Housing Sector – Page 25

MIL-OSI: Precision Drilling Announces 2024 Third Quarter Unaudited Financial Results

Source: GlobeNewswire (MIL-OSI)

CALGARY, Alberta, Oct. 29, 2024 (GLOBE NEWSWIRE) — This news release contains “forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending, Working Capital and Total Long-term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies. See “Financial Measures and Ratios” later in this news release.

Precision Drilling Corporation (“Precision” or the “Company”) (TSX:PD; NYSE:PDS) delivered strong third quarter financial results, demonstrating the resilience of the business and its robust cash flow potential. Year to date, Precision has already achieved the low end of its debt reduction target range and is well on track to allocate 25% to 35% of its free cash flow to share buybacks in 2024.

Financial Highlights

Revenue was $477 million and exceeded the $447 million realized in the third quarter of 2023 as activity increased in Canada and internationally, which more than offset lower activity in the U.S.
Adjusted EBITDA⁽¹⁾ was $142 million, including a share-based compensation recovery of $0.2 million. In 2023, third quarter Adjusted EBITDA was $115 million and included share-based compensation charges of $31 million.
Net earnings was $39 million or $2.77 per share, nearly doubling the $20 million or $1.45 per share in 2023.
Completion and Production Services revenue increased 27% over the same period last year to $73 million, while Adjusted EBITDA rose 40% to $20 million, reflecting the successful integration of the CWC Energy Services (CWC) acquisition in late 2023.
Internationally, revenue increased 21% over the third quarter of last year as the Company realized US$35 million of contract drilling revenue versus US$29 million in 2023. Revenue for the third quarter of 2024 was negatively impacted by fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
Debt reduction during the quarter was $49 million and total $152 million year to date. Share repurchases during the quarter were $17 million and total $50 million year to date.
Increased our 2024 planned capital expenditures from $195 million to $210 million to fund multiple contracted rig upgrades and the strategic purchase of drill pipe for use in 2025.

Operational Highlights

Canada’s activity increased 25%, averaging 72 active drilling rigs versus 57 in the third quarter of 2023. Our Super Triple and Super Single rigs are in high demand and approaching full utilization.
Canadian revenue per utilization day was $32,325 and comparable to the $32,224 in the same period last year.
U.S. activity averaged 35 drilling rigs compared to 41 for the third quarter of 2023.
U.S. revenue per utilization day was US$32,949 versus US$35,135 in the same quarter last year.
International activity increased 33% compared to the third quarter of 2023, with eight drilling rigs fully contracted this year following rig reactivations in 2023. International revenue per utilization day was US$47,223 compared to US$51,570 in the third quarter of 2023 due to fewer rig moves and planned rig recertifications completed in 2024.
Service rig operating hours increased 34% over the same quarter last year totaling 62,835 hours driven by the CWC acquisition.
Formed a strategic Joint Partnership (Partnership) with Indigenous partners to provide well servicing operations in northeast British Columbia.

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

MANAGEMENT COMMENTARY

“Precision’s international and Canadian businesses led our third quarter results, with revenue, Adjusted EBITDA, and net income all improving over the same period last year, demonstrating the resilience of our High Performance, High Value strategy and geographic exposure. Our cash flow conversion this quarter enabled us to repay debt, buy back shares, and continue to invest in our Super Series fleet. We have already achieved the low end of our debt repayment target range for this year and expect to be less than a year away from meeting our long-term target of a Net Debt to Adjusted EBITDA ratio⁽¹⁾ of less than one time.

“Canadian fundamentals for heavy oil, condensate, and LNG remain strong due to the additional takeaway capacity. The Trans Mountain oil pipeline expansion is driving higher and stable returns for producers, who are accelerating heavy oil and condensate targeted drilling plans, while Canada’s first LNG project is expected to stabilize natural gas pricing and further stimulate activity in the Montney in 2025. As the leading provider of high-quality and reliable services in Canada, demand for our Super Series fleet remains high. Today, we have 75 rigs operating, with our Super Triple and Super Single rigs nearly fully utilized. We expect strong customer demand and utilization to continue well beyond 2025.

“In the U.S., our rig count has been range-bound for the last several months, with 35 rigs operating today. Volatile commodity prices, customer consolidation, and budget exhaustion are all headwinds that we expect will continue to suppress activity for the remainder of the year. We are encouraged by recent momentum in our contract book with seven new contracts secured for oil and natural gas drilling projects that are expected to begin late this year for 2025 drilling programs. Looking ahead, we anticipate that the next wave of additional Gulf Coast LNG export facilities, coal plant retirements, and a build-out of AI data centers should drive further natural gas drilling and support sustained natural gas demand.

“Precision’s international operations provide a stable foundation for earnings and cash flow as our rigs are under long-term contracts that extend into 2028. Our well servicing business further complements our stability as we remain the premier well service provider in Canada where demand continues to outpace manned service rigs. In 2023, we repositioned these businesses with rig reactivations and our CWC acquisition and as a result, each business is on track to increase its 2024 Adjusted EBITDA by approximately 50% over the prior year.

“I am proud of the discipline Precision continues to show throughout the organization and we remain focused on our strategic priorities, which include generating free cash flow, improving capital returns to shareholders, and delivering operational excellence. With robust Canadian market fundamentals, an improving long-term outlook for the U.S., and a focused strategy, I am confident we will continue to drive higher total shareholder returns. I would like to thank our team for executing at the highest operating levels and generating strong financial performance and value for our customers,” stated Kevin Neveu, Precision’s President and CEO.

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts)		2024		2023		% Change				2024		2023		% Change
Revenue		477,155		446,754			6.8			1,434,157		1,430,983			0.2
Adjusted EBITDA⁽¹⁾		142,425		114,575			24.3			400,695		459,887			(12.9	)
Net earnings		39,183		19,792			98.0			96,400		142,522			(32.4	)
Cash provided by operations		79,674		88,500			(10.0	)		319,292		330,316			(3.3	)
Funds provided by operations⁽¹⁾		113,322		91,608			23.7			342,837		388,220			(11.7	)

Cash used in investing activities		38,852		34,278			13.3			141,032		157,157			(10.3	)
Capital spending by spend category⁽¹⁾
Expansion and upgrade		7,709		13,479			(42.8	)		30,501		39,439			(22.7	)
Maintenance and infrastructure		56,139		38,914			44.3			127,297		108,463			17.4
Proceeds on sale		(5,647	)	(6,698	)		(15.7	)		(21,825	)	(20,724	)		5.3
Net capital spending⁽¹⁾		58,201		45,695			27.4			135,973		127,178			6.9

Net earnings per share:
Basic		2.77		1.45			91.0			6.74		10.45			(35.5	)
Diluted		2.31		1.45			59.3			6.73		9.84			(31.6	)
Weighted average shares outstanding:
Basic		14,142		13,607			3.9			14,312		13,643			4.9
Diluted		14,890		13,610			9.4			14,317		14,858			(3.6	)

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

Operating Highlights

	For the three months ended September 30,							For the nine months ended September 30,
	2024		2023		% Change			2024		2023		% Change
Contract drilling rig fleet		214		224		(4.5	)		214		224		(4.5	)
Drilling rig utilization days:
U.S.		3,196		3,815		(16.2	)		9,885		13,823		(28.5	)
Canada		6,586		5,284		24.6			17,667		15,247		15.9
International		736		554		32.9			2,192		1,439		52.3
Revenue per utilization day:
U.S. (US$)		32,949		35,135		(6.2	)		33,011		35,216		(6.3	)
Canada (Cdn$)		32,325		32,224		0.3			34,497		32,583		5.9
International (US$)		47,223		51,570		(8.4	)		51,761		51,306		0.9
Operating costs per utilization day:
U.S. (US$)		22,207		21,655		2.5			22,113		20,217		9.4
Canada (Cdn$)		19,448		18,311		6.2			20,196		19,239		5.0

Service rig fleet		165		121		36.4			165		121		36.4
Service rig operating hours		62,835		46,894		34.0			194,390		144,944		34.1

Drilling Activity

	Average for the quarter ended 2023								Average for the quarter ended 2024
	Mar. 31		June 30		Sept. 30		Dec. 31			Mar. 31		June 30		Sept. 30
Average Precision active rig count⁽¹⁾:
U.S.		60		51		41		45			38		36		35
Canada		69		42		57		64			73		49		72
International		5		5		6		8			8		8		8
Total		134		98		104		117			119		93		115

^{(1) Average number of drilling rigs working or moving.}

Financial Position

(Stated in thousands of Canadian dollars, except ratios)	September 30, 2024		December 31, 2023⁽²⁾
Working capital⁽¹⁾		166,473		136,872
Cash		24,304		54,182
Long-term debt		787,008		914,830
Total long-term financial liabilities⁽¹⁾		858,765		995,849
Total assets		2,887,996		3,019,035
Long-term debt to long-term debt plus equity ratio ⁽¹⁾		0.32		0.37

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}^{(2) Comparative period figures were restated due to a change in accounting policy. See “CHANGE IN ACCOUNTING POLICY.”}

Summary for the three months ended September 30, 2024:

Revenue increased to $477 million compared with $447 million in the third quarter of 2023 as a result of higher Canadian and international activity, partially offset by lower U.S. activity, day rates and lower idle but contract rig revenue.
Adjusted EBITDA was $142 million as compared with $115 million in 2023, primarily due to increased Canadian and international results and lower share-based compensation. Please refer to “Other Items” later in this news release for additional information on share-based compensation.
Adjusted EBITDA as a percentage of revenue was 30% as compared with 26% in 2023.
Generated cash from operations of $80 million, reduced debt by $49 million, repurchased $17 million of shares, and ended the quarter with $24 million of cash and more than $500 million of available liquidity.
Revenue per utilization day, excluding the impact of idle but contracted rigs was US$32,949 compared with US$33,543 in 2023, a decrease of 2%. Sequentially, revenue per utilization day, excluding idle but contracted rigs, was largely consistent with the second quarter of 2024. U.S. revenue per utilization day was US$32,949 compared with US$35,135 in 2023. The decrease was primarily the result of lower fleet average day rates and idle but contracted rig revenue, partially offset by higher recoverable costs. We did not recognize revenue from idle but contracted rigs in the quarter as compared with US$6 million in 2023.
U.S. operating costs per utilization day increased to US$22,207 compared with US$21,655 in 2023. The increase is mainly due to higher recoverable costs and fixed costs being spread over fewer activity days, partially offset by lower repairs and maintenance. Sequentially, operating costs per utilization day were largely consistent with the second quarter of 2024.
Canadian revenue per utilization day was $32,325, largely consistent with the $32,224 realized in 2023. Sequentially, revenue per utilization day decreased $3,750 due to our rig mix, partially offset by higher fleet-wide average day rates.
Canadian operating costs per utilization day increased to $19,448, compared with $18,311 in 2023, resulting from higher repairs and maintenance and rig reactivation costs. Sequentially, daily operating costs decreased $2,204 due to lower labour expenses due to rig mix, recoverable expenses and repairs and maintenance.
Internationally, third quarter revenue increased 21% over 2023 as we realized revenue of US$35 million versus US$29 million in the prior year. Our higher revenue was primarily the result of a 33% increase in activity, partially offset by lower average revenue per utilization day. International revenue per utilization day was US$47,223 compared with US$51,570 in 2023 due to fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
Completion and Production Services revenue was $73 million, an increase of $16 million from 2023, as our third quarter service rig operating hours increased 34%.
General and administrative expenses were $23 million as compared with $44 million in 2023 primarily due to lower share-based compensation charges.
Net finance charges were $17 million, a decrease of $3 million compared with 2023 as a result of lower interest expense on our outstanding debt balance.
Capital expenditures were $64 million compared with $52 million in 2023 and by spend category included $8 million for expansion and upgrades and $56 million for the maintenance of existing assets, infrastructure, and intangible assets.
Increased expected capital spending in 2024 to $210 million, an increase of $15 million, due to the strategic purchase of drill pipe before new import tariffs take effect and additional customer-backed upgrades.
Income tax expense for the quarter was $14 million as compared with $8 million in 2023. During the third quarter, we continue to not recognize deferred tax assets on certain international operating losses.
Reduced debt by $49 million from the redemption of US$33 million of 2026 unsecured senior notes and US$3 million repayment of our U.S. Real Estate Credit Facility.
Renewed our Normal Course Issuer Bid (NCIB) and repurchased $17 million of common shares during the third quarter.

Summary for the nine months ended September 30, 2024:

Revenue for the first nine months of 2024 was $1,434 million, consistent 2023.
Adjusted EBITDA for the period was $401 million as compared with $460 million in 2023. Our lower Adjusted EBITDA was primarily attributed to decreased U.S. drilling results and higher share-based compensation, partially offset by the strengthening of Canadian and international results.
Cash provided by operations was $319 million as compared with $330 million in 2023. Funds provided by operations were $343 million, a decrease of $45 million from the comparative period.
General and administrative costs were $97 million, an increase of $14 million from 2023 primarily due to higher share-based compensation charges.
Net finance charges were $53 million, $10 million lower than 2023 due to our lower interest expense on our outstanding debt balance.
Capital expenditures were $158 million in 2024, an increase of $10 million from 2023. Capital spending by spend category included $31 million for expansion and upgrades and $127 million for the maintenance of existing assets, infrastructure, and intangible assets.
Reduced debt by $152 million from the redemption of US$89 million of 2026 unsecured senior notes and $31 million repayment of our Canadian and U.S. Real Estate Credit Facilities.
Repurchased $50 million of common shares under our NCIB.

STRATEGY

Precision’s vision is to be globally recognized as the High Performance, High Value provider of land drilling services. Our strategic priorities for 2024 are focused on increasing our capital returns to shareholders by delivering best-in-class service and generating free cash flow.

Precision’s 2024 strategic priorities and the progress made during the third quarter are as follows:

Concentrate organizational efforts on leveraging our scale and generating free cash flow.
- Generated cash from operations of $80 million, bringing our year to date total to $319 million.
- Increased utilization of our Super Single and Double rigs in the third quarter, driving Canadian drilling activity up 25% year over year.
- Increased our third quarter Completion and Production Services operating hours and Adjusted EBITDA 34% and 40%, respectively, year over year. Achieved our $20 million annual synergies target from the CWC acquisition, which closed in November 2023.
- Internationally, we realized US$35 million of contract drilling revenue versus US$29 million in 2023. Revenue for the third quarter of 2024 was negatively impacted by fewer rig moves and planned rig recertifications that accounted for 44 non-billable utilization days.
Reduce debt by between $150 million and $200 million and allocate 25% to 35% of free cash flow before debt repayments for share repurchases.
- Reduced debt by redeeming US$33 million of our 2026 unsecured senior notes and repaying US$3 million of our U.S. Real Estate Credit Facility. For the first nine months of the year, we have reduced debt by $152 million and already achieved the low end of our debt repayment target range.
- Returned $17 million of capital to shareholders through share repurchases. Year to date we allocated $50 million of our free cash flow to share buybacks, which represents over 25% of free cash flow for the first nine months of the year and within our annual target range of 25% to 35%.
- Remain firmly committed to our long-term debt reduction target of $600 million between 2022 and 2026 ($410 million achieved as of September 30, 2024), while moving direct shareholder capital returns towards 50% of free cash flow.
Continue to deliver operational excellence in drilling and service rig operations to strengthen our competitive position and extend market penetration of our Alpha™ and EverGreen™ products.
- Increased our Canadian drilling rig utilization days and well servicing rig operating hours over the third quarter of 2023, maintaining our position as the leading provider of high-quality and reliable services in Canada.
- Nearly doubled our EverGreen™ revenue from the third quarter of 2023.
- Continued to expand our EverGreen™ product offering on our Super Single rigs with hydrogen injection systems. EverGreenHydrogen™ reduces diesel consumption resulting in lower operating costs and greenhouse gas emissions for our customers.

OUTLOOK

The long-term outlook for global energy demand remains positive with rising demand for all types of energy including oil and natural gas driven by economic growth, increasing demand from third-world regions, and emerging energy sources of power demand. Oil prices are constructive, and producers remain disciplined with their production plans while geopolitical issues continue to threaten supply. In Canada, the recent commissioning of the Trans Mountain pipeline expansion and the startup of LNG Canada projected in 2025 are expected to provide significant tidewater access for Canadian crude oil and natural gas, supporting additional Canadian drilling activity. In the U.S., the next wave of LNG projects is expected to add approximately 11 bcf/d of export capacity from 2025 to 2028, supporting additional U.S. natural gas drilling activity. Coal retirements and a build-out of AI data centers could provide further support for natural gas drilling.

In Canada, we currently have 75 rigs operating and expect this activity level to continue until spring breakup, except for the traditional slowdown over Christmas. Our Canadian drilling activity continues to outpace 2023 due to increased heavy oil drilling activity and strong Montney activity driven by robust condensate demand and pricing. Since the startup of the Trans Mountain pipeline expansion in May, customer activity in heavy oil targeted areas has exceeded expectations, resulting in near full utilization of our Super Single fleet. Customers are benefiting from improved commodity pricing and a weak Canadian dollar. Our Super Triple fleet, the preferred rig for Montney drilling, is also nearly fully utilized and with the expected startup of LNG Canada in mid-2025, demand could exceed supply.

In recent years, the Canadian market has witnessed stronger second quarter drilling activity due to the higher percentage of wells drilled on pads in both the Montney and in heavy oil developments. Once a pad-equipped drilling rig is mobilized to site, it can walk from well to well and avoid spring break up road restrictions. We expect this higher activity trend to continue in the second quarter of 2025.

In the U.S., we currently have 35 rigs operating as drilling activity remains constrained by volatile commodity prices, customer consolidation and budget exhaustion. We view these headwinds as short-term in nature, which will continue to suppress activity for the remainder of the year and into 2025. However, looking further ahead, we expect that a new budget cycle, the next wave of Gulf Coast LNG export facilities, and new sources of domestic power demand should begin to stimulate drilling.

Internationally, we expect to have eight rigs running for the remainder of 2024, representing an approximate 40% increase in activity compared to 2023. All eight rigs are contracted through 2025 as well. We continue to bid our remaining idle rigs within the region and remain optimistic about our ability to secure additional rig activations.

As the premier well service provider in Canada, the outlook for this business remains positive. We expect the Trans Mountain pipeline expansion and LNG Canada to drive more service-related activity, while increased regulatory spending requirements are expected to result in more abandonment work. Customer demand should remain strong, and with continued labor constraints, we expect firm pricing into the foreseeable future.

We believe cost inflation is largely behind us and will continue to look for opportunities to lower costs.

Contracts

The following chart outlines the average number of drilling rigs under term contract by quarter as at October 29, 2024. For those quarters ending after September 30, 2024, this chart represents the minimum number of term contracts from which we will earn revenue. We expect the actual number of contracted rigs to vary in future periods as we sign additional term contracts.

As at October 29, 2024	Average for the quarter ended 2023								Average		Average for the quarter ended 2024								Average
	Mar. 31		June 30		Sept. 30		Dec. 31		2023		Mar. 31		June 30		Sept. 30		Dec. 31		2024
Average rigs under term contract:
U.S.		40		37		32		28		34		20		17		17		16		18
Canada		19		23		23		23		22		24		22		23		24		23
International		4		5		7		7		6		8		8		8		8		8
Total		63		65		62		58		62		52		47		48		48		49

SEGMENTED FINANCIAL RESULTS

Precision’s operations are reported in two segments: Contract Drilling Services, which includes our drilling rig, oilfield supply and manufacturing divisions; and Completion and Production Services, which includes our service rig, rental and camp and catering divisions.

	For the three months ended September 30,									For the nine months ended September 30,
(Stated in thousands of Canadian dollars)		2024		2023			% Change				2024		2023			% Change
Revenue:
Contract Drilling Services		406,155			390,728			3.9			1,215,125			1,257,762			(3.4	)
Completion and Production Services		73,074			57,573			26.9			225,987			178,257			26.8
Inter-segment eliminations		(2,074	)		(1,547	)		34.1			(6,955	)		(5,036	)		38.1
		477,155			446,754			6.8			1,434,157			1,430,983			0.2
Adjusted EBITDA:⁽¹⁾
Contract Drilling Services		133,235			131,701			1.2			406,662			468,302			(13.2	)
Completion and Production Services		19,741			14,118			39.8			50,786			39,031			30.1
Corporate and Other		(10,551	)		(31,244	)		(66.2	)		(56,753	)		(47,446	)		19.6
		142,425			114,575			24.3			400,695			459,887			(12.9	)

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

	For the three months ended September 30,								For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted)		2024		2023		% Change				2024		2023		% Change
Revenue		406,155		390,728			3.9			1,215,125		1,257,762			(3.4	)
Expenses:
Operating		262,933		247,937			6.0			776,210		759,750			2.2
General and administrative		9,987		11,090			(9.9	)		32,253		29,710			8.6
Adjusted EBITDA⁽¹⁾		133,235		131,701			1.2			406,662		468,302			(13.2	)
Adjusted EBITDA as a percentage of revenue⁽¹⁾		32.8	%	33.7	%					33.5	%	37.2	%

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

United States onshore drilling statistics:⁽¹⁾	2024				2023
	Precision		Industry⁽²⁾		Precision		Industry⁽²⁾
Average number of active land rigs for quarters ended:
March 31		38		602		60		744
June 30		36		583		51		700
September 30		35		565		41		631
Year to date average		36		583		51		692

^{(1) United States lower 48 operations only.}
^{(2) Baker Hughes rig counts.}

Canadian onshore drilling statistics:⁽¹⁾	2024				2023
	Precision		Industry⁽²⁾		Precision		Industry⁽²⁾
Average number of active land rigs for quarters ended:
March 31		73		208		69		221
June 30		49		134		42		117
September 30		72		207		57		188
Year to date average		65		183		56		175

^{(1) Canadian operations only.}
^{(2) Baker Hughes rig counts.}

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

	For the three months ended September 30,							For the nine months ended September 30,
(Stated in thousands of Canadian dollars, except where noted)		2024		2023		% Change			2024		2023
Revenue		73,074		57,573			26.9		225,987		178,257		26.8
Expenses:
Operating		50,608		41,612			21.6		167,128		133,325		25.4
General and administrative		2,725		1,843			47.9		8,073		5,901		36.8
Adjusted EBITDA⁽¹⁾		19,741		14,118			39.8		50,786		39,031		30.1
Adjusted EBITDA as a percentage of revenue⁽¹⁾		27.0	%	24.5	%				22.5	%	21.9	%
Well servicing statistics:
Number of service rigs (end of period)		165		121			36.4		165		121		36.4
Service rig operating hours		62,835		46,894			34.0		194,390		144,944		34.1
Service rig operating hour utilization		41	%	42	%				43	%	44	%

^{(1) See “FINANCIAL MEASURES AND RATIOS.”}

OTHER ITEMS

Share-based Incentive Compensation Plans

We have several cash and equity-settled share-based incentive plans for non-management directors, officers, and other eligible employees. Our accounting policies for each share-based incentive plan can be found in our 2023 Annual Report.

A summary of expense amounts under these plans during the reporting periods are as follows:

	For the three months ended September 30,					For the nine months ended September 30,
(Stated in thousands of Canadian dollars)	2024			2023		2024		2023
Cash settled share-based incentive plans		(1,626	)		30,105		28,810		20,091
Equity settled share-based incentive plans		1,440			701		3,517		1,834
Total share-based incentive compensation plan expense		(186	)		30,806		32,327		21,925

Allocated:
Operating		221			7,692		8,159		6,732
General and Administrative		(407	)		23,114		24,168		15,193
		(186	)		30,806		32,327		21,925

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

Because of the nature of our business, we are required to make judgements and estimates in preparing our Condensed Consolidated Interim Financial Statements that could materially affect the amounts recognized. Our judgements and estimates are based on our past experiences and assumptions we believe are reasonable in the circumstances. The critical judgements and estimates used in preparing the Condensed Consolidated Interim Financial Statements are described in our 2023 Annual Report.

EVALUATION OF CONTROLS AND PROCEDURES

Based on their evaluation as at September 30, 2024, Precision’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to ensure that information required to be disclosed by the Corporation in reports that are filed or submitted to Canadian and U.S. securities authorities is recorded, processed, summarized and reported within the time periods specified in Canadian and U.S. securities laws. In addition, as at September 30, 2024, there were no changes in the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting. Management will continue to periodically evaluate the Corporation’s disclosure controls and procedures and internal control over financial reporting and will make any modifications from time to time as deemed necessary.

