use Policies

    Source: United Nations – Geneva

    The Committee on Economic, Social and Cultural Rights today concluded its review of the seventh periodic report of the Philippines, with Committee Experts welcoming the State’s human rights plans and commitments, and asking about attacks on human rights defenders, indigenous land rights and drug use policies.

    Asraf Ally Caunhye, Committee Expert and Leader of the Taskforce for the Philippines, in opening remarks, welcomed the State party’s human rights plans and commitments.

    Hesaid, however, that there had been 305 killings of human rights defenders in the Philippines since the last review. The Philippines ranked third globally for killings of human rights defenders. What measures were in place to ensure that those responsible for these crimes were prosecuted and sanctioned?

    Mr. Caunhye said indigenous peoples continued to face violations of their economic, social and cultural rights through the destruction of ancestral lands by extractive industries approved by the State. How would the State party protect the rights of indigenous peoples?

    Ludovic Hennebel, Committee Vice-Chair and Member of the Taskforce for the Philippines, asked about plans to decriminalise drugs for personal use and implement alternatives to imprisonment for drug users. What measures were in place to put an end to the “war on drugs” and to provide reparations to victims?

    Rosemarie G. Edillon, Undersecretary, Policy and Planning Group, National Economic and Development Authority of the Philippines and head of the delegation, introducing the report, said economic development, resilience building, and poverty reduction were central to the Government’s human rights agenda. From 2015 to 2023, the poverty rate dropped from 23.5 to 15.5 per cent of the population. The State was providing social protection to the most vulnerable and disadvantaged.

    There was no State policy to attack human rights defenders, the delegation said. There were remedies to address violations of the right to life, and freedom of association and assembly.

    On indigenous land rights, the delegation said the Indigenous Peoples’ Rights Act protected designated ancestral grounds and cultural heritage as “no-go zones” for development projects and emphasised free, prior and informed consent for all such projects. The Government was mapping and registering indigenous cultural assets to protect them.

    Regarding drug policies, the delegation said the Government was adopting a humanitarian approach to drug use and rehabilitation. Many drug users were treated in communities rather than in rehabilitation centres. Persons who participated in rehabilitation programmes were removed from criminal offender lists.

    In concluding remarks, Mr. Caunhye said discussions had brought to light issues that needed to be addressed to strengthen the implementation of economic, social and cultural rights in the Philippines. This information would inform the Committee’s concluding observations.

    Ms. Edillon, in her concluding remarks, said the State party was united in its goal of advancing economic, social and cultural rights. It would continue with actions that would create change and realise the economic, social and cultural rights of all citizens.

    In her concluding remarks, Laura-Maria Craciunean-Tatu, Committee Chair, thanked the delegation for participating in the dialogue and for providing comprehensive answers.

    The delegation of the Philippines was comprised of representatives from the National Security Council; the National Commission on Muslim Filipinos; the National Commission on Indigenous Peoples; the National Council on Disability Affairs; the Philippine National Police; the Department of Health; the Presidential Human Rights Committee Secretariat; the Dangerous Drugs Board; the Department of Justice; the Department of Health; the National Economic and Development Authority; the Philippine Drug Enforcement Agency; the Department of Education; the Department of Labour and Employment; the Department of Social Welfare and Development; the Department of Foreign Affairs; and the Permanent Mission of the Philippines to the United Nations Office at Geneva.

    The Committee’s seventy-seventh session is being held until 28 February 2025. All documents relating to the Committee’s work, including reports submitted by States parties, can be found on the session’s webpage . Webcasts of the meetings of the session can be found here , and meetings summaries can be found here .

    The Committee will next meet in public at 5:30 p.m. on Friday, 28 February, to close its seventy-seventh session.

    Report.

    The Committee has before it the seventh periodic report of the Philippines (E/C.12/PHL/7).

    Presentation of Report

    ROSEMARIE G. EDILLON, Undersecretary, Policy and Planning Group, National Economic and Development Authority of the Philippines and head of the delegation, said that through the Philippine Development Plan, which she led, the Government aimed to enable and empower every Philippine citizen to achieve a comfortable lifestyle and a secure future. The 1987 Constitution served as a firm foundation for the protection and promotion of economic, social and cultural rights. This foundation was reinforced by laws, policies and programmes that supported workers, promoted equitable economic participation, and provided social protection.

    The Government had put in place a plan for economic and social transformation that accelerated economic and social recovery from the COVID-19 pandemic toward a prosperous, inclusive and resilient society and achievement of the Sustainable Development Goals. Economic development, resilience building, and poverty reduction were central to the Government’s human rights agenda. From 2015 to 2023, the poverty rate dropped from 23.5 per cent to 15.5 per cent of the population. The State had been employing a multi-dimensional strategy to reduce poverty, expanding the economic pie, facilitating access by the poor to the drivers of economic growth, and providing social protection to the most vulnerable and disadvantaged. It had broad-based programmes like the conditional cash transfer programme, which benefitted over 4.4 million households. Beneficiaries were also covered by other social development programmes.

    The labour market had made a strong recovery after the pandemic. Employment figures were favourable, but there was much volatility and uncertainty in domestic and external fronts. For this reason, Congress had passed legislation that mandated a 10-year labour market development plan, which promoted a dynamic, efficient and inclusive labour market environment.

    Legislative measures had been enacted to institutionalise and expand social protection. In healthcare, the universal health care law ensured automatic PhilHealth coverage for all citizens. Family planning initiatives had prevented an estimated 774,000 unsafe abortions and 1,400 maternal deaths annually. The Mental Health Act expanded services to ensure informed consent in treatment, prohibit shackling, and provide culturally sensitive care. Ongoing efforts focused on breaking barriers such as attitudinal biases, inadequate modifications in public spaces, and employment challenges faced by persons with disabilities.

    Following disruptions caused by the pandemic, the Department of Education launched the basic education development plan 2030 and the learning recovery continuity plan to reverse learning loss. Enrolment had rebounded to 28.5 million learners in the 2022–2023 school year, surpassing pre-pandemic levels. The Government was also strengthening access to special education through policies like Department of Education order no. 44, which provided clear guidance for implementing programmes tailored for learners with disabilities.

    Free, prior and informed consent was a cornerstone of the State’s indigenous peoples’ rights. Although challenges persisted in its effective enforcement, the Philippines continued to collaborate with key stakeholders and communities to ensure that indigenous rights and sustainable development initiatives were effectively upheld. It continued to promote and safeguard the cultural integrity of indigenous peoples by conducting initiatives that highlighted traditional knowledge, practices and crafts.

    Building on these initiatives, the Government, in collaboration with civil society, had launched the fourth Philippine human rights plan, a comprehensive roadmap for protecting and promoting human rights. Its second thematic chapter focused on the country’s commitment to the Covenant, integrating human rights into national development efforts and prioritising marginalised communities. The plan was aligned with the Philippine Development Plan 2023-2028 and the Sustainable Development Goals.

    The Philippines reaffirmed its unwavering commitment to the Covenant and its principles. The dialogue with the Committee was an opportunity for introspection and growth. The Committee’s feedback and recommendations would serve as a valuable guide as the State strived to build a society where every citizen could progressively realise their economic, social and cultural rights; and no one was left behind.

    Questions by Committee Experts

    ASRAF ALLY CAUNHYE, Committee Expert and Country Rapporteur, asked about measures taken to incorporate the Covenant into the domestic legal system and to ensure the primacy of Covenant rights. In which court cases had Covenant rights been invoked? The Committee welcomed the State party’s human rights plans and commitments. What steps had been taken to ratify the Optional Protocol? 

    What system was in place to ensure that the judiciary was free from political influence? There had been 305 killings of human rights defenders since the last review. The Philippines ranked third globally for killings of human rights defenders. The existing legal institution was reportedly unable to prevent the red-tagging and killing of human rights defenders, including persons from indigenous communities and minority groups. What measures were in place to ensure that those responsible for these crimes were prosecuted and sanctioned?

