Category: Intelligence Agencies

MIL-OSI Security: Transporting and Possessing Child Pornography Nets District Man More Than Seven Years in Federal Prison

Source: Federal Bureau of Investigation (FBI) State Crime Alerts (b)

WASHINGTON – Stephen Rattley Johnson, 37, of Washington, D.C., was sentenced today in U.S. District Court to 7.5 years in prison for uploading and possessing videos in 2020 depicting the rape and sadistic sexual abuse of prepubescent girls.

The sentencing was announced by U.S. Attorney Matthew M. Graves, FBI Acting Special Agent in Charge David Geist of the Washington Field Office’s Criminal and Cyber Division, and Chief Pamela A. Smith of the Metropolitan Police Department.

Johnson was found guilty by a federal jury on April 17, 2024, of five counts of transportation of child pornography and one count of possession of child pornography. On the possession count, the jury further found that the child pornography involved minors under 12 years of age, an aggravating circumstance that doubles the statutory maximum sentence. In addition to the prison term, U.S. District Court Judge Carl J. Nichols ordered Johnson to pay $52,600 in restitution and special assessments. Upon release from his prison term, Johnson will be required to serve 10 years of supervised release and register as a sex offender.

According to court documents and the evidence presented at trial, on September 21, 2020, and October 1, 2020, Johnson uploaded hundreds of child pornography files to his Google Drive cloud storage account. Google identified 220 of the files as known child pornography and closed Johnson’s account. Consistent with its statutory obligations, Google reported the material to the National Center for Missing and Exploited Children, which in turn referred the matter to law enforcement. As part of its investigation, investigators obtained the contents of Johnson’s Google account, which included hundreds of child pornography files.

Law enforcement arrested Johnson on October 7, 2021, and searched his then-residence in the H Street Corridor of Northeast Washington. Among other evidence, law enforcement seized his cellphone and the laptop Johnson had used to upload the child pornography. Although Johnson deleted the child pornography from his computer after Google closed his account, digital forensics experts were able to recover artifacts showing that Johnson had downloaded many of the files as early as April 2020 and that he had opened and watched them. Many of the files are videos depicting the rape and sadistic sexual abuse of prepubescent girls. In addition, Johnson’s web browser history showed that he had navigated to child pornography online—including several of the files he later uploaded to Google—and evidence from his cellphone showed that he continued to seek out child pornography even after Google closed his account.

The case was investigated by the FBI Washington Field Office and Metropolitan Police Department’s Child Exploitation and Human Trafficking Task Force; the Northern Virginia and Washington, D.C., Internet Crimes Against Children Task Force; and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

Assistant U.S. Attorney Paul V. Courtney and Special Assistant U.S. Attorney Ryan Lipes prosecuted the case, with valuable assistance from Assistant U.S. Attorneys Janani Iyengar and Jocelyn Bond.

22cr176

MIL-OSI Security: Former Miami-Dade Corrections Officer Pled Guilty to $150,000 COVID-19 Fraud

Source: United States Department of Justice (National Center for Disaster Fraud)

MIAMI – Yesterday, Daniel Fleureme, 56, of Miami-Dade County, a former Miami-Dade Corrections and Rehabilitation Department (MDCRD) Corrections Officer, pled guilty to wire fraud for defrauding a COVID-19 relief program by fraudulently obtaining an Economic Injury Disaster Loan from the U. S. Small Business Administration (SBA).

The Coronavirus Aid, Relief and Economic Security (CARES) Act was designed to provide emergency financial assistance to the millions of Americans who were suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act were Economic Injury Disaster Loans (EIDLs) to eligible small businesses experiencing substantial financial disruptions. These EIDLs were provided directly to borrowers by the SBA.

On July 27, 2020, Fleureme, while he was employed full-time by MDCRD as a Corrections Officer, submitted to the SBA a false and fraudulent EIDL application claiming to be the 100% owner of a sole proprietorship operating under the company legal and DBA names of “Daniel Fleureme.” In this fraudulent application, Fleureme claimed that he had owned the business since its creation on Feb. 15, 2017, and stated that the business had three employees as of Jan. 31, 2020. Fleureme’s EIDL application also falsely certified that for the 12-month period prior to Jan. 31, 2020, his sole proprietorship had gross revenues of $450,000 and a cost of goods sold of only $97,000. As a result of this fraudulent EIDL application, Fleureme received approximately $150,000 in EIDL proceeds from the SBA.

He is scheduled to be sentenced on Jan. 7, 2025, at 11:00 a.m., before U.S. District Judge Jose E. Martinez in Miami. Fleureme faces up to 20 years in prison for the wire fraud conviction. The court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney for the Southern District of Florida Markenzy Lapointe and Special Agent in Charge Jeffrey B. Veltri of the FBI, Miami Field Office, Inspector General Felix Jimenez of the Miami-Dade County Office of Inspector General (M-DC OIG), and Special Agent in Charge Amaleka McCall-Brathwaite, U.S. Small Business Administration Office of Inspector General (SBA OIG), Eastern Region, made the announcement.

The FBI’s Miami Area Corruption Task Force, which includes task force officers from the M-DC OIG, working in conjunction with SBA OIG, investigated the case. Assistant U.S. Attorney Edward N. Stamm is prosecuting the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

On Sept. 15, 2022, the Attorney General selected the Southern District of Florida’s U.S. Attorney’s Office to head one of three national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud. The Strike Force combines law enforcement and prosecutorial resources and focuses on large-scale, multistate pandemic relief fraud perpetrated by criminal organizations and transnational actors, as well as those who committed multiple instances of pandemic relief fraud. The Strike Force uses prosecutor-led and data analyst-driven teams to identify and bring to justice those who stole pandemic relief funds. Additional information regarding the Strike Force may be found at https://www.justice.gov/opa/pr/justice-department-announces-covid-19-fraud-strike-force-teams.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov, under case number 24-cr-20407.

###

MIL-OSI: First National Corporation Reports Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

STRASBURG, Va., Nov. 01, 2024 (GLOBE NEWSWIRE) — First National Corporation (the “Company” or “First National”) (NASDAQ: FXNC), reported unaudited consolidated net income of $2.2 million and basic and diluted earnings per common share of $0.36 for the third quarter of 2024 and adjusted net income⁽¹⁾ of $2.4 million and adjusted basic and diluted earnings per common share⁽¹⁾ of $0.39.

(Dollars in thousands, except earnings per share)	Three Months Ended
	Sept 30, 2024			Jun 30, 2024			Sept 30, 2023
Net income	$	2,248		$	2,442		$	3,121
Basic and diluted earnings per share	$	0.36		$	0.39		$	0.50
Return on average assets		0.62	%		0.68	%		0.91	%
Return on average equity		7.28	%		8.31	%		10.96	%

Non-GAAP Measures:
Adjusted net income⁽¹⁾	$	2,448		$	3,008		$	3,121
Adjusted basic and diluted earnings per share⁽¹⁾	$	0.39		$	0.48		$	0.50
Adjusted return on average assets⁽¹⁾		0.67	%		0.84	%		0.91	%
Adjusted return on average equity⁽¹⁾		7.93	%		10.23	%		10.96	%
Adjusted pre-provision, pre-tax earnings⁽¹⁾	$	4,712		$	4,092		$	3,952
Adjusted pre-provision, pre-tax return on average assets⁽¹⁾		1.29	%		1.14	%		1.16	%
Net interest margin⁽¹⁾		3.43	%		3.40	%		3.35	%
Efficiency ratio⁽¹⁾		67.95	%		70.65	%		70.67	%

*See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliations” for additional information and detailed calculations of adjustments.

“During the third quarter the company saw continued improvement in net interest margin thanks to proactive deposit pricing boosted by sticky noninterest-bearing deposits continuing to represent 31% of total deposits,” said Scott C. Harvard, President and CEO. “We also benefited from a 16% increase in ATM and check card fees and an 8% increase in wealth management fees in the quarter. During the quarter loans acquired from third party lenders continued to be a drag on what otherwise was excellent financial performance, with an adjusted pre-provision, pre-tax return on average assets of 1.29% for the period. We continue to be excited about the recent acquisition of Touchstone Bankshares, Inc., which closed on October 1, and look forward to integrating our two companies and building value for our shareholders.”

THIRD QUARTER HIGHLIGHTS

Key highlights of the three months ending September 30, 2024, are as follows. Comparisons are to the three-month period ending June 30, 2024, unless otherwise stated:

	●	Net interest margin⁽¹⁾ continued to improve to 3.43%
	●	Loan balances increased by 2%, annualized
	●	Noninterest-bearing deposits were stable at 31% of total deposits
	●	Noninterest income increased by 19%
	●	Adjusted ROA and ROE⁽¹⁾ of 0.67% and 7.93% respectively
	●	Tangible book value per share⁽¹⁾ increased to $19.37 from $17.38 one year ago

MERGER WITH TOUCHSTONE BANKSHARES, INC.

The Company completed the acquisition of Touchstone Bankshares, Inc. (“Touchstone”) with and into the Company, effective October 1, 2024 (the “Merger”). Immediately following the Merger, Touchstone Bank, the wholly owned subsidiary of Touchstone, was merged with and into First Bank. Pursuant to the previously announced terms of the Merger, each outstanding share of Touchstone common stock and preferred stock (on an as-converted, one-for-one basis, which shares of preferred stock converted automatically to common stock at the effective time of the Merger) received 0.8122 shares of the Company’s common stock.

Following the Merger, the former branches of Touchstone Bank assumed in the Merger continued to operate in Virginia as Touchstone Bank, a division of First Bank, and, in North Carolina, as Touchstone Bank, a division of First Bank, Strasburg, Virginia, until the systems integration is completed in February 2025. With the addition of Touchstone, the Company would have had approximately $2.1 billion in assets, $1.5 billion in loans and $1.8 billion in deposits on a combined pro-forma basis as of September 30, 2024. The combined company delivers banking services through thirty-three branch offices in Virginia and North Carolina and three loan production offices, in addition to its full complement of online banking services. During the third quarter of 2024, the Company incurred pre-tax merger costs of approximately $219 thousand related to the Merger. Effective October 1, 2024, common stock outstanding of First National Corporation totaled 8,970,345.

NET INTEREST INCOME

Net interest income increased $255 thousand, or 2%, to $11.7 million for the third quarter of 2024 compared to the second quarter of 2024. Total interest income increased by $389 thousand, or 2%, and was partially offset by a $134 thousand, or 2%, increase in total interest expense. The net interest margin⁽¹⁾ increased to 3.43%, up from 3.40% for the second quarter.