Based on their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements, and even those controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

FINANCIAL MEASURES AND RATIOS

Non-GAAP Financial Measures

We reference certain additional Non-Generally Accepted Accounting Principles (Non-GAAP) measures that are not defined terms under IFRS Accounting Standards to assess performance because we believe they provide useful supplemental information to investors.

Adjusted EBITDA

We believe Adjusted EBITDA (earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), as reported in our Condensed Interim Consolidated Statements of Net Earnings and our reportable operating segment disclosures, is a useful measure because it gives an indication of the results from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.

The most directly comparable financial measure is net earnings.

	For the three months ended September 30,					For the nine months ended September 30,
(Stated in thousands of Canadian dollars)		2024		2023			2024		2023
Adjusted EBITDA by segment:
Contract Drilling Services		133,235		131,701			406,662		468,302
Completion and Production Services		19,741		14,118			50,786		39,031
Corporate and Other		(10,551	)	(31,244	)		(56,753	)	(47,446	)
Adjusted EBITDA		142,425		114,575			400,695		459,887
Depreciation and amortization		75,073		73,192			227,104		218,823
Gain on asset disposals		(3,323	)	(2,438	)		(14,235	)	(15,586	)
Foreign exchange		849		363			772		(894	)
Finance charges		16,914		19,618			53,472		63,946
Gain on repurchase of unsecured notes		—		(37	)		—		(137	)
Loss (gain) on investments and other assets		(150	)	(3,813	)		(330	)	6,075
Incomes taxes		13,879		7,898			37,512		45,138
Net earnings		39,183		19,792			96,400		142,522

Funds Provided by (Used in) Operations

We believe funds provided by (used in) operations, as reported in our Condensed Interim Consolidated Statements of Cash Flows, is a useful measure because it provides an indication of the funds our principal business activities generate prior to consideration of working capital changes, which is primarily made up of highly liquid balances.

The most directly comparable financial measure is cash provided by (used in) operations.

Net Capital Spending

We believe net capital spending is a useful measure as it provides an indication of our primary investment activities.

The most directly comparable financial measure is cash provided by (used in) investing activities.

Net capital spending is calculated as follows:

	For the three months ended September 30,					For the nine months ended September 30,
(Stated in thousands of Canadian dollars)		2024		2023			2024		2023
Capital spending by spend category
Expansion and upgrade		7,709		13,479			30,501		39,439
Maintenance, infrastructure and intangibles		56,139		38,914			127,297		108,463
		63,848		52,393			157,798		147,902
Proceeds on sale of property, plant and equipment		(5,647	)	(6,698	)		(21,825	)	(20,724	)
Net capital spending		58,201		45,695			135,973		127,178
Business acquisitions		—		—			—		28,000
Proceeds from sale of investments and other assets		—		(10,013	)		(3,623	)	(10,013	)
Purchase of investments and other assets		7		3,211			7		5,282
Receipt of finance lease payments		(207	)	(64	)		(591	)	(64	)
Changes in non-cash working capital balances		(19,149	)	(4,551	)		9,266		6,774
Cash used in investing activities		38,852		34,278			141,032		157,157

Working Capital

We define working capital as current assets less current liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.

Working capital is calculated as follows:

	September 30,		December 31,
(Stated in thousands of Canadian dollars)		2024		2023
Current assets		472,557		510,881
Current liabilities		306,084		374,009
Working capital		166,473		136,872

Total Long-term Financial Liabilities

We define total long-term financial liabilities as total non-current liabilities less deferred tax liabilities, as reported in our Condensed Interim Consolidated Statements of Financial Position.

Total long-term financial liabilities is calculated as follows:

	September 30,		December 31,
(Stated in thousands of Canadian dollars)		2024		2023
Total non-current liabilities		920,812		1,069,364
Deferred tax liabilities		62,047		73,515
Total long-term financial liabilities		858,765		995,849

Non-GAAP Ratios
We reference certain additional Non-GAAP ratios that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
*Adjusted EBITDA % of Revenue*	We believe Adjusted EBITDA as a percentage of consolidated revenue, as reported in our Condensed Interim Consolidated Statements of Net Earnings, provides an indication of our profitability from our principal business activities prior to consideration of how our activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges.
*Long-term debt to long-term debt plus equity*	We believe that long-term debt (as reported in our Condensed Interim Consolidated Statements of Financial Position) to long-term debt plus equity (total shareholders’ equity as reported in our Condensed Interim Consolidated Statements of Financial Position) provides an indication of our debt leverage.
*Net Debt to Adjusted EBITDA*	We believe that the Net Debt (long-term debt less cash, as reported in our Condensed Interim Consolidated Statements of Financial Position) to Adjusted EBITDA ratio provides an indication of the number of years it would take for us to repay our debt obligations.
Supplementary Financial Measures
We reference certain supplementary financial measures that are not defined terms under IFRS to assess performance because we believe they provide useful supplemental information to investors.
*Capital Spending by Spend Category*	We provide additional disclosure to better depict the nature of our capital spending. Our capital spending is categorized as expansion and upgrade, maintenance and infrastructure, or intangibles.

CHANGE IN ACCOUNTING POLICY

Precision adopted Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants – Amendments to IAS 1, as issued in 2020 and 2022. These amendments apply retrospectively for annual reporting periods beginning on or after January 1, 2024 and clarify requirements for determining whether a liability should be classified as current or non-current. Due to this change in accounting policy, there was a retrospective impact on the comparative Statement of Financial Position pertaining to the Corporation’s Deferred Share Unit (DSU) plan for non-management directors which are redeemable in cash or for an equal number of common shares upon the director’s retirement. In the case of a director retiring, the director’s respective DSU liability would become payable and the Corporation would not have the right to defer settlement of the liability for at least twelve months. As such, the liability is impacted by the revised policy. The following changes were made to the Statement of Financial Position:

As at January 1, 2023, accounts payable and accrued liabilities increased by $12 million and non-current share-based compensation liability decreased by $12 million.
As at December 31, 2023, accounts payable and accrued liabilities increased by $8 million and non-current share-based compensation liability decreased by $8 million.

The Corporation’s other liabilities were not impacted by the amendments. The change in accounting policy will also be reflected in the Corporation’s consolidated financial statements as at and for the year ending December 31, 2024.

JOINT PARTNERSHIP

On September 26, 2024, Precision formed a strategic Partnership with two Indigenous partners to provide well servicing operations in northeast British Columbia. Precision contributed $4 million in assets to the Partnership. Precision holds a controlling interest in the Partnership and the portions of the net earnings and equity not attributable to Precision’s controlling interest are shown separately as Non-Controlling Interests (NCI) in the consolidated statements of net earnings and consolidated statements of financial position.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this release, including statements that contain words such as “could”, “should”, “can”, “anticipate”, “estimate”, “intend”, “plan”, “expect”, “believe”, “will”, “may”, “continue”, “project”, “potential” and similar expressions and statements relating to matters that are not historical facts constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking information and statements”).

In particular, forward-looking information and statements include, but are not limited to, the following:

our strategic priorities for 2024;
our capital expenditures, free cash flow allocation and debt reduction plans for 2024 through to 2026;
anticipated activity levels, demand for our drilling rigs, day rates and daily operating margins in 2024;
the average number of term contracts in place for 2024;
customer adoption of Alpha™ technologies and EverGreen™ suite of environmental solutions;
timing and amount of synergies realized from acquired drilling and well servicing assets;
potential commercial opportunities and rig contract renewals; and
our future debt reduction plans.

These forward-looking information and statements are based on certain assumptions and analysis made by Precision in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. These include, among other things:

our ability to react to customer spending plans as a result of changes in oil and natural gas prices;
the status of current negotiations with our customers and vendors;
customer focus on safety performance;
existing term contracts are neither renewed nor terminated prematurely;
our ability to deliver rigs to customers on a timely basis;
the impact of an increase/decrease in capital spending; and
the general stability of the economic and political environments in the jurisdictions where we operate.

Undue reliance should not be placed on forward-looking information and statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks and uncertainties include, but are not limited to:

volatility in the price and demand for oil and natural gas;
fluctuations in the level of oil and natural gas exploration and development activities;
fluctuations in the demand for contract drilling, well servicing and ancillary oilfield services;
our customers’ inability to obtain adequate credit or financing to support their drilling and production activity;
changes in drilling and well servicing technology, which could reduce demand for certain rigs or put us at a competitive advantage;
shortages, delays and interruptions in the delivery of equipment supplies and other key inputs;
liquidity of the capital markets to fund customer drilling programs;
availability of cash flow, debt and equity sources to fund our capital and operating requirements, as needed;
the impact of weather and seasonal conditions on operations and facilities;
competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services;
ability to improve our rig technology to improve drilling efficiency;
general economic, market or business conditions;
the availability of qualified personnel and management;
a decline in our safety performance which could result in lower demand for our services;
changes in laws or regulations, including changes in environmental laws and regulations such as increased regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and greenhouse gas emissions, which could have an adverse impact on the demand for oil and natural gas;
terrorism, social, civil and political unrest in the foreign jurisdictions where we operate;
fluctuations in foreign exchange, interest rates and tax rates; and
other unforeseen conditions which could impact the use of services supplied by Precision and Precision’s ability to respond to such conditions.

Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2023, which may be accessed on Precision’s SEDAR+ profile at www.sedarplus.ca or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this release are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(Stated in thousands of Canadian dollars)	September 30, 2024			December 31, 2023⁽¹⁾			January 1, 2023⁽¹⁾
ASSETS
Current assets:
Cash	$	24,304		$	54,182		$	21,587
Accounts receivable		401,652			421,427			413,925
Inventory		41,398			35,272			35,158
Assets held for sale		5,203			—			—
Total current assets		472,557			510,881			470,670
Non-current assets:
Income tax recoverable		696			682			1,602
Deferred tax assets		27,767			73,662			455
Property, plant and equipment		2,296,079			2,338,088			2,303,338
Intangibles		15,566			17,310			19,575
Right-of-use assets		63,708			63,438			60,032
Finance lease receivables		4,938			5,003			—
Investments and other assets		6,685			9,971			20,451
Total non-current assets		2,415,439			2,508,154			2,405,453
Total assets	$	2,887,996		$	3,019,035		$	2,876,123

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	282,810		$	350,749		$	404,350
Income taxes payable		3,059			3,026			2,991
Current portion of lease obligations		19,263			17,386			12,698
Current portion of long-term debt		952			2,848			2,287
Total current liabilities		306,084			374,009			422,326

Non-current liabilities:
Share-based compensation		10,339			16,755			47,836
Provisions and other		7,408			7,140			7,538
Lease obligations		54,010			57,124			52,978
Long-term debt		787,008			914,830			1,085,970
Deferred tax liabilities		62,047			73,515			28,946
Total non-current liabilities		920,812			1,069,364			1,223,268
Equity:
Shareholders’ capital		2,337,079			2,365,129			2,299,533
Contributed surplus		76,656			75,086			72,555
Deficit		(915,629	)		(1,012,029	)		(1,301,273	)
Accumulated other comprehensive income		158,602			147,476			159,714
Total equity attributable to shareholders		1,656,708			1,575,662			1,230,529
Non-controlling interest		4,392			—			—
Total equity		1,661,100			1,575,662			1,230,529
Total liabilities and equity	$	2,887,996		$	3,019,035		$	2,876,123

^{(1) Comparative period figures were restated due to a change in accounting policy. See “CHANGE IN ACCOUNTING POLICY.”}

^{(2) See “JOINT PARTNERSHIP” for additional information.}

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(Stated in thousands of Canadian dollars, except per share amounts)	2024			2023			2024			2023


Revenue	$	477,155		$	446,754		$	1,434,157		$	1,430,983
Expenses:
Operating		311,467			288,002			936,383			888,039
General and administrative		23,263			44,177			97,079			83,057
Earnings before income taxes, loss (gain) on investments and other assets, gain on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals, and depreciation and amortization		142,425			114,575			400,695			459,887
Depreciation and amortization		75,073			73,192			227,104			218,823
Gain on asset disposals		(3,323	)		(2,438	)		(14,235	)		(15,586	)
Foreign exchange		849			363			772			(894	)
Finance charges		16,914			19,618			53,472			63,946
Gain on repurchase of unsecured senior notes		—			(37	)		—			(137	)
Loss (gain) on investments and other assets		(150	)		(3,813	)		(330	)		6,075
Earnings before income taxes		53,062			27,690			133,912			187,660
Income taxes:
Current		2,297			2,047			4,659			4,008
Deferred		11,582			5,851			32,853			41,130
		13,879			7,898			37,512			45,138
Net earnings	$	39,183		$	19,792		$	96,400		$	142,522
Net earnings per share attributable to shareholders:
Basic	$	2.77		$	1.45		$	6.74		$	10.45
Diluted	$	2.31		$	1.45		$	6.73		$	9.84

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(Stated in thousands of Canadian dollars)	2024			2023			2024			2023
Net earnings	$	39,183		$	19,792		$	96,400		$	142,522
Unrealized gain (loss) on translation of assets and liabilities of operations denominated in foreign currency		(16,104	)		39,180			30,409			3,322
Foreign exchange gain (loss) on net investment hedge with U.S. denominated debt		9,536			(24,616	)		(19,283	)		(1,484	)
Comprehensive income	$	32,615		$	34,356		$	107,526		$	144,360

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(Stated in thousands of Canadian dollars)	2024			2023			2024			2023
Cash provided by (used in):
Operations:
Net earnings	$	39,183		$	19,792		$	96,400		$	142,522
Adjustments for:
Long-term compensation plans		2,620			11,577			14,490			9,200
Depreciation and amortization		75,073			73,192			227,104			218,823
Gain on asset disposals		(3,323	)		(2,438	)		(14,235	)		(15,586	)
Foreign exchange		815			1,275			965			(13	)
Finance charges		16,914			19,618			53,472			63,946
Income taxes		13,879			7,898			37,512			45,138
Other		27			—			120			(220	)
Loss (gain) on investments and other assets		(150	)		(3,813	)		(330	)		6,075
Gain on repurchase of unsecured senior notes		—			(37	)		—			(137	)
Income taxes paid		(508	)		(187	)		(4,842	)		(2,395	)
Income taxes recovered		58			4			58			7
Interest paid		(31,692	)		(35,500	)		(69,435	)		(79,702	)
Interest received		426			227			1,558			562
Funds provided by operations		113,322			91,608			342,837			388,220
Changes in non-cash working capital balances		(33,648	)		(3,108	)		(23,545	)		(57,904	)
Cash provided by operations		79,674			88,500			319,292			330,316

Investments:
Purchase of property, plant and equipment		(63,797	)		(51,546	)		(157,747	)		(146,378	)
Purchase of intangibles		(51	)		(847	)		(51	)		(1,524	)
Proceeds on sale of property, plant and equipment		5,647			6,698			21,825			20,724
Proceeds from sale of investments and other assets		—			10,013			3,623			10,013
Business acquisitions		—			—			—			(28,000	)
Purchase of investments and other assets		(7	)		(3,211	)		(7	)		(5,282	)
Receipt of finance lease payments		207			64			591			64
Changes in non-cash working capital balances		19,149			4,551			(9,266	)		(6,774	)
Cash used in investing activities		(38,852	)		(34,278	)		(141,032	)		(157,157	)

Financing:
Issuance of long-term debt		10,900			23,600			10,900			162,649
Repayments of long-term debt		(59,658	)		(49,517	)		(162,506	)		(288,538	)
Repurchase of share capital		(16,891	)		—			(50,465	)		(12,951	)
Issuance of common shares from the exercise of options		495			—			686			—
Debt amendment fees		—			—			(1,317	)		—
Lease payments		(3,586	)		(2,410	)		(10,005	)		(6,413	)
Funding from non-controlling interest		4,392			—			4,392			—
Cash used in financing activities		(64,348	)		(28,327	)		(208,315	)		(145,253	)
Effect of exchange rate changes on cash		(403	)		251			177			(428	)
Increase (decrease) in cash		(23,929	)		26,146			(29,878	)		27,478
Cash, beginning of period		48,233			22,919			54,182			21,587
Cash, end of period	$	24,304		$	49,065		$	24,304		$	49,065

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

	Attributable to shareholders of the Corporation
(Stated in thousands of Canadian dollars)	Shareholders’ Capital			Contributed Surplus			Accumulated Other Comprehensive Income		Deficit			Total			Non- controlling interest		Total Equity
Balance at January 1, 2024	$	2,365,129		$	75,086		$	147,476	$	(1,012,029	)	$	1,575,662		$	—	$	1,575,662
Net earnings for the period		—			—			—		96,400			96,400			—		96,400
Other comprehensive income for the period		—			—			11,126		—			11,126			—		11,126
Share options exercised		978			(292	)		—		—			686			—		686
Settlement of Executive Performance and Restricted Share Units		21,846			(1,479	)		—		—			20,367			—		20,367
Share repurchases		(51,050	)		—			—		—			(51,050	)		—		(51,050	)
Redemption of non-management directors share units		176			(176	)		—		—			—			—		–
Share-based compensation expense		—			3,517			—		—			3,517			—		3,517
Funding from non-controlling interest		—			—			—		—			—			4,392		4,392
Balance at September 30, 2024	$	2,337,079		$	76,656		$	158,602	$	(915,629	)	$	1,656,708		$	4,392	$	1,661,100

	Attributable to shareholders of the Corporation
(Stated in thousands of Canadian dollars)	Shareholders’ Capital			Contributed Surplus		Accumulated Other Comprehensive Income		Deficit			Total			Non- controlling interest		Total Equity
Balance at January 1, 2023	$	2,299,533		$	72,555	$	159,714	$	(1,301,273	)	$	1,230,529		$	—	$	1,230,529
Net earnings for the period		—			—		—		142,522			142,522			—		142,522
Other comprehensive income for the period		—			—		1,838		—			1,838			—		1,838
Settlement of Executive Performance and Restricted Share Units		19,206			—		—		—			19,206			—		19,206
Share repurchases		(12,951	)		—		—		—			(12,951	)		—		(12,951	)
Redemption of non-management directors share units		757			—		—		—			757			—		757
Share-based compensation expense		—			1,834		—		—			1,834			—		1,834
Balance at September 30, 2023	$	2,306,545		$	74,389	$	161,552	$	(1,158,751	)	$	1,383,735		$	—	$	1,383,735

2024 THIRD QUARTER RESULTS CONFERENCE CALL AND WEBCAST

Precision Drilling Corporation has scheduled a conference call and webcast to begin promptly at 11:00 a.m. MT (1:00 p.m. ET) on Wednesday, October 30, 2024.

To participate in the conference call please register at the URL link below. Once registered, you will receive a dial-in number and a unique PIN, which will allow you to ask questions.

https://register.vevent.com/register/BI4cb3a3db88084e66ad528ebb2bdb81e4

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will be available on Precision’s website for 12 months.

https://edge.media-server.com/mmc/p/mov2xb4k

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

Additional Information

For further information, please contact:

Lavonne Zdunich, CPA, CA
Vice President, Investor Relations
403.716.4500

800, 525 – 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com

The MIL Network –

January 25, 2025

MIL-OSI: Savi Financial Corporation Earns $205,000 in the Third Quarter of 2024; Results Highlighted by NIM Expansion

Source: GlobeNewswire (MIL-OSI)

MOUNT VERNON, Wash., Oct. 29, 2024 (GLOBE NEWSWIRE) — Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported net income of $205,000, or $0.05 per diluted share, for the third quarter of 2024. This compared to a net loss of $5,000, or a loss of $0.00 per diluted share, in the second quarter of 2024, and net income of $558,000, or $0.13 per diluted share, in the third quarter of 2023. In the first nine months of 2024, the Company reported a net loss of $216,000, or a loss of $0.05 per diluted share, compared to net income of $1.59 million, or $0.36 per diluted share, in the first nine months of 2023. All results are unaudited.

“We reported improved third quarter 2024 operating results, compared to the preceding quarter, driven by increases in net interest income, lower non-interest expense and net interest margin expansion,” said Michal D. Cann, Chairman and President of Savi Financial Corporation. “Overall, loan growth was muted during the quarter, in part due to a slowdown in the local economy and uncertainties surrounding the election and future economic growth. However, we are seeing improvements in our loan pipeline, particularly with SBA loan originations. Further, we experienced good growth in core deposits during the quarter, with an increase in core deposits from local municipalities, which will allow us to reduce our reliance on brokered deposits to fund future growth.”

“Loan growth was relatively flat compared to the preceding quarter and up 5% compared to a year ago. However, we did see good growth in the loan pipelines,” said Andrew Hunter, President and CEO of SaviBank. “We continue to seek out lending opportunities from our customers and anticipate slower than historic loan growth for the remainder of the year.”

“The increase in loan yields during the quarter contributed to net interest margin (NIM) expansion of four basis points during the current quarter,” said Rob Woods, Chief Financial Officer of SaviBank. “We anticipate funding costs are near their peak and will continue to stabilize and should improve over the next few quarters if interest rates continue to decrease.” The Company’s NIM was 3.52% in the third quarter of 2024, compared to 3.48% in the preceding quarter, and 3.66% in the third quarter a year ago. The NIM remains higher than the peer average of 3.21% posted by the 171 banks that comprised the Dow Jones U.S. Microcap Bank Index as of June 30, 2024. The cost of funds increased to 244 basis points during the third quarter of 2024, compared to 238 basis points in the preceding quarter.

Merger

On March 22, 2024, the Company announced that it had signed a Purchase and Assumption agreement whereby Lakewood, WA. based Harborstone Credit Union will acquire SaviBank in an all-cash transaction. The transaction is structured as a purchase agreement with Harborstone Credit Union purchasing substantially all assets and assuming substantially all liabilities of SaviBank. The transaction is anticipated to be completed in the spring of 2025, subject to receiving all regulatory approvals. Shareholders of Savi Financial have approved the acquisition.

“We look forward to working with Harborstone Credit Union to continue our tradition of having a positive impact in our local communities,” said Cann. “We are deeply focused on providing resources and services for our customers to succeed, and believe that the additional services, products and locations Harborstone Credit Union provides will help us continue to meet the financial needs of our customers. Through the unique structure of this acquisition by Harborstone Credit Union, we believe we are maximizing value to our shareholders who have supported us over the years.”

Third Quarter 2024 Highlights:

The Company reported net income of $205,000 for the third quarter of 2024, compared to net loss of $5,000 for the second quarter of 2024, and net income of $558,000 for the third quarter of 2023.
Earnings per diluted share were $0.05 in the third quarter of 2024, compared to losses per diluted share of $0.00 in the preceding quarter, and earnings per diluted share of $0.13 in the third quarter of 2023.
Net interest income was $5.06 million in the third quarter of 2024, compared to $4.86 million in the second quarter of 2024, and $5.03 million in the third quarter of 2023.
Total revenue, consisting of net interest income and non-interest income, was $5.88 million in the third quarter of 2024, compared to $6.04 million in the preceding quarter and $5.89 million in the third quarter a year ago.
Non-interest expense was $5.57 million in the third quarter of 2024, compared to $5.82 million in the preceding quarter, and $5.56 million in the third quarter a year ago. The decrease in non-interest expense during the third quarter of 2024 was largely due to lower salary and employee benefits compared to the prior quarter.
Average third quarter 2024 total loans increased 2% to $512.8 million, compared to $503.8 million in the second quarter of 2024, and increased 8% from $473.6 million in the third quarter of 2023. Total loans at September 30, 2024, decreased to $509.5 million from $512.1 million at June 30, 2024, and increased 5% compared to $487.2 million at September 30, 2023.
SBA and USDA loan production for the twelve months ended September 30, 2024, totaled 22 loans for $14.5 million, compared to production of 18 loans for $14.8 million in the year-ago period.
Average third quarter 2024 total deposits grew 2% to $502.5 million, from $490.8 million in the preceding quarter, and increased 6% from $474.1 million in the third quarter a year ago. Total deposits increased 4% to $512.9 million, at September 30, 2024, compared to $492.1 million at June 30, 2024, and increased 7% compared to $481.5 million at September 30, 2023.
The Company recorded an $86,000 provision for credit losses in the third quarter of 2024, compared to a $255,000 provision in the second quarter of 2024, and a $350,000 credit to the provision in the third quarter of 2023.
Allowance for loan losses, as a percentage of total loans, was 1.18% at September 30, 2024, compared to 1.19% at June 30, 2024, and 1.16% at September 30, 2023.
Nonperforming loans, as a percentage of total loans, was 0.26% at September 30, 2024, compared to 0.24% at June 30, 2024, and 0.09% at September 30, 2023.
Nonperforming assets, as a percentage of total assets, was 0.21% at September 30, 2024, compared to 0.20% at June 30, 2024, and 0.19% a year ago.
Net charge-offs were $214,000 in the third quarter of 2024, compared to $35,000 in the second quarter of 2024, and $77,000 in the third quarter a year ago.
SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.19% at September 30, 2024.