    How did the Government prevent the abusive use of the Anti-Terrorism Act to restrict the activities of human rights defenders? What had barred the enactment of the bills on human rights defenders and the Human Rights Charter? How would the national human rights institution be enabled to function independently in accordance with the Paris Principles?

    Indigenous peoples continued to face violations of their economic, social and cultural rights through the destruction of ancestral lands. They were being deprived of their land management and food systems by extractive industries approved by the State. How would the State party protect the rights of indigenous peoples? What measures were in place to ensure that the National Commission on Indigenous Peoples expedited the issuance of land titles?

    What steps had been taken to ensure that free, prior and informed consent was obtained for extractive projects? What progress had been made in developing a national action plan on business and human rights? How did the State ensure that enterprises exercised due diligence when carrying out extractive activities and provided reparations for indigenous peoples affected by such activities?

    What measures were in place to implement the State’s commitments under the Paris Agreement? What resources had been allocated to addressing climate change? How was the State party addressing environmental pollution caused by extractive and logging activities?

    Despite a decline in poverty levels, 18 per cent of the population lived below the poverty line. Prevailing inequality in wealth remained high. The top 10 per cent of the population earned 45 per cent of gross national income, while the bottom 50 per cent earned only around four per cent. What measures would the State party take to eradicate poverty and support households living in poverty, rationalise fiscal policy, and introduce a progressive tax base that increased taxes for the wealthiest?

    Corruption was reportedly rampant in the police, the judiciary and other State institutions. What measures were in place to combat corruption? Were there cases in which politicians had been sentenced for corruption offences? Were there measures to allow citizens to access information held by Government bodies? Would the State party set up an anti-corruption commission or court?

    There was no anti-discrimination law in the Philippines. What steps had been taken to adopt an anti-discrimination bill? How would the State party protect vulnerable persons from discrimination? What measures had the State party taken to increase the representation of women in politics and decision-making positions, and in high income sectors of the economy? How was the State party providing childcare services to empower women to take part in the workforce?

    Responses by the Delegation 

    The delegation said the judiciary was independent and the Judicial Bar Council nominated judges independently. Justice programmes had been included in Government fiscal programmes to ensure that they were appropriately funded.

    The conditional cash transfer programme benefitted the poorest households with family members who were still in school. The poverty rate was at 15.5 per cent as of 2023. This rate had decreased thanks to State support programmes. The State party was investing in physical and digital connectivity for island provinces, which facilitated poor households’ access to growth centres.

    The Philippines was vulnerable to natural disasters. The Government was investing in disaster risk reduction and mitigation. Concerning the Paris Agreement, the State’s goals were to reduce emissions by 75 per cent, reduce dependence on fossil fuels, and increase the use of renewable energy. The Electric Vehicle Industry Development Act reduced tariffs on electric vehicles to encourage their import and use.

    The State party had specific laws on anti-discrimination in different fields. It did not have a bill on sexual orientation and gender identity, but had issued an executive order that concerned discrimination on the basis of gender preferences.

    The State party’s justice system, including the Supreme Court, and its national human rights institution, the Commission on Human Rights, effectively addressed complaints of human rights violations. There was thus no need to ratify the Optional Protocol.

    There were many non-governmental organizations in the Philippines that had expressed opposition to the current bill on human rights defenders. The State party had engaged with civil society organizations on the revision of the bill. The bill called for human rights defenders to not advocate for the violent overthrow of the Government.

    The State party was supporting the participation of women in the labour force. It had advocated for policies and legislation that allowed for nighttime work for women, safe spaces in workplaces, lengthened maternity and paternity leave and telework, and was conducting studies on inclusive work arrangements for women, youth and persons with disabilities.

    The Philippines’ Anti-Terrorism Act supported the country’s response to terrorism and safeguarded the rights of those accused of the crime. The State had issued guidelines on detentions and surveillance that ensured that persons’ rights were not violated. The Philippines’ rank in the Global Terrorism Indexhad fallen thanks to implementation of the Act. Investigations had been launched into all claims of misuse, and arrest warrants had been issued for officers who had misused the law. Enforcement of the Act was carried out with the highest level of responsibility. The State party ensured that its actions adhered to due process and the rule of law.

    The Philippines was a State party to the United Nations Convention against Corruption and had implement a national corruption prevention programme. Recently, it had hosted a regional conference on open governance and enacted a revision to the Government Procurement Act, which closed loopholes. An electronic procurement service had been launched to increase transparency. Many Government processes had been digitised, lessening opportunities for corruption.

    The Indigenous Peoples’ Rights Act protected designated ancestral grounds and cultural heritage as “no-go zones” for development projects and emphasised free, prior and informed consent for all such projects. The Government was mapping and registering indigenous cultural assets to protect them.

    The State had an indirect taxation system, as many families relied on overseas remittances for their income, which were not being taxed. The tax system punished undesirable behaviours such as the consumption of alcohol and cigarettes. Revenues from these taxes were being allocated to the health sector.

    Follow-Up Questions by Committee Experts 

    Committee Experts asked follow-up questions on measures to ensure that internally displaced persons had access to adequate food, basic housing, healthcare, education and social protection services; the status of the bill on the protection of internally displaced persons; measures other than the tax system to reduce disparities in wealth and income; steps to ensure gender parity in Government bodies; whether the State party had an implementation mechanism for recommendations issued to it by international bodies; how the State party linked climate adaptation policies with the land registration system to compensate people affected by natural disasters; how the State party could receive income from major emitters to fund climate adaptation plans; the ramifications of tax policies on economic, social and cultural rights; projects to strengthen anti-corruption bodies; and whether the State party trained judges and prosecutors on the Covenant.

    Responses by the Delegation

    The delegation said the National Commission on Indigenous Peoples was revising guidelines on the Indigenous Peoples’ Rights Act. The Commission had issued 272 approved ancestral domain titles to indigenous peoples.

    The national disaster risk reduction management framework addressed preparedness, rescue, response, recovery and rehabilitation. The State party conducted post-disaster needs assessments and tried to compensate for economic loss. A “digital locker” was being developed to allow citizens to store land titles, which would support reparation claims in cases of disasters.

    Discussions on the national action plan on business and human rights were in advanced stages. The State party sought to develop business and human rights policies that addressed specific issues related to children, indigenous peoples and environmental protection.

    The Government was interested in generating revenues from major emitters. It had developed a law that allocated resources to measuring loss and damage from climate change, which would help in this regard. The State party hosted the Loss and Damage Fund, and there were many international investments in environmental, social and governance projects in the Philippines.

    The Philippines had been recognised by the United Nations for its national recommendations tracking database. Judges were provided with training on the Covenant.

    Women parliamentary members had pushed for policies promoting women’s rights and inclusive governance. Community consultations and education programmes were in place to promote women’s participation in politics.

    The State party had proposed bills to amend taxes on passive income. It provided tax incentives to businesses that chose to operate outside of Manila.

    Questions by a Committee Expert

    SEREE NONTHASOOT, Committee Expert and Member of the Taskforce for the Philippines , expressed concerns about high levels of unemployment and informal employment in the Philippines. The informal sector provided livelihoods for about 60 per cent of the population, the majority of whom were female. What measures were in place to regularise the informal sector? The Committee was concerned about the quality of employment provided to persons with disabilities.

    What measures were in place to inspect sweatshops and to issue sanctions to employers who violated workers’ rights? What measures were in place to address workplace harassment and gender-based violence. Who was excluded from the social security system? It reportedly did not cover persons in street situations.

    There was significant variation between minimum wages in the capital and other regions. How did the State party support adequate living and working standards outside the capital? Did workers who were not paid minimum wages have access to a complaints mechanism? There had been a significant increase in child labour in the State party. How was this being addressed?

    The Committee was concerned by reports of red-tagging and killing of trade union workers. How was the Government promoting freedom of association? What was the role of relevant agencies in protecting trade union rights and the right to strike?