The $389 thousand increase in total interest income was attributable to a $475 thousand increase in interest and fees on loans, which was partially offset by a $43 thousand decrease in interest income on securities and a $41 thousand decrease in interest on deposits in banks. The increase in interest and fees on loans was attributable to a 9-basis point increase in the yield on the loan portfolio and a $9.2 million increase in the average balance of loans. The decrease in interest income on deposits in other banks was attributable to a $2.9 million decrease in average balances. The decrease in interest income on securities was attributable to a $1.7 million decrease in the average balance of total securities and an 8-basis point decrease in yield. The yield on total earning assets increased to 5.08% from 5.03% in the second quarter.

The $134 thousand increase in total interest expense was primarily attributable to a $138 thousand increase in interest expense on deposits. The increase in interest expense on deposits resulted from a $933 thousand increase in the average balance of interest-bearing deposits and a 4-basis point increase in cost. The total cost of funds was 1.72% for the third quarter of 2024, which was a 3-basis point increase compared to the second quarter of 2024.

NONINTEREST INCOME

Noninterest income totaled $3.2 million for the third quarter of 2024, which was a $517 thousand, or 19%, increase from the second quarter of 2024 and was attributable to increases in all income categories. ATM and check card fees and fees for other customer services increased $125 thousand and $98 thousand, respectively. There were also increases in wealth management fees, service charges on deposit accounts, and brokered mortgage fees of $73 thousand, $63 thousand, and $60 thousand, respectively.

NONINTEREST EXPENSE

Noninterest expense totaled $10.5 million for the third quarter of 2024, which was a decrease of $200 thousand, or 2%, compared to the second quarter of 2024. The decrease was primarily attributable to a $528 thousand decrease in legal and professional fees, which was a result of lower merger-related expenses in the third quarter compared to the prior period. Merger expenses totaled $219 thousand for the third quarter of 2024 compared to $571 thousand in the second quarter of 2024.

ASSET QUALITY

Overview

Loans that were past due greater than 30 days and still accruing interest as a percentage of total loans were 0.24% on September 30, 2024, 0.24% on June 30, 2024, and 0.18% on September 30, 2023. Nonperforming assets (“NPAs”) as a percentage of total assets decreased to 0.41% on September 30, 2024, compared to 0.59% on June 30, 2024, and increased from 0.23% on September 30, 2023. Annualized net charge-offs as a percentage of total loans were 0.63% for the third quarter of 2024, 0.19% for the second quarter of 2024 and 0.03% for the third quarter of 2023. The allowance for credit losses on loans totaled $12.7 million, or 1.28% of total loans on September 30, 2024, $12.6 million, or 1.27% of total loans on June 30, 2024, and $8.9 million, or 0.93% of total loans on September 30, 2023.

Past Due Loans

Loans past due greater than 30 days and still accruing interest totaled $2.4 million on September 30, 2024, $2.4 million on June 30, 2024, and $1.8 million on September 30, 2023. There were no loans greater than 90 days past due and still accruing on September 30, 2024 and June 30, 2024, compared to $370 thousand on September 30, 2023.

Nonperforming Assets

NPAs decreased to $6.0 million on September 30, 2024 from $8.5 million on June 30, 2024. NPA’s totaled $3.1 million on September 30, 2023. NPA’s represented 0.41%, 0.59%, and 0.23% of total assets, respectively. The NPAs were primarily comprised of commercial and industrial loans.

Net Charge-offs

Net charge-offs totaled $1.6 million for the third quarter of 2024, $482 thousand for the second quarter of 2024, and $83 thousand for the third quarter of 2023.

Provision for Credit Losses

The provision for credit losses totaled $1.7 million for the third quarter of 2024, $400 thousand for the second quarter of 2024, and $100 thousand in the third quarter of 2023. The provision in the third quarter of 2024 was comprised of a $1.7 million provision for credit losses on loans, a $5 thousand recovery of credit losses on held-to-maturity securities, and a $17 thousand recovery of credit losses on unfunded commitments. The provision for credit losses on loans in the third quarter of 2024 was primarily attributable to increases in specific reserves on commercial and industrial loans and an increase in the general reserve component of the allowance for credit losses on loans related to an increase in projected losses, which resulted from a higher projected unemployment rate when compared to the prior quarterly period.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans totaled $12.7 million on September 30, 2024, $12.6 million on June 30, 2024, and $8.9 million on September 30, 2023. During the third quarter of 2024, the specific reserve component of the allowance decreased by $373 thousand, while the general reserve component of the allowance increased by $524 thousand. Net charge-offs increased in the third quarter and were primarily comprised of commercial and industrial loans with specific reserves that were established in prior periods.

The following table provides the changes in the allowance for credit losses on loans for the three-month periods ended (dollars in thousands):

	Sept 30, 2024			Jun 30, 2024			Sept 30, 2023
Allowance for credit losses on loans, beginning of period	$	12,553		$	12,603		$	8,858
Net charge-offs		(1,572	)		(482	)		(83	)
Provision for credit losses on loans		1,723			432			121
Allowance for credit losses on loans, end of period	$	12,704		$	12,553		$	8,896

The allowance for credit losses on loans as a percentage of total loans totaled 1.28% on September 30, 2024, 1.27% on June 30, 2024, and 0.93% on September 30, 2023.

Allowance for Credit Losses on Unfunded Commitments

The allowance for credit losses on unfunded commitments totaled $370 thousand on September 30, 2024, $387 thousand on June 30, 2024 and $189 on September 30, 2023. There was a $17 thousand recovery of credit losses on unfunded commitments in the third quarter of 2024, a $26 thousand recovery of credit losses on unfunded commitments in the second quarter of 2024, and an $8 thousand recovery of credit losses on unfunded commitments in the third quarter of 2023.

Allowance for Credit Losses on Securities

The allowance for credit losses on securities held-to-maturity (“HTM”) totaled $105 thousand on September 30, 2024, compared to $110 thousand on June 30, 2024, and $131 thousand on September 30, 2023. The recovery of credit losses on securities totaled $5 thousand for the third quarter of 2024, $7 thousand for the second quarter of 2024 and $12 thousand for the third quarter of 2023.

LIQUIDITY

Liquidity sources available to the Bank, including interest-bearing deposits in banks, unpledged securities available for sale, at fair value, unpledged securities held-to-maturity, at par, that were eligible to be pledged to the Federal Reserve Bank through its Bank Term Funding Program, and available lines of credit totaled $499.1 million on September 30, 2024, $533.3 million on June 30, 2024, and $532.1 million on September 30, 2023.

The Bank maintains liquidity to fund loan growth and to meet potential demand from deposit customers. The estimated amount of uninsured customer deposits totaled $400.1 million on September 30, 2024, $419.4 million on June 30, 2024, and $346.9 million on September 30, 2023. Excluding municipal deposits, the estimated amount of uninsured customer deposits totaled $322.6 million on September 30, 2024, $324.6 million on June 30, 2024, and $268.4 million on September 30, 2023.

BALANCE SHEET

Assets totaled $1.5 billion on September 30, 2024, which was a $6.8 million, or 2% (annualized), decrease from June 30, 2024, and an $84.8 million, or 6%, increase from September 30, 2023. The decrease in total assets from the second quarter of 2024 was primarily due to a $9.1 million decrease in cash and cash equivalents and a $2.2 million decrease in other assets, which was partially offset by a $4.6 million increase in loans, net of allowance for credit losses. Total assets increased from September 30, 2023 primarily from a $76.4 million increase in cash and cash equivalents and a $38.4 million increase in loans, net of the allowance for credit losses on loans, which were partially offset by a $28.5 million decrease in securities held to maturity.

On September 30, 2024, loans totaled $994.7 million, an increase of $4.7 million or 1.9% (annualized) from $990.0 million, on June 30, 2024. Quarterly average loans totaled $991.2 million, an increase of $9.2 million or 3.8% (annualized) from the second quarter of 2024. On September 30, 2024, loans increased $42.2 million, or 4%, from one year ago, and quarterly average loans increased $68.2 million, or 7%, when comparing the third quarter of 2024 to the same period in 2023.

On September 30, 2024, securities totaled $269.6 million, a decrease of $875 thousand from June 30, 2024, and a decrease of $30.7 million from September 30, 2023. AFS securities totaled $146.0 million on September 30, 2024, $144.8 million on June 30, 2024, and $148.2 million on September 30, 2023. On September 30, 2024, total net unrealized losses on the AFS securities portfolio were $17.3 million, a decrease of $4.6 million from total net unrealized losses on AFS securities of $21.9 million on June 30, 2024. HTM securities are carried at cost and totaled $121.5 million on September 30, 2024, $123.6 million on June 30, 2024, and $150.0 million on September 30, 2023, and had net unrealized losses of $7.8 million on September 30, 2024, a decrease of $3.6 million compared to the prior quarter.

On September 30, 2024, total deposits were $1.3 billion, a decrease of $12.5 million or approximately 4% (annualized) from June 30, 2024. Quarterly average deposits decreased from the second quarter of 2024 by $5.3 million or 2% (annualized). Total deposits increased $18.1 million or 1% from September 30, 2023, and quarterly average deposits for the third quarter of 2024 increased $31.2 million or 3% from the third quarter of 2023. Total deposits decreased from the prior quarter due to a $14.4 million decrease in noninterest-bearing deposits and a $1.3 million decrease in interest-bearing demand deposits, which were partially offset by a $3.1 million increase in time deposits.

On September 30, 2024 and June 30, 2024, other borrowings totaled $50.0 million and were comprised of funds borrowed from the Federal Reserve Bank through their Bank Term Funding Program. On September 30, 2024, other borrowings had a fixed interest rate of 4.76% and a maturity date of January 15, 2025. The Bank benefited from the borrowings with a reduction in interest rate risk and an increase in net interest income. There were no other borrowings on September 30, 2023.

The following table provides capital ratios at the periods ended:

	Sept 30, 2024			Jun 30, 2024			Sept 30, 2023
Total capital ratio⁽²⁾		14.29	%		14.13	%		14.80	%
Tier 1 capital ratio⁽²⁾		13.04	%		12.88	%		13.86	%
Common equity Tier 1 capital ratio⁽²⁾		13.04	%		12.88	%		13.86	%
Leverage ratio⁽²⁾		9.23	%		9.17	%		9.96	%
Common equity to total assets⁽³⁾		8.62	%		8.23	%		8.20	%
Tangible common equity to tangible assets⁽¹⁾⁽³⁾		8.43	%		8.03	%		8.00	%

During the third quarter of 2024, the Company declared and paid cash dividends of $0.15 per common share, which was consistent with the second quarter of 2024 and the third quarter of 2023.

NON-GAAP FINANCIAL MEASURES

In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that the Company’s management believes provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this document include adjusted net income, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity, pre-provision pre-tax earnings, adjusted pre-provision pre-tax earnings, fully taxable equivalent interest income, the net interest margin, the efficiency ratio, tangible book value per share, and tangible common equity to tangible assets.

The Company believes certain non-GAAP financial measures enhance the understanding of its business, performance and financial position. Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is included at the end of this release.