About Northwest Washington

SaviBank currently operates six branches in Skagit County, two branches in Island County, one branch in Whatcom County and one branch in San Juan County. The Skagit, Whatcom, Island and San Juan counties region stretches north from the greater Seattle/Everett/Bellevue metropolis to the Canadian border.

The housing market in Skagit, Island, Whatcom and San Juan counties remains stable, although it has fallen off the record high levels from the past few years. According to the Northwest Multiple Listing Service, the average home in Skagit County sold for $560,000, up 1.91% in September 30, 2024, compared to a year ago, and there was a 2.37 month supply of homes on the market. For Island County, the average house sold for $605,000, down 0.82% from a year ago and supply totaled 3.18 months. For Whatcom County, the average home sold for $611,000, up 10.38% from a year ago and supply totaled 2.61 months. For San Juan County, the average home sold for $829,000, down from 13.65% a year ago and supply totaled 9.05 months.

Skagit’s population is projected to grow 3.84% from 2024 through 2029, and median household income is projected to increase by 11.41% during the same time frame. Whatcom County’s population is projected to grow 4.97% from 2024 through 2029, and median household income is projected to increase by 10.99%. Island County’s population is projected to grow 2.24% from 2024 through 2029, and median household income is projected to increase by 12.83%. San Juan County’s population is projected to grow 6.78% from 2024 through 2029, and median household income is projected to increase by 10.88%.

Sources:
https://www.nwmls.com/real-estate-news/monthly-market-snapshot/

https://www.capitaliq.spglobal.com/

About Savi Financial Corporation Inc. and SaviBank

Savi Financial Corporation is the bank holding company which owns SaviBank. The Bank began operations April 11, 2005, and has 10 branch locations in Anacortes, Burlington, Bellingham, Concrete, Mount Vernon (2), Oak Harbor, Freeland, Sedro-Woolley, and Friday Harbor, Washington. The Bank provides loan and deposit services to customers who are predominantly small and middle-market businesses and individuals in and around Skagit, Island, Whatcom and San Juan counties. As a locally-owned community bank, we believe that when everyone becomes Savi about their finances, our entire community benefits.
For additional information about SaviBank, visit: www.SaviBank.com.

About Harborstone Credit Union

Harborstone Credit Union is a Washington-chartered and federally insured credit union headquartered in Lakewood, Washington. Founded in 1955 as McChord Federal Credit Union, serving airmen on McChord Air Force Base (now Joint Base Lewis McChord), Harborstone Credit Union has grown to become one of the largest credit unions in Washington State with over 91,000 members and approximately $2.1 billion in total assets. Harborstone Credit Union has sixteen branches located throughout King, Pierce, and Thurston counties and offers members a full range of products and services with the aim to assist members in achieving financial well-being through innovative financial solutions that foster thriving communities and economic vitality. For more information, please visit www.harborstone.com.

Forward Looking Statements

Certain statements in this news release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors, such as the businesses of Harborstone Credit Union and SaviBank may not be integrated successfully or such integration may take longer to accomplish than expected, the expected cost savings and any revenue synergies from the acquisition may not be fully realized within the expected timeframes, disruption from the acquisition may make it more difficult to maintain relationships with customers, associates, or suppliers, the required governmental approvals of the acquisition may not be obtained on the proposed terms and schedule, or Savi Financial shareholders may not approve the acquisition, any of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by the companies or any person that the future events, plans, or expectations contemplated by the companies will be achieved. All subsequent written and oral forward-looking statements concerning the companies or any person acting on their behalf is expressly qualified in its entirety by the cautionary statements above. None of Harborstone Credit Union, Savi Financial or SaviBank undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, to reflect circumstances or events that occur after the date the forward-looking statements are made.


SELECTED FINANCIAL DATA
(In thousands of dollars, except for ratios and per share amounts)
Unaudited
	Three Months Ended													Nine Months Ended
	September 30, 2024			September 30, 2023			Var %		June 30, 2024			Var %		September 30, 2024			September 30, 2023			Var %
SUMMARY OF OPERATIONS
Interest income	$	8,756		$	7,573		16	%	$	8,371		5	%	$	24,962		$	21,092		18	%
Interest expense		(3,698	)		(2,539	)	46			(3,509	)	5			(10,411	)		(6,092	)	71
Net interest income		5,058			5,034		0			4,862		4			14,551			15,000		(3	)
Provision for loan losses		(86	)		350		(125	)		(255	)	(66	)		(578	)		539		(207	)

NII after loss provision		4,972			5,384		(8	)		4,607		8			13,973			15,539		(10	)
Non-interest income		825			852		(3	)		1,181		(30	)		2,587			2,796		(7	)
Non-interest expense		(5,566	)		(5,559	)	0			(5,823	)	(4	)		(16,920	)		(16,415	)	3
Income before tax		231			677		(66	)		(35	)	(760	)		(360	)		1,920		(119	)
Federal income tax expense		26			119		(78	)		(30	)	(187	)		(144	)		333		(143	)
Net income	$	205		$	558		(63	)%	$	(5	)	(4,200	)%	$	(216	)	$	1,587		(114	)%

PER COMMON SHARE DATA
Number of shares outstanding (000s)		3,465			3,460		0	%		3,465		—	%		3,465			3,460		0.14	%
Earnings per share, basic	$	0.06		$	0.16		(63	)	$	(0.00	)	(4,200	)	$	(0.06	)	$	0.46		(114	)
Earnings per share, diluted	$	0.05		$	0.13		(63	)	$	(0.00	)	(4,201	)	$	(0.05	)	$	0.36		(114	)
Market value		14.50			6.86		111			14.79		(2	)		14.50			6.86		111
Book value		10.93			10.95		(0	)		10.61		3			10.93			10.95		(0	)
Market value to book value		132.63	%		62.65	%	112			139.40	%	(5	)		132.63	%		62.65	%	112

BALANCE SHEET DATA
Assets	$	623,637		$	591,370		5	%	$	621,191		0	%	$	623,637		$	591,370		5	%
Investments securities		36,629			35,140		4			34,698		6			36,629			35,140		4
Total loans		509,535			487,184		5			512,080		(0	)		509,535			487,184		5
Total deposits		512,912			481,476		7			492,140		4			512,912			481,476		7
Borrowings		52,500			52,500		–			72,000		(27	)		52,500			52,500		–
Sub Debt – Savi Financial Only		17,000			17,000		–			17,000		–			17,000			17,000		–
Shareholders’ equity		37,881			37,887		(0	)		36,777		3			37,881			37,887		(0	)

AVERAGE BALANCE SHEET DATA
Average assets	$	622,414		$	583,931		7	%	$	612,262		2	%	$	608,559		$	557,460		9	%
Average total loans		512,751			473,590		8			503,793		2			502,860			459,765		9
Average total deposits		502,526			474,076		6			490,753		2			498,373			456,093		9
Average shareholders’ equity		37,329			37,812		(1	)		36,678		2			37,534			37,082		1

ASSET QUALITY RATIOS
Net (charge-offs) recoveries	$	(214	)	$	(77	)	N/M		$	(35	)	N/M		$	(422	)	$	(266	)	N/M
Net (charge-offs) recoveries to average loans		(0.17	)%		(0.07	)%	N/M			(0.03	)%	N/M			(0.11	)%		(0.08	)%	N/M
Non-performing loans as a % of loans		0.26			0.09		183			0.24		6			0.26			0.09		183
Non-performing assets as a % of assets		0.21			0.19		10			0.20		4			0.21			0.19		10
Allowance for loan losses as a % of total loans		1.18			1.16		2			1.19		(1	)		1.18			1.16		2
Allowance for loan losses as a % of non-performing loans		462.69			1,223.59		(62	)		492.30		(6	)		462.69			1,223.59		(62	)

FINANCIAL RATIOSSTATISTICS
Return on average equity		2.20	%		5.90	%	(63	)%		-0.05	%	(4,128	)%		-0.77	%		5.71	%	(113	)%
Return on average assets		0.13			0.38		(66	)		(0.00	)	(4,133	)		(0.05	)		0.38		(112	)
Net interest margin		3.52			3.66		(4	)		3.48		1			3.47			3.77		(8	)
Efficiency ratio		81.59			92.23		(12	)		83.37		(2	)		85.53			92.24		(7	)
Average number of employees (FTE)		136			145		(6	)		140		(3	)		142			146		(3	)

CAPITAL RATIOS

Tier 1 leverage ratio — Bank		8.19			8.24		(1	)%		8.27		(1	)%		8.19			8.24		(1	)%
Common equity tier 1 ratio — Bank		9.59			9.08		6			9.36		2			9.59			9.08		6
Tier 1 risk-based capital ratio — Bank		9.59			9.08		6			9.36		2			9.59			9.08		6
Total risk-based capital ratio –Bank		10.78			10.22		5			10.56		2			10.78			10.22		5

Contact:
Michal D. Cann
Chairman & President
Savi Financial Corporation
(360) 399-7001

The MIL Network –

January 25, 2025

MIL-OSI: First Northwest Bancorp Reports Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

PORT ANGELES, Wash., Oct. 29, 2024 (GLOBE NEWSWIRE) —

CEO Commentary
“This was a quarter of mixed results. Progress on customer deposit gathering and the termination of the FDIC Consent Order was overshadowed by a quarterly loss driven by additional provisions primarily related to certain equity loans made to high net worth, accredited investors.

The teamwork and collaboration between Staff, Management and the Board to address the matters identified in the Consent Order is demonstrative of the qualifications, determination and capabilities of the First Fed team. We appreciate that the FDIC acknowledged the planning, monitoring and execution required to comply with the Order and validation that all of these matters were properly addressed. I am very proud of this accomplishment, and I would like to thank all of the many people within the bank who worked tirelessly to reach this achievement less than one year after the Order was issued.

Through an internal review of our loan portfolio and with consultation with our prudential regulators, it was determined that larger provisions were required in the second quarter of 2024. As a result, we decided it was appropriate to file a restated quarterly report on Form 10-Q for the quarter ended June 30, 2024, and identified a material weakness in the design of certain internal controls. The loans for which we increased reserves were originated between 2020 and 2023. More recent vintages of our loan portfolio are performing well as we have engaged in lending and partnerships that we have evaluated as having a relatively lower risk profile. The provision for credit losses after the amendment was $8.7 million in the second quarter of 2024.

Management and the Board of Directors take the reported material weakness very seriously. We have taken corrective action to address the basis for the restatement and are working to promptly remediate.

We also acknowledge the ongoing lawsuits filed by some of the Water Station equipment borrowers. We intend to vigorously defend against these claims, which we believe are meritless. We also intend to continue pursuing collection of all monies owed by the litigants using all available legal means.

Moving forward, the highly capable bankers at First Fed are focused on continuing to build relationships with small businesses and individuals in the communities we serve. We continue to pursue inroads in SBA, treasury, maritime lending, first and second mortgage lending and community banking. We are introducing products and services to meet our customers where they are and to enhance their overall experience with First Fed. We believe that focusing on these fundamentals of Community Banking will improve our results and our overall franchise value.”

— Matthew P. Deines, President and CEO, First Northwest Bancorp

2024 FINANCIAL RESULTS	3Q 24			2Q 24			3Q 23			2024 YTD			2023 YTD
OPERATING RESULTS (in millions)
Net (loss) income	$	(2.0	)	$	(2.2	)	$	2.5		$	(3.8	)	$	7.8
Pre-provision net interest income		14.0			14.2			15.0			42.2			47.2
Provision for credit losses		3.1			8.7			0.4			12.8			0.2
Noninterest expense		15.8			15.6			14.4			45.8			44.5
Total revenue, net of interest expense *		15.8			21.6			17.9			53.5			54.2
PER SHARE DATA
Basic and diluted (loss) earnings	$	(0.23	)	$	(0.25	)	$	0.28		$	(0.43	)	$	0.87
Book value		17.17			16.81			16.20			17.17			16.20
Tangible book value *		17.00			16.64			16.03			17.00			16.03
BALANCE SHEET (in millions)
Total assets	$	2,255		$	2,216		$	2,154		$	2,255		$	2,154
Total loans		1,735			1,698			1,635			1,735			1,635
Total deposits		1,712			1,708			1,658			1,712			1,658
Total shareholders’ equity		161			159			156			161			156
ASSET QUALITY
Net charge-off ratio⁽¹⁾		0.10	%		1.70	%		0.30	%		0.67	%		0.10	%
Nonperforming assets to total assets		1.35			1.07			0.11			1.35			0.11
Allowance for credit losses on loans
to total loans		1.27			1.14			1.04			1.27			1.04
Nonaccrual loan coverage ratio		72			82			714			72			714
(1) Performance ratios are annualized, where appropriate. ^*See reconciliation of Non-GAAP Financial Measures later in this release.

2024 FINANCIAL RESULTS (Continued)	3Q 24			2Q 24			3Q 23			2024 YTD			2023 YTD
SELECTED RATIOS
Return on average assets⁽¹⁾		-0.36	%		-0.40	%		0.46	%		-0.23	%		0.50	%
Return on average equity⁽¹⁾		-4.91			-5.47			6.17			-3.14			6.50
Return on average tangible common equity^{(1) *}		-4.96			-5.53			6.23			-3.17			6.57
Net interest margin		2.70			2.76			2.97			2.74			3.22
Efficiency ratio		100.31			72.32			80.52			85.54			82.06
Bank common equity tier 1 (CETI) ratio		12.20			12.40			13.43			12.20			13.43
Bank total risk-based capital ratio		13.44			13.49			14.38			13.44			14.38
(1) Performance ratios are annualized, where appropriate. ^*See reconciliation of Non-GAAP Financial Measures later in this release.

	2024 Significant Items as of September 30, 2024
•	Year-to-date net loss of $3.8 million was primarily due to a provision for credit losses of $12.8 million as the collectability of a small number of loan relationships continued to deteriorate and additional reserves were taken on purchased loan pools.
•	First Fed Bank (“First Fed” or the “Bank”) balance sheet restructuring contributed to an improved year-to-date yield on earning assets by 16-basis points over the prior year end to 5.44%.
	– Sale-leaseback transaction completed in the second quarter, resulting in a $7.9 million gain on sale of premises and equipment.
	– Sold $23.2 million of lower-yielding security investments which resulted in $2.1 million year-to-date loss on sale.
	– Purchased $53.3 million of higher-yielding security investments year-to-date.
	– Continued conversion of lower-yielding bank-owned life insurance (“BOLI”) with one conversion completed in the first quarter and an exchange in the third quarter. Two additional policy restructures expected to be completed by the end of the first quarter of 2025.
•	Net interest margin decreased over the prior year end from 3.13% to 2.74%, impacted by the increase in deposit and borrowing costs outpacing increased yields on loans and investments.
•	Loan mix shifted away from construction and commercial real estate into commercial business, auto, multi-family real estate, one-to-four family and home equity compared to the prior year end. The weighted-average rate on new loans year-to-date was 8.5%.
•	Borrowings increased $14.1 million, or 4.4%, to $335.0 million at September 30, 2024, compared to $320.9 million at December 31, 2023.
•	Repurchased 214,132 shares during the first quarter, which closed out the October 2020 Stock Repurchase Plan.
•	Repurchased 98,156 shares during the third quarter under the new share repurchase plan approved in April 2024.
•	Year-to-date deposit growth of $34.7 million, or 2.0%, to $1.71 billion, with a $30.0 million shift from savings to money market accounts. Cost of total deposits increased over the prior year end from 1.66% to 2.49%.
•	Estimated insured deposits totaled $1.3 billion, or 77% of total deposits at September 30, 2024. Available liquidity to uninsured deposit coverage remained strong at 142% at September 30, 2024.
•	Classified loans increased to 2.71% of total loans at September 30, 2024, compared to 2.12% at December 31, 2023.
•	Nonperforming assets increased $11.7 million year-to-date mainly due to three commercial loan relationships included in commercial construction, commercial real estate and commercial business.
•	Completed a reduction-in-force impacting 9% of our workforce on July 24, 2024. This action, along with year-to-date headcount management through attrition, is expected to result in a reduction in current levels of compensation expense by approximately $820,000 per quarter starting in the fourth quarter of 2024.

First Northwest Bancorp (Nasdaq: FNWB) (“First Northwest” or the “Company”) today reported a net loss of $2.0 million for the third quarter of 2024, compared to a net loss of $2.2 million for the second quarter of 2024 and net income of $2.5 million for the third quarter of 2023. Basic and diluted loss per share were $0.23 for the third quarter of 2024, compared to basic and diluted loss per share of $0.25 for the second quarter of 2024 and basic and diluted earnings per share of $0.28 for the third quarter of 2023. In the third quarter of 2024, the Company generated a return on average assets of -0.36%, a return on average equity of -4.91% and a return on average tangible common equity* of -4.96%. Loss before provision for income taxes was $3.2 million for the third quarter of 2024, compared to a loss before provision for income taxes of $2.8 million for the preceding quarter, a decrease of $417,000, or 15.1%, and decreased $6.3 million compared to income of $3.1 million for the third quarter of 2023.

The Bank recorded reserves on individually analyzed loans totaling $1.9 million due to the uncertain future cash flows from specific loan relationships in the third quarter of 2024. An additional credit loss on loans of $1.8 million was attributable to an increase in the reserve on pooled commercial business loans, with a reserve loss rate of 3.4% applied to that segment of the loan portfolio at period end. We believe the reserve on individually analyzed loans does not represent a universal decline in the collectability of all loans in the portfolio. We continue to work on resolution plans for all troubled borrowers. The provision for credit losses on loans had a significant negative impact on net income and was the only reason for the net loss recorded for the third quarter of 2024.

Steps taken to restructure the Bank’s balance sheet continue to have a positive impact. The fair value hedge on loans, tied to the compounded overnight index swap using the secured overnight financing rate index, established in the first quarter of 2024 added $946,000 to interest income year-to-date. The fair value hedge on loans reduces interest rate risk by reducing liability sensitivity while increasing interest income. We estimate that if rates remain unchanged, this hedge will add $1.3 million of annualized interest income in 2024. The estimated impact will be reduced if the Federal Reserve Board (“FRB”) implements additional rate cuts during the year. The Bank expects to maintain a positive carry on its derivative for up to 75-basis points of additional rate cuts.

The balance sheet restructure plan also includes the conversion of BOLI policies in order to reinvest in higher yielding products. The first $6.1 million policy earning 2.58% was surrendered during the first quarter and reinvested into a policy earning 5.18%. In the third quarter of 2024, a $1.3 million policy earning 3.18% was exchanged and reinvested into a policy earning 5.73%. The remaining surrender and exchange transactions are expected to be completed by the end of the first quarter of 2025.

Net Interest Income
Total interest income decreased $405,000 to $28.2 million for the third quarter of 2024, compared to $28.6 million in the previous quarter, and increased $2.4 million compared to $25.8 million in the third quarter of 2023. Interest income decreased in the third quarter of 2024 primarily due to interest reversals for loans placed on nonaccrual totaling $619,000. The interest adjustments were partially offset by higher yields on performing loans combined with increased loan volume. Interest and fees on loans increased year-over-year as the loan portfolio grew as a result of draws on new and existing lines of credit, originations of commercial real estate, commercial business and home equity loans, and auto and manufactured home loan purchases. Loan yields increased over the prior year due to higher rates on new originations as well as the repricing of variable and adjustable-rate loans tied to the Prime Rate or other indices.

Total interest expense decreased $190,000 to $14.2 million for the third quarter of 2024, compared to $14.4 million in the second quarter of 2024, and increased $3.3 million compared to $10.9 million in the third quarter of 2023. Interest expense for the three months ended September 30, 2024, was lower primarily due to lower rates on advances combined with decreased advance volumes. The decrease was partially offset by a 9-basis point increase in the cost of deposits to 2.56% for the quarter ended September 30, 2024, from 2.47% for the prior quarter as a result of customers continuing to shift deposit balances into higher earning products. The increase over the third quarter of 2023 was the result of a 71-basis point increase in the cost of deposits from 1.85% in the third quarter one year ago. A shift in the deposit mix from transaction and savings accounts to money market accounts and time deposits also added to the higher cost of deposits compared to the third quarter of 2023. Higher costs of brokered time deposits also contributed to additional deposit costs with a 57-basis point increase to 4.88% for the current quarter compared to 4.31% for the third quarter one year ago.

Net interest income before provision for credit losses for the third quarter of 2024 decreased $215,000, or 1.5%, to $14.0 million, compared to $14.2 million for the preceding quarter, and decreased $930,000, or 6.2%, from the third quarter one year ago. The impact of the September FRB rate cut will be reflected beginning with fourth quarter 2024 interest income and expenses.

The Company recorded a $3.1 million provision for credit losses on loans in the third quarter of 2024, primarily due to reserves taken individually analyzed loans and Current Expected Credit Loss model loss factor increases attributable to pooled commercial business and multi-family loans at quarter end. Credit loss provision increases were offset by decreases to the loss factors applied to consumer, commercial real estate and one-to-four family loans. Higher loss factors applied to unfunded commitments and a moderate increase in commitment balances also resulted in a provision for credit losses on unfunded commitments of $57,000 for the quarter. The total provision for credit loss recorded for the third quarter of 2024 was $3.1 million, compared to a credit loss provision of $8.7 million for the preceding quarter and a provision of $371,000 for the third quarter of 2023.

The net interest margin decreased to 2.70% for the third quarter of 2024, from 2.76% for the prior quarter, and decreased 27-basis points from 2.97% for the third quarter of 2023. The decrease over the linked quarter is primarily due to the accrued interest reversed on three nonperforming commercial loans during the three months ended September 30, 2024, partially offset by an increase in interest income earned on a higher volume of loans. Investment securities also had decreased volume due to regular payments and lower yields due to variable-rate securities compared to the preceding quarter. The Company reported reduced rates and declining volume of borrowings during the quarter which lowered costs; however, these savings were partially offset by an increase in cost due to a higher volume of retail customer deposits. The decrease in net interest margin from the same quarter one year ago is due to higher funding costs for deposits and borrowed funds. Organic loan production comprised 73% of new loan commitments for the third quarter with the remaining 27% added through purchases of higher-yielding loans from established third-party relationships. The Bank’s fair value hedging agreements on securities and loans added $188,000 and $395,000, respectively, to interest income for the third quarter of 2024.

The yield on average earning assets for the third quarter of 2024 decreased 11-basis points to 5.44% compared to 5.55% for the second quarter of 2024 and increased 30-basis points from 5.14% for the third quarter of 2023. The third quarter decrease is attributable to the accrued interest reversed on nonperforming loans, a lower yield and volume of investment securities and a decrease in the balance of Federal Home Loan Bank (“FHLB”) stock. The year-over-year increase in interest income was primarily due to higher average loan balances augmented by increases in yields on all earning assets, which were positively impacted by the higher rate environment.

The cost of average interest-bearing liabilities decreased 5-basis points to 3.23% for the third quarter of 2024, compared to 3.28% for the second quarter of 2024, and increased 63-basis points from 2.60% for the third quarter of 2023. Total cost of funds decreased to 2.82% for the third quarter of 2024 from 2.87% in the prior quarter and increased from 2.23% for the third quarter of 2023. Current quarter decreases were due to lower average balances and costs on borrowings. The Bank continues to offer higher rate specials on money market and CD accounts to attract and retain retail customer deposits. The average brokered CD balance decreased $5.5 million from the linked quarter with a 6-basis point decrease in the average rate paid on brokered funds.

The increase in cost of average interest-bearing liabilities over the same quarter last year was driven by higher rates paid on deposits and borrowings and higher average CD balances. The Company attracted and retained funding through the use of promotional products and a focus on digital account acquisition. The mix of retail deposit balances shifted from no or low-cost transaction and savings accounts towards higher cost term certificate and higher yield money market accounts. Retail CDs represented 29.3%, 26.8% and 27.6% of retail deposits at September 30, 2024, June 30, 2024 and September 30, 2023, respectively. Average interest-bearing deposit balances increased $44.8 million, or 3.2%, to $1.45 billion for the third quarter of 2024 compared to the second quarter of 2024 and increased $75.0 million, or 5.4%, compared to $1.38 billion for the third quarter of 2023.