    Responses by the Delegation

    The delegation said the unemployment rate for 2023-2024 was 4.3 per cent. The rate quickly recovered after the pandemic. The State party had determined that less than 40 per cent of workers were in the informal sector. It was developing policy recommendations related to protecting the rights of informal sector workers and revising occupational safety and health standards to protect against accidents. The State was expanding opportunities for skills training and upskilling to help citizens increase their employability. There was a policy and regulatory framework in place to protect the rights of workers in the “gig economy”.

    The Government was encouraging investment outside of the capital. It conducted consultations and examined trends in real wages before setting regional minimum wages. Setting a standard minimum wage for the entire State would discourage businesses from investing in remote provinces.

    There was no State policy to attack human rights defenders. There were remedies to address violations of the right to life, and freedom of association and assembly. The Government rejected the word red-tagging due to the absence of such a policy.

    The “Reach Out” programme aimed to reach out to families in street situations, welcoming them in temporary shelters. Abandoned children were placed in foster families. Over 2,000 individuals had benefitted from the programme in 2023.

    The National Commission against Child Labour had inspected over 10,000 establishments in 2020, identifying violations of child labour laws. Many children identified as labourers were provided with educational materials and support. Family cash transfer programmes included seminars for parents which discouraged child labour. Parents who engaged their children in child labour could be taken off the programme.

    The Government was providing training for persons with disabilities to help them pass eligibility requirements for public sector jobs. It also conducted skills matching to help persons with disabilities access work in the private sector.

    Follow-Up Questions by Committee Experts

    Committee Experts asked follow-up questions on whether regional minimum wages were indexed and reviewed regularly; the role of the Government in protecting Filipino national migrant workers overseas; the number of labour inspections conducted annually; whether the Commission on Human Rights received complaints from workers; whether the State party would adopt policies mandating businesses to adopt diversity and inclusion regulations; plans to revise the Labour Code to remove barriers to forming and joining trade unions; and disaggregated data collected on persons not in employment, education or training.

    Responses by the Delegation

    The delegation said the Government considered regional poverty lines when setting provincial minimum wages. This was a starting wage, and the Government was supporting workers to receive higher wages.

    The State party had created a Department of Migrant Workers, which protected the rights of national migrant workers overseas. The Department was forming bilateral agreements with other countries to protect migrant workers from abuse. Several thousands of workers had been repatriated during the pandemic, many of whom had received assistance. Their children were provided with scholarships.

    Collecting data on persons not in employment, education or training was a goal of the Philippine Development Plan. There were special employment programmes for students and alternative learning systems in place to reduce the number of such persons.

    The State party had intensified efforts to identify and prevent child labour. More than 50,000 child labourers had been provided with necessary services and more than 30,000 child labourers had been removed from labour.

    The Philippines had several thousands of trade unions and workers’ associations with over four million members in total. The State engaged in dialogue with the International Labour Organization regarding incidents in which workers were killed or disappeared, and had adopted measures to prevent such incidents in the future. A committee had been formed to investigate these cases, and investigations into several cases had been concluded.

    In 2023, the State party had inspected more than 400,000 establishments to ensure they complied with health and safety standards.

    Questions by a Committee Expert

    LUDOVIC HENNEBEL, Committee Vice-Chair and Member of the Taskforce for the Philippines , asked about progress made in implementing recommendations from other treaty bodies on polygamy. What measures were in place to reform divorce procedures? 

    Had the State party received complaints regarding the violation of children’s rights during conflict or on the recruitment and use of children in armed conflict? What sanctions were imposed for persons who forced children to work? How was the State party preventing sexual and online exploitation of children, and supporting birth registration for children from indigenous and Muslim communities? What measures were in place to protect victims of rape and to repeal laws allowing perpetrators to avoid punishment by marrying victims?

    How did the State party promote equal access to civil unions for members of the lesbian, gay, bisexual, transgender and intersex community and protect the bodily integrity of intersex persons?

    How were people in the informal sector supported to access housing? What measures were in place to prevent evictions? How did the State party promote access to health for vulnerable groups, to mental health care in rural areas, and to emergency contraception and post-abortion care? How did it promote education on sexual and reproductive health for rural and young people?

    Was the State party planning to decriminalise drugs for personal use and implement alternatives to imprisonment for drug users? What protection was in place to prevent stigmatisation and criminalisation of persons receiving treatment for drug addiction? What measures were in place to put an end to the “war on drugs” and to provide reparations to victims of the war?

    Responses by the Delegation

    The delegation said the Philippines recognised several types of contractual employment, including for work performed outside the employer’s facilities and independent contractors. These workers were able to file complaints with the Government in cases of violations of labour rights.

    A law on agrarian emancipation had freed 6,000 farmers from debt. The State was also implementing agricultural support programmes. The area under the Verde Island Passage would be declared as a protected area, and the State would allocate resources to protecting the area. The State’s Blue Economy Bill would mandate policies for managing marine and coastal resources. The State party had also enacted a law on seafarers’ rights.

    The natural disaster risk reduction and management act regulated support for persons displaced by natural disasters. Such persons could access State-funded shelters. The Government continued to provide support to persons displaced by the 2017 Marawi siege. The Marawi Compensation Board ensured tax-free compensation for housing and property lost during the siege. The State also provided livelihoods, healthcare and educational support for victims.

    The Executive Branch had been advocating for a law on freedom of information, which would be passed soon. A freedom of information programme had been established to grant public access to official, non-confidential documents of public concern. A witness protection programme was also in place. The Anti-Red Tape Authority promoted transparency in Government operations, while the Ombudsman acted on confidential complaints of corruption. Punitive actions for corruption offences were severe.

    In State law, polygamy was illegal, and bigamy was a criminal offence. However, Muslim men with financial ability and their wives’ permission could marry multiple wives under traditional law, which also mandated divorces.

    The Philippines advocated for the protection of children in armed conflict. It had ratified the Optional Protocol to the Convention on the Rights of the Child on the involvement of children in armed conflict. Members of the Armed Forces under the age of 18 did not take part in combat. When violations occurred, investigations were carried out. However, the New People’s Army continued to recruit children. There were over 500 documented cases of this terrorist group’s use of children. The Government continued to exert efforts to ensure that schools were not used to exploit children.

    The State was strengthening efforts to address adolescent pregnancy through the implementation of comprehensive sexuality education and referral networks to reproductive health facilities. Over 100 schools were implementing the education programme, and over 1.1 million leaners had participated. Behavioural change materials had also been developed for schools and health facilities.

    The Philippines remained a prime target for online sexual abuse of children. Legislation had been implemented in 2022 to penalise all forms of online abuse of children. State agencies were cooperating to identify perpetrators.

    The Government was collecting data on malnutrition and stunting. Stunting in children under five had decreased from 33 per cent in 2018 to 23 per cent in 2024.

    Housing had been declared as a national concern by the current Government. The national housing programme had provided an average of 35,000 social housing units per year in recent years. Around 75,000 housing units had been provided to persons living in areas vulnerable to natural disasters and to indigenous peoples.

    The Government was adopting a humanitarian approach to drug use and rehabilitation. The drug clearing project sought to take away drugs from the people and discourage people from using drugs. Rehabilitation support was provided to drug users. Over 60 per cent of regions had been declared “drug cleared”, and over 40 per cent “drug-free”.

    Follow-Up Questions by Committee Experts

    Committee Experts asked follow-up questions on the passage of the extrajudicial killing bill and its relationship with the State drug policy; whether police were prohibited from reporting drug-related deaths to the media; whether detentions of drug users were voluntary; how the State supported people with drug-use records, who were criminalised, to access the work market; issues with the coverage of social security and nutrition programmes; measures to expedite agrarian reform to address high levels of poverty among farmers; measures to protect small-scale fishers from large-scale fishing businesses; indicators to assess multi-dimensional poverty and inform policies to tackle poverty; measures to support and protect the children of overseas workers from domestic abuse; how the energy market was regulated to make access to energy affordable; the impact of the prohibition of abortion on maternal mortality rates and measures implemented to respond to treaty bodies’ recommendations on increasing access to pre- and post-natal care services; and measures to legalise abortion in cases where there was risk to the health of the mother.