ABOUT FIRST NATIONAL CORPORATION

First National Corporation (NASDAQ: FXNC) is the parent company and bank holding company of First Bank (the “Bank”), a community bank that first opened for business in 1907 in Strasburg, Virginia. The Bank offers loan and deposit products and services through its website, www.fbvirginia.com, its mobile banking platform, a network of ATMs located throughout its market area, three loan production offices, a customer service center in a retirement community, and thirty-three bank branch office locations located throughout the Shenandoah Valley, the Roanoke Valley, the central and south-central regions of Virginia, the city of Richmond, and in northern North Carolina. In addition to providing traditional banking services, the Bank operates a wealth management division under the name First Bank Wealth Management. The Bank also owns First Bank Financial Services, Inc., which owns an interest in an entity that provides title insurance services.

FORWARD-LOOKING STATEMENTS

Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s plans, objectives, expectations and intentions and other statements that are not historical facts, and other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expression. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties. For details on factors that could affect expectations, future events, or results, see the risk factors and other cautionary language included in First National’s Annual Report on Form 10-K for the year ended December 31, 2023, and most recent Quarterly Report on Form 10-Q and other filings with the Securities and Exchange Commission (the “SEC”).

Additional risks and uncertainties may include, but are not limited to: (1) the risk that the cost savings and any revenue synergies from the Merger may not be realized or take longer than anticipated to be realized, including due to the state of the economy or other competitive factors in the areas in which the parties operate, (2) disruption from the Merger of customer, supplier, employee or other business partner relationships, including diversion of management’s attention from ongoing business operations and opportunities due to the Merger, (3) the possibility that the costs, fees, expenses and charges related to the Merger may be greater than anticipated, (4) reputational risk and the reaction of each of the parties’ customers, suppliers, employees or other business partners to the Merger, (5) the risks relating to the integration of Touchstone’s operations into the operations of First National, including the risk that such integration will be materially delayed or will be more costly or difficult than expected, (6) the risk of expansion into new geographic or product markets, (7) the dilution caused by First National’s issuance of additional shares of its common stock in the Merger, and (8) general competitive, economic, political and market conditions. All subsequent written and oral forward-looking statements concerning First National or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. First National does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

CONTACTS

Scott C. Harvard		M. Shane Bell
President and CEO		Executive Vice President and CFO
(540) 465-9121		(540) 465-9121
sharvard@fbvirginia.com		sbell@fbvirginia.com

FIRST NATIONAL CORPORATION
Performance Summary
(in thousands, except share and per share data)
(unaudited)

		As of or For the Three Months Ended					As of or For the Nine Months Ended
	Sept 30, 2024		Jun 30, 2024		Sept 30, 2023		Sept 30, 2024		Sept 30, 2023
Income Statement
Interest and dividend income
Interest and fees on loans	$	14,479	$	14,004	$	12,640	$	41,967	$	36,038
Interest on deposits in banks		1,538		1,579		338		4,405		1,441
Taxable interest on securities		1,091		1,134		1,323		3,449		3,968
Tax-exempt interest on securities		303		306		304		914		917
Dividends		33		32		26		98		81
Total interest and dividend income	$	17,444	$	17,055	$	14,631	$	50,833	$	42,445
Interest expense
Interest on deposits	$	4,958	$	4,820	$	3,810	$	14,549	$	9,428
Interest on subordinated debt		69		69		69		207		207
Interest on junior subordinated debt		68		66		69		202		203
Interest on other borrowings		600		606		—		1,782		3
Total interest expense	$	5,695	$	5,561	$	3,948	$	16,740	$	9,841
Net interest income	$	11,749	$	11,494	$	10,683	$	34,093	$	32,604
Provision for credit losses		1,700		400		100		3,100		200
Net interest income after provision for credit losses	$	10,049	$	11,094	$	10,583	$	30,993	$	32,404
Noninterest income
Service charges on deposit accounts	$	675	$	612	$	733	$	1,941	$	2,062
ATM and check card fees		934		809		976		2,513		2,624
Wealth management fees		952		879		811		2,714		2,336
Fees for other customer services		276		178		122		649		538
Brokered mortgage fees		92		32		38		162		73
Income from bank owned life insurance		191		149		175		491		459
Net gains on securities available for sale		39		—		—		39		—
Other operating income		44		27		198		1,427		623
Total noninterest income	$	3,203	$	2,686	$	3,053	$	9,936	$	8,715
Noninterest expense
Salaries and employee benefits	$	5,927	$	5,839	$	5,505	$	17,637	$	16,040
Occupancy		585		548		534		1,668		1,586
Equipment		726		691		598		2,008		1,756
Marketing		262		273		204		730		720
Supplies		123		115		128		354		423
Legal and professional fees		596		1,124		439		2,172		1,204
ATM and check card expense		394		368		440		1,123		1,265
FDIC assessment		195		203		161		575		479
Bank franchise tax		262		261		262		785		778
Data processing expense		290		163		266		699		720
Amortization expense		4		5		5		13		14
Other real estate owned expense (income), net		10		—		15		10		(201	)
Net losses on disposal of premises and equipment		2		—		—		50		—
Other operating expense		1,083		1,069		1,227		3,181		3,358
Total noninterest expense	$	10,459	$	10,659	$	9,784	$	31,005	$	28,142
Income before income taxes	$	2,793	$	3,121	$	3,852	$	9,924	$	12,977
Income tax expense		545		679		731		2,025		2,502
Net income	$	2,248	$	2,442	$	3,121	$	7,899	$	10,475

FIRST NATIONAL CORPORATION
Performance Summary
(in thousands, except share and per share data)
(unaudited)

		For the Three Months Ended									For the Nine Months Ended
	Sept 30, 2024			Jun 30, 2024			Sept 30, 2023			Sept 30, 2024			Sept 30, 2023
Common Share and Per Common Share Data
Earnings per common share, basic	$	0.36		$	0.39		$	0.50		$	1.26		$	1.67
Adjusted earnings per common share, basic ⁽¹⁾	$	0.39			0.48			0.50		$	1.38		$	1.67
Weighted average shares, basic		6,287,997			6,278,113			6,256,663			6,278,668			6,266,707
Earnings per common share, diluted	$	0.36		$	0.39		$	0.50		$	1.26		$	1.67
Adjusted earnings per common share, diluted ⁽¹⁾	$	0.39			0.48			0.50		$	1.38		$	1.67
Weighted average shares, diluted		6,303,282			6,289,405			6,271,351			6,291,775			6,276,502
Shares outstanding at period end		6,296,705			6,280,406			6,260,934			6,296,705			6,260,934
Tangible book value per share at period end ⁽¹⁾	$	19.37		$	18.59		$	17.38		$	19.37		$	17.38
Cash dividends	$	0.15		$	0.15		$	0.15		$	0.45		$	0.45

Key Performance Ratios
Return on average assets		0.62	%		0.68	%		0.91	%		0.73	%		1.03	%
Adjusted return on average assets ⁽¹⁾		0.67	%		0.84	%		0.91	%		0.80	%		1.03	%
Return on average equity		7.28	%		8.31	%		10.96	%		8.84	%		12.57	%
Adjusted return on average equity ⁽¹⁾		7.93	%		10.23	%		10.96	%		9.70	%		12.57	%
Net interest margin⁽¹⁾		3.43	%		3.40	%		3.35	%		3.36	%		3.44	%
Efficiency ratio ⁽¹⁾		67.95	%		70.65	%		70.67	%		68.05	%		68.17	%

Average Balances
Average assets	$	1,449,185		$	1,448,478		$	1,355,113		$	1,441,965		$	1,360,154
Average earning assets		1,374,566			1,370,187			1,275,111			1,366,639			1,278,135
Average shareholders’ equity		122,802			118,255			112,987			119,303			111,460

Asset Quality
Loan charge-offs	$	1,667		$	521		$	143		$	2,601		$	1,228
Loan recoveries		95			39			60			185			326
Net charge-offs		1,572			482			83			2,416			902
Non-accrual loans		5,929			8,549			3,116			5,929			3,116
Other real estate owned, net		56			—			—			56			—
Nonperforming assets ⁽⁵⁾		5,985			8,549			3,116			5,985			3,116
Loans 30 to 89 days past due, accruing		2,358			2,399			1,395			2,358			1,395
Loans over 90 days past due, accruing		—			—			370			—			370
Special mention loans		516			1,380			—			516			—
Substandard loans, accruing		1,713			279			1,683			1,713			1,683

Capital Ratios ⁽²⁾
Total capital	$	148,477		$	147,500		$	146,163		$	148,477		$	146,163
Tier 1 capital		135,490			134,451			136,947			135,490			136,947
Common equity Tier 1 capital		135,490			134,451			136,947			135,490			136,947
Total capital to risk-weighted assets		14.29	%		14.13	%		14.80	%		14.29	%		14.80	%
Tier 1 capital to risk-weighted assets		13.04	%		12.88	%		13.86	%		13.04	%		13.86	%
Common equity Tier 1 capital to risk-weighted assets		13.04	%		12.88	%		13.86	%		13.04	%		13.86	%
Leverage ratio		9.23	%		9.17	%		9.97	%		9.23	%		9.97	%

FIRST NATIONAL CORPORATION
Performance Summary
(in thousands, except share and per share data)
(unaudited)

	For the Period Ended
	Sept 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sept 30, 2023
Balance Sheet
Cash and due from banks	$	18,197		$	16,729		$	14,476		$	17,194		$	17,168
Interest-bearing deposits in banks		108,319			118,906			124,232			69,967			32,931
Cash and cash equivalents	$	126,516		$	135,635		$	138,708		$	87,161		$	50,099
Securities available for sale, at fair value		146,013			144,816			147,675			152,857			148,175
Securities held to maturity, at amortized cost (net of allowance for credit losses)		121,425			123,497			125,825			148,244			149,948
Restricted securities, at cost		2,112			2,112			2,112			2,078			2,077
Loans, net of allowance for credit losses		982,016			977,423			960,371			957,456			943,603
Other real estate owned, net		56			—			—			—			—
Premises and equipment, net		22,960			22,205			21,993			22,142			21,363
Accrued interest receivable		4,794			4,916			4,978			4,655			4,502
Bank owned life insurance		24,992			24,802			24,652			24,902			24,734
Goodwill		3,030			3,030			3,030			3,030			3,030
Core deposit intangibles, net		104			108			113			117			122
Other assets		16,698			18,984			17,738			16,653			18,567
Total assets	$	1,450,716		$	1,457,528		$	1,447,195		$	1,419,295		$	1,366,220