Selected Yields	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Loan yield		5.51	%		5.62	%		5.51	%		5.38	%		5.31	%
Investment securities yield		4.90			5.01			4.75			4.53			4.18
Cost of interest-bearing deposits		3.00			2.91			2.86			2.52			2.22
Cost of total deposits		2.56			2.47			2.43			2.12			1.85
Cost of borrowed funds		4.35			4.76			4.52			4.50			4.45
Net interest spread		2.21			2.27			2.28			2.40			2.54
Net interest margin		2.70			2.76			2.76			2.84			2.97

Noninterest Income
Noninterest income decreased to $1.8 million for the third quarter of 2024 compared to $7.4 million for the second quarter of 2024. Nonrecurring second quarter transactions included a sale-leaseback transaction which resulted in a gain on sale of premises and equipment of $7.9 million, partially offset by a $2.1 million loss on the sale of lower-yielding available-for-sale securities. Income from the gain on sale of loans in the third quarter of 2024 includes $51,000 from SBA loans, compared to $116,000 in the prior quarter. Write-downs on sold loan servicing rights mark-to-market valuation totaled $161,000 for the third quarter of 2024 compared to $103,000 in the prior quarter. Other noninterest income includes a valuation gain on partnership investments of $279,000 compared to a loss of $56,000 in the preceding quarter.

Noninterest income decreased 38.7% from $2.9 million in the same quarter one year ago. The third quarter of 2023 included $750,000 in credit enhancements reimbursed to the Company on Splash charge-offs recorded in other noninterest income. The quarter ended September 30, 2023, also included a $102,000 gain on sale of mortgage loans, compared to a $6,000 gain in the third quarter of 2024.

Noninterest Income
$ in thousands	3Q 24		2Q 24			1Q 24		4Q 23			3Q 23
Loan and deposit service fees	$	1,059	$	1,076		$	1,102		1,068		$	1,068
Sold loan servicing fees and servicing rights mark-to-market		10		74			219		276			98
Net gain on sale of loans		58		150			52		33			171
Net (loss) gain on sale of investment securities		—		(2,117	)		—		(5,397	)		—
Net gain on sale of premises and equipment		—		7,919			—		—			—
Increase in cash surrender value of bank-owned life insurance		315		293			243		260			252
Other income		337		(48	)		572		831			1,315
Total noninterest income	$	1,779	$	7,347		$	2,188	$	(2,929	)	$	2,904

Noninterest Expense
Noninterest expense totaled $15.9 million for the third quarter of 2024, compared to $15.6 million for the preceding quarter and $14.4 million for the third quarter a year ago. Increases were primarily due to one-time severance payouts of $704,000 during the three months ended September 30, 2024, partially offset by a decrease in occupancy due to the one-time tax assessment on the sale-leaseback of $359,000 paid in the previous quarter. Other expense increased this quarter primarily due to $161,000 of additional credit related expenses.

The increase in total noninterest expenses compared to the third quarter of 2023 is mainly due to current quarter one-time severance payouts of $704,000, additional payroll tax expense of $342,000 and additional medical benefit expense of $162,000. Payroll tax expense in the third quarter of 2023 included accretion of the employee retention credit (“ERC”) which reduced the expense by $293,000. In the fourth quarter of 2023, the Bank stopped the recognition of the ERC for the foreseeable future. Occupancy increased due to the additional rent of $416,000 from the previous quarter sale-leaseback transaction. Other increases compared to the third quarter of 2023 included $51,000 in stockholder communications, $103,000 of state taxes, $163,000 in FDIC insurance premiums, and $269,000 of additional credit related expenses. These increases were partially offset by lower legal fees of $204,000, consulting fees of $146,000 and advertising costs of $91,000. The Company continues to focus on controlling compensation expense and reducing advertising and other discretionary spending to improve earnings.

Noninterest Expense
$ in thousands	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Compensation and benefits	$	8,582		$	8,588		$	8,128		$	7,397		$	7,795
Data processing		2,085			2,008			1,944			2,107			1,945
Occupancy and equipment		1,553			1,799			1,240			1,262			1,173
Supplies, postage, and telephone		360			317			293			351			292
Regulatory assessments and state taxes		548			457			513			376			446
Advertising		409			377			309			235			501
Professional fees		698			684			910			1,119			929
FDIC insurance premium		533			473			386			418			369
Other expense		1,080			906			580			3,725			926
Total noninterest expense	$	15,848		$	15,609		$	14,303		$	16,990		$	14,376

Efficiency ratio		100.31	%		72.32	%		88.75	%		150.81	%		80.52	%

Investment Securities
Investment securities increased $4.2 million, or 1.4%, to $310.9 million at September 30, 2024, compared to $306.7 million three months earlier, and increased $1.5 million compared to $309.3 million at September 30, 2023. The market value of the portfolio increased $8.1 million during the third quarter of 2024 primarily due to the market rally in the second half the third quarter which drove the yield curve lower. At September 30, 2024, municipal bonds totaled $81.4 million and comprised the largest portion of the investment portfolio at 26.2%. Agency issued mortgage-backed securities (“MBS agency”) were the second largest segment, totaling $78.5 million, or 25.3%, of the portfolio at quarter end. Included in MBS non-agency were $29.6 million of commercial mortgage-backed securities (“CMBS”), of which 89.8% were in “A” tranches and the remaining 10.2% were in “B” tranches. Our largest exposure in the CMBS portfolio at September 30, 2024, was to long-term care facilities, which comprised 65.0%, or $19.2 million, of our private label CMBS securities. All of the CMBS bonds had credit enhancements ranging from 28.8% to 71.8%, with a weighted-average credit enhancement of 55.3%, that further reduced the risk of loss on these investments.

The estimated average life of the securities portfolio was approximately 7.4 years at September 30, 2024, 7.8 years at the prior quarter end and 7.7 years for the third quarter of 2023. The effective duration of the portfolio was approximately 3.9 years at September 30, 2024, compared to 4.3 years in the prior quarter and 4.9 years at the end of the third quarter of 2023. Our recent investment purchases have primarily been floating rate securities to take advantage of higher short-term rates above those offered on cash and to reduce our liability sensitivity.

Investment Securities Available for Sale, at Fair Value
$ in thousands	3Q 24		2Q 24		1Q 24		4Q 23		3Q 23
Municipal bonds	$	81,363	$	78,825	$	87,004	$	87,761	$	93,995
U.S. Treasury notes		—		—		—		—		2,377
International agency issued bonds (Agency bonds)		—		—		—		—		1,703
U.S. government agency issued asset-backed securities (ABS agency)		13,296		13,982		14,822		11,782		—
Corporate issued asset-backed securities (ABS corporate)		16,391		16,483		13,929		5,286		—
Corporate issued debt securities (Corporate debt):
Senior positions		10,241		9,066		13,617		9,270		16,975
Subordinated bank notes		43,817		43,826		39,414		42,184		37,360
U.S. Small Business Administration securities (SBA)		9,317		9,772		7,911		—		—
Mortgage-backed securities:
U.S. government agency issued mortgage-backed securities (MBS agency)		78,549		77,301		83,271		63,247		66,946
Non-agency issued mortgage-backed securities (MBS non-agency)		57,886		57,459		65,987		76,093		89,968
Total securities available for sale, at fair value	$	310,860	$	306,714	$	325,955	$	295,623	$	309,324

Loans and Unfunded Loan Commitments
Net loans, excluding loans held for sale, increased $36.7 million, or 2.2%, to $1.71 billion at September 30, 2024, from $1.68 billion at June 30, 2024, and increased $96.4 million, or 6.0%, from $1.62 billion one year ago.

Commercial business loans increased $38.2 million, primarily attributable to a $29.0 million increase in our Northpointe Bank Mortgage Purchase Program participation, organic originations totaling $7.9 million and draws on existing lines of credit of $5.7 million which were partially offset by payments. One-to-four family loans increased $5.9 million during the third quarter of 2024 as a result of $14.2 million in residential construction loans that converted to permanent amortizing loans, partially offset by payoffs and scheduled payments. Home equity loans increased $4.3 million over the previous quarter due to organic home equity loan production of $5.5 million and draws on new and existing commitments of $4.6 million, partially offset by payoffs and scheduled payments. Multi-family loans increased $3.7 million during the current quarter. The increase was primarily the result of $9.2 million of construction loans converting into permanent amortizing loans, partially offset by payoffs and scheduled payments. Commercial real estate loans increased $497,000 during the third quarter of 2024 compared to the previous quarter as originations of $8.6 million were offset by payoffs and scheduled payments.

Construction loans decreased $11.6 million during the quarter, with $23.4 million converting into fully amortizing loans, partially offset by draws on new and existing loans. New single-family residence construction loan commitments totaled $4.1 million in the third quarter, compared to $2.7 million in the preceding quarter. Auto and other consumer loans decreased $4.4 million during the third quarter of 2024 as payoffs and scheduled payments were higher than $5.8 million of new auto loan purchases, a $4.3 million manufactured home loan pool and individual manufactured home loan purchases totaling $1.2 million.

The Company originated $3.4 million in residential mortgages during the third quarter of 2023 and sold $3.9 million, with an average gross margin on sale of mortgage loans of approximately 2.06%. This production compares to residential mortgage originations of $5.0 million in the preceding quarter with sales of $4.9 million, and an average gross margin of 2.05%. Single-family home inventory remained historically low and higher market rates on mortgage loans continued to limit saleable mortgage loan production through much of the third quarter.

Loans by Collateral and Unfunded Commitments
$ in thousands	3Q 24		2Q 24		1Q 24		4Q 23		3Q 23
One-to-four family construction	$	51,607	$	49,440	$	70,100	$	60,211	$	72,991
All other construction and land		45,166		58,346		55,286		69,484		71,092
One-to-four family first mortgage		469,053		434,840		436,543		426,159		409,207
One-to-four family junior liens		14,701		13,706		12,608		12,250		12,859
One-to-four family revolving open-end		48,459		44,803		45,536		42,479		38,413
Commercial real estate, owner occupied:
Health care		29,407		29,678		29,946		22,523		22,677
Office		17,901		19,215		17,951		18,468		18,599
Warehouse		11,645		14,613		14,683		14,758		14,890
Other		64,535		56,292		55,063		61,304		57,414
Commercial real estate, non-owner occupied:
Office		49,770		50,158		53,099		53,548		53,879
Retail		49,717		50,101		50,478		51,384		51,466
Hospitality		62,282		62,628		66,982		67,332		61,339
Other		82,573		84,428		93,040		94,822		96,083
Multi-family residential		354,118		350,382		339,907		333,428		325,338
Commercial business loans		86,904		79,055		90,781		76,920		75,068
Commercial agriculture and fishing loans		15,369		14,411		10,200		5,422		4,437
State and political subdivision obligations		404		405		405		405		439
Consumer automobile loans		144,036		151,121		139,524		132,877		134,695
Consumer loans secured by other assets		132,749		129,293		122,895		108,542		104,999
Consumer loans unsecured		4,411		5,209		6,415		7,712		9,093
Total loans	$	1,734,807	$	1,698,124	$	1,711,442	$	1,660,028	$	1,634,978

Unfunded commitments under lines of credit or existing loans	$	166,446	$	155,005	$	148,736	$	149,631	$	154,722

Deposits
Total deposits increased $3.4 million to $1.71 billion at September 30, 2024, compared to $1.71 billion at June 30, 2024, and increased $53.9 million, or 3.3%, compared to $1.66 billion one year ago. During the third quarter of 2024, total retail customer deposit balances increased $23.4 million and brokered deposit balances decreased $20.0 million. Compared to the preceding quarter, there were balance increases of $18.1 million in consumer time deposits, $17.7 million in business money market accounts, $7.9 million in consumer demand accounts and $7.7 million in business time deposits. These increases were partially offset by decreases in business demand accounts of $26.4 million, brokered time deposits of $20.0 million, consumer money market accounts of $7.4 million, business savings accounts of $6.5 million, consumer savings accounts of $5.3 million and public fund time deposits of $941,000, during the third quarter of 2024. Increases in time deposits and money market accounts were driven by customer behavior as they sought out higher rates. Overall, the current rate environment continues to contribute to greater competition for deposits with ongoing deposit rate specials offered to attract new funds.

The Company estimates that $401.0 million, or 23%, of total deposit balances were uninsured at September 30, 2024. Approximately $265.7 million, or 16%, of total deposits were uninsured business and consumer deposits with the remaining $135.3 million, or 8%, consisting of uninsured public funds at September 30, 2024. Uninsured public fund balances were fully collateralized. The Bank holds an FHLB standby letter of credit as part of our participation in the Washington Public Deposit Protection Commission program which covered $115.5 million of related deposit balances while the remaining $19.8 million of uninsured tribal accounts was fully covered through pledged securities at September 30, 2024.

As of September 30, 2024, consumer deposits made up 58% of total deposits with an average balance of $24,000 per account, business deposits made up 22% of total deposits with an average balance of $51,000 per account, public fund deposits made up 8% of total deposits with an average balance of $1.6 million per account and the remaining 12% of account balances are brokered time deposits. We have maintained the majority of our public fund relationships for over 10 years. Approximately 70% of our customer base is located in rural areas, with 18% in urban areas and the remaining 12% are brokered deposits as of September 30, 2024.

Deposits
$ in thousands	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Noninterest-bearing demand deposits	$	252,999		$	276,543		$	252,083		$	269,800		$	280,475
Interest-bearing demand deposits		167,202			162,201			169,418			182,361			179,029
Money market accounts		433,307			423,047			362,205			372,706			374,269
Savings accounts		212,763			224,631			242,148			253,182			260,279
Certificates of deposit, retail		441,665			398,161			443,412			410,136			379,484
Total retail deposits		1,507,936			1,484,583			1,469,266			1,488,185			1,473,536
Certificates of deposit, brokered		203,705			223,705			207,626			169,577			179,586
Total deposits	$	1,711,641		$	1,708,288		$	1,676,892		$	1,657,762		$	1,653,122

Public fund and tribal deposits included in total deposits	$	139,729		$	138,439		$	132,652		$	128,627		$	130,974
Total loans to total deposits		101	%		99	%		102	%		100	%		99	%

Deposit Mix	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Noninterest-bearing demand deposits		14.8	%		16.2	%		15.0	%		16.3	%		17.0	%
Interest-bearing demand deposits		9.8			9.5			10.1			11.0			10.8
Money market accounts		25.3			24.8			21.6			22.5			22.6
Savings accounts		12.4			13.1			14.4			15.3			15.7
Certificates of deposit, retail		25.8			23.3			26.5			24.7			23.0
Certificates of deposit, brokered		11.9			13.1			12.4			10.2			10.9

Cost of Deposits for the Quarter Ended	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Interest-bearing demand deposits		0.45	%		0.47	%		0.45	%		0.45	%		0.46	%
Money market accounts		2.65			2.40			2.08			1.48			1.22
Savings accounts		1.64			1.62			1.63			1.54			1.42
Certificates of deposit, retail		4.16			4.10			4.13			3.92			3.52
Certificates of deposit, brokered		4.88			4.94			4.94			4.72			4.31
Cost of total deposits		2.56			2.47			2.43			2.12			1.85

Asset Quality
The allowance for credit losses on loans (“ACLL”) increased $2.6 million from $19.3 million at June 30, 2024, to $22.0 million at September 30, 2024. The ACLL as a percentage of total loans was 1.27% at September 30, 2024, increasing from 1.14% at June 30, 2024, and increasing from 1.04% one year earlier. The current quarter increase can be attributed to $1.9 million of additional reserves taken on individually evaluated commercial business loans due uncertainty in the collectability of these loans. The pooled loan reserve increased $1.2 million due to higher loss factors applied to commercial business and multi-family loans, partially offset by lower loss factors applied to one-to-four family, commercial real estate, home equity, auto and other consumer loans. Loss factors were revised based on the results of an annual loss driver analysis, in conjunction with other relevant factors, to update each segment’s sensitivity to qualitative factors used in the calculation of the pooled reserve at September 30, 2024.

Nonperforming loans totaled $30.4 million at September 30, 2024, an increase of $6.8 million from June 30, 2024, primarily attributable to a $5.6 million delinquent commercial real estate relationship and two commercial business loans with an aggregate total of $1.7 million placed on nonaccrual due to credit concerns. The percentage of the allowance for credit losses on loans to nonperforming loans decreased to 72% at September 30, 2024, from 82% at June 30, 2024, and from 714% at September 30, 2023. This ratio continues to decline as higher balances of real estate loans are included in nonperforming assets with no significant corresponding increase to the ACLL as these secured loans are considered adequately reserved for based on information currently available.

Classified loans increased $7.2 million to $46.9 million at September 30, 2024, due to the downgrade of one $6.4 million commercial real estate loan and ten commercial business loans totaling $5.6 million during the third quarter, partially offset by loan payoffs totaling $5.0 million. An $11.2 million construction loan relationship, which became a classified loan in the fourth quarter of 2022; an $8.1 million commercial construction loan relationship, which became classified in the previous quarter; and a $6.2 million commercial loan relationship, which became classified in the fourth quarter of 2023, account for 55% of the classified loan balance at September 30, 2024. The Bank has exercised legal remedies, including the appointment of a third-party receiver and foreclosure actions, to liquidate the underlying collateral to satisfy the real estate loans in two of these three collateral dependent relationships. The Bank is also closely monitoring certain equity program loans, with 14 loans totaling $5.9 million included in classified loans at September 30, 2024, and an additional nine loans totaling $3.1 million included in the special mention risk grading category.

$ in thousands	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Allowance for credit losses on loans to total loans		1.27	%		1.14	%		1.05	%		1.05	%		1.04	%
Allowance for credit losses on loans to nonaccrual loans		72			82			92			94			714
Nonaccrual loans to total loans		1.75			1.39			1.14			1.12			0.15
Net charge-off ratio (annualized)		0.10			1.70			0.19			0.14			0.30

Total nonaccrual loans	$	30,376		$	23,631		$	19,481		$	18,644		$	2,374
Reserve for unfunded commitments	$	704		$	647		$	548		$	817		$	828

Capital
Total shareholders’ equity increased to $160.8 million at September 30, 2024, compared to $158.9 million three months earlier, due to an increase in the after-tax fair market values of the available-for-sale investment securities portfolio of $6.3 million, partially offset by a net loss of $2.0 million, a decrease in the after-tax fair market values of derivatives of $1.2 million, share repurchases totaling $1.0 million and dividends declared of $659,000.

Book value per common share was $17.17 at September 30, 2024, compared to $16.81 at June 30, 2024, and $16.20 at September 30, 2023. Tangible book value per common share* was $17.00 at September 30, 2024, compared to $16.64 at June 30, 2024, and $16.03 at September 30, 2023.

Capital levels for both the Company and its operating bank, First Fed, remain in excess of applicable regulatory requirements and the Bank was categorized as “well-capitalized” at September 30, 2024. Common Equity Tier 1 and Total Risk-Based Capital Ratios at September 30, 2024, were 12.2% and 13.4%, respectively.

	3Q 24			2Q 24			1Q 24			4Q 23			3Q 23
Equity to total assets		7.13	%		7.17	%		7.17	%		7.42	%		7.25	%
Tangible common equity to tangible assets *		7.06			7.10			7.10			7.35			7.17
Capital ratios (First Fed Bank):
Tier 1 leverage		9.39			9.38			9.74			9.90			10.12
Common equity Tier 1 capital		12.20			12.40			12.56			13.12			13.43
Tier 1 risk-based		12.20			12.40			12.56			13.12			13.43
Total risk-based		13.44			13.49			13.57			14.11			14.38

Share Repurchase Program and Cash Dividend
First Northwest continued to return capital to our shareholders through cash dividends and share repurchases during the third quarter of 2024. We repurchased 98,156 shares of common stock under the Company’s April 2024 Stock Repurchase Plan (“Repurchase Plan”) at an average price of $10.19 per share for a total of $1.0 million during the quarter ended September 30, 2024, leaving 846,123 shares remaining under the plan. In addition, the Company paid cash dividends totaling $652,000 in the third quarter of 2024.

^{____________________
*} See reconciliation of Non-GAAP Financial Measures later in this release.

Awards/Recognition
The Company received several accolades as a leader in the community in the last year.

	In September 2024, the First Fed team was recognized in the 2024 Best of Olympic Peninsula surveys, winning Best Bank and Best Lender in Clallam County; Best Bank and Best Financial Advisor in the West End; and Best Lender in Jefferson County. First Fed was also a finalist for Best Bank, Best Customer Service, Best Employer and Best Financial Advisor in Jefferson County; Best Customer Service, Best Employer and Best Financial Advisor in Clallam County; and Best Customer Service and Best Employer in the West End.
	In May 2024, First Fed, along with the First Fed Community Foundation, were honored to be ranked second on the Puget Sound Business Journal Midsize Corporate Philanthropists list.
	In October 2023, the First Fed team was honored to bring home the Gold for Best Bank in the Best of the Northwest survey hosted by Bellingham Alive for the second year in a row.
	In September 2023, the First Fed team was recognized in the 2023 Best of Olympic Peninsula surveys as a finalist for Best Employer in Kitsap County and Best Bank and Best Financial Institution in Bainbridge.

About the Company
First Northwest Bancorp (Nasdaq: FNWB) is a financial holding company engaged in investment activities including the business of its subsidiary, First Fed Bank. First Fed is a Pacific Northwest-based financial institution which has served its customers and communities since 1923. Currently First Fed has 16 locations in Washington state including 12 full-service branches. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a full array of financial products and services for individuals, small businesses, non-profit organizations and commercial customers. In 2022, First Northwest made an investment in The Meriwether Group, LLC, a boutique investment banking and accelerator firm. Additionally, First Northwest focuses on strategic partnerships to provide modern financial services such as digital payments and marketplace lending. First Northwest Bancorp was incorporated in 2012 and completed its initial public offering in 2015 under the ticker symbol FNWB. The Company is headquartered in Port Angeles, Washington.

Forward-Looking Statements
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, including our ability to collect, the outcome of litigation and statements regarding our mission and vision, and include, but are not limited to, statements about our plans, objectives, expectations and intentions that are not historical facts, and other statements often identified by words such as “believes,” “expects,” “anticipates,” “estimates,” or similar expressions. These forward-looking statements are based upon current management beliefs and expectations and may, therefore, involve risks and uncertainties, many of which are beyond our control. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; the risk of inaccuracies in the reporting of our financial condition as a result of the material weakness in our internal controls; and other factors described in the Company’s latest Annual Report on Form 10-K under the section entitled “Risk Factors,” and other filings with the Securities and Exchange Commission (“SEC”),which are available on our website at www.ourfirstfed.com and on the SEC’s website at www.sec.gov.

Any of the forward-looking statements that we make in this press release and in the other public statements we make may turn out to be incorrect because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company’s operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2024 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Company’s operations and stock price performance.