    Responses by the Delegation

    The delegation said there were several programmes supporting children in their first 1,000 days of life, including conditional cash transfers. Health workers were provided with training on caring for newborns and there were pre- and post-natal care programmes in place.

    The Philippines was an early adopter of a multidimensional poverty index, which helped to identify areas in which increased support was needed. A community-based monitoring system had been set up to collect data on multidimensional poverty.

    The State party had observed that for families with mothers who migrated overseas, grandparents typically cared for children and family circles also provided support. The Government had instructed teachers on identifying evidence of domestic abuse. Migrant workers were required to develop financial plans before leaving the country. The reintegration programme was being strengthened to help returning migrant workers.

    The State had reached 100 per cent electrification of rural regions, and was now working to address pockets of households that did not have electricity, supporting their access to renewable energy.

    Maternal deaths had been steadily decreasing in recent years. The Government was continuing to strengthen maternal and newborn care programmes, including by upskilling birthing nurses and reducing unsafe abortions.

    The State party prevented commercial fishers from fishing in waters reserved for municipal fishers and spawning grounds. The Clean and Healthy Oceans Programme aimed to reduce illegal and unregulated fishing by improving compliance with regulations. Programmes were in place to develop aquatic parks to support small-scale fishers, who could also access support for livelihoods and fishing tools.

    Questions by a Committee Expert

    LAURA-MARIA CRACIUNEAN-TATU, Committee Chair and Member of the Taskforce for the Philippines , commended the State party on the constant increase in the budget allocated to education, which had reached 3.2 per cent of gross domestic product. However, this was well below the United Nations’ recommendation of at least four per cent of gross domestic product. Were there further plans to increase the education budget? The Philippines’ global ranking in terms of quality of education was in the bottom 25 of 172 nations, the lowest score in Asia. What measures were envisioned to increase access to quality education for all?

    The State party had put in place a five-year development plan for children with disabilities, which ended in 2019. What results were achieved by the plan and what measures were in place to address limited access to education for children with disabilities and indigenous children? In one region, 56 per cent of children were not attending school. What measures were in place to address this issue? What measures were in place to address the impact of COVID-19 lockdowns on access to education? How was the national policy framework on schools as zones for peace implemented? Legislation had been implemented that discontinued mother tongue education for minority groups. What was the rationale behind the adoption of this law?

    There was increasing disparity in access to the internet across different regions. What measures were in place to improve access to the internet for poor households and regions?

    Responses by the Delegation 

    The delegation said that the Constitution mandated that education needed to be given priority in the budget. Overall spending on education amounted for around 5.5 per cent of gross domestic product. The State party had made kindergarten education compulsory and extended compulsory education by two years, and the curriculum had been revised recently to improve education quality. The Government was working to address the inadequate supply of textbooks and computers in schools through decentralisation. The Philippines had over 100 languages and it was difficult to develop learning materials in each of these languages. The State thus decided to discontinue mother tongue language instruction and standardise English as a medium of instruction from grade five.

    The State party was also working to address the impact of the COVID-19 pandemic on learning outcomes. Recently, legislation had been passed on remedial education. During the pandemic, the Government adopted learning continuity plans to support access to education through online and broadcast education.

    The Government had implemented many measures to manage culturally sensitive education in Muslim and indigenous communities. Education on peace and conflict resolution was being promoted, and the State party was working to repair schools damaged by conflicts. The Government promoted the concept of schools as zones of peace in conflict-affected areas such as Mindanao. Local governments and security forces contributed to protecting schools in peace zones from being used in military activities through measures such as school escorts. The Government continued to provide psychosocial support for children affected by armed conflict.

    The indigenous education programme promoted quality, culturally relevant education for indigenous peoples. It had been implemented in over 3,000 schools. Over 75 indigenous languages were used in instruction, and an additional 4,000 teachers, 95 per cent of whom were indigenous, had recently been hired to provide education to indigenous children.

    The Government was working to improve access to education and healthcare for children with disabilities. Legislation mandating inclusive education for children with disabilities had been adopted and disability support officers had been established in educational institutions.

    The State party had improved the policy and regulatory framework on internet access. The national fibre-optic cable network was being expanded to southern regions. The State party was collaborating with Starlink to allow southern provinces to access the internet via satellites. Telecommunications companies were provided with incentives to operate in the Philippines, and wi-fi access points were being set up in schools and public places.

    The State’s campaign against illegal drugs was now geared towards rehabilitation and reintegration of drug users. The House of Representatives had investigated extrajudicial killings occurring in the context of the war on drugs and the Government had decided to amend the Penal Code to increase penalties for extrajudicial killings.

    Follow-Up Questions by Committee Experts

    Committee Experts asked follow-up questions on how the State party promoted education in Spanish and Arabic; the results of the education programme on Islamic values; how the State party protected the expression of indigenous culture and indigenous cultural sites; whether indigenous leaders participated in creating policies impacting their communities; legal and administrative provisions to protect indigenous languages; the number of legal cases invoking economic, social and cultural rights in which reparations had been granted for violations; the role of the Commission of Human Rights in investigating complaints from workers and places of detention; how the State party would protect fishing zones for small-scale fishers; measures for reducing threats and attacks against human rights defenders; plans to decriminalise abortion; and measures to protect the lesbian, gay, bisexual, transgender and intersex community.

    Responses by the Delegation

    The delegation said there were schools in Mindanao that provided Arabic and Islamic education. Education in Spanish and Arabic was an option in mainstream schools. Four-year courses on Arabic teaching were provided in local universities.

    There was no legal framework on cultural misappropriation, but the Government was working to protect intellectual property rights by registering the cultural assets and expressions of indigenous peoples. Indigenous communities needed to be consulted regarding all projects and policies affecting them. Indigenous leaders were included in local development councils.

    Courts had cited the Covenant in decisions upholding standards of living and access to economic, social and cultural rights, including in cases in which remedies were granted for environmental harm caused by mining operations. There needed to be a new Charter governing the mandate of the Commission on Human Rights, which had traditionally focused on civil and political rights but was recently working to promote economic, social and cultural rights.

    Court cases were underway into violations of regulations on fishing zones by commercial fishers. The Government protected the rights of legitimate environmental defenders. Protection of the environment was included as a pillar of the national security policy.

    The State party had pivoted to a community-based approach to illegal drugs. Many drug users were treated in communities rather than in rehabilitation centres. Persons who participated in rehabilitation programmes were removed from criminal offender lists, but not drug user lists.

    The State party had not yet developed a comprehensive bill on the rights of internally displaced persons. Persons affected by the Marawi siege had been provided with access to water and electricity, and reconstruction efforts were ongoing in affected areas.

    The State had created a committee on lesbian, gay, bisexual, transgender and intersex affairs, which was developing policies and programmes to promote equality and inclusion of the community. The Constitution and various State legislation prohibited discrimination based on sexual orientation and gender identity. The police had formulated a gender sensitivity programme to ensure protection of this community.

    Pre-natal checkups were provided free of charge in primary health facilities, and mobile clinics provided maternal health services in isolated areas. The Government, while maintaining the prohibition of abortion, had taken measures to ensure quality post-abortion care was provided without stigmatisation.

    Closing Remarks

    ASRAF ALLY CAUNHYE, Committee Expert and Country Rapporteur for the Philippines , said the dialogue had been fruitful and constructive, addressing a range of issues confronting the Philippines. Discussions had brought to light issues that needed to be addressed to strengthen the implementation of economic, social and cultural rights, and would inform the Committee’s concluding observations. Mr. Caunhye expressed thanks to all persons who had contributed to the dialogue.