Noninterest-bearing demand deposits	$	383,400		$	397,770		$	384,092		$	379,208		$	403,774
Savings and interest-bearing demand deposits		663,925			665,208			677,458			662,169			646,980
Time deposits		205,930			202,818			197,587			192,349			184,419
Total deposits	$	1,253,255		$	1,265,796		$	1,259,137		$	1,233,726		$	1,235,173
Other borrowings		50,000			50,000			50,000			50,000			—
Subordinated debt, net		4,999			4,998			4,998			4,997			4,997
Junior subordinated debt		9,279			9,279			9,279			9,279			9,279
Accrued interest payable and other liabilities		8,068			7,564			5,965			5,022			4,792
Total liabilities	$	1,325,601		$	1,337,637		$	1,329,379		$	1,303,024		$	1,254,241

Preferred stock	$	—		$	—		$	—		$	—		$	—
Common stock		7,871			7,851			7,847			7,829			7,826
Surplus		33,409			33,116			33,021			32,950			32,840
Retained earnings		99,270			97,966			96,465			94,198			95,988
Accumulated other comprehensive (loss), net		(15,435	)		(19,042	)		(19,517	)		(18,706	)		(24,675	)
Total shareholders’ equity	$	125,115		$	119,891		$	117,816		$	116,271		$	111,979
Total liabilities and shareholders’ equity	$	1,450,716		$	1,457,528		$	1,447,195		$	1,419,295		$	1,366,220

Loan Data
Mortgage real estate loans:
Construction and land development	$	61,446		$	60,919		$	53,364		$	52,680		$	50,405
Secured by farmland		9,099			8,911			9,079			9,154			7,113
Secured by 1-4 family residential		351,004			346,976			347,014			344,369			340,773
Other real estate loans		440,648			440,857			436,006			438,118			426,065
Loans to farmers (except those secured by real estate)		633			349			332			455			667
Commercial and industrial loans (except those secured by real estate)		114,190			115,951			113,230			112,619			116,463
Consumer installment loans		5,396			5,068			4,808			4,753			4,596
Deposit overdrafts		253			365			251			222			368
All other loans		12,051			10,580			8,890			7,060			6,049
Total loans	$	994,720		$	989,976		$	972,974		$	969,430		$	952,499
Allowance for credit losses		(12,704	)		(12,553	)		(12,603	)		(11,974	)		(8,896	)
Loans, net	$	982,016		$	977,423		$	960,371		$	957,456		$	943,603

FIRST NATIONAL CORPORATION
Non-GAAP Reconciliations
(in thousands, except share and per share data)
(unaudited)

		For the Three Months Ended									For the Nine Months Ended
	Sept 30, 2024			Jun 30, 2024			Sept 30, 2023			Sept 30, 2024			Sept 30, 2023
Adjusted Net Income
Net income (GAAP)	$	2,248		$	2,442		$	3,121		$	7,899		$	10,475
Add: Merger-related expenses		219			571			—			790			—
Subtract: Tax effect of adjustment ⁽⁴⁾		(19	)		(5	)		—			(24	)		—
Adjusted net income (non-GAAP)	$	2,448		$	3,008		$	3,121		$	8,665		$	10,475

Adjusted Earnings Per Share, Basic
Weighted average shares, basic		6,287,997			6,278,113			6,256,663			6,278,668			6,266,707
Basic earnings per share (GAAP)	$	0.36		$	0.39		$	0.50		$	1.26		$	1.67
Adjusted earnings per share, basic (Non-GAAP)	$	0.39		$	0.48		$	0.50		$	1.38		$	1.67

Adjusted Earnings Per Share, Diluted
Weighted average shares, diluted		6,303,282			6,289,405			6,271,351			6,291,775			6,276,502
Diluted earnings per share (GAAP)	$	0.36		$	0.39		$	0.50		$	1.26		$	1.67
Adjusted diluted earnings per share (Non-GAAP)	$	0.39		$	0.48		$	0.50		$	1.38		$	1.67

Adjusted Pre-Provision, Pre-Tax Earnings
Net interest income	$	11,749		$	11,494		$	10,683		$	34,093		$	32,604
Total noninterest income		3,203			2,686			3,053			9,936			8,715
Net revenue	$	14,952		$	14,180		$	13,736		$	44,029		$	41,319
Total noninterest expense		10,459			10,659			9,784			31,005			28,142
Pre-provision, pre-tax earnings	$	4,493		$	3,521		$	3,952		$	13,024		$	13,177
Add: Merger expenses		219			571			–			790			–
Adjusted pre-provision, pre-tax, earnings	$	4,712		$	4,092		$	3,952		$	13,814		$	13,177

Adjusted Performance Ratios
Average assets	$	1,449,264		$	1,448,478		$	1,355,178		$	1,441,996		$	1,360,154
Return on average assets (GAAP)		0.62	%		0.68	%		0.91	%		0.73	%		1.03	%
Adjusted return on average assets (Non-GAAP)		0.67	%		0.84	%		0.91	%		0.80	%		1.03	%

Average shareholders’ equity	$	122,802		$	118,255			11,309		$	119,303		$	111,460
Return on average equity (GAAP)		7.28	%		8.31	%		10.96	%		8.87	%		12.57	%
Adjusted return on average equity (Non-GAAP)		7.93	%		10.23	%		10.96	%		9.70	%		12.57	%

Pre-provision, pre-tax return on average assets		1.23	%		0.98	%		1.16	%		1.21	%		1.30	%
Adjusted pre-provision, pre-tax return on average assets		1.29	%		1.14	%		1.16	%		1.28	%		1.30	%

Net Interest Margin
Tax-equivalent net interest income	$	11,842		$	11,587		$	10,764		$	34,360		$	32,848
Average earning assets		1,374,566			1,370,187			1,275,111			1,366,639			1,278,136
Net interest margin		3.43	%		3.40	%		3.35	%		3.36	%		3.44	%

FIRST NATIONAL CORPORATION
Non-GAAP Reconciliations
(in thousands, except share and per share data)
(unaudited)

	For the Three Months Ended									For the Nine Months Ended
	Sept 30, 2024			June 30, 2024			Sept 30, 2023			Sept 30, 2024			Sept 30, 2023
Efficiency Ratio
Total noninterest expense	$	10,459		$	10,659		$	9,784		$	31,005		$	28,142
Add: other real estate owned income, net		(10	)		—			(15	)		(10	)		201
Subtract: amortization of intangibles		(4	)		(4	)		(5	)		(13	)		(14	)
Subtract: loss on disposal of premises and equipment, net		(2	)		—			—			(50	)		—
Subtract: merger expenses		(219	)		(571	)		—			(790	)		—
Subtotal	$	10,224		$	10,084		$	9,764		$	30,142		$	28,329
Tax-equivalent net interest income	$	11,842		$	11,587		$	10,764		$	34,360		$	32,848
Total noninterest income		3,203			2,686			3,053			9,936			8,715
Subtotal	$	15,045		$	14,273		$	13,817		$	44,296		$	41,563

Efficiency ratio		67.95	%		70.65	%		70.67	%		68.05	%		68.16	%

Tax-Equivalent Net Interest Income
GAAP measures:
Interest income – loans	$	14,479		$	14,004		$	12,640		$	41,967		$	36,038
Interest income – investments and other		2,965			3,051			1,991			8,866			6,407
Interest expense – deposits		(4,958	)		(4,820	)		(3,810	)		(14,549	)		(9,428	)
Interest expense – subordinated debt		(69	)		(69	)		(69	)		(207	)		(207	)
Interest expense – junior subordinated debt		(68	)		(66	)		(69	)		(202	)		(203	)
Interest expense – other borrowings		(600	)		(606	)		–			(1,782	)		(3	)
Net interest income	$	11,749		$	11,494		$	10,683		$	34,093		$	32,604
Non-GAAP measures:
Add: Tax benefit realized on non-taxable interest income – loans ⁽⁴⁾	$	13		$	12		$	—		$	25		$	—
Add: Tax benefit realized on non-taxable interest income – municipal securities ⁽⁴⁾		80			81			81			242			244
Tax benefit realized on non-taxable interest income	$	93		$	93		$	81		$	267		$	244
Tax-equivalent net interest income	$	11,842		$	11,587		$	10,764		$	34,360		$	32,848


Tangible Common Equity and Tangible Assets
Total assets (GAAP)	$	1,450,716		$	1,457,528		$	1,366,220		$	1,451,032		$	1,366,220
Subtract: goodwill		(3,030	)		(3,030	)		(3,030	)		(3,030	)		(3,030	)
Subtract: core deposit intangibles, net		(104	)		(108	)		(122	)		(104	)		(122	)
Tangible assets (Non-GAAP)	$	1,447,582		$	1,454,390		$	1,363,068		$	1,447,898		$	1,363,068

Total shareholders’ equity (GAAP)	$	125,115		$	119,891		$	111,979		$	125,115		$	111,979
Subtract: goodwill		(3,030	)		(3,030	)		(3,030	)		(3,030	)		(3,030	)
Subtract: core deposit intangibles, net		(104	)		(108	)		(122	)		(104	)		(122	)
Tangible common equity (Non-GAAP)	$	121,981		$	116,753		$	108,827		$	121,981		$	108,827

Tangible common equity to tangible assets ratio		8.43	%		8.03	%		8.00	%		8.43	%		8.00	%

FIRST NATIONAL CORPORATION
Non-GAAP Reconciliations
(in thousands, except share and per share data)
(unaudited)

	For the Three Months Ended						For the Nine Months Ended
	Sept 30, 2024		June 30, 2024		Sept 30, 2023		Sept 30, 2024		Sept 30, 2023
Tangible Book Value Per Share
Tangible common equity	$	121,981	$	116,753	$	108,827	$	121,981	$	108,827
Common shares outstanding, ending		6,296,705		6,280,406		6,260,934		6,296,705		6,260,934
Tangible book value per share	$	19.37	$	18.59	$	17.38	$	19.37	$	17.38

⁽¹⁾ Non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliations” for additional information and detailed calculations of adjustments.

⁽²⁾ Capital ratios are for First Bank.

⁽³⁾ Capital ratios presented are for First National Corporation.

⁽⁴⁾ The tax rate utilized in calculating the tax benefit is 21%. Certain merger-related expenses are non-deductible.

⁽⁵⁾ Nonperforming assets are comprised of nonaccrual loans and other real estate owned.

MIL-OSI Security: Director Wray Visits FBI Offices in Burlington, Bedford, and Providence

Source: Federal Bureau of Investigation (FBI) State Crime Alerts (b)

Wray discussed the region’s biggest challenges and emphasized that a continued focus on partnerships was critical to staying ahead of the threat

FBI Director Christopher Wray speaks with law enforcement partners during a meeting at the FBI Boston Division’s Bedford Resident Agency in New Hampshire during an October 2024 visit to New England.

This week, FBI Director Christopher Wray visited the Burlington, Vermont; Bedford, New Hampshire; and Providence, Rhode Island, resident agencies. He met with employees, U.S. attorneys, and a number of key law enforcement, private sector, and community partners from across the region.