For More Information Contact:
Matthew P. Deines, President and Chief Executive Officer
Geri Bullard, EVP, Chief Financial Officer and Chief Operating Officer
IRGroup@ourfirstfed.com
360-457-0461

FIRST NORTHWEST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data) (Unaudited)

	September 30, 2024			June 30, 2024			September 30, 2023			Three Month Change			One Year Change
ASSETS
Cash and due from banks	$	17,953		$	19,184		$	20,609			-6.4	%		-12.9	%
Interest-earning deposits in banks		64,769			63,995			63,277			1.2			2.4
Investment securities available for sale, at fair value		310,860			306,714			309,324			1.4			0.5
Loans held for sale		378			1,086			689			-65.2			-45.1
Loans receivable (net of allowance for credit losses on loans $21,970, $19,343, and $16,945)		1,714,416			1,677,764			1,618,033			2.2			6.0
Federal Home Loan Bank (FHLB) stock, at cost		14,435			13,086			12,621			10.3			14.4
Accrued interest receivable		8,939			9,466			8,093			-5.6			10.5
Premises and equipment, net		10,436			10,714			17,954			-2.6			-41.9
Servicing rights on sold loans, at fair value		3,584			3,740			3,729			-4.2			-3.9
Bank-owned life insurance, net		41,429			41,113			40,318			0.8			2.8
Equity and partnership investments		14,912			15,085			14,623			-1.1			2.0
Goodwill and other intangible assets, net		1,083			1,084			1,087			-0.1			-0.4
Deferred tax asset, net		10,802			12,216			16,611			-11.6			-35.0
Prepaid expenses and other assets		41,490			40,715			26,577			1.9			56.1
Total assets	$	2,255,486		$	2,215,962		$	2,153,545			1.8	%		4.7	%

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	1,711,641		$	1,708,288		$	1,657,762			0.2	%		3.3	%
Borrowings		334,994			302,575			300,416			10.7			11.5
Accrued interest payable		2,153			3,143			2,276			-31.5			-5.4
Accrued expenses and other liabilities		43,424			41,771			34,651			4.0			25.3
Advances from borrowers for taxes and insurance		2,485			1,304			2,375			90.6			4.6
Total liabilities		2,094,697			2,057,081			1,997,480			1.8			4.9

Shareholders’ Equity
Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding		—			—			—			n/a			n/a
Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 9,365,979 at September 30, 2024; issued and outstanding 9,453,247 at June 30, 2024; and issued and outstanding 9,630,735 at September 30, 2023		94			94			96			0.0			-2.1
Additional paid-in capital		93,218			93,985			95,658			-0.8			-2.6
Retained earnings		100,660			103,322			113,579			-2.6			-11.4
Accumulated other comprehensive loss, net of tax		(26,424	)		(31,597	)		(45,850	)		16.4			42.4
Unearned employee stock ownership plan (ESOP) shares		(6,759	)		(6,923	)		(7,418	)		2.4			8.9
Total shareholders’ equity		160,789			158,881			156,065			1.2			3.0
Total liabilities and shareholders’ equity	$	2,255,486		$	2,215,962		$	2,153,545			1.8	%		4.7	%

FIRST NORTHWEST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data) (Unaudited)

	Quarter Ended
	September 30, 2024			June 30, 2024			September 30, 2023			Three Month Change			One Year Change
INTEREST INCOME
Interest and fees on loans receivable	$	23,536		$	23,733		$	21,728			-0.8	%		8.3	%
Interest on investment securities		3,786			3,949			3,368			-4.1			12.4
Interest on deposits in banks		582			571			524			1.9			11.1
FHLB dividends		302			358			214			-15.6			41.1
Total interest income		28,206			28,611			25,834			-1.4			9.2
INTEREST EXPENSE
Deposits		10,960			10,180			7,699			7.7			42.4
Borrowings		3,226			4,196			3,185			-23.1			1.3
Total interest expense		14,186			14,376			10,884			-1.3			30.3
Net interest income		14,020			14,235			14,950			-1.5			-6.2
PROVISION FOR CREDIT LOSSES
Provision for credit losses on loans		3,077			8,640			880			-64.4			249.7
Provision for (recapture of) credit losses on unfunded commitments		57			99			(509	)		-42.4			111.2
Provision for credit losses		3,134			8,739			371			-64.1			744.7
Net interest income after provision for credit losses		10,886			5,496			14,579			98.1			-25.3
NONINTEREST INCOME
Loan and deposit service fees		1,059			1,076			1,068			-1.6			-0.8
Sold loan servicing fees and servicing rights mark-to-market		10			74			98			-86.5			-89.8
Net gain on sale of loans		58			150			171			-61.3			-66.1
Net loss on sale of investment securities		—			(2,117	)		—			100.0			n/a
Net gain on sale of premises and equipment		—			7,919			—			-100.0			n/a
Increase in cash surrender value of bank-owned life insurance		315			293			252			7.5			25.0
Other income		337			(48	)		1,315			802.1			-74.4
Total noninterest income		1,779			7,347			2,904			-75.8			-38.7
NONINTEREST EXPENSE
Compensation and benefits		8,582			8,588			7,795			-0.1			10.1
Data processing		2,085			2,008			1,945			3.8			7.2
Occupancy and equipment		1,553			1,799			1,173			-13.7			32.4
Supplies, postage, and telephone		360			317			292			13.6			23.3
Regulatory assessments and state taxes		548			457			446			19.9			22.9
Advertising		409			377			501			8.5			-18.4
Professional fees		698			684			929			2.0			-24.9
FDIC insurance premium		533			473			369			12.7			44.4
Other expense		1,080			906			926			19.2			16.6
Total noninterest expense		15,848			15,609			14,376			1.5			10.2
(Loss) income before (benefit) provision for income taxes		(3,183	)		(2,766	)		3,107			-15.1			-202.4
(Benefit) provision for income taxes		(1,203	)		(547	)		603			-119.9			-299.5
Net (loss) income	$	(1,980	)	$	(2,219	)	$	2,504			10.8	%		-179.1	%

Basic and diluted (loss) earnings per common share	$	(0.23	)	$	(0.25	)	$	0.28			8.0	%		-182.1	%

FIRST NORTHWEST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data) (Unaudited)

	Nine Months Ended September 30,						Percent
	2024			2023			Change
INTEREST INCOME
Interest and fees on loans receivable	$	70,036		$	62,531			12.0	%
Interest on investment securities		11,367			9,886			15.0
Interest on deposits in banks		1,798			1,545			16.4
FHLB dividends		942			628			50.0
Total interest income		84,143			74,590			12.8
INTEREST EXPENSE
Deposits		31,252			18,261			71.1
Borrowings		10,708			9,092			17.8
Total interest expense		41,960			27,353			53.4
Net interest income		42,183			47,237			-10.7
PROVISION FOR CREDIT LOSSES
Provision for credit losses on loans		12,956			1,195			984.2
(Recapture of) provision for credit losses on unfunded commitments		(113	)		(1,024	)		89.0
Provision for credit losses		12,843			171			7,410.5
Net interest income after provision for credit losses		29,340			47,066			-37.7
NONINTEREST INCOME
Loan and deposit service fees		3,237			3,273			-1.1
Sold loan servicing fees and servicing rights mark-to-market		303			400			-24.3
Net gain on sale of loans		260			405			-35.8
Net loss on sale of investment securities		(2,117	)		—			100.0
Net gain on sale of premises and equipment		7,919			—			100.0
Increase in cash surrender value of bank-owned life insurance		851			668			27.4
Other income		861			2,203			-60.9
Total noninterest income		11,314			6,949			62.8
NONINTEREST EXPENSE
Compensation and benefits		25,298			23,812			6.2
Data processing		6,037			6,063			-0.4
Occupancy and equipment		4,592			3,596			27.7
Supplies, postage, and telephone		970			1,082			-10.4
Regulatory assessments and state taxes		1,518			1,259			20.6
Advertising		1,095			2,471			-55.7
Professional fees		2,292			2,619			-12.5
FDIC insurance premium		1,392			939			48.2
Other		2,566			2,623			-2.2
Total noninterest expense		45,760			44,464			2.9
(Loss) income before (benefit) provision for income taxes		(5,106	)		9,551			-153.5
(Benefit) provision for income taxes		(1,303	)		1,903			-168.5
Net (loss) income		(3,803	)		7,648			-149.7
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.		—			160			-100.0
Net (loss) income attributable to parent	$	(3,803	)	$	7,808			-148.7	%

Basic and diluted (loss) earnings per common share	$	(0.43	)	$	0.87			-149.4	%

FIRST NORTHWEST BANCORP AND SUBSIDIARY
Selected Financial Ratios and Other Data
(Dollars in thousands, except per share data) (Unaudited)

	As of or For the Quarter Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Performance ratios:⁽¹⁾
Return on average assets		-0.36	%		-0.40	%		0.07	%		-1.03	%		0.46	%
Return on average equity		-4.91			-5.47			0.98			-14.05			6.17
Average interest rate spread		2.21			2.27			2.28			2.40			2.54
Net interest margin⁽²⁾		2.70			2.76			2.76			2.84			2.97
Efficiency ratio⁽³⁾		100.3			72.3			88.8			150.8			80.5
Equity to total assets		7.13			7.17			7.17			7.42			7.25
Average interest-earning assets to average interest-bearing liabilities		118.0			117.6			118.3			118.2			120.0
Book value per common share	$	17.17		$	16.81		$	17.00		$	16.99		$	16.20

Tangible performance ratios:⁽¹⁾
Tangible common equity to tangible assets⁽⁴⁾		7.06	%		7.10	%		7.10	%		7.35	%		7.17	%
Return on average tangible common equity⁽⁴⁾		-4.96			-5.53			0.99			-14.20			6.23
Tangible book value per common share⁽⁴⁾	$	17.00		$	16.64		$	16.83		$	16.83		$	16.03

Asset quality ratios:
Nonperforming assets to total assets at end of period⁽⁵⁾		1.35	%		1.07	%		0.87	%		0.85	%		0.11	%
Nonaccrual loans to total loans⁽⁶⁾		1.75			1.39			1.14			1.12			0.15
Allowance for credit losses on loans to nonaccrual loans⁽⁶⁾		72.33			81.85			92.18			93.92			713.77
Allowance for credit losses on loans to total loans		1.27			1.14			1.05			1.05			1.04
Annualized net charge-offs to average outstanding loans		0.10			1.70			0.19			0.14			0.30

Capital ratios (First Fed Bank):
Tier 1 leverage		9.4	%		9.4	%		9.7	%		9.9	%		10.1	%
Common equity Tier 1 capital		12.2			12.4			12.6			13.1			13.4
Tier 1 risk-based		12.2			12.4			12.6			13.1			13.4
Total risk-based		13.4			13.5			13.6			14.1			14.4

Other Information:
Average total assets	$	2,209,333		$	2,219,370		$	2,166,187		$	2,127,655		$	2,139,734
Average total loans		1,718,402			1,717,830			1,678,656			1,645,418			1,641,206
Average interest-earning assets		2,061,970			2,072,280			2,027,821			1,980,226			1,994,251
Average noninterest-bearing deposits		252,911			251,442			249,283			259,845			276,294
Average interest-bearing deposits		1,452,817			1,408,018			1,422,116			1,379,059			1,377,734
Average interest-bearing liabilities		1,747,649			1,762,858			1,714,474			1,675,044			1,661,996
Average equity		160,479			163,079			161,867			155,971			160,994
Average common shares — basic		8,756,765			8,783,086			8,876,236			8,928,620			8,906,526
Average common shares — diluted		8,756,765			8,783,086			8,907,184			8,968,828			8,934,882
Tangible assets⁽⁴⁾		2,253,914			2,214,361			2,238,446			2,200,230			2,151,849
Tangible common equity⁽⁴⁾		159,217			157,280			158,932			161,773			154,369

(1)	Performance ratios are annualized, where appropriate.
(2)	Net interest income divided by average interest-earning assets.
(3)	Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4)	See reconciliation of Non-GAAP Financial Measures later in this release.
(5)	Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

FIRST NORTHWEST BANCORP AND SUBSIDIARY
Selected Financial Ratios and Other Data
(Dollars in thousands, except per share data) (Unaudited)

	As of or For the Nine Months Ended September 30,
	2024			2023
Performance ratios:⁽¹⁾
Return on average assets		-0.23	%		0.50	%
Return on average equity		-3.14			6.50
Average interest rate spread		2.25			2.83
Net interest margin⁽²⁾		2.74			3.22
Efficiency ratio⁽³⁾		85.54			82.06
Equity to total assets		7.13			7.25
Average interest-earning assets to average interest-bearing liabilities		117.9			121.0
Book value per common share	$	17.17		$	16.20

Tangible performance ratios:⁽¹⁾
Tangible common equity to tangible assets⁽⁴⁾		7.06	%		7.17	%
Return on average tangible common equity⁽⁴⁾		-3.17			6.57
Tangible book value per common share⁽⁴⁾	$	17.00		$	16.03

Asset quality ratios:
Nonperforming assets to total assets at end of period⁽⁵⁾		1.35	%		0.11	%
Nonaccrual loans to total loans⁽⁶⁾		1.75			0.15
Allowance for credit losses on loans to nonaccrual loans⁽⁶⁾		72.33			713.77
Allowance for credit losses on loans to total loans		1.27			1.04
Annualized net charge-offs to average outstanding loans		0.67			0.10

Capital ratios (First Fed Bank):
Tier 1 leverage		9.4	%		10.1	%
Common equity Tier 1 capital		12.2			13.4
Tier 1 risk-based		12.2			13.4
Total risk-based		13.4			14.4

Other Information:
Average total assets	$	2,198,337		$	2,102,980
Average total loans		1,705,088			1,698,394
Average interest-earning assets		2,054,052			1,959,946
Average noninterest-bearing deposits		251,218			284,282
Average interest-bearing deposits		1,427,743			1,333,696
Average interest-bearing liabilities		1,741,683			1,619,763
Average equity		161,803			160,573
Average common shares — basic		8,805,124			8,910,391
Average common shares — diluted		8,805,124			8,930,404
Tangible assets⁽⁴⁾		2,253,914			2,151,849
Tangible common equity⁽⁴⁾		159,217			154,369

(1)	Performance ratios are annualized, where appropriate.
(2)	Net interest income divided by average interest-earning assets.
(3)	Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4)	See reconciliation of Non-GAAP Financial Measures later in this release.
(5)	Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

	September 30, 2024			June 30, 2024		September 30, 2023		Three Month Change			One Year Change
	(In thousands)
Real Estate:
One-to-four family	$	395,792		$	389,934	$	369,950	$	5,858		$	25,842
Multi-family		353,813			350,076		325,496		3,737			28,317
Commercial real estate		376,008			375,511		381,508		497			(5,500	)
Construction and land		95,709			107,273		143,434		(11,564	)		(47,725	)
Total real estate loans		1,221,322			1,222,794		1,220,388		(1,472	)		934
Consumer:
Home equity		76,960			72,613		64,424		4,347			12,536
Auto and other consumer		281,198			285,623		248,786		(4,425	)		32,412
Total consumer loans		358,158			358,236		313,210		(78	)		44,948
Commercial business		155,327			117,094		101,380		38,233			53,947
Total loans receivable		1,734,807			1,698,124		1,634,978		36,683			99,829
Less:
Derivative basis adjustment		(1,579	)		1,017		—		(2,596	)		(1,579	)
Allowance for credit losses on loans		21,970			19,343		16,945		2,627			5,025
Total loans receivable, net	$	1,714,416		$	1,677,764	$	1,618,033	$	36,652		$	96,383

Selected loan detail:

	September 30, 2024		June 30, 2024		September 30, 2023		Three Month Change			One Year Change
	(In thousands)
Construction and land loans breakout
1-4 Family construction	$	43,125	$	56,514	$	63,371	$	(13,389	)	$	(20,246	)
Multifamily construction		29,109		43,341		54,318		(14,232	)		(25,209	)
Nonresidential construction		17,500		1,015		18,746		16,485			(1,246	)
Land and development		5,975		6,403		6,999		(428	)		(1,024	)
Total construction and land loans	$	95,709	$	107,273	$	143,434	$	(11,564	)	$	(47,725	)

Auto and other consumer loans breakout
Triad Manufactured Home loans	$	129,600	$	125,906	$	101,339	$	3,694		$	28,261
Woodside auto loans		126,129		131,151		124,833		(5,022	)		1,296
First Help auto loans		15,971		17,427		5,079		(1,456	)		10,892
Other auto loans		2,064		2,690		5,022		(626	)		(2,958	)
Other consumer loans		7,434		8,449		12,513		(1,015	)		(5,079	)
Total auto and other consumer loans	$	281,198	$	285,623	$	248,786	$	(4,425	)	$	32,412

Commercial business loans breakout
PPP loans	$	–	$	5	$	45	$	(5	)	$	(45	)
Northpointe Bank MPP		38,155		9,150		162		29,005			37,993
Secured lines of credit		37,686		28,862		35,833		8,824			1,853
Unsecured lines of credit		1,571		1,133		919		438			652
SBA loans		7,219		7,146		9,149		73			(1,930	)
Other commercial business loans		70,696		70,798		55,272		(102	)		15,424
Total commercial business loans	$	155,327	$	117,094	$	101,380	$	38,233		$	53,947

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

Non-GAAP Financial Measures
This press release contains financial measures that are not in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Non-GAAP measures are presented where management believes the information will help investors understand the Company’s results of operations or financial position and assess trends. Where non-GAAP financial measures are used, the comparable GAAP financial measure is also provided. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that may be presented by other companies. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons. Reconciliations of the GAAP and non-GAAP measures are presented below.

Calculation of Total Revenue:

	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023			September 30, 2023
	(Dollars in thousands)
Net interest income	$	14,020	$	14,235	$	13,928	$	14,195		$	14,950
Noninterest income		1,779		7,347		2,188		(2,929	)		2,904
Total revenue, net of interest expense⁽¹⁾	$	15,799	$	21,582	$	16,116	$	11,266		$	17,854

(1) We believe this non-GAAP metric provides an important measure with which to analyze and evaluate income available for noninterest expenses.

Calculations Based on Tangible Common Equity:

	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
	(Dollars in thousands, except per share data)
Total shareholders’ equity	$	160,789		$	158,881		$	160,506		$	163,340		$	156,065
Less: Goodwill and other intangible assets		1,083			1,084			1,085			1,086			1,087
Disallowed non-mortgage loan servicing rights		489			517			489			481			609
Total tangible common equity	$	159,217		$	157,280		$	158,932		$	161,773		$	154,369

Total assets	$	2,255,486		$	2,215,962		$	2,240,020		$	2,201,797		$	2,153,545
Less: Goodwill and other intangible assets		1,083			1,084			1,085			1,086			1,087
Disallowed non-mortgage loan servicing rights		489			517			489			481			609
Total tangible assets	$	2,253,914		$	2,214,361		$	2,238,446		$	2,200,230		$	2,151,849

Average shareholders’ equity	$	160,479		$	163,079		$	161,867		$	155,971		$	160,994
Less: Average goodwill and other intangible assets		1,084			1,085			1,085			1,086			1,087
Average disallowed non-mortgage loan servicing rights		517			489			481			608			557
Total average tangible common equity	$	158,878		$	161,505		$	160,301		$	154,277		$	159,350

Net (loss) income	$	(1,980	)	$	(2,219	)	$	396		$	(5,522	)	$	2,504
Common shares outstanding		9,365,979			9,453,247			9,442,796			9,611,876			9,630,735
GAAP Ratios:
Equity to total assets		7.13	%		7.17	%		7.17	%		7.42	%		7.25	%
Return on average equity		-4.91	%		-5.47	%		0.98	%		-14.05	%		6.17	%
Book value per common share	$	17.17		$	16.81		$	17.00		$	16.99		$	16.20
Non-GAAP Ratios:
Tangible common equity to tangible assets⁽¹⁾		7.06	%		7.10	%		7.10	%		7.35	%		7.17	%
Return on average tangible common equity⁽¹⁾		-4.96	%		-5.53	%		0.99	%		-14.20	%		6.23	%
Tangible book value per common share⁽¹⁾	$	17.00		$	16.64		$	16.83		$	16.83		$	16.03

(1) We believe these non-GAAP metrics provide an important measure with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

	September 30, 2024			September 30, 2023
	(Dollars in thousands, except per share data)
Total shareholders’ equity	$	160,789		$	156,065
Less: Goodwill and other intangible assets		1,083			1,087
Disallowed non-mortgage loan servicing rights		489			609
Total tangible common equity	$	159,217		$	154,369

Total assets	$	2,255,486		$	2,153,545
Less: Goodwill and other intangible assets		1,083			1,087
Disallowed non-mortgage loan servicing rights		489			609
Total tangible assets	$	2,253,914		$	2,151,849

Average shareholders’ equity	$	161,803		$	160,573
Less: Average goodwill and other intangible assets		1,085			1,088
Average disallowed non-mortgage loan servicing rights		496			690
Total average tangible common equity	$	160,222		$	158,795

Net (loss) income	$	(3,803	)	$	7,808
Common shares outstanding		9,365,979			9,630,735
GAAP Ratios:
Equity to total assets		7.13	%		7.25	%
Return on average equity		-3.14	%		6.50	%
Book value per common share	$	17.17		$	16.20
Non-GAAP Ratios:
Tangible common equity to tangible assets⁽¹⁾		7.06	%		7.17	%
Return on average tangible common equity⁽¹⁾		-3.17	%		6.57	%
Tangible book value per common share⁽¹⁾	$	17.00		$	16.03

(1) We believe these non-GAAP metrics provide an important measure with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

Images accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/e387e9e8-0a9a-4306-8623-41b739acb402
https://www.globenewswire.com/NewsRoom/AttachmentNg/4a433c9b-6823-47f3-8843-0d8138f89182
https://www.globenewswire.com/NewsRoom/AttachmentNg/d5ca9bb6-4a5d-45aa-8336-dd1ae06f0786
https://www.globenewswire.com/NewsRoom/AttachmentNg/5b9aaf8c-4fd4-437d-af24-7ba8fc60616c

The MIL Network –

January 25, 2025

MIL-OSI: AutoScheduler Adds Vice President of Customer Success to Reinforce Focus on Successful Customer Implementations

Source: GlobeNewswire (MIL-OSI)

AUSTIN, Texas, Oct. 29, 2024 (GLOBE NEWSWIRE) — AutoScheduler.AI, an innovative Warehouse Orchestration Platform and WMS accelerator, announces that Ian Johnston has joined the company as the Vice President of Customer Success. He will replace Stephen Zujkowski, who is retiring. Ian has over a decade of experience in supply chain operations, logistics management, and strategic leadership. He will use his expertise to help AutoScheduler’s customers gain value and success from deploying AutoScheduler solutions. He will be the face of success for all AutoScheduler’s customers, ensuring the talented implementation team continues delivering exceptional services and fostering true partnerships.

“As a leader within Amazon, Ian has demonstrated a deep understanding of operational planning and championed many technology implementations that enabled transformative changes within numerous operations,” says Keith Moore, CEO of AutoScheduler.AI. “His rich and diverse experience in leading and supporting innovation and a keen understanding of driving customer excellence make him a perfect fit for this pivotal role at AutoScheduler.AI.”

“I am looking forward to setting new benchmarks for excellence in customer success with the best project delivery experiences, clear communications, and robust customer relationships, enabling AutoScheduler.AI to be the market leader in warehouse orchestration,” says Ian Johnston, Vice President, Customer Success, AutoScheduler.AI. “I am dedicated to driving value for clients through our innovative solutions and aligning AutoScheduler’s capabilities with customer needs.”

As Vice President of Customer Success, Ian oversees the strategy, execution, and management of all aspects of customer deployment and satisfaction. He will ensure that customers derive maximum value from AutoScheduler, leading to improved fulfillment, better labor utilization, and lower costs. As the leader in the Customer Success organization, he will drive measurable positive business outcomes, customer satisfaction, retention, and expansion across the customer base.

Before joining AutoScheduler.AI, Ian served as Director of Supply Chain at Amazon, overseeing North America’s largest heavy bulky logistics network, which included managing demand forecasting, capacity management, and product development for the U.S. and Canada. Ian’s leadership contributed to significant advancements in operational efficiency, including the development of several novel planning products that enhanced forecast accuracy and capacity flexibility, reducing Amazon’s cost to serve and improving delivery speeds. Prior to Amazon, Ian served as a Marine Infantry Officer, where he led combat operations in Afghanistan and deterrence operations in Southeast Asia. He later served at the White House, supporting two administrations and several high-profile events.

Ian holds an MBA from the University of Virginia’s Darden School of Business, a BA in Political Science with a minor in Spanish from The Citadel, and is actively pursuing a Master of Science in Real Estate at the University of San Diego.

About AutoScheduler.AI
AutoScheduler.AI orchestrates warehouse activities directly on top of your WMS, optimizing operations for peak performance. Developed alongside industry leaders like P&G and successfully deployed at prominent companies such as Pepsi, General Mills, and Unilever, our AI and Machine Learning platform seamlessly integrates with your existing systems. Focused on labor planning, inventory workflow, human-robotics interaction, and space utilization, we streamline operations, reducing travel and inventory handling while maximizing OTIF rates and labor efficiency. With prescriptive analytics driving insights, our clients harness the power to enhance efficiencies and generate value across their supply chains. Reach out to us at info@autoscheduler.ai for more information.

Contact:
Becky Boyd
MediaFirst PR
Becky@MediaFirst.Net
Cell: (404) 421-8497

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/199e4f06-1419-40e1-8665-b27f4eb199cd

The MIL Network –

January 25, 2025

MIL-OSI: Nicola Wealth Real Estate and Townline Celebrate Completion of Meridian Residential Project in Coquitlam, B.C.