    ROSEMARIE G. EDILLON, Undersecretary, Policy and Planning Group, National Economic and Development Authority of the Philippines and head of the delegation, thanked the Committee for the dialogue. The State party was united in its goal of advancing economic, social and cultural rights. The President had a clear vision for national development that focused on improving access to all economic, social and cultural rights. The State party would continue with actions that would create change and realise the economic, social and cultural rights of all citizens.

    LAURA-MARIA CRACIUNEAN-TATU, Committee Chair , thanked the delegation for participating in the dialogue and for providing comprehensive answers. In some instances, additional data would have been appreciated. Human rights mechanisms were not mutually exclusive; they all served to enhance protections of rights holders. The Committee thanked civil society organizations for submitting information to the Committee and called for further cooperation between civil society and the Government.

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    CESCR25.006E

    MIL OSI United Nations News

  • MIL-OSI Security: Sacramento County Man Sentenced to 33 Months in Prison for Fraud in Connection with Medical Device Sales

    Source: Office of United States Attorneys

    SACRAMENTO, Calif. — Michael Andrew Scott, 38, of Fair Oaks, was sentenced Tuesday by Senior U.S. District Judge Kimberly J. Mueller to 33 months in prison for fraud in connection with a medical device sales scheme, Acting U.S. Attorney Michele Beckwith announced. In addition, Scott was ordered to pay $376,044 in restitution to his victims.

    According to court documents, between June 2018 and June 2022, Scott devised a scheme to defraud investors in his company, Trusted Medical Partnership. Scott told investors that either he or Trusted Medical Partnership received purchase orders from health care providers for medical devices but lacked the capital to fulfill the orders. Scott solicited and obtained loans from these investors, and, in exchange, promised them substantial returns in a relatively short time with zero risk.

    In reality, Scott’s representations to these prospective investors were false because Scott did not have purchase orders from health care providers. To some of his victims, Scott sent purchase orders that he had doctored or fabricated in order to convince them to lend money. The health care providers listed on these purported purchase orders confirmed that the orders were fake altogether or altered to reflect inflated amounts or other false information. Trusted Medical Partnership was not a legitimate business — while incorporated in the State of California, it conducted no legitimate business transactions, paid no taxes, submitted no wage or employment-related records, and was suspended in December 2021 before Scott solicited investments on its behalf from some of his victims.

    Scott’s victims lent him money on the basis of his false statements, including the fraudulent purchase orders, but received little to no returns on their investments. Instead, Scott spent the money on gambling at several local casinos (sometimes the same day he received the victims’ money), personal expenses, or payments to other, prior investors in order to keep the scheme running. Collectively, Scott defrauded at least 16 victims of almost $470,000.

    This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Dhruv M. Sharma prosecuted the case.

    MIL Security OSI

  • MIL-OSI Security: Floridian Sentenced for Role in Money Laundering Operation

    Source: Office of United States Attorneys

    PITTSBURGH, Pa. – A resident of Ocala, Florida, has been sentenced to time served, to be followed by three years of supervised release, on his conviction for money laundering conspiracy, Acting United States Attorney Troy Rivetti announced today.

    Senior United States District Judge Nora Barry Fischer imposed the sentence on Charles Wilson Stout, 66, who had served approximately six months of imprisonment for his crime.

    According to information presented to the Court, Stout engaged in a money laundering conspiracy from in and around April 2022 until in and around June 2022. The Court was advised that a Washington, D.C.-based university was the victim of a business email compromise that resulted in the fraudulent transfer of more than $603,000 from a bank account located in the Western District of Pennsylvania into a separate bank account owned by Stout.

    To obfuscate the source of the fraudulent funds, Stout and his co-defendant, David Kakra Mensah, created a shell company and transferred portions of the fraudulently obtained proceeds into a cryptocurrency account that Mensah owned. In addition to participating in the business e-mail compromise, Mensah was also involved in a romance fraud scheme in which he obtained and moved money through individual victims living in Pennsylvania, Oregon, and elsewhere. Mensah previously pleaded guilty and was sentenced to 24 months of imprisonment.

    Assistant United States Attorneys Mark V. Gurzo and Kelly M. Locher prosecuted this case on behalf of the government.

    Acting United States Attorney Rivetti commended the Federal Bureau of Investigation for the investigation leading to the successful prosecution of Stout.

    MIL Security OSI

  • MIL-OSI Video: Secretary-General Travel, Deputy Secretary-General & other topics – Daily Press Briefing

    Source: United Nations (Video News)

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

    – Secretary-General Travel
    – Deputy Secretary-General
    – Occupied Palestinian Territory
    – Democratic Republic of the Congo
    – Children in Eastern and Southern Africa
    – Sudan
    – Libya
    – Myanmar
    – Central America
    – Ukraine
    – Guest Tomorrow
    – Financial Contribution

    SECRETARY-GENERAL TRAVEL
    The Secretary-General traveled to Bridgetown, Barbados today where, this evening, he will speak at the opening ceremony of the 48th Regular Meeting of the Conference of the Heads of Government of the Caribbean Community, also known as CARICOM. 
    In his remarks, he is expected to highlight three key areas where, together, we must drive progress – peace and security, the climate crisis and sustainable development.
    Also today, the Secretary-General will hold a bilateral meeting with Prime Minister Mia Mottley of Barbados.
    Tomorrow, the Secretary-General will have a closed session with CARICOM Heads of Government, to exchange views on pressing issues in the region, such as Haiti. 
    He is expected back in New York later tomorrow.

    DEPUTY SECRETARY-GENERAL
    The Deputy Secretary-General, Amina Mohammed, arrived in Johannesburg, South Africa today to attend the G20 Foreign Ministers meeting on behalf of the Secretary-General. Ms. Mohammed will underline support for multilateral cooperation and the South African G20 Presidency and reinforce the case for dialogue and joint action to address common challenges, including trade, tax, debt, and financing climate action. On the margins of the meeting, she is expected to meet with senior government officials from G20 members and guest countries.
    From Johannesburg, Ms. Mohammed will proceed to Nairobi, Kenya, to hold meetings with a wide range of stakeholders and UN entities in preparation of the second UN Food System Summit Stocktaking and to meet with senior government officials.
    On 26 February, Ms. Mohammed will return to South Africa – this time to Cape Town to attend the G20 Finance Ministers and Central Bank Governors Meeting and open the Finance in Common Summit 2025 on behalf of the Secretary-General.
    The Deputy Secretary-General will return to New York on 27 February.

    OCCUPIED PALESTINIAN TERRITORY
    The World Health Organization and UNICEF say that the emergency polio outbreak response in the Gaza Strip is continuing, with a mass vaccination campaign scheduled to begin on Saturday and continue until 26 February. The novel oral polio vaccine type 2 will be administered to more than 591,000 children under 10 years of age to protect them from polio. The campaign aims to reach all children under 10 – including those previously missed – to close immunity gaps and end the outbreak.
    Meanwhile, partners supporting water, sanitation and hygiene services are working to increase the production and distribution of water for drinking and domestic purposes to improve living conditions in the Strip and minimize public health risks.
    There are now more than 1,780 operational water points across Gaza. Over 85 per cent of them are used to support water trucking activities by UN partners. 
    The Office for the Coordination of Humanitarian Affairs reports that UN partners are also training and deploying mobile teams and volunteers at aid distribution points to ensure that vulnerable groups – including people with disabilities – have safe and dignified access to humanitarian assistance. More than 100 such teams are operating at nearly 70 aid distribution points throughout Gaza.
    Turning to the West Bank, OCHA says that Israeli forces’ operations in northern areas continue, causing further destruction and displacement among Palestinian residents.
    Yesterday, in Tulkarm refugee camp, Israeli forces demolished at least five homes, with several others also slated for demolition.