During these partner meetings, Director Wray talked about the Bureau’s work in the region and reaffirmed our commitment to supporting our state and local partners on issues such as violent crime, election security, threats to critical infrastructure, national security at the northern border, and emerging challenges, such as the impact of artificial intelligence on elder fraud and scams.

“As a country and as a profession, we’re dealing with all sorts of challenges,” Director Wray said. “But our partnerships—with law enforcement, the private sector, and the communities we serve—give me confidence that we can stay ahead of the threats out there.”

MIL-OSI Security: Perry County Man Sentenced to 23 Years in Prison for Soliciting Pornography From Hundreds of Minors While Pretending to be Teen Girl on Snapchat

Source: Federal Bureau of Investigation (FBI) State Crime News

COLUMBUS, Ohio – A Junction City, Ohio, man was sentenced in federal court in Columbus today to 276 months in prison for sexually exploiting minors and possessing child pornography.

Since 2018, Clay Thomas Wolfe, 28, solicited child pornography from more than 300 victims via the mobile application Snapchat. Approximately 100 exploitation victims who provided sexual content to Wolfe have been identified by law enforcement as minors thus far from across multiple states including Ohio, Pennsylvania and Kentucky.

Wolfe pretended on Snapchat to be a 15-year-old female named “Ally” who lived in Ohio and used this persona to solicit child pornography from primarily middle school and high school aged boys. Wolfe’s Snapchat account also contained sexually explicit photographs and videos of minor males as young as 10 and 11 years old.

The investigation was initiated in April 2022, when law enforcement officials in Pennsylvania learned that a sixth-grade student was sharing a nude photograph of a classmate that he had received from Wolfe while Wolfe was pretending to be “Ally.”

As part of his online persona, Wolfe sent the male victims photos and videos of pubescent female’s naked breasts and genitalia that he found on adult pornography sites or public social media accounts. He would use that content to entice the minors he chatted with to send content of their own including image and video files of primarily minor males, some as young as twelve-years-old, engaged in sexually explicit conduct such as bestiality, masturbation, and sexual acts including oral and anal penetration. Wolfe would also extort the victims by threatening to send the nude images of his victims to their friends and family unless they sent him additional images.

In total, Wolfe received approximately 850 images and 570 videos depicting child pornography.

Wolfe was arrested and charged federally in June 2023 and pleaded guilty in April 2024.

Kenneth L. Parker, United States Attorney for the Southern District of Ohio; and Elena Iatarola, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division; announced the sentence imposed today by U.S. District Judge Michael H. Watson. U.S. Attorney Parker and Special Agent in Charge Iatarola commended the cooperation of the Perry County Sheriff’s Office and Perry County Prosecutor. Assistant United States Attorneys Emily Czerniejewski and Jennifer M. Rausch and are representing the United States in this case.

# # #

MIL-OSI Security: New Jersey Resident Pleads Guilty to Helping Russia’s Defense Sector Evade U.S. Export Controls

Source: Federal Bureau of Investigation FBI Crime News (b)

Defendant Facilitated Russia’s Acquisition of Millions of Dollars of U.S.-Made Dual-Use Electronics Used in Radar, Surveillance, and Military Research and Development

Vadim Yermolenko, 43, a dual U.S.-Russian national and resident of New Jersey, pleaded guilty to conspiracy to violate the Export Control Reform Act, conspiracy to commit bank fraud, and conspiracy to defraud the United States for his role in a transnational procurement and money laundering network that sought to acquire sensitive dual-use electronics for Russian military and intelligence services.

“This defendant joins the nearly two dozen other criminals that our Task Force KleptoCapture has brought to justice in American courtrooms over the past two and a half years for enabling Russia’s military aggression,” said Attorney General Merrick B. Garland. “This defendant admitted to playing a central role in a now-disrupted scheme with Russian intelligence services to smuggle sniper rifle ammunition and U.S. military grade equipment into Russia. The Justice Department will never stop working to aggressively disrupt and prosecute both the criminal networks and the individuals responsible for bolstering the Russian war machine.”

“The illegal export of sensitive, dual-use technologies in support of Russia’s war effort poses a significant threat to the United States and its allies and must not be tolerated,” said FBI Director Christopher Wray. “The defendant in this case played a key role in exporting U.S. technology that in the hands of our adversaries could pose great danger to our national security. The FBI and its partners will continue to focus on protecting strategic innovation at home and hold accountable anyone who facilitates illegal transfers to hostile nations like Russia.”

“To facilitate the Russian war machine, the defendant played a critical role in exporting sensitive, dual-use technologies to Russia, facilitating shipping and the movement of millions of dollars through U.S. financial institutions,” said U.S. Attorney Breon Peace for the Eastern District of New York. “This plea highlights my Office and our law enforcement partners continued commitment to use all tools available to prosecute those who unlawfully procure U.S. technology to send to Russia.”

According to court documents, the defendant was affiliated with Serniya Engineering and Sertal LLC, Moscow-based companies that operate under the direction of Russian intelligence services to procure advanced electronics and sophisticated testing equipment for Russia’s military industrial complex and research and development sector. Serniya and Sertal operated a vast network of shell companies and bank accounts throughout the world, including the United States, that were used in furtherance of the scheme to conceal the involvement of the Russian government and the true Russian end users of U.S.-origin equipment.

The defendant and his co-conspirators unlawfully purchased and exported highly sensitive, export controlled electronic components, some of which can be used in the development of nuclear and hypersonic weapons, quantum computing and other military applications. Following Russia’s invasion of Ukraine in February 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce (DOC) Bureau of Industry and Security (BIS) levied sanctions and imposed additional export restrictions on Serniya, Sertal, and several individuals and companies used in the scheme, calling them “instrumental to the Russian Federation’s war machine.”

Sertal was licensed to conduct highly sensitive and classified procurement activities by Russia’s Federal Security Service (FSB), Russia’s principal security agency and the main successor agency to the Soviet Union’s KGB. The Serniya network’s Russian clients included State Corporation Rostec, the state-owned defense conglomerate; State Atomic Energy Corporation Rosatom (Rosatom); the Ministry of Defense; the Foreign Intelligence Service (SVR); and various components of the FSB, including the Department of Military Counterintelligence and the Directorate for Scientific and Technological Intelligence, commonly known as “Directorate T.”

To carry out the scheme, the defendant helped set up numerous shell companies and dozens of bank accounts in the U.S. to illicitly move money and export-controlled goods. During the period charged in the indictment, more than $12 million passed through accounts owned or controlled by the defendant. These funds were used in part to purchase sensitive equipment used in radar, surveillance and military research and development. In one instance, money from one of the defendant’s accounts was used to purchase export-controlled sniper bullets, which were intercepted in Estonia before they could be smuggled into Russia.

Co-defendant Alexey Brayman previously pleaded guilty to conspiracy to defraud the United States and is awaiting sentence. The case against co-defendant Vadim Konoshchenok, a suspected FSB operative, was dismissed after Konoshchenok was removed from the United States as part of a prisoner exchange negotiated between the United States and Russia. Defendant Nikolaos Bogonikolos’ case remains pending. Defendants Boris Livshits, Alexey Ippolitov, Svetlana Skvortsova, and Yevgeniy Grinin remain at large.

The FBI, BIS, and IRS are investigating the case.

The U.S. Customs and Border Protection, Department of Justice’s Office of International Affairs, and Estonian authorities provided valuable assistance.

Assistant U.S. Attorneys Artie McConnell, Andrew D. Reich, and Matthew Skurnik for the Eastern District of New York are prosecuting the case, with assistance from Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section.

Today’s actions were coordinated through the Justice Department’s Task Force KleptoCapture and the Justice and Commerce Departments’ Disruptive Technology Strike Force. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.

MIL-OSI USA: Joint ODNI, FBI, and CISA Statement on Russian Election Influence Efforts

News In Brief – Source: US Computer Emergency Readiness Team

WASHINGTON, D.C. – Today, the Office of the Director of National Intelligence (ODNI), the Federal Bureau of Investigation (FBI), and the Cybersecurity and Infrastructure Security Agency (CISA) released the following statement:

“The IC assesses that Russian influence actors manufactured a recent video that falsely depicted individuals claiming to be from Haiti and voting illegally in multiple counties in Georgia. This judgment is based on information available to the IC and prior activities of other Russian influence actors, including videos and other disinformation activities. The Georgia Secretary of State has already refuted the video’s claims as false.

Russian influence actors also manufactured a video falsely accusing an individual associated with the Democratic presidential ticket of taking a bribe from a U.S. entertainer.

This Russian activity is part of Moscow’s broader effort to raise unfounded questions about the integrity of the US election and stoke divisions among Americans, as detailed in prior ODNI election updates. In the lead up to election day and in the weeks and months after, the IC expects Russia to create and release additional media content that seeks to undermine trust in the integrity of the election and divide Americans.”

###

MIL-OSI USA: Chairman Cotton Statement on CIA Findings on Covid Origins

US Senate News:

Source: United States Senator for Arkansas Tom Cotton
FOR IMMEDIATE RELEASEContact: Caroline Tabler or Patrick McCann (202) 224-2353January 25, 2025
Chairman Cotton Statement on CIA Findings on Covid Origins
Washington, D.C. — Senator Tom Cotton (R-Arkansas), Chairman of the Senate Intelligence Committee, released the following statement about the CIA’s findings on the origins of the Coronavirus:
“I’ve said from the beginning that Covid likely originated in the Wuhan labs. Communist China covered it up and the liberal media covered for them. I’m pleased the CIA concluded in the final days of the Biden administration that the lab-leak theory is the most plausible explanation of Covid’s origins and I commend Director Ratcliffe for fulfilling his promise to release this conclusion. Now, the most important thing is to make China pay for unleashing a plague on the world.”

MIL-OSI Australia: Minister Shorten doorstop interview at Flinders University Adelaide, South Australia

Source: Ministers for Social Services

1 November 2024

Location:

Adelaide

BILL SHORTEN, MINISTER FOR THE NDIS AND GOVERNMENT SERVICES: Good afternoon, everybody. It’s great to be here with Louise Glanville, who is the National Quality and Safeguards Commissioner for the NDIS, and also with Associate Commissioner Natalie Wade. Two bits of good news for Australians with disability and indeed for Australians generally. The first is that the National Disability Insurance Agency has released its Annual Financial Statement, the AFSR, and it demonstrates that because of the reforms that we’ve undertaken in the last nearly three years, that the Scheme is going to spend $1 billion less in the last 12 months than was expected.

So, Treasurer Chalmers said the forecast was that the Scheme for financial year 2023/24 would be $1 billion higher than it actually was. Now the Scheme is looking after more people than ever in the last 12 months, there’s 660,000 Australians receiving valuable and life changing support on the National Disability Insurance Scheme. What we were able to do is invest in outcomes and actually spend a little less than we forecast we would. So great news for the future sustainability of the Scheme. And it reflects well on the changes which Labor’s been making.