Source: GlobeNewswire (MIL-OSI)

Vancouver, BC, Oct. 29, 2024 (GLOBE NEWSWIRE) — Nicola Wealth Real Estate (NWRE) and Townline are pleased to announce the completion of Meridian, a landmark 37-storey residential rental apartment project located at 515 Cottonwood Avenue in Coquitlam, B.C. The project, a joint venture between NWRE and Townline, brings 267 thoughtfully designed rental homes to the thriving Burquitlam neighbourhood, including nine units leased to BC Housing to support affordable housing. The 267 homes include a mix of market rental units and units which are dedicated to supporting middle-income households.

Situated just a four-minute walk from the Burquitlam SkyTrain Station on the Evergreen Line, Meridian offers convenient access to public transit, nearby amenities like SFU, Burnaby Lake, Burnaby Mountain, and Douglas College, as well as popular recreational spots such as Rocky Point Park.

“We are thrilled to have partnered with Townline on this significant project. Their expertise in development and construction has been invaluable, and together we’ve delivered a high-quality residential community that will meet the needs of renters in the lower mainland,” said Mark Hannah, Executive Managing Director and Head of Real Estate at Nicola Wealth.

Rick Ilich, Founder and CEO of Townline, added, “We are proud to partner with Nicola Wealth to bring these amenity-rich homes to a growing, transit-oriented community. We look forward to building on Meridian’s success and partnering on future projects with the industry leaders at Nicola Wealth Real Estate.”

Meridian is set to welcome its first residents in November 2024. Designed with renters in mind, Meridian offers 1-3 bedroom homes, including townhomes, all equipped with premium finishes and a wide range of modern conveniences.

Retail Component

In addition to its residential offering, Meridian boasts approximately 10,000 square feet of commercial retail space, which is fully leased to popular tenants including Dos Bros, Pur&Simple, and Anytime Fitness.

With modern interiors, generous outdoor spaces, and a host of amenities designed to enhance residents’ quality of life, Meridian is poised to be a vibrant community hub in Burquitlam.

Building Features and Amenities

Residents of Meridian will enjoy exclusive access to a variety of high-end amenities located on the 3rd and 37th floors, including:

A state-of-the-art fitness room, yoga studio, and strength area
Rooftop Sky Lounge with panoramic views of Metro Vancouver and Burnaby Mountain
Outdoor patios with grilling stations, a firepit lounge, and terrace dining area
Co-working spaces, study rooms, games rooms, and lounges
A dog run, parcel lockers, secure underground parking with EV-ready stalls, and keyless entry systems for enhanced security and convenience

About Nicola Wealth Real Estate

Nicola Wealth Real Estate (NWRE) is the in-house real estate team of Nicola Wealth, a premier Canadian financial planning and investment firm with over $16.4 billion (CAD) of assets under management as at October 29, 2024. NWRE has an experienced and innovative team that sources and asset manages a growing portfolio of properties in major markets across North America spanning a diversified range of asset classes which include industrial, self-storage, multi-family rental apartment, retail, seniors housing, and office. The Nicola Wealth Real Estate portfolio now exceeds $10 billion gross asset value. For more information, please visit realestate.nicolawealth.com.

About Townline

Townline is known for its innovative living solutions and unparalleled attention to detail. For over 40 years, every Townline project – from single-family homes and townhomes to concrete high-rise towers and mixed-use communities – has been defined by a strong focus on homeowner and tenant experience, purposeful design, and an unwavering commitment to enriching the cities and communities we build in. This is the Townline Way.

The Townline Way is defined by our honesty, attention to detail, and thoughtfulness in all that we do. Our strong relationships are an important part of this – with our customers, our tenants, our partners, and our communities. Townline is deeply involved at each stage of every project, with in-house development, finance, construction, marketing, sales and leasing, asset management, property management and customer care teams.

Attachments

The MIL Network –

January 25, 2025

MIL-OSI: Anthem Citizen Real Estate Development Trust Raises C$82 Million Maximum Size Initial Public Offering and Acquires Interest in Citizen Project

Source: GlobeNewswire (MIL-OSI)

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, British Columbia, Oct. 29, 2024 (GLOBE NEWSWIRE) — Anthem Citizen Real Estate Development Trust (the “REDT“) announced today that it has raised its maximum offering size of C$82 million and completed its initial public offering (the “Offering”). Pursuant to the Offering, the REDT issued C$82,000,000 of trust units, consisting of 5,658,870 Class A Units and 2,541,130 Class F Units (collectively, the “Units”) at a price of C$10.00 per Class A Unit and Class F Unit.

The REDT is a newly-created, unincorporated investment trust and was established for the primary purpose of indirectly owning an interest in a mixed-use, transit-oriented development project containing 372 condominium units, 200 market rental units, 73 non-market, affordable rental units, 176 hotel suites and 4,881 square feet of retail space located in the Metrotown neighbourhood in Burnaby, British Columbia (the “Project”). The Project is located directly across the Kingsway Boulevard from the Metropolis at Metrotown shopping centre and within close proximity to the Metrotown SkyTrain station.

Immediately following closing of the Offering, the REDT indirectly acquired an approximate 72.2% interest in the Project. The REDT is managed by Anthem Properties Group Ltd. (the “Manager”). The Manager has an indirect interest in the Project through its subsidiary, Anthem Metro King Developments GP Ltd.

The Units were offered to the public by CIBC World Markets Inc., the sole agent for the Offering.

The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and may not be offered or sold within the United States unless registered under the 1933 Act and applicable state securities laws or pursuant to exemptions from the registration requirements of the 1933 Act and applicable state securities laws.

Anthem Citizen Real Estate Development Trust

Anthem Citizen Real Estate Development Trust was formed for the primary purpose of indirectly owning an interest in the development of a mixed-used, transit-oriented development project in Burnaby, British Columbia expected to develop and operate a building containing 372 condominium units, 200 market rental units, 73 non-market, affordable rental units, 176 hotel suites and 4,881 square feet of retail space.

Forward-Looking Statements

This news release contains statements that include forward-looking information within the meaning of Canadian securities laws. These forward-looking statements reflect the current expectations of the REDT regarding future events, including statements concerning the development of the Project and creating value for unitholders. In some cases, forward-looking statements can be identified by terms such as “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “seek”, “aim”, “estimate”, “target”, “project”, “predict”, “forecast”, “potential”, “continue”, “likely”, “schedule”, or the negative thereof or other similar expressions concerning matters that are not historical facts.

Material factors and assumptions used by management of the REDT to develop the forward-looking information include, but are not limited to, the REDT’s current expectations about: real property ownership and revenues; construction and development risk; obtaining necessary building permits for the Project; the realization of property value appreciation and timing thereof; the inventory of mixed-use properties; competition from developers of mixed-use properties; the Burnaby, British Columbia real estate market; government legal and regulatory changes; property encumbrances relating to the Project; significant fixed expenditures and fees in connection with the maintenance, operation and administration of the Project; closing and other transaction costs in connection with the acquisition and disposition of the Project; the availability of financing and current interest rates; revenue shortfalls; assumptions about rental growth rates, hotel occupancy and average daily rates in the Canadian mixed-use real estate market; demographic trends; fluctuations in interest rates; litigation risks; the relative illiquidity of real property investments; the Canadian economic environment; the geographic concentration of the REDT’s business; natural disasters and severe weather; demand levels for mixed-use properties in the metro Vancouver area and local economic conditions; negative geopolitical events; public health crises; the capital structure of the REDT; distributions; capital depletion; potential conflicts of interest; reliance on the good faith and ability of the Project’s project manager to manage and operate the Project; reliance on property management companies; the limited operating history of the REDT; the limited experience of management of the REDT with respect to managing a reporting issuer; the limited liquidity of the Class A Units and Class F Units; and tax laws. While management of the REDT considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.

Although management believes the expectations reflected in such forward-looking statements are reasonable and represent the REDT’s internal projections, expectations and beliefs at this time, such statements involve known and unknown risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the REDT’s control, could cause actual results in future periods to differ materially from current expectations of estimated or anticipated events or results expressed or implied by such forward-looking statements. Such factors include the risks identified in the REDT’s final prospectus, including under the heading “Risk Factors” therein. Readers are cautioned against placing undue reliance on forward-looking statements. Except as required by applicable Canadian securities laws, the REDT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Additional information regarding Anthem Citizen Real Estate Development Trust is available at www.citizenbyanthemdevtrust.com and on www.sedarplus.com.

About Anthem Properties

Anthem is a real estate development, investment and management company that strives, solves and evolves to create better spaces and stronger communities, with more than 385 residential, commercial, and retail projects. Founded in 1991, Anthem is a team of 800 people, with a diverse portfolio consisting of 41,700 homes, 11.5 million square feet of retail, industrial and office space and has developed more than 60 communities across 9,800 acres of land across in Alberta, British Columbia, Ontario and California. We are Growing Places.

Contact:

Elisha McCallum
Vice President, Communications
Phone: 604.488.3612 Mobile: 778.668.0185
Email: emccallum@anthemproperties.com

The MIL Network –

January 25, 2025

MIL-OSI: Anthem Successfully Closes on First Real Estate Development Trust IPO on a Canadian Asset

Source: GlobeNewswire (MIL-OSI)

VANCOUVER, British Columbia, Oct. 29, 2024 (GLOBE NEWSWIRE) — Anthem Properties Group, through the Anthem Citizen Real Estate Development Trust (REDT), has successfully closed on the first Canadian initial public offering of its kind on its 66-storey, mixed-use development, Citizen, based in Burnaby, BC (by way of an offering of units of Anthem Citizen Real Estate Development Trust) (the “IPO”)).

The IPO reached its $82M CDN target raise. Anthem worked on this offering with CIBC Capital Markets, who acted as sole agent and has a successful track record of completed real estate development IPOs for US assets.

“The completion of this financing is a win for the Anthem team on many fronts,” said Anthem Core-Founder & CEO, Eric Carlson. “It enables access to housing units for our community, including much-needed market and affordable rentals, in an architecturally significant, multi-use 66 storey tower, which represents innovation by the City of Burnaby when it comes to land use. Financially, the IPO of a single asset Mutual Fund Trust is a creative and unique solution to raise the capital required to make this project happen.”

With a mix of market, rental and affordable homes, anchored by a hotel and supported by retail space, Citizen is anticipated to be a premier destination in Metrotown, Burnaby. Anthem has a productive and positive working relationship with the City of Burnaby, which is eager to create great spaces that encourage residents and businesses to choose their city to call home. The project has rezoning approvals and entitlements completed, and construction is underway.

Background on the IPO including investor materials and past REDT press releases can be found at www.citizenbyanthemdevtrust.com

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities of the REDT in the United States, nor shall there be any sale of the securities of the REDT in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws.

About Anthem Properties

Anthem is a real estate development, investment and management company that strives, solves and evolves to create better spaces and stronger communities, with more than 385 residential, commercial, and retail projects. Founded in 1991, Anthem is a team of 800 people, with a diverse portfolio consisting of 41,700 homes, 11.5 million square feet of retail, industrial and office space and has developed more than 60 communities across 9,800 acres of land across in Alberta, British Columbia, Ontario and California. We are Growing Places.

Contact:
Elisha McCallum
Vice President, Communications
Phone: 604.488.3612 Mobile: 778.668.0185
Email: emccallum@anthemproperties.com

The MIL Network –

January 25, 2025

MIL-OSI: 1300 Clients and Accelerating Growth: European Tech Scaleflex Unveils Visual Experience Platform to Disrupt $4.5B DAM Market

Source: GlobeNewswire (MIL-OSI)

Since 2020, the company has reached 1300 clients. The release of the Visual Experience Platform is set to reshape the $4.5B market of Digital Asset Management (DAM) and AI Visual Enhancement markets solutions. The DAM market is expected to reach $16.2B dollars by 2032.¹

PARIS, Oct. 29, 2024 (GLOBE NEWSWIRE) — With €2.5M in funding, France-founded solution provider Scaleflex introduces its new Visual Experience Platform (VXP).

Analysts expect the DAM market to reach a compound annual growth rate (CAGR) surpassing 17%². Key drivers include increased adoption of cloud-based architecture and the integration of AI and machine learning for asset management.

“VXP answers our clients’ call for a single platform that goes beyond traditional DAM — facilitating content optimization, enrichment, and distribution. Our work with L-Commerce, an E. Leclerc subsidiary, France’s leading grocery retailer, is proof. We helped them process assets faster, at lower costs, boosting both scalability and web performance. Both are critical for eCommerce success,” says Emil Novakov, co-founder and CEO of Scaleflex.

VXP is a first-of-its-kind software in the DAM market, offering integrated functions tailored to marketing, digital, and IT teams :

Digital Asset Management, a single source of truth to reference and distribute visual assets (images, videos…)
Visual AI-enhancement to automate tasks like Not safe for work moderation, enrichment, tagging and visual search (vector search)
Web Portals to collaborate and share assets such as brand guidelines, marketing campaigns…
Dynamic Media Optimization transforming visuals to increase web performance

The composable VXP helps IT & business teams from enterprise & midmarket companies optimize billions of visual assets. Over 1300 clients benefit from the VXP modules, including Michelin, Hyundai, Rakuten, Grupo Piñero, SeLoger, or the European Space Agency.

The VXP’s intuitive interface can be used by marketing, digital, and communications teams. In addition, IT departments can leverage a full headless approach thanks to scalable APIs that easily integrate into existing systems, driving faster innovation.

“With a cloud-agnostic architecture built to scale and provide blazing-fast performance for our customers, our platform easily integrates with any system, including MACH-based architectures, providing businesses the agility to adapt and scale their visual stack,” says Julian De Maestri, co-founder and CTO of Scaleflex. “VXP is a next-gen composable solution.”

About Scaleflex:

A fast-growing European Tech SaaS, Scaleflex provides comprehensive visual content management solutions. The company’s portfolio includes state-of-the-art tools that help business and IT teams maximize the value of their media assets, optimize content delivery, and improve digital experiences across the board. With a focus on performance, scalability, and innovation, Scaleflex is trusted by more than 1300 customers.
For more information, please visit www.scaleflex.com.

Media Contact:
Jonathan Britel
Phone: +33 6 77 91 18 49
Email: jonathan.britel@scaleflex.com
Side topics : Interview enquiries about IT & technology innovation in Retail, Real Estate, Tourism and Online Media

^¹ Fortune Business Insights. (2024, September). Digital Asset Management (DAM) Market Size, Share & Regional Forecast, 2024-2032. Report ID: FBI104914. https://www.fortunebusinessinsights.com/digital-asset-management-dam-market-104914

^² FNFR. (2024). Digital Asset Management (DAM) Market Size, Share, Growth Analysis Report 2020-2026. https://www.fnfresearch.com/digital-asset-management-dam-market

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/487a4984-c96d-4880-a2b3-2f7ae6c5f405

The MIL Network –

January 25, 2025

MIL-OSI: PSB Holdings, Inc. Reports Earnings of $0.69 per Share for Q3 2024; Net Interest Margin and Tangible Book Value Increase; Asset Quality Improves

Source: GlobeNewswire (MIL-OSI)

WAUSAU, Wis., Oct. 28, 2024 (GLOBE NEWSWIRE) — PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank (“Peoples”) serving Northcentral and Southeastern Wisconsin reported third quarter earnings ending September 30, 2024 of $0.69 per common share on net income of $2.9 million, compared to $0.56 per common share on net income of $2.3 million during the second quarter ending June 30, 2024, and $0.29 per common share on net income of $1.2 million during the third quarter ending September 30, 2023.

PSB’s third quarter 2024 operating results reflected the following changes from the second quarter of 2024: (1) higher net interest margin increased 6 basis points; (2) slightly lower non-interest income; (3) lower non-interest expense due to the second quarter reflecting elevated severance expenses; and (4) the return of a $2.5 million non-performing loan to performing status and a corresponding release in specific reserves.

“Over the past year, we have increased shareholders’ tangible book value per share 18.7% and paid $0.62 in dividends to our shareholders, up 12.7% from the 12 month period ended September 30, 2023. With the rapid rise in short term interest rates over the past couple of years coming to an apparent end, we expect our net interest margin to be stable and operating expenses to continue to be well managed and efficient. Additionally, as funds become available from investment and loan repayments and maturities, we expect the funds to be reinvested into higher yielding assets which should lessen the volatility in fair market value adjustments reflected in our tangible book value,” stated Scott Cattanach, President and CEO.

September 30, 2024, Highlights:

Net interest income increased to $9.9 million for the quarter ended September 30, 2024, from $9.4 million for the quarter ended June 30, 2024, as increases in asset and loan yields outpaced the increases in funding costs.
Noninterest income decreased slightly to $1.8 million for the quarter ended September 30, 2024, compared to $1.9 million the prior quarter.
Noninterest expenses decreased during the quarter ended September 30, 2024, reflecting lower salary and benefit expenses. Included in salary and benefit expenses for the prior quarter were non-recurring expenses totaling approximately $404,000.
Tangible book value per common share increased $1.86 per share to $26.41 at September 30, 2024, compared to $24.55 one quarter earlier, and increased $4.16 per share, or 18.7%, compared to $22.25 at September 30, 2023. Additionally, PSB paid dividends totaling $0.62 per share over the past year. During the third quarter ended September 30, 2024, tangible book value per share was positively influenced by higher net income, intangible asset amortization, an increase in fair market value of investment securities and consistent stock repurchase activity.
Loans decreased $16.9 million in the third quarter ended September 30, 2024, to $1.06 billion largely due to not replacing certain out of market maturing loans. Allowance for credit losses increased to 1.18% of gross loans.
Non-performing assets declined to 0.71% of total assets at September 30, 2024 from 0.84% at June 30, 2024 as a $2.5 million loan returned to performing status.
Total deposits decreased $13.2 million during the quarter ended September 30, 2024 to $1.14 billion, with a large portion of the decrease attributable to a large overnight deposit held at June 30, 2024 which was withdrawn in early July.
Return on average tangible common equity was 10.96% for the quarter ended September 30, 2024, compared to 9.34% the prior quarter and 5.17% in the year ago quarter.

Balance Sheet and Asset Quality Review

Total assets decreased $9.7 million to $1.48 billion at September 30, 2024. Investment securities available for sale increased $9.7 million to $174.9 million at September 30, 2024, from $165.2 million one quarter earlier. Total collateralized liquidity available to meet cash demands was approximately $321 million at September 30, 2024, with an additional $343 million that could be raised in a short time frame from the brokered CDs market.

Total loans receivable decreased $16.9 million to $1.06 billion at September 30, 2024, due primarily to lower commercial and construction lending. Commercial non-real estate loans decreased $9.1 million to $139.0 million at September 30, 2024, from $148.2 million one quarter earlier. Gross construction lending decreased $9.6 million to $61.0 million at September 30, 2024, from $70.5 million at June 30, 2024, while loans in process declined $3.6 million during the quarter ended September 30, 2024. Commercial real estate loans decreased $2.6 million to $541.6 million at September 30, 2024, from $544.2 million the prior quarter. Meanwhile, residential real estate loans increased slightly from the prior quarter to $341.3 million from $340.9 million. The loan portfolio remains well diversified with commercial real estate and construction loans totaling 55.4% of gross loans followed by residential real estate loans at 31.4% of gross loans, commercial non-real estate loans at 12.8% and consumer loans at 0.4%.

The allowance for credit losses increased slightly to 1.18% of gross loans at September 30, 2024, from 1.16% the prior quarter. Annualized net charge-offs to average loans were zero for the last five quarters. Non-performing assets totaled 0.71% of total assets at September 30, 2024, compared to 0.84% at June 30, 2024. During the quarter ended September 30, 2024, a loan totaling $2.5 million was returned to performing status, while a loan on a recreation facility totaling $3.3 million was added to nonaccrual status. Additionally, one loan relationship to an equipment dealership on nonaccrual status totaling $5.1 million at June 30, 2024 was paid down to $2.8 million at September 30, 2024 on sale of the equipment inventory. For the seventh consecutive quarter, the Bank did not own any foreclosed real estate.

Total deposits decreased $13.2 million to $1.14 billion at September 30, 2024, from $1.15 billion at June 30, 2024. The decrease in deposits reflects a $13.1 million decrease in interest-bearing demand and savings deposits, a $19.7 million decrease in money market deposits partially offset by a $14.6 million increase in non-interest bearing deposits and a $5.4 million increase in retail and local time deposits. The decrease in money market deposits reflected a large deposit of $49 million on June 30, 2024 that was drawn down in early July 2024.

At September 30, 2024, non-interest bearing demand deposits increased to 23.3% of total deposits from 21.6% the prior quarter, while interest-bearing demand and savings deposits decreased to 28.4% of deposits, compared to 29.3% at June 30, 2024. Uninsured and uncollateralized deposits decreased to 21.6% of total deposits at September 30, 2024, from 24.0% of total deposits at June 30, 2024.

FHLB advances decreased to $181.3 million at September 30, 2024, compared to $184.9 million at June 30, 2024.

Tangible stockholder equity as a percent of total tangible assets increased to 7.85% at September 30, 2024, compared to 7.32% at June 30, 2024, and 6.98% at September 30, 2023.

Tangible net book value per common share increased $4.16, to $26.41, at September 30, 2024, compared to $22.25 one year earlier, an increase of 18.7% after dividends of $0.62 were paid to shareholders. Relative to the prior quarter, tangible net book value per common share increased due to continued earnings, a fair market value increase in the investment portfolio which reduced unrealized losses reflected in accumulated other comprehensive income and amortization of intangible assets. The accumulated other comprehensive loss on the investment portfolio was $15.8 million at September 30, 2024, compared to $20.5 million one quarter earlier.

Operations Review

Net interest income increased to $9.9 million (on a net margin of 2.90%) for the third quarter of 2024, from $9.4 million (on a net margin of 2.84%) for the second quarter of 2024, and $9.6 million (on a net margin of 2.88%) for the third quarter of 2023. Earning asset yields increased by 8 basis points to 5.29% during the third quarter of 2024 from 5.21% during the second quarter of 2024, while interest bearing deposit and borrowing costs increased 7 basis points to 3.13% compared to 3.06% during the second quarter of 2024.

The increase in earning asset yields was primarily due to higher yields on loan originations and renewals. Loan yields increased during the third quarter of 2024 to 5.78% from 5.67% for the second quarter of 2024, up 11 basis points. Taxable security yields were 3.01% for the quarter ended September 30, 2024, compared to 3.02% for the quarter ended June 30, 2024, while tax-exempt security yields were 3.31% for the quarter ended September 30, 2024 compared to 3.33% the prior quarter.

The cost of all deposits was 2.11% for the quarter ended September 30, 2024, compared to 2.11% the prior quarter, while the overall cost of funds increased 7 basis points from 3.06% to 3.13% during the same time period. Deposit costs for money market deposits decreased during the quarter ended September 30, 2024, to 2.69% from 2.72% the prior quarter. The cost of time deposits and FHLB advances continued to increase and were primarily responsible for the rise in the Bank’s cost of funds in the current quarter. The cost of time deposits increased to 4.04% for the third quarter ended September 30, 2024, from 3.97% the prior quarter. FHLB advance costs rose to 4.44% during the third quarter ended September 30, 2024, from 4.28% the prior quarter.

Total noninterest income decreased slightly for the third quarter of 2024 to $1.84 million, from $1.91 million for the second quarter of 2024. Mortgage banking income remained at $433,000 in the September 30, 2024 quarter while various decreases in nominal revenue sources accounted for the slight decline in non-interest income during the third quarter ended September 30, 2024. At September 30, 2024, the Bank serviced $371 million in secondary market residential mortgage loans for others which provide fee income.

Noninterest expenses decreased to $8.2 million for the third quarter of 2024, compared to $8.4 million for the second quarter of 2024. The second quarter ended June 30, 2024, reflected higher salary and benefit expenses related to non-recurring costs. Relative to one year earlier, salary and benefit cost increased 5.7% to $4.8 million for the quarter ended September 30, 2024, compared to $4.5 million for the third quarter ended September 30, 2023.

Taxes increased $183,000 during the third quarter to $593,000, from $410,000 one quarter earlier. The increase generally reflects higher pre-tax income. The effective tax rate for the quarter ended September 30, 2024, was 16.6% compared to 14.4% for the second quarter ended June 30, 2024, and 63.8% for the third quarter ended September 30, 2023, when higher tax expenses were incurred to recognize the loss of certain deferred tax assets following a change in Wisconsin tax law that eliminated state taxes on certain qualified assets.