    Full Highlights: https://www.un.org/sg/en/content/ossg/noon-briefing-highlight?date%5Bvalue%5D%5Bdate%5D=19+February+2025

    https://www.youtube.com/watch?v=A0iEq-V8ZyE

    MIL OSI Video

  • MIL-OSI Europe: President Calviño’s interview with the Süddeutsche Zeitung

    Source: European Investment Bank

    Interview by Matthias Kolb and Alexander Mühlauer (Süddeutschen Zeitung)

    Nadia Calviño is President of the European Investment Bank (EIB), the largest promotional bank in the world. On behalf of the EU Member States, it is tasked with ensuring stability through investments within and beyond the European Union. So it’s little wonder that the former Deputy Prime Minister of Spain would attend the 61st Munich Security Conference. Shortly before the event, Calviño visited Ukrainian President Volodymyr Zelenskyy in Kyiv, signing investment agreements totalling around  €1 billion. Before beginning her interview with the Süddeutsche Zeitung, the 56-year-old wanted to get one thing straight, right from the start: Europe must realise that we are at a turning point in history.

    Something seems to have ruptured between the United States and the European Union. Trump is talking with Putin about the future of Ukraine, without the EU at the table. The US Secretary of Defense says that America will no longer guarantee security in Europe. And US Vice President J.D. Vance says the greatest risk for Europe is not Russia or China, but the alleged internal threat to freedom of expression. How shocked are you by this?

    Calviño: I’m not shocked, or even surprised. I was certain we would see a fundamental change in transatlantic relations. We Europeans need to remember where our strengths lie, stand up for our interests and defend the rules-based world order from which we have benefited so richly over the past 80 years. And the Americans even more so.

    Isn’t the new US government threatening to destroy this world order?

    I am convinced that good transatlantic relations are strategically important for both sides. We must work to create a new foundation for them. In such turbulent times, it is more important than ever for Europe to stand for stability and reliability – not just within our own borders, but also for the rest of the world. That Europe should do even more to uphold a rules-based world order is something I hear often from our partners across the globe.

    But again, do the United States pose a risk to the global order?

    It is in their interest to preserve the things that have made America great. Institutions like the World Bank, the International Monetary Fund or the World Trade Organization, which we founded together. That’s one reason the US dollar is a global reserve currency. There are many win-win situations to be had from working together, and with Europe. But the most important thing is for us to accept that the world of tomorrow is very different from the world of yesterday.

    “We are at a turning point in history.”

    The European Investment Bank is the world’s largest promotional bank. As its president, what can you do to help Europe stand the test of time in this new world?

    We are at a crucial moment in history. And at a turning point in the geopolitical order. The future will depend on the decisions we make today, and every decision counts.

    What does that mean exactly?

    Since I joined the EIB as president in 2024, I have held talks with all 27 EU Member States and our European and international partners, but also with civil society and industry. For the first time, we have set out a clear Strategic Roadmap. 2024 was a record year for us, in which the EIB signed €89 billion in financing to strengthen Europe’s competitiveness and security. These funds will go, for example, to energy infrastructure and renewable projects, to new technologies like artificial intelligence or quantum computers, and to supporting the transport and automotive industries. In 2024, we invested a record amount in energy networks. We also doubled our support for security and defence – to €1 billion – and we expect to double it again in 2025.

    At the Munich Security Conference, we kept hearing the question of where Member States could get the many billions of euros they would need to invest in their armies, including under pressure from Trump. Are they all coming to you now?

    Ursula von der Leyen has already proposed relaxing the rules under the Stability Pact so that EU countries can finance their defence spending. Olaf Scholz has similar ideas. The EIB is not a defence ministry, but there is a lot we can do to help in this area. For example, if Member States want to renovate their roads and bridges to improve military mobility, we can fund that, just like we can fund protection of critical infrastructure like submarine cables, or investments in cybersecurity. We are doing this, and are exchanging with Europe’s finance and defence ministries and with industry.

    What is the EIB financing in Germany in this domain?

    We are currently looking into 14 specific projects across Europe. In 2021, for example, we granted the Munich-based drone startup Quantum Systems a loan of €10 million. Their products are now used by the Ukrainian military, and have both civilian and military applications, so they can be supported by the EIB. The Lithuanian government has just applied to us with a proposal that we are now evaluating. It seeks financial assistance to build the base for the new German army brigade in Rūdninkai, near the border with Belarus.

    Soon 5 000 German soldiers will be permanently stationed in Lithuania, as a deterrent to Russia. Cost projections by the German Defence Ministry for this brigade are over €10 billion. Lithuania would like to invest around €1 billion in the new base. How much money could come from the EIB?

    This is a very important and demanding project, and we’ve only just started looking into the details. Another good example is the EIB support for the expansion of the Danish port in Esbjerg. Going forward, it will be better able to accommodate NATO vessels and the transport of materials for offshore wind farms.

    You just came from a visit to Ukraine. How is the EIB supporting that country?

    The trip to Ukraine was my first one outside the EU as EIB President. We are probably Ukraine’s most important investment partner, and our role is one that our partners value greatly. During my visit, we signed agreements for investment totalling around €1 billion. They will allow major Ukrainian banks to grant more loans to medium-sized companies. And with the country’s government, we have signed packages to finance infrastructure for energy, transport, water and district heating, as well as the construction of bunkers in schools and nurseries. So we are actively investing in all of the important areas for the Ukrainian people to lead normal lives, as far as possible. And, of course, we aim to strengthen the country’s resilience.

    Are you also supporting Ukraine’s defence industry?

    We support the European security and defence industry, which also helps Ukraine. In 2024 we expanded the dual-use approach, so that we can now support a wide range of projects, such as border security, cybersecurity, satellites and drones, and mine clearance.

    The CEO of the Italian arms company Leonardo recently told our reporters that Europe has one main problem: Member States spend more and more money on defence, but don’t work together enough. Is he right?

    It is clear that a common European procurement system would make us stronger and more efficient, especially when it comes to our flagship projects. And yes, I think the European Investment Bank can contribute by acting as an independent appraiser for projects. In 2024, to bring in top expertise, we signed agreements with the NATO Innovation Fund and the European Defence Agency so that we can draw on their technical knowledge in this regard.

    Is there any dispute at the EIB due to differing positions on Ukraine, with member countries like Hungary or Slovakia that have pro-Moscow governments?

    No, not at all.

    “I would never presume to tell a Member State what to do.”

    So you are president of one of the only EU institutions that aren’t divided?

    I told you that I visited the 27 Member States, and listened very carefully to them. On that basis, we drew up our strategy, which was unanimously supported. We are therefore well aligned with the EU priorities and the expectations of the Member States. There is strong support for what we are doing. Including in Ukraine.

    When it comes to Europe’s future, one word always comes up: competitiveness. What does Europe need to do to avoid falling even further behind the US and China economically?

    The different reports, for example by Enrico Letta and Mario Draghi, are quite unanimous: We need market integration, streamlining and investment. So what we need to do is clear. And I think the new Commission is willing to go in that direction. On streamlining, for example, we have teamed up with the Commission to adapt environmental reporting standards so that we can pursue the Paris Agreement and our green transformation objectives in a way that promotes the competitiveness of European industry, as well as green finance and green investment.

    How optimistic are you that Europe will finally begin to react more quickly and actually make decisions? With the capital markets union, we’ve been waiting ten years for things to finally happen. And that’s just one example of many.

    As Spain’s Minister of Finance and its Deputy Prime Minister, I saw lots of things. The euro area crisis, the COVID-19 pandemic. And I have seen how Europe can succeed: Together, we developed the vaccines, and we dealt with the crisis. With the NextGenerationEU package, Spain has made some very far-reaching reforms and, thanks to mobilising investment, it is now the best-performing economy in Europe and a driver of growth and prosperity on the continent. We succeed when we unite, act decisively, truly focus and bring all our energy together.

    In contrast to Spain and other countries, Germany’s economy has been hit hard. Many experts see the debt brake as an obstacle to further growth. What does Germany have to do for things to start looking up again?

    I would never presume to tell a Member State what to do. I simply wish for a strong Germany with a stable, pro-Europe government – because we need a strong Germany at the centre of our union.