The other bit of really good news is that the National Quality and Safeguards Commission has released its annual statement, its annual report, and it demonstrates that for the first time really since the creation of the NDIS, we’re coming to grips with handling complaints. Complaints are up 78%, not because there’s been a 78% jump in problems, but rather that for the first time, a properly resourced Quality and Safeguards Commission is able to investigate 111,000 different matters.

The Scheme is changing lives, but there have been problems with it. There have been problems because the Scheme’s been treated as the only lifeboat in the ocean for Australians with disability, because there hasn’t been proper scrutiny of the payment system, because whilst most providers are doing a great job, some are not. But what we’re able to say today is that the reforms which Labor has put in place with people with disability, with states and territories, is improving the bottom line of the Scheme. We’re getting better outcomes without having to spend quite as much money as we expected to, which is good news for taxpayers and for people on the Scheme, because quality is being emphasised. But also, the National Safeguards Commission, who is the watchdog, to make sure that participants on the Scheme are both safe and receiving quality services Labor has invested significantly, we’ve doubled their staff, we’ve majorly increased their funding. What it means is we’re now able to ensure that we are now seeing greater attention paid to the quality and the safeguarding of NDIS participants.

Why don’t we leave it at that from me for now. We’re happy to take questions, but I might invite Louise Glanville, the new Quality and Safeguards Commissioner, to explain what’s been happening with how we’re keeping people safe. And then I might invite Natalie Wade, the Associate Commissioner, to add some further remarks.

LOUISE GLANVILLE, NDIS QUALITY AND SAFEGUARDS COMMISSIONER: Thank you for that, Minister. It’s great to be here with you and with Natalie today. And what’s really important about the work of the Commission, that it is building progressively to being a strong regulator. Indeed, we want to be a formidable regulator. We want to ensure that people with disability are receiving the sorts of supports they need and the quality of services that they need. We know there are many providers out there that do fantastic work in relation to the disability space, and we are keen to ensure that that continues into the future.

It’s important that we think about the human rights of people with disability in this respect, and that we deliver on the promise of the NDIS for people to live ordinary lives, like we all do, in every single way. So, it’s wonderful to be here and to watch the way in which the regulatory tools that we can be using to assist with that process are really on the increase and on the improve that the government, the federal government has made substantial commitment to our resourcing to enable us to do that work well. There has been a strong staff grown, and certainly I give credit to my predecessor, Mike Phelan, who has been acting in this space and has done some great work in leading the team at the commission in order to do this very important piece of work that will assist in ensuring the sustainability of the NDIS over time.

NATALIE WADE, NDIS QUALITY AND SAFEGUARDS ASSOCIATE COMMISSIONER: Thank you, Minister and Commissioner Glanville. Today’s annual report from the NDIS Quality and Safeguards Commission, really highlights that with the increase in complaints there is a demonstrated trust between the Commission, but also the disability community, where people with disabilities are bringing forward to us at the regulator, the issues that they’re facing in receiving quality and safe services.

It is fundamental to our work as a regulator to hear directly from people with disability and for them to trust that when they tell us that there is a problem, that they will be able to receive a response and resolve, and those matters will be [inaudible].

It’s really important to reflect on the increase of regulatory action that has been taken by the Commission in the last 12 months. It is absolutely imperative that providers be supported to understand their role in providing quality and safe services to people with disability. But it’s also fundamental to ensure that when things go wrong or providers do not do what they are expected to do, that regulatory action follows. And today’s annual report really highlights that that is exactly what has been happening in the last 12 months.

Commissioner Glanville and I are very much looking forward to continuing the work from the last 12 months and ensuring that the human rights of people with disability is centred in our work, that providers are most supportive, and that we all move forward to advance the rights of people with disability as we regulate this space.

JOURNALIST: Part of these reports, will anything in the near future be addressing the wait times to get onto the NDIS?

SHORTEN: Yeah, the NDIS has grown remarkably. The year before I became the Minister, it was growing at 23%. That’s too fast. That’s I think reflecting also a lack of other services for Australians with disability. One thing that has happened though in the last 12 months as we’ve been reforming the Scheme, is that there’s been almost the analogy that, there’s almost been a rush for last drinks at the pub, so to speak, by a proportion of providers who have been desperate to try and get some extra money out of the Scheme before they can’t any longer. So that has led to, I think, a surge in people seeking change of circumstances. Listen, long story short, we’ve got to treat every application and every change of circumstance as serious and legitimate until proven otherwise.

But what that has meant is a doubling in the workload of the agency. We’ve surged workforce to help get rid of the backlog of claims. We’re sorry that people have been inconvenienced, but we are now seeing a decrease in the claims coming in and the variations coming in as people calm down and realize that the Scheme isn’t actually just trying to exit a whole lot of people with permanent disability.

And also, some of the shonks are now being chased out. I mean, I think it shows the determination of the Albanese government that we have banned for life, in many cases 200 people, from providing services to the Scheme. 200 plus people have been banned in the last two years, 124 in the last 12 months. This is a clear message that if you just want to use people with disability as human ATMs, if you think that somehow a government Scheme of taxpayer money is easy pickings, you’re wrong. That’s changing.

JOURNALIST: And so, how is that working? How do you monitor those shonks for lack of a better word?

SHORTEN: When I became Minister three years ago, frankly, I was shocked and appalled at what I discovered. The Scheme had been rolled out and there were over half a million people on the Scheme, and that was good by the previous government. But the complete naivety, negligence of a lack of scrutiny of payments meant that people were able to draw down, in some cases, tens of thousands of dollars with no accountability, that there was no pre-checking of the integrity of invoices before they were paid, that we see price gouging, where some service providers will provide an identical service to someone on the Scheme to who’s not on the Scheme, identical, and it could be a shower chair or it could be a some other service, but they charge the NDIS participant more just because they’re on the NDIS.

So, we’ve now got rules against that. We’ve set up what’s called a Fraud Fusion Taskforce. They have got hundreds of investigations underway. It shouldn’t have been the case, but it’s taken until now and this government, to get 21 Commonwealth agencies working with each other. And, you know, we’re now sending people to jail for ripping off the Scheme. I think there was a view in the unethical parts of the community that NDIS is a government Scheme, it’s easy money to cheat. Those wells are drying up, because we are now investing in a state-of-the-art investigation processes. I must always stress though, it is changing hundreds of thousands of lives for the better, and most service providers are doing a good job. But there has been an element of fraud, unethical behaviour, price gouging and opportunism. And we say to those people, get off our Scheme, you’re not welcome, you will get caught.

JOURNALIST: And then just a question, locally in Port Augusta earlier this week, there was the death of a 26-year-old woman with severe intellectual and physical disabilities. Are you aware of that?

SHORTEN: It’s shocking and tragic about Tegan’s passing in Port Augusta. She wasn’t on the NDIS. South Australian Police are investigating it. It’s not compulsory to be on the NDIS, but I think it is a wakeup call for community to look out for each other. This is a more general comment, not reflecting on the NDIS, but just all of us. Someone who’s vulnerable is not someone else’s business. We should all keep an eye out for our neighbours. You can do that without being a nosey parker, but we’ve got to look after each other. SA police will do, I’m sure, an excellent job in getting to what has happened. We certainly will take a keen interest to see what lessons there are.

One thing that the NDIS is doing is that when people are presenting for their plans, we are now – and this is following Annie Smith’s death, that tragedy which was completely avoidable and culpable – what we are now doing is making sure that if you’re on the NDIS, you’ve got more than one relationship. You can’t just be with a carer or just with a family member. We want to make sure that that’s a red flag to us because we it takes it takes a village to support anyone. And that’s what we’ve got to behave. We’ve got to get back to that true Australian value.

JOURNALIST: Are you aware of she was receiving any government payments, Centrelink or?

SHORTEN: I don’t know.

JOURNALIST: And now completely unrelated from Canberra. Um, do you believe the Prime Minister and his claims about contact with Qantas?

SHORTEN: Yes, I do. Um, the Prime Minister has been diligent in reporting, um, any upgrades and disclosures. He’s acted consistently with the standards which are set out for our parliamentarians. The opposition has tried to smear the Prime Minister, but a lot of it seems to have blown back in their own face. Again, you know, Mr. Dutton, he says it’s wrong of Mr. Albanese to accept an upgrade, which he declared. But then again, when you take a favour from Gina Rinehart, you know, is there an expectation? So, their transport spokeswoman, Bridget, just said it came out all guns blazing but managed to shoot her foot off.

So, what Australians want us to do is adhere to proper standards of ethical conduct. What Australians want us to do is be transparent in our dealings with all people, and what they want us to do is get on with the cost-of-living issues. I mean, the opposition, the Liberal Party, has stolen a week of the nation’s life talking about this. All it’s done is probably depress Australians opinions of politicians generally. But in the meantime, people are battling their mortgages. People are trying to make ends meet. That’s where Labor’s head is at. And I think that’s what they expect of all parliamentarians.

JOURNALIST: Someone leaking out of the ministry called the Prime Minister a sook. So, you think that the PM is being a sook in this situation?

SHORTEN: Oh, I’m not even going to respond. I mean, frankly, that is not an accurate characterisation.

MIL OSI News –

MIL-OSI Security: Two Violent Sex Traffickers Sentenced to Combined 39 Years

Source: United States Department of Justice (Human Trafficking)

RALEIGH, N.C. – D’Angelo Taborn, of Durham, was sentenced today to 27 years in prison for sex trafficking by force, fraud, or coercion. Following an FBI sting operation in Jacksonville, NC, Taborn and his co-defendant, Imani Franco, were arrested for using threats to coerce women into sex trafficking. Taborn, 31, pled guilty to the charge on July 24, 2024. Franco, 30, pled guilty on April 25, 2024, and was sentenced on September 23, 2024, to 12 years.

“Our Human Trafficking Task Force brings agencies together to expose traffickers, rescue victims, and dismantle the illicit networks that traffic in human beings for sex or labor,” said U.S. Attorney Michael F. Easley, Jr. “These defendants treated their victims like animals, deprived them of food, and threatened them with violence if they did not comply. Thankfully the FBI, NCIS, and local law enforcement acted swiftly, to hold the traffickers accountable and help put the survivors on their path of healing.”

“It is difficult to hear these victims literally felt “caged” by these offenders. To be forced into sex trafficking, to have to ask for food, those are deplorable conditions for any human being to endure,” said Robert M. DeWitt the FBI Special Agent in Charge in North Carolina. “The FBI and our local law enforcement partners will never stop working to combat human trafficking.”

According to court documents and other information presented in court, on August 12, 2022, the Federal Bureau of Investigation’s Human Trafficking Task Force conducted a proactive sting operation in Jacksonville, based on online advertisements for commercial sex. An undercover officer responded to an advertisement and was directed to a hotel in Jacksonville. The undercover officer encountered a young female depicted in the advertisement, later identified as Victim 1.