About PSB Holdings, Inc.

PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is a community bank headquartered in Wausau, Wisconsin, serving northcentral and southeastern Wisconsin from twelve full-service banking locations in Marathon, Oneida, Vilas, Portage, Milwaukee and Waukesha counties and a loan production office in Dane County. Peoples also provides investment and insurance products, along with retirement planning services, through Peoples Wealth Management, a division of Peoples. PSB Holdings, Inc. is traded under the stock symbol PSBQ on the OTCQX Market. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about PSB’s business based, in part, on assumptions made by management and include, without limitation, statements with respect to the potential growth of PSB, its future profits, expected stock repurchase levels, future dividend rates, future interest rates, and the adequacy of its capital position. Forward-looking statements can be affected by known and unknown risks, uncertainties, and other factors, including, but not limited to, strength of the economy, the effects of government policies, including interest rate policies, risks associated with the execution of PSB’s vision and growth strategy, including with respect to current and future M&A activity, and risks associated with global economic instability. The forward-looking statements in this press release speak only as of the date on which they are made and PSB does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

PSB Holdings, Inc.
Consolidated Balance Sheets
September 30, June 30, and March 31, 2024, September 30, 2023, unaudited, December 31, 2023 derived from audited financial statements

	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
(dollars in thousands, except per share data)		2024			2024			2024			2023			2023

Assets

Cash and due from banks	$	23,554		$	16,475		$	13,340		$	20,887		$	12,881
Interest-bearing deposits		5,126			251			105			1,431			668
Federal funds sold		58,434			69,249			2,439			5,462			7,764

Cash and cash equivalents		87,114			85,975			15,884			27,780			21,313
Securities available for sale (at fair value)		174,911			165,177			165,566			164,024			160,883
Securities held to maturity (fair values of $82,389, $79,993, $81,234, $82,514 and
$75,236 respectively)		86,847			86,825			87,104			87,081			86,908
Equity securities		1,752			1,661			1,474			1,474			2,273
Loans held for sale		–			2,268			865			230			971
Loans receivable, net (allowance for credit losses of $12,598, $12,597, $12,494,
$12,302 and $12,267 respectively)		1,057,974			1,074,844			1,081,394			1,078,475			1,098,019
Accrued interest receivable		4,837			5,046			5,467			5,136			4,716
Foreclosed assets		–			–			–			–			–
Premises and equipment, net		14,065			14,048			13,427			13,098			13,242
Mortgage servicing rights, net		1,727			1,688			1,657			1,664			1,684
Federal Home Loan Bank stock (at cost)		8,825			8,825			7,006			6,373			6,373
Cash surrender value of bank-owned life insurance		24,565			24,401			24,242			24,085			23,931
Core deposit intangible		212			229			249			273			297
Goodwill		2,541			2,541			2,541			2,541			2,541
Other assets		10,598			12,111			11,682			11,866			14,094

TOTAL ASSETS	$	1,475,968		$	1,485,639		$	1,418,558		$	1,424,100		$	1,437,245

Liabilities

Non-interest-bearing deposits	$	265,078		$	250,435		$	247,608		$	266,829		$	288,765
Interest-bearing deposits		874,035			901,886			865,744			874,973			883,474

Total deposits		1,139,113			1,152,321			1,113,352			1,141,802			1,172,239

Federal Home Loan Bank advances		181,250			184,900			158,250			134,000			128,000
Other borrowings		6,128			5,775			8,096			8,058			5,660
Senior subordinated notes		4,779			4,778			4,776			4,774			4,772
Junior subordinated debentures		12,998			12,972			12,947			12,921			12,896
Allowance for credit losses on unfunded commitments		477			477			477			577			512
Accrued expenses and other liabilities		12,850			13,069			10,247			12,681			10,258

Total liabilities		1,357,595			1,374,292			1,308,145			1,314,813			1,334,337

Stockholders’ equity

Preferred stock – no par value:
Authorized – 30,000 shares; no shares issued or outstanding
Outstanding – 7,200 shares, respectively		7,200			7,200			7,200			7,200			7,200
Common stock – no par value with a stated value of $1.00 per share:
Authorized – 18,000,000 shares; Issued – 5,490,798 shares
Outstanding – 4,105,594, 4,128,382, 4,147,649, 4,164,735 and
4,174,197 shares, respectively		1,830			1,830			1,830			1,830			1,830
Additional paid-in capital		8,567			8,527			8,466			8,460			8,421
Retained earnings		138,142			135,276			134,271			132,666			131,624
Accumulated other comprehensive income (loss), net of tax		(15,814	)		(20,503	)		(20,775	)		(20,689	)		(26,190	)
Treasury stock, at cost – 1,385,204, 1,362,416, 1,343,149, 1,326,063 and
1,316,601 shares, respectively		(21,552	)		(20,983	)		(20,579	)		(20,180	)		(19,977	)

Total stockholders’ equity		118,373			111,347			110,413			109,287			102,908

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,475,968		$	1,485,639		$	1,418,558		$	1,424,100		$	1,437,245

PSB Holdings, Inc.
Consolidated Statements of Income
	Quarter Ended												Nine Months Ended
(dollars in thousands,	Sep. 30,		Jun. 30,		Mar. 31,			Dec. 31,			Sep. 30,		September
except per share data – unaudited)	2024		2024		2024			2023			2023		2024			2023

Interest and dividend income:
Loans, including fees	$	15,634	$	15,433	$	15,109		$	14,888		$	14,263	$	46,176		$	38,745
Securities:
Taxable		1,345		1,295		1,197			1,147			1,114		3,837			3,772
Tax-exempt		522		521		526			532			533		1,569			1,605
Other interest and dividends		699		265		343			320			238		1,307			531

Total interest and dividend income		18,200		17,514		17,175			16,887			16,148		52,889			44,653

Interest expense:
Deposits		5,905		5,838		6,082			5,526			4,817		17,825			11,467
FHLB advances		2,038		1,860		1,450			1,349			1,321		5,348			3,068
Other borrowings		57		58		60			54			51		175			161
Senior subordinated notes		59		58		59			59			59		176			179
Junior subordinated debentures		252		255		251			254			255		758			731

Total interest expense		8,311		8,069		7,902			7,242			6,503		24,282			15,606

Net interest income		9,889		9,445		9,273			9,645			9,645		28,607			29,047
Provision for credit losses		–		100		95			100			150		195			350

Net interest income after provision for credit losses		9,889		9,345		9,178			9,545			9,495		28,412			28,697

Noninterest income:
Service fees		367		350		336			360			349		1,053			1,088
Mortgage banking income		433		433		308			247			345		1,174			981
Investment and insurance sales commissions		230		222		121			100			158		573			810
Net loss on sale of securities		–		–		(495	)		(297	)		–		(495	)		(279	)
Increase in cash surrender value of life insurance		165		159		157			154			155		481			461
Life insurance death benefit		–		–		–			–			–		–			533
Other noninterest income		648		742		617			540			675		2,007			2,022

Total noninterest income		1,843		1,906		1,044			1,104			1,682		4,793			5,616

Noninterest expense:
Salaries and employee benefits		4,771		5,167		5,123			4,244			4,514		15,061			14,404
Occupancy and facilities		757		733		721			675			689		2,211			2,086
Loss (gain) on foreclosed assets		1		–		–			1			–		1			(46	)
Data processing and other office operations		1,104		1,047		1,022			1,001			953		3,173			2,784
Advertising and promotion		164		171		129			244			161		464			489
Core deposit intangible amortization		17		20		24			24			24		61			85
Other noninterest expenses		1,337		1,257		1,306			1,169			1,113		3,900			3,388

Total noninterest expense		8,151		8,395		8,325			7,358			7,454		24,871			23,190

Income before provision for income taxes		3,581		2,856		1,897			3,291			3,723		8,334			11,123
Provision for income taxes		593		410		169			878			2,374		1,172			3,967

Net income	$	2,988	$	2,446	$	1,728		$	2,413		$	1,349	$	7,162		$	7,156
Preferred stock dividends declared	$	122	$	122	$	122		$	122		$	122	$	366		$	366

Net income available to common shareholders	$	2,866	$	2,324	$	1,606		$	2,291		$	1,227	$	6,796		$	6,790
Basic earnings per common share	$	0.69	$	0.56	$	0.39		$	0.55		$	0.29	$	1.64		$	1.61
Diluted earnings per common share	$	0.69	$	0.56	$	0.39		$	0.55		$	0.29	$	1.64		$	1.61

PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)		Quarter ended
		Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
Earnings and dividends:			2024			2024			2024			2023			2023

	Interest income	$	18,200		$	17,514		$	17,175		$	16,887		$	16,148
	Interest expense	$	8,311		$	8,069		$	7,902		$	7,242		$	6,503
	Net interest income	$	9,889		$	9,445		$	9,273		$	9,645		$	9,645
	Provision for credit losses	$	–		$	100		$	95		$	100		$	150
	Other noninterest income	$	1,843		$	1,906		$	1,044		$	1,104		$	1,682
	Other noninterest expense	$	8,151		$	8,395		$	8,325		$	7,358		$	7,454
	Net income available to common shareholders	$	2,866		$	2,324		$	1,606		$	2,291		$	1,227

	Basic earnings per common share (3)	$	0.69		$	0.56		$	0.39		$	0.55		$	0.29
	Diluted earnings per common share (3)	$	0.69		$	0.56		$	0.39		$	0.55		$	0.29
	Dividends declared per common share (3)	$	–		$	0.32		$	–		$	0.30		$	–
	Tangible net book value per common share (4)	$	26.41		$	24.55		$	24.21		$	23.84		$	22.25

	Semi-annual dividend payout ratio	n/a				33.60	%	n/a				38.14	%	n/a
	Average common shares outstanding		4,132,218			4,139,456			4,154,702			4,168,924			4,186,940


Balance sheet – average balances:
	Loans receivable, net of allowances for credit loss	$	1,066,795		$	1,088,013		$	1,081,936		$	1,081,851		$	1,076,158
	Assets	$	1,445,613		$	1,433,749		$	1,429,437		$	1,424,240		$	1,425,522
	Deposits	$	1,110,854		$	1,111,240		$	1,138,010		$	1,148,399		$	1,149,624
	Stockholders’ equity	$	114,458		$	110,726		$	109,473		$	105,060		$	105,745


Performance ratios:
	Return on average assets (1)		0.82	%		0.69	%		0.49	%		0.67	%		0.38	%
	Return on average common stockholders’ equity (1)		10.63	%		9.03	%		6.32	%		9.29	%		4.94	%
	Return on average tangible common
	stockholders’ equity (1)(4)		10.96	%		9.34	%		6.57	%		9.64	%		5.17	%
	Net loan charge-offs to average loans (1)		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
	Nonperforming loans to gross loans		0.97	%		1.15	%		1.08	%		0.54	%		0.55	%
	Nonperforming assets to total assets		0.71	%		0.84	%		0.83	%		0.42	%		0.42	%
	Allowance for credit losses to gross loans		1.18	%		1.16	%		1.14	%		1.13	%		1.10	%
	Nonperforming assets to tangible equity
	plus the allowance for credit losses (4)		8.71	%		11.09	%		10.59	%		5.38	%		5.87	%
	Net interest rate margin (1)(2)		2.90	%		2.84	%		2.80	%		2.88	%		2.88	%
	Net interest rate spread (1)(2)		2.16	%		2.15	%		2.12	%		2.20	%		2.27	%
	Service fee revenue as a percent of
	average demand deposits (1)		0.56	%		0.56	%		0.54	%		0.52	%		0.50	%
	Noninterest income as a percent
	of gross revenue		9.20	%		9.81	%		5.73	%		6.14	%		9.43	%
	Efficiency ratio (2)		68.43	%		72.52	%		78.93	%		67.04	%		64.58	%
	Noninterest expenses to average assets (1)		2.24	%		2.35	%		2.34	%		2.05	%		2.07	%
	Average stockholders’ equity less accumulated
	other comprehensive income (loss) to
	average assets		9.06	%		9.03	%		8.98	%		8.88	%		9.00	%
	Tangible equity to tangible assets (4)		7.85	%		7.32	%		7.60	%		7.49	%		6.98	%

Stock price information:

	High	$	25.00		$	21.40		$	22.50		$	22.30		$	22.50
	Low	$	20.30		$	19.75		$	20.05		$	20.10		$	20.35
	Last trade value at quarter-end	$	25.00		$	20.40		$	21.25		$	22.11		$	21.15

(1) Annualized
(2) The yield on federally tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.
(3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals.
(4) Tangible stockholders’ equity excludes goodwill and core deposit intangibles.

PSB Holdings, Inc.
Consolidated Statements of Comprehensive Income

			Quarter Ended
			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
(dollars in thousands – unaudited)				2024			2024			2024			2023			2023

Net income			$	2,988		$	2,446		$	1,728		$	2,413		$	1,349

Other comprehensive income, net of tax:

	Unrealized gain (loss) on securities available
		for sale		4,738			184			(615	)		5,278			(3,085	)

	Reclassification adjustment for security
		loss included in net income		–			–			391			280			–

	Accretion of unrealized loss included in net
		income on securities available for sale
		deferred tax adjustment for Wisconsin
		Act 19		–			–			(35	)		–			–

	Amortization of unrealized loss included in net
		income on securities available for sale
		transferred to securities held to maturity		90			89			91			91			91

	Unrealized gain (loss) on interest rate swap			(101	)		39			123			(109	)		79

	Reclassification adjustment of interest rate
		swap settlements included in earnings		(38	)		(40	)		(41	)		(39	)		(35	)


Other comprehensive income (loss)				4,689			272			(86	)		5,501			(2,950	)

Comprehensive income (loss)			$	7,677		$	2,718		$	1,642		$	7,914		$	(1,601	)

PSB Holdings, Inc.
Nonperforming Assets as of:
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(dollars in thousands)		2024			2024			2024			2023			2023

Nonaccrual loans (excluding restructured loans)	$	10,116		$	12,184		$	11,498		$	5,596		$	5,807
Nonaccrual restructured loans		25			28			30			34			42
Restructured loans not on nonaccrual		292			299			304			310			256
Accruing loans past due 90 days or more		–			–			–			–			–

Total nonperforming loans		10,433			12,511			11,832			5,940			6,105
Other real estate owned		–			–			–			–			–

Total nonperforming assets	$	10,433		$	12,511		$	11,832		$	5,940		$	6,105

Nonperforming loans as a % of gross loans receivable		0.97	%		1.15	%		1.08	%		0.54	%		0.55	%
Total nonperforming assets as a % of total assets		0.71	%		0.84	%		0.83	%		0.42	%		0.42	%
Allowance for credit losses as a % of nonperforming loans		120.75	%		100.69	%		105.59	%		207.10	%		200.93	%

PSB Holdings, Inc.
Nonperforming Assets >= $500,000 net book value before specific reserves
At September 30, 2024
(dollars in thousands)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves

Real estate – Recreation Facility	Nonaccrual	$	3,291		$	–
Real estate – Independent Auto Repair	Nonaccrual		562			–
Real estate – Equipment Dealership	Nonaccrual		2,808			660


Total listed nonperforming assets		$	6,661		$	660
Total bank wide nonperforming assets		$	10,433		$	1,220
Listed assets as a % of total nonperforming assets			64	%		54	%

PSB Holding, Inc.
Loan Composition by Collateral Type
Quarter-ended (dollars in thousands)	Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023

Commercial:
Commercial and industrial	$	115,234		$	125,508		$	118,821		$	117,207		$	138,299
Agriculture		11,203			11,480			12,081			12,304			12,464
Municipal		12,596			11,190			28,842			31,530			27,186

Total Commercial		139,033			148,178			159,744			161,041			177,949

Commercial Real Estate:
Commercial real estate		541,577			544,171			546,257			536,209			539,488
Construction and development		60,952			70,540			63,375			81,701			86,456

Total Commercial Real Estate		602,529			614,711			609,632			617,910			625,944

Residential real estate:
Residential		269,954			270,944			274,300			274,453			274,632
Construction and development		34,655			36,129			34,158			33,960			33,141
HELOC		36,734			33,838			31,357			29,766			29,044

Total Residential Real Estate		341,343			340,911			339,815			338,179			336,817

Consumer installment		4,770			4,423			4,867			4,357			4,350

Subtotals – Gross loans		1,087,675			1,108,223			1,114,058			1,121,487			1,145,060
Loans in process of disbursement		(17,836	)		(21,484	)		(20,839	)		(31,359	)		(35,404	)

Subtotals – Disbursed loans		1,069,839			1,086,739			1,093,219			1,090,128			1,109,656
Net deferred loan costs		733			702			669			649			630
Allowance for credit losses		(12,598	)		(12,597	)		(12,494	)		(12,302	)		(12,267	)

Total loans receivable	$	1,057,974		$	1,074,844		$	1,081,394		$	1,078,475		$	1,098,019

PSB Holding, Inc.
Selected Commercial Real Estate Loans by Purpose
	Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,
(dollars in thousands)		2024				2024				2024				2023				2023

	Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)
Multi Family	$	140,307	14.7	%	$	146,873	15.2	%	$	142,001	14.4	%	$	132,386	13.2	%	$	133,466	13.3	%
Industrial and Warehousing		86,818	9.1			86,025	8.9			85,409	8.6			83,817	8.3			88,906	8.9
Retail		33,020	3.5			34,846	3.6			33,177	3.4			35,419	3.5			35,281	3.5
Hotels		31,611	3.3			34,613	3.6			35,105	3.6			36,100	3.6			31,819	3.2
Office		6,378	0.7			6,518	0.7			6,655	0.7			6,701	0.7			6,746	0.7

(1) Percentage of commercial and commercial real estate portfolio and commitments.

PSB Holdings, Inc.
Deposit Composition

Insured and Collateralized Deposits	September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2024				2024				2024				2023				2023
	$		%		$		%		$		%		$		%		$		%

Non-interest bearing demand	$	210,534	18.6	%	$	202,343	17.5	%	$	199,076	17.8	%	$	197,571	17.3	%	$	209,133	17.9	%
Interest-bearing demand and savings		305,631	26.8	%		304,392	26.5	%		318,673	28.7	%		317,984	27.8	%		307,620	26.3	%
Money market deposits		138,376	12.2	%		137,637	12.0	%		143,167	12.9	%		142,887	12.5	%		135,910	11.4	%
Retail and local time deposits <= $250		155,988	13.7	%		149,298	13.0	%		148,404	13.3	%		149,145	13.1	%		144,738	12.4	%

Total core deposits		810,529	71.3	%		793,670	69.0	%		809,320	72.7	%		807,587	70.7	%		797,401	68.0	%
Retail and local time deposits > $250		23,500	2.1	%		22,500	2.0	%		24,508	2.3	%		23,000	2.0	%		22,750	1.9	%
Broker & national time deposits <= $250		1,241	0.1	%		1,490	0.1	%		2,229	0.2	%		3,470	0.3	%		3,222	0.3	%
Broker & national time deposits > $250		56,164	4.9	%		56,328	4.9	%		61,752	5.5	%		70,020	6.1	%		88,614	7.6	%

Totals	$	891,434	78.4	%	$	873,988	76.0	%	$	897,809	80.7	%	$	904,077	79.1	%	$	911,987	77.8	%

PSB Holdings, Inc.
Deposit Composition

Uninsured Deposits	September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2024				2024				2024				2023				2023
	$		%		$		%		$		%		$		%		$		%

Non-interest bearing demand	$	54,544	4.7	%	$	48,092	4.1	%	$	48,532	4.4	%	$	69,258	6.1	%	$	79,632	6.8	%
Interest-bearing demand and savings		18,317	1.6	%		32,674	2.8	%		20,535	1.8	%		20,316	1.8	%		22,847	1.9	%
Money market deposits		157,489	13.8	%		177,954	15.4	%		124,766	11.2	%		124,518	10.9	%		133,653	11.4	%
Retail and local time deposits <= $250		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%

Total core deposits		230,350	20.1	%		258,720	22.3	%		193,833	17.4	%		214,092	18.8	%		236,132	20.1	%
Retail and local time deposits > $250		17,329	1.5	%		19,613	1.7	%		21,710	1.9	%		23,633	2.1	%		24,120	2.1	%
Broker & national time deposits <= $250		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%
Broker & national time deposits > $250		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%

Totals	$	247,679	21.6	%	$	278,333	24.0	%	$	215,543	19.3	%	$	237,725	20.9	%	$	260,252	22.2	%

PSB Holdings, Inc.
Deposit Composition

Total Deposits	September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2024				2024				2024				2023				2023
	$		%		$		%		$		%		$		%		$		%

Non-interest bearing demand	$	265,078	23.3	%	$	250,435	21.6	%	$	247,608	22.2	%	$	266,829	23.4	%	$	288,765	24.7	%
Interest-bearing demand and savings		323,948	28.4	%		337,066	29.3	%		339,208	30.5	%		338,300	29.6	%		330,467	28.2	%
Money market deposits		295,865	26.0	%		315,591	27.4	%		267,933	24.1	%		267,405	23.4	%		269,563	22.8	%
Retail and local time deposits <= $250		155,988	13.7	%		149,298	13.0	%		148,404	13.3	%		149,145	13.1	%		144,738	12.4	%

Total core deposits		1,040,879	91.4	%		1,052,390	91.3	%		1,003,153	90.1	%		1,021,679	89.5	%		1,033,533	88.1	%
Retail and local time deposits > $250		40,829	3.6	%		42,113	3.7	%		46,218	4.2	%		46,633	4.1	%		46,870	4.0	%
Broker & national time deposits <= $250		1,241	0.1	%		1,490	0.1	%		2,229	0.2	%		3,470	0.3	%		3,222	0.3	%
Broker & national time deposits > $250		56,164	4.9	%		56,328	4.9	%		61,752	5.5	%		70,020	6.1	%		88,614	7.6	%

Totals	$	1,139,113	100.0	%	$	1,152,321	100.0	%	$	1,113,352	100.0	%	$	1,141,802	100.0	%	$	1,172,239	100.0	%

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)

	Quarter ended September 30, 2024							Quarter ended June 30, 2024							Quarter ended September 30, 2023
	Average					Yield /		Average					Yield /		Average					Yield /
	Balance			Interest		Rate		Balance			Interest		Rate		Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)	$	1,079,393		$	15,674	5.78	%	$	1,100,518		$	15,520	5.67	%	$	1,088,137		$	14,337	5.23	%
Taxable securities		177,520			1,345	3.01	%		172,563			1,295	3.02	%		173,287			1,114	2.55	%
Tax-exempt securities (2)		79,472			661	3.31	%		79,564			659	3.33	%		81,327			675	3.29	%
FHLB stock		8,825			176	7.93	%		7,931			182	9.23	%		6,368			127	7.91	%
Other		36,680			523	5.67	%		8,241			83	4.05	%		8,195			111	5.37	%

Total (2)		1,381,890			18,379	5.29	%		1,368,817			17,739	5.21	%		1,357,314			16,364	4.78	%

Non-interest-earning assets:
Cash and due from banks		17,162							17,345							19,299
Premises and equipment,
net		14,216							13,930							13,266
Cash surrender value ins		24,458							24,297							23,840
Other assets		20,485							21,865							23,782
Allowance for credit
losses		(12,598	)						(12,505	)						(11,979	)

Total	$	1,445,613						$	1,433,749						$	1,425,522

Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand
deposits	$	323,841		$	1,515	1.86	%	$	331,740		$	1,467	1.78	%	$	335,214		$	1,198	1.42	%
Money market deposits		277,884			1,876	2.69	%		271,336			1,835	2.72	%		255,823			1,489	2.31	%
Time deposits		247,296			2,514	4.04	%		257,006			2,536	3.97	%		279,971			2,130	3.02	%
FHLB borrowings		182,414			2,038	4.44	%		174,596			1,860	4.28	%		134,386			1,321	3.90	%
Other borrowings		6,702			57	3.38	%		6,870			58	3.40	%		5,681			51	3.56	%
Senior sub. notes		4,779			59	4.91	%		4,777			58	4.88	%		4,772			59	4.91	%
Junior sub. debentures		12,985			252	7.72	%		12,960			255	7.91	%		12,883			255	7.85	%

Total		1,055,901			8,311	3.13	%		1,059,285			8,069	3.06	%		1,028,730			6,503	2.51	%

Non-interest-bearing liabilities:
Demand deposits		261,833							251,158							278,616
Other liabilities		13,421							12,580							12,431
Stockholders’ equity		114,458							110,726							105,745

Total	$	1,445,613						$	1,433,749						$	1,425,522

Net interest income				$	10,068						$	9,670						$	9,861
Rate spread						2.16	%						2.15	%						2.27	%
Net yield on interest-earning assets						2.90	%						2.84	%						2.88	%

(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on federally tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)
	Nine months ended September 30, 2024							Nine months ended September 30, 2023
	Average					Yield/		Average					Yield/
	Balance			Interest		Rate		Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)	$	1,091,366		$	46,393	5.68	%	$	1,025,955		$	38,851	5.06	%
Taxable securities		173,971			3,837	2.95	%		189,583			3,772	2.66	%
Tax-exempt securities (2)		79,822			1,986	3.32	%		81,670			2,032	3.33	%
FHLB stock		7,755			523	9.01	%		4,943			228	6.17	%
Other		18,804			784	5.57	%		8,154			303	4.97	%

Total (2)		1,371,718			53,523	5.21	%		1,310,305			45,186	4.61	%

Non-interest-earning assets:
Cash and due from banks		17,291							17,403
Premises and equipment,
net		13,778							13,311
Cash surrender value ins		24,301							24,446
Other assets		21,146							23,364
Allowance for credit
losses		(12,496	)						(12,004	)

Total	$	1,435,738						$	1,376,825

Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand
deposits	$	335,317		$	4,654	1.85	%	$	350,928		$	3,286	1.25	%
Money market deposits		274,405			5,608	2.73	%		241,594			3,508	1.94	%
Time deposits		256,287			7,563	3.94	%		257,639			4,673	2.43	%
FHLB borrowings		166,703			5,348	4.29	%		110,460			3,068	3.71	%
Other borrowings		7,373			175	3.17	%		7,082			161	3.04	%
Senior sub. notes		4,778			176	4.92	%		4,965			179	4.82	%
Junior sub. debentures		12,972			758	7.81	%		12,857			731	7.60	%

Total		1,057,835			24,282	3.07	%		985,525			15,606	2.12	%

Non-interest-bearing liabilities:
Demand deposits		254,134							273,699
Other liabilities		12,720							12,165
Stockholders’ equity		111,049							105,436

Total	$	1,435,738						$	1,376,825

Net interest income				$	29,241						$	29,580
Rate spread						2.14	%						2.49	%
Net yield on interest-earning assets						2.85	%						3.02	%

(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on federally tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.