    MIL OSI Europe News

  • MIL-OSI Europe: Answer to a written question – EU funds spent by UNRWA on terrorist-linked activities – E-002294/2024(ASW)

    Source: European Parliament

    Given the essential role of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) , which provides crucial support to the civilian population in Gaza and the wider region, as confirmed by the European Council in December 2024[1], the EU expressed grave concern about the serious allegations made on 24 January 2024 on the possible involvement of some UNRWA staff in the unprecedented 7 October 2023 attacks, which the EU condemned in the strongest possible terms.

    The Commission has been in constant contact with UNRWA at the highest levels. As a result, UNRWA committed, notably in the context of the signature of the EU-UNRWA contribution agreement to implement the actions requested in the 29 January 2024 Commission statement[2]: (i) to allow an audit to be conducted by EU-appointed independent external experts; (ii) to strengthen its Department of Internal Investigations; and (iii) to carry out a review of all UNRWA staff to confirm that they did not participate in the attacks.

    Following the fulfilment by UNRWA of all the conditions agreed for the 2024 EU funding, the Commission disbursed in three tranches a total of EUR 82 million, and an additional top-up of EUR 10 million in December 2024[3].

    This came in addition to the EUR 48.5 million of EU humanitarian funding in 2024. The Commission is committed to continuing its support for the Agency, and closely monitors the implementation of the action plan developed by UNRWA in response to the recommendations of the Independent Review Group[4] and further decisive action by the UN to ensure neutrality, accountability and to strengthen control and oversight over the operations of the Agency.

    The Commission will also continue monitoring the implementation of the recommendations resulting from the EU audit.

    • [1] https://www.consilium.europa.eu/media/jhlenhaj/euco-conclusions-19122024-en.pdf
    • [2] https://neighbourhood-enlargement.ec.europa.eu/news/european-commission-statement-unrwa-2024-01-29_en
    • [3] https://neighbourhood-enlargement.ec.europa.eu/news/commission-disburses-additional-eu10-million-payment-unrwa-2024-12-20_en
    • [4] https://www.unrwa.org/resources/reports/colonna-report-and-unrwa%E2%80%99s-high-level-action-plan-implementation-recommendations
    Last updated: 19 February 2025

    MIL OSI Europe News

  • MIL-OSI Asia-Pac: Hong Kong Customs and Marine Police detected six large-scale maritime smuggling cases involving cigarettes and drugs during joint anti-smuggling operations (with photo)

    Source: Hong Kong Government special administrative region

    Hong Kong Customs and Marine Police detected six large-scale maritime smuggling cases involving cigarettes and drugs during joint anti-smuggling operations (with photo)
    Hong Kong Customs and Marine Police detected six large-scale maritime smuggling cases involving cigarettes and drugs during joint anti-smuggling operations (with photo)
    ******************************************************************************************

         Hong Kong Customs and the Marine Police conducted joint operations from February 12 to 19 targeting large-scale maritime smuggling activities and six cases involving suspected illicit cigarettes and suspected dangerous drugs were detected. During the joint operations, a total of about 16.93 million sticks of suspected illicit cigarettes and 459 kilograms of suspected cannabis buds were seized.     Customs and police officers conducted anti-smuggling operations in Sai Kung and Lantau Island from February 13 to 16 and detected four suspected illicit cigarettes smuggling cases. A total of 4.1 million sticks of suspected illicit cigarettes, with an estimated market value of about $19 million and a duty potential of about $13.5 million, found in four goods vehicles and the waters nearby. The four goods vehicles involved in the cases were also detained.                 At small hours on February 18, Customs found a suspicious unattended fishing vessel in Shau Kei Wan Typhoon Shelter. Upon inspection, Customs officers seized 12.83 million suspected illicit cigarettes, with an estimated market value of about $57 million and a duty potential of about $42 million, inside the compartments of the vessel.      Later on the same day, Customs intercepted a suspicious fishing vessel in the waters off Lamma Island, during which persons onboard the fishing vessel threw numerous nylon bags into the sea. Customs officers then took immediate action to board the vessel and retrieved the subject nylon bags from the water. Upon inspection, a total of about 459kg suspected cannabis buds, with an estimated market value of about $118 million, were found inside the nylon bags. Three local men, aged between 44 and 60, suspected to be connected with the case were arrested in the operation.     Investigations on the above mentioned six cases are ongoing.     Being a government department primarily responsible for tackling smuggling activities, Customs has long been combating various smuggling activities at the forefront. Customs will keep up its enforcement action and continue to fiercely combat sea smuggling activities through proactive risk management and intelligence-based enforcement strategies. Customs will continue co-operating and exchanging intelligence with the Police, Mainland and international law enforcement agencies, with targeted anti-smuggling operations carried out at suitable times to disrupt these activities.     Smuggling is a serious offence. Under the Import and Export Ordinance, any person found guilty of importing or exporting unmanifested cargo is liable to a maximum fine of $2 million and imprisonment for seven years.      Under the Dangerous Drug Ordinance, trafficking in a dangerous drug is a serious offence. The maximum penalty upon conviction is a fine of $5 million and life imprisonment.     Under the Dutiable Commodities Ordinance, anyone involved in dealing with, possession of, selling or buying illicit cigarettes commits an offence. The maximum penalty upon conviction is a fine of $1 million and imprisonment for two years.     Members of the public may report any suspected drug trafficking or illicit cigarette activities to Customs’ 24-hour report hotline 182 8080 or its dedicated crime reporting email account (crimereport@customs.gov.hk) or online form (eform.cefs.gov.hk/form/ced002/).

     
    Ends/Wednesday, February 19, 2025Issued at HKT 22:27

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    MIL OSI Asia Pacific News

  • MIL-OSI Asia-Pac: CEPA Forum held today

    Source: Hong Kong Government special administrative region

    CEPA Forum held today
    CEPA Forum held today
    *********************

         The Hong Kong Special Administrative Region (HKSAR) Government and the Ministry of Commerce of the People’s Republic of China co-organised the Forum on the Second Agreement Concerning Amendment to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) Agreement on Trade in Services (Amendment Agreement II) today (February 19). The forum aimed to familiarise business sectors with the liberalisation measures and implementation arrangements of the Amendment Agreement II signed by both sides under the CEPA framework on October 9, 2024.     The HKSAR Government would like to express sincere gratitude to the Central Government for its support for the HKSAR, with the Ministry of Commerce and relevant authorities actively responding to the HKSAR Government’s proposal of further opening up the Mainland market to Hong Kong in trade in services and signing the Amendment Agreement II, enabling more Hong Kong businesses and professionals to enter the Mainland market with more preferential treatments. The Permanent Secretary for Commerce and Economic Development, Ms Maggie Wong, and the Director-General of the Department of Taiwan, Hong Kong and Macao Affairs of the Ministry of Commerce, Mr Fan Shijie, attended the forum and delivered speeches.      Over 350 people, including representatives from local and foreign chambers of commerce, consulates, major trade associations and professional sectors, participated in the forum. The forum comprised three breakout sessions covering financial and legal services; audiovisual and telecommunications services; and other services (including construction and related engineering, medical, testing and certification, advertising, and tourism and travel related services). Representatives from over 20 central ministries and HKSAR Government bureaux and departments briefed participants at the forum on the content and implementation arrangements of the Amendment Agreement II, as well as the criteria and procedures for application for preferential treatments, and answered questions from the trade.     The Mainland and Hong Kong signed CEPA in 2003. CEPA has now been upgraded to a comprehensive and modern free trade agreement, covering four major areas, namely Trade in Goods, Trade in Services, Investment, and Economic and Technical Co-operation. The Amendment Agreement II introduces new liberalisation measures across a number of service sectors where Hong Kong enjoys competitive advantages, thus making it easier for Hong Kong service suppliers and professionals to set up enterprises and develop businesses in the Mainland, as well as enabling them to make contribution to the national development of new quality productive forces and solid progress in promoting high-quality development. The Amendment Agreement II came into effect on the day of signing and will be implemented on March 1.