A short time later, law enforcement observed the defendants step out of a hotel room just down the hall. When they saw law enforcement, Taborn and Franco attempted to leave, but they were detained while officers obtained search warrants for their hotel room and vehicle. Taborn and Franco carried three phones between them, and when officers called the number listed in the commercial sex advertisement for Victim 1, one of the phones rang.

When Taborn and Franco were arrested, Victim 1 became visibly relieved. She explained that Taborn and Franco had recruited her a month earlier and that they expected her to engage in commercial sex to make money for them. Taborn required Victim 1 to perform oral sex on him twice to ensure she was a “good product.” Taborn and Franco controlled all aspects of the commercial sex operation and took all the money that Victim 1 earned. They transported Victim 1 to different cities—Jacksonville, Charlotte, Durham, and Danville, Virginia—to find additional customers for commercial sex. Investigators located numerous commercial sex advertisements and obtained hotel receipts and surveillance footage that confirmed Victim 1’s account.

Victim 1 described how she feared Taborn and felt “like an animal in a cage.” She was not allowed to leave her room and had to request food and water from Taborn and Franco. When officers recovered her, it had been more than 24 hours since she had last eaten—a meal that consisted of four leftover chicken wings from Taborn’s and Franco’s dinner. On one occasion, Victim 1 witnessed Taborn and Franco recruit another female victim, Victim 2, who they picked up in South Carolina and transported back to North Carolina. Victim 2 had not known they wanted her to engage in commercial sex in North Carolina. When Victim 2 said she did not want to participate, Taborn threatened her with his black handgun in front of Victim 1. Officers found a firearm with an extended magazine and laser matching the description in the glovebox of Taborn’s car.

Michael F. Easley, Jr., U.S. Attorney for the Eastern District of North Carolina made the announcement after sentencing by U.S. District Judge James C. Dever III. The Federal Bureau of Investigation (FBI) undertook this investigation as part of “Operation Cross Country,” a nationwide sex-trafficking enforcement campaign, with assistance from the Onslow County Sheriff’s Office, the New Hanover County Sheriff’s Office, the Jacksonville Police Department, and the Naval Criminal Investigative Service (NCIS). Assistant U.S. Attorney Jake D. Pugh prosecuted the case.

This case was part of our Human Trafficking Task Force created to expose and prosecute anyone who exploits North Carolinians for sex or forced labor. Our victim-centric approach focuses on stabilizing victims, getting them resources, and helping them through the court process. If you have a tip about trafficking, text 233733.

Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No. 7:23-cr-0092-D.

MIL-OSI: Northway Financial, Inc. Announces Third Quarter Earnings

Source: GlobeNewswire (MIL-OSI)

NORTH CONWAY, N.H., Nov. 01, 2024 (GLOBE NEWSWIRE) — Northway Financial, Inc. (the “Company”) (OTCQB: NWYF), the parent company of Northway Bank (the “Bank”), today reported net income for the quarter ended September 30, 2024 of $1.2 million, or $0.45 per basic common share, compared to $1.6 million, or $0.58 per basic common share for the quarter ended September 30, 2023. For the nine months ended September 30, 2024, the Company reported net income of $3.6 million, or $1.31 per basic common share, compared to $4.7 million, or $1.71 per basic common share for the same period in 2023.

President and CEO William J. Woodward commented: “During the third quarter we continued to reduce our reliance on wholesale funding by putting a focus on retaining deposits and limiting our lending. Wholesale funding decreased by $122 million, significantly reducing our reliance on wholesale funding. The third quarter was marked by the announcement of our pending merger with Camden National Corporation. The closing date of the merger is still to be determined but we anticipate the merger to be completed in the first quarter of 2025. We will be holding a special shareholder meeting to approve the merger agreement. The details of the merger and the shareholder meeting will be sent to all shareholders in the coming weeks. Please look out for the information and return your proxy card as soon as possible. The Board of Directors have unanimously approved the merger, and your support, as always, is greatly appreciated.”

Financial Highlights

Total Assets were $1.2 billion, Loans, Net, were $900 million, and Total Deposits were $1 billion at September 30, 2024.
Total Assets decreased $137 million, or 10%, compared to September 30, 2023, driven by decreases in Loans, Net of $55 million, Cash and Due from Banks and Interest-Bearing Deposits of $51 million and Securities Available-for-Sale at Fair Value of $20 million.
The decrease in Loans, Net was led by a decrease in Commercial Real Estate loans of $25 million, Residential Real Estate loans of $22 million, and Consumer Loans of $6 million, compared to September 30, 2023.
Non-Municipal Deposits (excluding brokered deposits) increased $18 million compared to September 30, 2023 led by an increase in Retail Deposits of $21 million or 4%.
The increase in Retail Deposits was led by an increase in Time Deposits of $69 million offset by a decrease in Non-Maturity Deposits of $48 million.
Non-Municipal Deposits (excluding brokered deposits) increased $18 million, or 6%, compared to December 31, 2023.
Wholesale Funding, which includes brokered deposits and borrowings, decreased $122 million, or 49%, compared to September 30, 2023, and $82 million, or 39%, compared to December 31, 2023.
Total Equity increased $21 million, or 37%, compared to September 30, 2023, primarily from an increase in the market value of Securities Available-for-Sale at Fair Value.
Net Income for the nine-month period ending September 30, 2024, was $3.6 million, or $1.31, per basic common share.
Year-to-date Net Interest Income was $2.9 million lower than the same period last year driven by an increase in interest expense of $2.2 million.
The year-to-date Net Interest Margin decreased from 2.67% to 2.59% as funding costs increased .44% while the yield on earning assets increased 0.25%, compared to year-to-date September 30, 2023.
Nonperforming loans as a percentage of total loans stood at 0.41% compared to 0.31% at September 30, 2023.
Total delinquent loans as a percentage of total loans were 0.06% compared to 0.02% at September 30, 2023.
The Bank’s regulatory capital ratios at September 30, 2024 exceeded all well-capitalized ratios as defined under FDIC’s prompt corrective action rules.
The market price of our common stock, as of October 31, 2024, was $32.35.


Northway Financial, Inc.
Selected Financial Highlights
(Unaudited)

(Dollars in thousands, except per share data)	Three Months Ended					Nine Months Ended
	9/30/2024		9/30/2023			9/30/2024		9/30/2023

Interest and Dividend Income	$	12,772	$	13,372		$	37,576	$	38,260
Interest Expense		5,046		4,572			14,223		12,002
Net Interest and Dividend Income		7,726		8,800			23,353		26,258
Provision for Credit Losses		–		–			–		–
All Other Noninterest Income		1,445		1,036			3,819		3,535
Noninterest Expense		8,041		7,720			23,837		24,030
Net Income Before Gain (Loss) on Securities		1,130		2,116			3,335		5,763
Gain (Loss) on Securities Available-for-Sale, Net		–		–			–		–
(Loss) Gain on Marketable Equity Securities		249		(199	)		515		(309	)
Income before Income Tax (Benefit) Expense		1,379		1,917			3,850		5,454
Income Tax (Benefit) Expense		133		305			233		744
Net Income	$	1,246	$	1,612		$	3,617	$	4,710
Net Income Available to Common Stockholders	$	1,246	$	1,612		$	3,617	$	4,710
Earnings per Common Share, Basic	$	0.45	$	0.58		$	1.31	$	1.71


	9/30/2024			12/31/2023			9/30/2023

Balance Sheet
Total Assets	$	1,221,077		$	1,290,467		$	1,357,654
Cash and Due from Banks and Interest-Bearing Deposits		22,584			68,887			74,139
Securities Available-for-Sale, at Fair Value		241,224			246,756			261,502
Marketable Equity Securities, at Fair Value		3,104			2,589			3,405
Loans Held-for-Sale		1,555			–			–
Loans, Net		900,517			909,781			956,053
Total Liabilities		1,141,363			1,217,230			1,299,301
Non Municipal Non-Maturity Deposits		712,708			734,741			763,784
Municipal Non-Maturity Deposits		113,959			133,100			138,674
Certificates of Deposit		183,576			127,726			143,868
Securities Sold Under Agreements to Repurchase		49,722			55,353			68,728
Short-Term Borrowings		–			65,000			78,600
Long-Term Debt		45,000			60,000			60,000
Junior Subordinated Debentures		20,620			20,620			20,620
Stockholders’ Equity		79,714			73,237			58,353
Profitability and Efficiency
Net Interest Margin		2.59	%		2.63	%		2.67	%
Yield on Earning Assets		4.11			3.90			3.86
Cost of Interest Bearing Liabilities		1.98			1.63			1.54
Book Value Per Share of Common Shares Outstanding	$	28.97		$	26.62		$	21.21
Tangible Book Value Per Share of Common Shares Outstanding		25.18			22.83			17.42
Common Shares Outstanding		2,751,650			2,751,650			2,751,650
Weighted Average Number of Common Shares, Basic		2,751,650			2,751,650			2,751,650
Capital Ratios for the Bank
Tier 1 Core Capital to Average Assets		9.09	%		8.30	%		8.23	%
Common Equity Risk-Based Capital		15.27			14.40			13.91
Tier 1 Risk-Based Capital		15.27			14.40			13.91
Total Risk-Based Capital		16.52			15.65			15.16

About Northway Financial, Inc.

Northway Financial, Inc., headquartered in North Conway, New Hampshire, is a bank holding company. Through its subsidiary bank, Northway Bank, the Company offers a broad range of financial products and services to individuals, businesses, and the public sector from its 16 banking offices and its loan production offices located in Bedford and Portsmouth, New Hampshire.

Forward-looking Statements

Statements included in this press release that are not historical or current fact are “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Northway Financial, Inc. disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events or circumstances.

No Offer or Solicitation

This communication is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the pending merger of Camden National Corporation (“Camden National”) and the Company (the “Merger”) and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of Camden National, the Company or the combined company, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Additional Information and Where to Find It

In connection with the Merger, Camden National has filed a registration statement on Form S-4 with the SEC, which also includes a proxy statement of Northway and a prospectus of Camden National, and Camden National will file other documents regarding the proposed transaction with the SEC. A definitive proxy statement/prospectus will also be sent to Northway stockholders seeking the required stockholder approval of the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF NORTHWAY ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS, WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The documents filed by Camden National with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, the documents filed by Camden National may be obtained free of charge under the “Investor Relations” section of Camden National’s website at http://www.camdennational.bank. Alternatively, these documents, when available, can be obtained free of charge from Camden National upon written request to Camden National Corporation, Attn: Corporate Secretary, 2 Elm Street, Camden, Maine 04843.