The MIL Network –

January 25, 2025

MIL-OSI USA: Congressman Deluzio Cosponsors Legislation to Rein in Corporate Landlords and Lower Housing Costs

Source: United States House of Representatives – Congressman Chris Deluzio (PA-17)

CARNEGIE, PA – This week, Representatives Chris Deluzio (PA-17) joined as an original co-sponsor of the Stop Wall Street Landlords Act reintroduced by Ro Khanna (CA-17), Katie Porter (CA-47), and Mark Takano (CA-39). This bill would end large institutional investors’ ability to use taxpayer dollars to subsidize the acquisition of single-family residential homes.

Since the 2008 housing crash and subsequent foreclosure crisis, increased investor activity in America’s housing market has normalized excessive fees and abusive practices while artificially driving up housing and rent prices. Investors bought 18% of all homes that sold in the fourth quarter of this year and 26% of the most affordable homes. In California, Nevada, Florida, Georgia, and other states where corporate landlords own a large concentration of single-family homes used as rental properties, investors are driving up the cost of rent.

“Low- and middle-income families in Western PA and across the country are being pushed out because of predatory practices by large corporate landlords buying up homes in our communities,” said Representative Chris Deluzio (PA-17). “Too many Wall Street investors are not good landlords; they have neglected maintenance, local taxes, and more—all while taking homes off the market. That is why I am proud to be an original co-sponsor of the Stop Wall Street Landlords Act—to help level the playing field and bring down housing costs in America.”

“Homes should be owned by people, not wealthy corporate landlords who are buying up affordable single-family homes and pushing the dream of homeownership out of reach for ordinary Americans,” said Rep. Ro Khanna (CA-17). “Affordable housing is one of the most pressing issues in my district and across the state. The Stop Wall Street Landlords Act will ensure that taxpayer dollars are not being used to fuel the housing crisis with more subsidies to corporate landlords. I’m proud to lead this effort with Representatives Porter and Takano to put affordable housing for families first.”

“As a single mom of three, it’s heartbreaking when my kids question whether they’ll be able to afford a home in the future,” said Rep. Katie Porter (CA-47). “Americans across the country, especially in my home state of California, are counting on lawmakers to lower the cost of housing. I’m helping lead the Stop Wall Street Landlords Act to crack down on wealthy corporate landlords who drive up the cost of housing and push families out of the market—all to line their own pockets. Every American deserves to have a fair shot at homeownership, and this bill will help level the playing field.”

“With big corporations and private equity using their pricing power to raise costs on everything from groceries to gas, it is no wonder they are also targeting single-family homes,” said Rep. Mark Takano (CA-39). “Not only are “Wall Street landlords driving up the cost of housing by monopolizing ownership of single-family residences, but they are doing so by using taxpayer dollars. It’s time we put the people’s bottom line first—not private equity’s. The Stop Wall Street Landlords Act, which I am proud to lead with Representatives Khanna and Porter, will keep corporations out of the single-family housing market for good.”

“Owning a home has always been a big part of the American dream,” said Rep. Bonnie Watson Coleman (NJ-12). “But because corporate investors buy up whole neighborhoods of single-family homes, leading to a rapid increase in the cost of housing, the idea of owning a home for many families across New Jersey remains just a dream. I’m proud to co-sponsor the Stop Wall Street Landlords Act to put a stop to this predatory practice, and give everyone a fair shot at a stable future for themselves and their families.”

Specifically, the Stop Wall Street Landlords Act will:

End large institutional investors’ ability to benefit from tax breaks reserved for homeowners – namely mortgage interest, insurance, and depreciation deductions.

Direct the Federal Housing Financial Agency (FHFA) and related agencies Fannie Mae, Freddie Mac and Ginnie Mae to (a) prohibit large institutional investors from purchasing mortgages on single-family residential (SFR) homes – or any interest in such a mortgage – and (b) from newly lending on a security or securitizing any SFR mortgage under which the mortgagee meets the bill definition of a specified large investor.

The bill makes exceptions for mom-and-pop landlords, housing providers that participate in federal affordable housing programs, nonprofits and developers committed to building and supplying affordable single-family homes to owner occupiers in the American housing market.

For the full text of the bill, click here.

Cosponsors: Representatives Chris Deluzio, Katie Porter, Mark Takano, Raúl M. Grijalva, Maxwell Alejandro Frost, Barbara Lee, Sheila Cherfilus-McCormick, Bonnie Watson Coleman, Jonathan L. Jackson.

Endorsing groups: California Democratic Renters Council, Churches United For Fair Housing, Consumer Action, Destination: Home, National Coalition for the Homeless, Private Equity Stakeholder Project, Sacramento Regional Coalition to End Homelessness.

###

MIL OSI USA News –

January 25, 2025

MIL-OSI USA: NBC News: Senators take aim at big private equity landlords as rents soar

US Senate News:

Source: United States Senator for Massachusetts – Elizabeth Warren

October 24, 2024

As Wall Street financiers snapped up huge swaths of the nation’s rental housing market in recent years, the deals sailed through unchallenged. Now, with the costs of renting an apartment or home out of reach for a growing number of Americans, four Democratic senators say these transactions need more scrutiny.

Sen. Elizabeth Warren, D-Mass., sent a letter to private equity giant KKR on Wednesday, demanding information about its recent $2.1 billion purchase of 5,200 rental apartments across eight states. Among her questions: How does KKR plan to ensure that long-term tenants will be able to stay in their homes and what proportion of profits does KKR expect to generate from hikes in rents and fees at the apartments?

“KKR is just the latest private equity firm using the housing crisis to rake in profits while squeezing families,” Warren said in a statement to NBC News. “I’m sounding the alarm because we can’t solve the housing crisis unless we crack down on predatory practices by Wall Street investors.”

…

Read the full story here.

By: Gretchen Morgenson
Source: NBC News

MIL OSI USA News –

January 25, 2025

MIL-OSI USA: Governor Parson Announces Six Judicial Appointments, Appoints Ray County Presiding Commissioner

Source: US State of Missouri

OCTOBER 25, 2024

Jefferson City — Today, Governor Mike Parson announced judicial appointments to the 3rd, 12th, 25th, 30th, and 43rd Judicial Circuits and appointed a new Ray County Presiding Commissioner.

Alex T. Van Zandt, of Bethany, will be appointed as Associate Circuit Judge for Mercer County in the 3rd Judicial Circuit.

Mr. Van Zandt is the Harrison County Prosecuting Attorney. He holds Bachelors of Arts in political science and business from the University of Missouri–Columbia and a Juris Doctor from the University of Missouri–Kansas City. He will fill the vacancy created by the election of the Honorable Matthew M. Krohn as Circuit Judge who is unopposed in the 2024 general election.

Jonathan A. Yelton, of Jefferson City, will be appointed as Associate Circuit Judge for Warren County in the 12th Judicial Circuit.

Mr. Yelton is deputy general counsel for the Office of Missouri Governor Michael L. Parson. He holds a Bachelor of Science in criminal justice from Sterling College and a Juris Doctor from the University of Kansas. He will fill the vacancy created by the election of the Honorable Richard L. Scheibe as Circuit Judge who is unopposed in the 2024 general election.

Kevin S. Hillman, of Waynesville, will be appointed as Associate Circuit Judge for Pulaski County in the 25th Judicial Circuit.

Mr. Hillman is the Pulaski County Prosecuting Attorney. He holds a Bachelor of Arts in history and government from Centre College and a Juris Doctor from the University of Cincinnati. He will fill the vacancy created by the retirement of the Honorable Colin P. Long.

Cynthia R. Black, of Marshfield, will be appointed as Associate Circuit Judge for Webster County in the 30th Judicial Circuit.

Ms. Black owns Cynthia R. Black, Attorney at Law, LLC. She holds a Bachelor of Arts in political science from Missouri State University and a Juris Doctor from the University of Missouri–Columbia. She will fill the vacancy created by the appointment of the Honorable D. Charles Replogle as Circuit Judge.

The Honorable D. Charles Replogle, of Marshfield, will be appointed as Circuit Judge for the 30th Judicial Circuit.

Judge Replogle is the associate circuit judge for Mercer County in the 30th Judicial Circuit. He holds a Bachelor of Science in criminal justice from Missouri Southern State University and a Juris Doctor from the University of Tulsa. He will fill the vacancy created by the retirement of the Honorable Michael O. Hendrickson.

Micha L. Dixon, of Jamesport, will be appointed as Associate Circuit Judge for Daviess County in the 43rd Judicial Circuit.

Ms. Dixon is the attorney for the 43rd Judicial Circuit Juvenile Office and an assistant prosecuting attorney in the 43rd Judicial Circuit. She holds a Bachelor of Arts in criminal justice and criminology and a Juris Doctor from the University of Missouri–Kansas City. Ms. Dixon will fill the vacancy created by the election of the Honorable Daren L. Adkins as Circuit Judge who is unopposed in the 2024 general election.

Sheila Tracy, of Richmond, was appointed Ray County Presiding Commissioner.

Ms. Tracy currently serves as a realtor at ReeceNichols Real Estate. She previously served as president of the Northland Regional Chamber of Commerce, vice president of membership for the Independence Chamber of Commerce, and as executive director of the Richmond Area Chamber of Commerce. Ms. Tracy further serves as a member of the Missouri Chamber of Commerce and Industry and the American Chamber of Commerce Executives.

MIL OSI USA News –

January 25, 2025

MIL-OSI Banking: Existing Home Sales Remain Subdued, While New Sales Push Higher

Source: Fannie Mae

Key Takeaways:

Durable goods orders declined 0.8 percent for the second consecutive month in September, according to the Census Bureau. However, the decline was due to a large pullback in aircraft orders; excluding transportation, durable goods orders rose 0.4 percent. Core capital goods orders (nondefense excluding aircraft) increased 0.5 percent. Shipments of the same category, a good proxy for business fixed investment, declined 0.3 percent.
Existing home sales declined 1.0 percent to a seasonally adjusted annualized rate (SAAR) of 3.84 million in September, the slowest sales pace since 2010, according to the National Association of REALTORS®. The number of homes available on the market increased 1.5 percent to 1.39 million, marking the ninth consecutive monthly increase in this measure. The months’ supply ticked up one-tenth to 4.3, above its 2019 average of 3.9.
New single-family home sales rose 4.1 percent to a SAAR of 738,000 in September, the strongest pace since May 2023, according to the Census Bureau. The number of new homes available for sale remains elevated but increased just 0.4 percent in September, bringing the months’ supply down three-tenths to 7.6.

Forecast Impact:

Existing home sales were a bit below our expectations in September. Still, we had previously observed only a small pickup in mortgage applications as rates fell over the summer, so the subdued sales figure is in line with our thinking that there is a waning pool of potential homebuyers at current affordability levels. With mortgage rates now up more than 40 basis points since the end of September, we don’t expect a significant pickup in sales by the end of the year. However, the new home side remains a bright spot in the housing market. Considering revisions to previous months, the new sales figure was almost exactly in line with our forecast for the quarter. We view the current months’ supply of new homes for sale as sort of a goldilocks zone for continuing sales transactions; it’s high enough to encourage builders to continue to use incentives to move inventories but not so high that they’re likely to meaningfully slow construction. Still, we note that the October and November readings of both existing and new home sales are likely to be volaille given hurricane disruptions, and the recent move back up in mortgage rates could act as a headwind. Still, the outlook for new single-family starts and construction remains generally positive given a lack of existing inventories available for sale in many metros.

Nathaniel Drake
Economic and Strategic Research Group
October 25, 2024

Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae’s Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

MIL OSI Global Banks –

January 25, 2025

MIL-OSI USA: ICYMI: Governor Katie Hobbs Follows Through on Promise to Secure Arizona’s Water Future

Source: US State of Arizona

Hobbs Takes Action to Shut Down Bad Actor Developers, Protect Groundwater

Phoenix, AZ – In case you missed it, Governor Katie Hobbs took major action this week to secure Arizona’s water future. On Monday, the Arizona Department of Real Estate issued cease-and-desist orders to a developer attempting to skirt water supply laws to make a profit off illegally pumping Arizona groundwater. Then on Wednesday, ADWR took the first steps towards the creation of a Willcox basin AMA.

Here’s what they’re saying:

Ed Curry, Willcox basin farmer: “This announcement of a potential AMA is a new beginning for the Willcox Basin, and we must continue to work together to move forward to protect our groundwater supplies. I am thankful for the courage of Governor Hobbs and her administration to tackle these issues head on.”

Mike Laws, Mayor of Willcox: “Our community is facing difficult decisions as Arizona moves forward with an Active Management Area for the Willcox Basin. While there are a range of views on the AMA, the urgency of addressing our water challenges cannot be overstated. Governor Hobbs has demonstrated a strong commitment to protecting Arizona’s water resources, and with no legislative solutions in place, the Governor and Arizona Department of Water Resources have acted with the tools available to them.”

Steve Kisiel, Willcox Basin homeowner: “Today’s announcement by ADWR to initiate the AMA designation process gives me hope that we will finally have a secure water future here in the Willcox Basin.”

Mark Jove, WIllcox Basin winegrower: “We support and welcome this step taken towards protecting our water supplies. As a small business vineyard in the Willcox groundwater basin we’ve experienced firsthand the alarming declines in our local water levels due to decades of unchecked, unlimited groundwater pumping. An AMA designation would finally put us on a path to stabilizing this precious and shared resource to safeguard local growers and business owners.”

Cochise Groundwater Stewards: “For years, we’ve pleaded for groundwater management that protects our property, our families, and our economy. Legislators from both parties have introduced workable bills throughout the last five years – none received a hearing. With the Legislature apparently abandoning us in rural Arizona, it’s time for ADWR to designate a new AMA here. Finally, we are being heard.”

MORE BELOW:

Arizona Republic: AZ regulators issue cease-and-desist for developer they say is building ‘wildcat’ subdivisions

State officials allege two limited liability corporations owned by Andrei Polukhtin, 2PHDS and Morning Vista Homes, are building so-called “wildcat” subdivisions via unregulated lot splits in Rio Verde Foothills. That neighborhood made national news last year when it lost its primary water supply.
Some areas of the state heavily reliant on groundwater, including most of Maricopa County, are designated as active management areas. There, property owners generally must show real estate regulators proof of legal rights to a 100-year supply of water before selling parcels for larger developments.
The action signals growing interest in upholding water and development requirements by state regulators. Democratic Gov. Katie Hobbs directed the Arizona Department of Real Estate last year to take increased action to prevent wildcat developments from popping up around the state.

KJZZ: Hobbs administration to Rio Verde Foothills developer: Cease and desist amid water concerns

Arizona Gov. Katie Hobbs’ administration says it has sent a cease and desist letter to a developer trying to get around water regulations in the unincorporated community of Rio Verde Foothills.
Hundreds of homes in Rio Verde Foothills were cut off from their water supply in 2023 due to drought restrictions in neighboring Scottsdale. The state Legislature had to step in to negotiate a temporary fix for the community.
Hobbs said she still wants the legislature to take action to close the wildcat subdivision loophole.

Arizona Daily Star: Arizona takes major step toward regulating groundwater pumping in Willcox area

The Arizona Department of Water Resources said Wednesday it’s taking the first steps to usher in groundwater pumping regulation in the Willcox Basin, whose aquifer has dramatically declined due to unregulated pumping by farmers.
A group calling itself Cochise Water Stewards said Wednesday that “enough is enough” after a decade-long wait for solutions to Willcox’s collapsing aquifer.
Vance Williams, a resident of the Sunizona area southeast of Willcox, said, “I am grateful that ADWR has finally decided to take the first step toward establishing an AMA to protect the groundwater in the Willcox basin. I just wish it had happened sooner as my well in Sunizona went dry in 2020 and I have heard from many other neighbors across the basin whose wells have gone dry.”
“The AMA will stop any new large agricultural operations from moving into our area while also putting a halt to expansion of existing irrigation,” Williams said. “I am hopeful that the AMA will also reduce current pumping levels, a necessary step needed to save our aquifer. Thank you to Governor Hobbs and her staff for working to protect the groundwater in the Willcox Basin.”

Arizona Agenda: Hobbs makes her move

Yesterday morning, group chats and inboxes were buzzing in Southeast Arizona: Gov. Katie Hobbs and the Arizona Department of Water Resources have begun the process of designating the Willcox Basin as an “Active Management Area,” which will limit groundwater pumping in the area.
And it would be a historical milestone as the first state-initiated “subsequent AMA” in Arizona, highlighting Hobbs’ role as the first governor to push the ADWR to take rural groundwater management seriously.
Besides being a strong political move by Hobbs, an AMA designation will “stop the bleeding” in the Willcox Basin while the Legislature continues its policy battles.
And now that Hobbs has proven willing to put AMAs in place, legislative stalemate tactics will no longer be an option for her policy opponents. They’ll have to come up with statutory amendments or AMA alternatives that actually pass through the Legislature and survive Hobbs’ veto pen.

MIL OSI USA News –

January 25, 2025

MIL-OSI United Kingdom: Australian funds back British economy with major moves to the UK

Source: United Kingdom – Executive Government & Departments

A further billion pounds of investment will be injected into the British economy as the Prime Minister continues his drive to attract foreign business back to the UK.

Prime Minister Keir Starmer continues drive on growth during historic first visit to the Pacific
This comes as Australian superannuation fund Aware Super forms a strategic partnership with a British property firm to invest up to £1 billion in UK property
Australian boost builds on the major success of International Investment Summit last week, which included a further £2.4 billion of investment from Down Under

A further billion pounds of investment will be injected into the British economy as the Prime Minister continues his drive to attract foreign business back to the UK.

The boost comes as UK firms break into the New Zealand banking sector, growing jobs in the UK, and expanding their global operations.

Australia’s biggest pension fund, AustralianSuper is also preparing to bolster its international investment team in London, in a major vote of confidence for the UK as a global asset management centre.

The Fund expects to manage £250 billion from its London office by 2035, an increase of more than 10 times over the next decade, from its current management of around £15 billion from its UK base.

The Prime Minister met the CEO of the Australian firm, Paul Schroder, on arrival in Samoa yesterday to discuss the move.

Meanwhile, Aware Super, one of Australia’s top performing and largest profit-for-member superannuation funds, has formed a strategic partnership with Delancey Real Estate to invest up to an initial £1 billion in UK property, further bolstering UK – Australia economic ties.

Its initial focus will be on Central London office sites in prime locations, upgrading and renovating properties to ensure they meet environmental standards and deliver on the partnership’s commitment to reducing carbon emissions in the property market.

Prime Minister Keir Starmer said:

“These investments are a major vote of confidence in the UK, and in this government.

“I am determined to ensure that UK is the best place in the world to invest and do business, so we improve the lives of hardworking people.

“By attracting strong, sustained investment, we will also build the expertise we need to drive innovation, stay ahead of the global game, and support economies around the world with British backed projects.”

AustralianSuper chief executive Paul Schroder said:

“We invest heavily in Australia, but our size requires an increasingly international focus. We are ramping up our investment capabilities in the UK as it is one of the world’s leading gateways to both talent and global markets, which are key for driving future returns for members.

“By 2035 we expect to manage approximately £250 billion of investments from our London hub, which will represent a significant portion of our global portfolio. We have great confidence in the fundamentals of the UK economy and the country’s commitment to global growth.

“This underpins our confidence in the investments we have already made in the UK such as the Canada Water urban regeneration project, London’s King’s Cross Estate, Peel Ports Group and Vantage Data Centers. We also see great potential for new investment opportunities in the energy transition, digital infrastructure, mixed-use estates, transport and logistics.”

Aware Super chief executive Deanne Stewart:

“Aware Super has strong confidence in the UK economy and markets and is pleased to announce a ground-breaking new commercial partnership that will invest up to an initial £1 billion, an exciting milestone that will coincide with the first anniversary of establishing our London Office.”

Meanwhile, UK firms obconnect and Raidiam have been making waves in the New Zealand banking sector, rolling out the British Confirmation of Payee (CoP) system to revolutionise banking in the country, in partnership with the NZ Banking Association.

No other companies are currently able to offer the same service, with the partnership combining specialist expertise of the two British companies to serve as a fulcrum for data sharing and facilitating fraud prevention across any territory.

The deal has allowed the companies to expand their UK operations to more than 250 people.

The win for the British companies come after mobile banking app Revolut broke into the New Zealand market last year. The firm is preparing to expand their operations in the country from 4 FTEs focused on New Zealand investments, to 10 over the next 12 months.

The British business wins coincide with the UK securing CPTPP ratification from Australia in the next step towards accession of the trading bloc – the first non-founding country to do so.

The boost in Australian investment also comes after a string of Australian announcements as part of the government’s International Investment Summit, which attracted more £63 billion of investment into the UK economy and created 38,000 jobs.

They included Australian firms Macquarie supporting investment of £1.3 billion into new green infrastructure and IFM investing more than £1.1 billion through Manchester Airports Group into London Stansted Airport to expand its existing terminal by around a third. The investment will secure new air routes to key business and leisure destinations, boost local supply chains and create 5,000 jobs.

The Prime Minister’s visit to Samoa for the Commonwealth Heads of Government Meeting is the first by a sitting Prime Minister to a Pacific Island. During the summit, the Prime Minister will make the case to build resilient economies across the Commonwealth to unlock growth and investment.

Published 25 October 2024

MIL OSI United Kingdom –

January 25, 2025

MIL-OSI United Kingdom: Press release: Australian funds back British economy with major moves to the UK

Source: United Kingdom – Prime Minister’s Office 10 Downing Street

A further billion pounds of investment will be injected into the British economy as the Prime Minister continues his drive to attract foreign business back to the UK.

Prime Minister Keir Starmer continues drive on growth during historic first visit to the Pacific
This comes as Australian superannuation fund Aware Super forms a strategic partnership with a British property firm to invest up to £1 billion in UK property
Australian boost builds on the major success of International Investment Summit last week, which included a further £2.4 billion of investment from Down Under