     
    Ends/Wednesday, February 19, 2025Issued at HKT 21:30

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    MIL OSI Asia Pacific News

  • MIL-OSI USA: Attorney General James Announces Takedown of Fentanyl and Cocaine Trafficking Ring in the Hudson Valley 

    Source: US State of New York

    NEW YORK – New York Attorney General Letitia James today announced the takedown of a drug trafficking ring in the Hudson Valley that illegally sold cocaine, powder fentanyl, and counterfeit oxycodone pills containing fentanyl across Dutchess, Ulster, and Orange Counties. An investigation led by the Office of the Attorney General’s (OAG) Organized Crime Task Force (OCTF) recovered two and a half kilograms of cocaine worth approximately $45,000, thousands of counterfeit oxycodone pills containing fentanyl worth over $500,000, and three and a half kilograms of powder fentanyl worth over $200,000. Five illegal handguns, including two ghost guns, and four high-capacity magazines were also seized during the operation. A 122-count indictment charging four individuals for their roles in the drug trafficking network was unsealed in Dutchess County Court. The indictment charges Xavier Grant, Antawone West, Michael Jones, and Kenyi Torres with multiple felonies for narcotics and firearms offenses.

    “Drug traffickers who distribute lethal amounts of opioids put communities throughout our state in danger,” said Attorney General James. “Not only did these individuals sell deadly narcotics, they disguised fentanyl in fake prescription pills, putting the lives of their customers at even greater risk. I thank our partners in law enforcement for their collaboration in this effort to take a dangerous criminal organization off our streets as we continue to work to keep New Yorkers safe.”

    The takedown was the result of an eleven-month joint investigation led by OCTF and the New York State Police’s (NYSP) Special Investigations Unit – Hudson Valley (SIU-HV) and Troop K – Violent Gang and Narcotics Enforcement Team (K-VGNET).

    The investigation included hundreds of hours of physical and covert surveillance, analysis of voluminous electronic evidence, including cellphone communications, covert video and audio recordings, and other traditional investigative techniques. During their communications, the defendants frequently utilized coded and cryptic terminology in an attempt to disguise their illicit activities, such as referring to orders of counterfeit oxycodone pills containing fentanyl as “blues,” “blueberries,” or “perks,” a nod to their legitimate, prescription medication counterparts. 

    The investigation revealed that Grant, West, Jones, and Torres obtained cocaine, powder fentanyl, and counterfeit oxycodone pills containing fentanyl for further distribution. Additionally, the investigation revealed that the four defendants worked together to store, supply, and distribute the narcotics in Dutchess, Orange, and Ulster Counties. The narcotics were stored in various stash locations in the residential areas of Poughkeepsie and often sold in parking lots. The investigation also seized five illegal handguns, four of which were loaded, and two of which were ghost guns, in addition to four illegal high-capacity magazines.

    The investigation into this narcotics trafficking network led to the recovery of:

    • Two and a half kilograms of cocaine;
    • Thousands of counterfeit oxycodone pills containing fentanyl weighing over two and a half kilograms;
    • Three and a half kilograms of powder fentanyl;
    • Five illegal handguns, including two ghost guns and four high-capacity magazines;
    • Drug paraphernalia, including scales, ziplock bags, glassine envelopes, and other packaging materials used to package and measure narcotics;
    • Two “kilo” presses; and
    • Approximately $255,000 in cash.

    Some of the alleged narcotics and firearms seized during the investigation, including cocaine, counterfeit oxycodone pills containing fentanyl, powder fentanyl, five handguns, four high-capacity magazines, and “kilo” presses.

    The 122-count indictment, unsealed in Dutchess County Court, includes counts for various felony narcotics offenses, including charges against Jones and West for Criminal Sale of a Controlled Substance in the First Degree and Criminal Possession of a Controlled Substance in the First Degree, respectively. Each carries a maximum sentence of 20 years in prison. Additional charges include various counts of Criminal Sale of a Controlled Substance (class B felonies) and Criminal Possession of a Controlled Substance (class A-II and B felonies), as well as Conspiracy to commit those crimes.

    Jones and West are also charged with firearms offenses including Criminal Possession of a Weapon in the Second Degree, a class C violent felony, Criminal Possession of a Weapon in the Third Degree, a class D felony, and Criminal Possession of a Firearm, a class E felony.

    Grant and Torres are each charged with, among other things, multiple counts of Criminal Sale of a Controlled Substance in the Second Degree, a class A-II felony, which carries a maximum sentence of 10 years in prison. They are also charged with Conspiracy to commit those crimes. The charges against the defendants are merely accusations and the defendants are presumed innocent unless and until proven guilty.

    Some of the alleged counterfeit oxycodone pills containing fentanyl seized during this investigation.

    “I want to thank the Attorney General’s Office, and our law enforcement partners for their vigilant hard work that has resulted in the arrests of these dangerous individuals,” said New York State Police Superintendent Steven G. James. “The sale of these highly addictive drugs perpetuates a cycle of substance abuse which poses a significant threat to safety and quality of life within our neighborhoods. This sends a strong message to dealers that we will not tolerate illegal drugs and weapons being brought into or sold in our communities.”

    Those charged in the indictment include:

    • Xavier Grant a/k/a “X,” 22 years old of Poughkeepsie, New York;
    • Antawone West, 25 years old of Poughkeepsie, New York;
    • Michael Jones a/k/a “Slime,” 33 years old of Poughkeepsie, New York; and
    • Kenyi Torres, 45 years old of Middletown, New York.

    This takedown marks the latest major drug bust in OAG’s Suburban and Upstate Response to the Growing Epidemic (SURGE) Initiative, a law enforcement effort that brings together state and local law enforcement to target New York’s heroin, opioid, and narcotics trafficking networks. Since launching in 2017, SURGE has taken 984 alleged traffickers off the streets.

    The investigation was led by OCTF Detectives David Walsh and Steven Cohan, under the supervision of OCTF Detective Supervisor Bradford Miller, OCTF Downstate Assistant Chief Ismael Hernandez, and OCTF Deputy Chief Andrew Boss. The Attorney General’s Investigations Division is led by Chief Oliver Pu-Folkes. 

    Attorney General James would also like to thank Dutchess County District Attorney Anthony Parisi, the Dutchess County Sheriff’s Office, the City of Poughkeepsie Police Department, and the Dutchess County Drug Task Force for their assistance throughout the investigation.

    The case is being prosecuted by OCTF Assistant Deputy Attorney General Joseph Barca under the supervision of Downstate OCTF Deputy Chief Lauren Abinanti, with the assistance of OCTF Legal Support Analysts Madeline Rosen, Alex DiGiacomo, and former Legal Support Analyst Christine Cintron. Nicole Keary is the Deputy Attorney General in Charge of OCTF. The Division for Criminal Justice is led by Chief Deputy Attorney General José Maldonado. Both the Investigations Division and the Division for Criminal Justice are overseen by First Deputy Attorney General Jennifer Levy.

    MIL OSI USA News

  • MIL-OSI Security: Milton — RCMP to hold a press conference following arrests linked to a complex and international cybercrime investigation

    Source: Royal Canadian Mounted Police

    The Officer in Charge of the Integrated Cybercrime Investigations Unit of the Central Region RCMP, Inspector Lina Dabit, will hold a press conference to provide results of a complex and international cybercrime investigation.

    Following a statement of facts, representatives from the RCMP will be available for questions.

    For media wanting to attend in person, please register by sending your name and media credentials to: media.relations.rcmp-Ontario-relations.medias.grc@rcmp-grc.gc.ca

    A live link to the conference will be provided upon registration for media only.

    When: February 20, 2025

    Time: 10:00 AM – Media is invited to start arriving in person at 9:15 AM

    Location: 2755 High Point Drive, Milton RCMP Detachment

    MIL Security OSI