Participants in Solicitation

Camden National, Northway, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the U.S. Securities and Exchange Commission (the “SEC”). Information regarding Camden National’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 5, 2024, and certain other documents filed by Camden National with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

MIL-OSI: $TOCKHOLDER ALERT: The M&A Class Action Firm Continues To Investigate The Merger – IPG, VTS, AVTE, MHLD

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Jan. 25, 2025 (GLOBE NEWSWIRE) — Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered millions of dollars for shareholders and is recognized as a Top 50 Firm by ISS Securities Class Action Services Report. We are headquartered at the Empire State Building in New York City and are investigating:

The Interpublic Group of Companies, Inc. (NYSE: IPG), relating to the proposed merger with Omnicom Group Inc. Under the terms of the agreement, Interpublic shareholders will own 39.4% of the combined company.

Click here for more https://monteverdelaw.com/case/interpublic-group-of-companies-inc-ipg/. It is free and there is no cost or obligation to you.

Vitesse Energy, Inc. (NYSE: VTS), relating to the proposed merger with Lucero Energy Corp. Under the terms of the agreement, Vitesse stockholders are expected to own approximately 80% of the Company and Lucero shareholders are expected to own 20%.

Click here for more https://monteverdelaw.com/case/vitesse-energy-inc-vts/. It is free and there is no cost or obligation to you.

Aerovate Therapeutics, Inc. (NASDAQ: AVTE), relating to a proposed merger with Jade Biosciences. Under the terms of the agreement, pre-merger Aerovate stockholders are expected to own approximately 1.6% of the combined company, while pre-merger Jade stockholders are expected to own approximately 98.4% of the combined entity.

Click here for more information https://monteverdelaw.com/case/aerovate-therapeutics-inc-avte/. It is free and there is no cost or obligation to you.

Maiden Holdings, Ltd. (NASDAQ: MHLD), relating to the proposed merger with Kestrel Group LLC. Under the terms of the agreement, each issued and outstanding common share of Maiden will be converted into the right to receive one common share in the combined company.

Click here for more https://monteverdelaw.com/case/maiden-holdings-ltd-mhld/. It is free and there is no cost or obligation to you.

NOT ALL LAW FIRMS ARE THE SAME. Before you hire a law firm, you should talk to a lawyer and ask:

Do you file class actions and go to Court?
When was the last time you recovered money for shareholders?
What cases did you recover money in and how much?

About Monteverde & Associates PC

Our firm litigates and has recovered money for shareholders…and we do it from our offices in the Empire State Building. We are a national class action securities firm with a successful track record in trial and appellate courts, including the U.S. Supreme Court.

No company, director or officer is above the law. If you own common stock in any of the above listed companies and have concerns or wish to obtain additional information free of charge, please visit our website or contact Juan Monteverde, Esq. either via e-mail at jmonteverde@monteverdelaw.com or by telephone at (212) 971-1341.

Contact:
Juan Monteverde, Esq.
MONTEVERDE & ASSOCIATES PC
The Empire State Building
350 Fifth Ave. Suite 4740
New York, NY 10118
United States of America
jmonteverde@monteverdelaw.com
Tel: (212) 971-1341

Attorney Advertising. (C) 2024 Monteverde & Associates PC. The law firm responsible for this advertisement is Monteverde & Associates PC (www.monteverdelaw.com). Prior results do not guarantee a similar outcome with respect to any future matter.

MIL-OSI Security: “Bearded Bandit” Bank Robber Admits Striking the Same Rhode Island Bank Again

Source: Office of United States Attorneys

PROVIDENCE, RI – A Cranston man, previously convicted in federal court and incarcerated for more than six years for robbing nine banks in 2012, admitted to a federal judge on Wednesday that he participated in the robbery of an East Providence bank on New Year’s Eve in December 2019, a bank he had previously robbed during his 2012 spree, announced United States Attorney Zachary A. Cunha.

Justin Worley, 44, known previously as the “Bearded Bandit,” admitted that he entered the bank late in the afternoon of December 31, 2019 with another person, and that they each approached a teller and demanded that they empty their money drawers. The second man, later identified as Nicholas Lage, 38, brandished a knife during the robbery. Between them, the two men fled the bank with approximately $12,000. They were spotted and arrested later in the evening at Twin River casino.

Worley pleaded guilty on Wednesday to charges of conspiracy to commit bank robbery and bank robbery. He is scheduled to be sentenced on January 30, 2025. The defendant’s sentences will be determined by a federal district judge after consideration of the U.S. Sentencing Guidelines and other statutory factors.

Nicholas Lage pleaded guilty on April 1, 2021, to charges of conspiracy to commit bank robbery and bank robbery. He was sentenced on August 6, 2021, to 36 months of incarceration to be followed by three years of federal supervised release.

The case is being prosecuted by Assistant United States Attorney Ronald R. Gendron.

The matter was investigated by East Providence Police Department and the FBI.

###

MIL-OSI: Glen Burnie Bancorp Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

GLEN BURNIE, Md., Oct. 31, 2024 (GLOBE NEWSWIRE) — Glen Burnie Bancorp (“Bancorp”) (NASDAQ: GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net income of $129,000, or $0.04 per basic and diluted common share for the three-month period ended September 30, 2024, compared to net income of $551,000, or $0.19 per basic and diluted common share for the three-month period ended September 30, 2023. Bancorp reported a net loss of $72,000, or $0.02 per basic and diluted common share for the nine-month period ended September 30, 2024, compared to net income of $1.3 million, or $0.44 per basic and diluted common share for the same period in 2023. On September 30, 2024, Bancorp had total assets of $368.4 million. Bancorp is the oldest independent commercial bank in Anne Arundel County.

“The Company’s positive earnings results for the third quarter 2024 reflect efficient and productive operations, a focus on disciplined loan growth, and balance sheet management. However, our financial performance for the year 2024 is disappointing and represents the challenges inherent in navigating the interest rate environment of the last several years. The Company is focused on generating additional interest earning assets at higher current market and rebuilding our base of core, low-cost deposits,” said Mark C. Hanna, President, and Chief Executive Officer. “Despite the challenges of declining net interest income, the Company’s financial strength is reflected in a strong capital position, available liquidity and prudent expense management. Although interest expense increased significantly in year over year comparisons, prompt adjustments to rates on loans contributed to expanded interest income and higher yields on earning assets that partially offset higher interest expense and helped mitigate margin compression.”

In closing, Mr. Hanna added, “To invest in strategic opportunities that will benefit the long-term performance of the Bank, the difficult decision was made to change the longstanding practice of approving quarterly cash dividends for shareholders. As the Bank evaluates our next 75 years, we are committed to our business model and the economic strength of the communities we serve. To better serve the evolving needs of our clients, there is a need to reinvest in our people, technology, products and facilities. Based on our capital levels, conservative underwriting policies, on-and off-balance sheet liquidity, strong loan diversification, and current economic conditions within the markets we serve, management expects to navigate the uncertainties and remain well-capitalized. We will continue to execute on our strategic priorities to generate organic loan and deposit growth.”

Highlights for the First Nine Months of 2024

Despite growth in loans and deposits in the first nine months of the year, net interest income decreased $1.1 million, or 11.54% to $8.2 million through September 30, 2024, as compared to $9.2 million during the same period of 2023. The decrease resulted primarily from a $2.4 million increase in interest expense. The increase in interest on deposits was driven by the higher cost of money market deposit balances. The increase in interest on borrowings was driven by a $25.6 million increase in the average balance of borrowed funds due to the elevated level of deposit runoff that occurred in 2023.

Due to growth of $30.7 million in the loan portfolio and a 0.11% increase in the current expected credit loss (“CECL”) percentage, the Company added $591,000 to its allowance for credit losses on loans in the first nine months of 2024, as compared to a $68,000 release of allowance for credit losses in the first nine months of 2023. While this provision negatively impacted earnings in the first half of the year, the growth in loan balances should generate additional interest revenue in future periods. The Company expects that its strong liquidity and capital positions, along with the Bank’s total regulatory capital to risk weighted assets of 16.72% on September 30, 2024, as compared to 18.10% for the same period of 2023, will provide ample capacity for future growth.

Return on average assets for the three-month period ended September 30, 2024, was 0.14%, as compared to 0.61% for the three-month period ended September 30, 2023. Return on average equity for the three-month period ended September 30, 2024, was 2.63%, as compared to 12.47% for the three-month period ended September 30, 2023. Lower net income and a higher average asset balance primarily drove the lower return on average assets, while lower net income and a higher average equity balance primarily drove the lower return on average equity.

The cost of funds increased 0.86% when comparing September 30, 2024, to the same period in 2023, rising from 0.46% to 1.32%. This 0.86% increase was primarily due to the change in the funding mix between lower cost interest-bearing and noninterest-bearing deposit balances and higher cost borrowed funds and money market deposit balances.

On September 30, 2024, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 15.47% on September 30, 2024, as compared to 17.37% on December 31, 2023. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

Balance Sheet Review

Total assets were $368.4 million on September 30, 2024, an increase of $13.0 million or 3.66%, from $355.4 million on September 30, 2023. Investment securities decreased by $22.7 million or 15.94% to $120.0 million as of September 30, 2024, compared to $142.7 million for the same period of 2023. Loans, net of deferred fees and costs, were $207.0 million on September 30, 2024, an increase of $32.2 million or 18.41%, from $174.8 million on September 30, 2023. Cash and cash equivalents increased $7.9 million or 54.68%, from September 30, 2023 to September 30, 2024.

Total deposits were $314.2 million on September 30, 2024, a decrease of $600,000 or 0.18%, from $314.8 million on September 30, 2023. Despite the year-over-year decline, deposit balances have increased $14.2 million or 4.73% from December 31, 2023. Noninterest-bearing deposits were $115.9 million on September 30, 2024, a decrease of $11.0 million or 8.64%, from $126.9 million on September 30, 2023. Interest-bearing deposits were $198.3 million on September 30, 2024, an increase of $10.4 million or 5.53%, from $187.9 million on September 30, 2023. Total borrowings were $30.0 million on September 30, 2024, an increase of $5.0 million or 20.00%, from $25.0 million on September 30, 2023.
As of September 30, 2024, total stockholders’ equity was $21.2 million (5.74% of total assets), equivalent to a book value of $7.29 per common share. Total stockholders’ equity on September 30, 2023, was $13.2 million (3.70% of total assets), equivalent to a book value of $4.57 per common share.

Asset quality, which has trended within a narrow range over the past several years, has remained sound as of September 30, 2024. Nonperforming assets, which consist of nonaccrual loans, restructured loans to borrowers with financial difficulty, accruing loans past due 90 days or more, and other real estate owned (“OREO”), represented 0.08% of total assets on September 30, 2024, compared to 0.15% on December 31, 2023, demonstrating positive asset quality trends across the portfolio. The allowance for credit losses on loans was $2.75 million, or 1.33% of total loans, as of September 30, 2024, compared to $2.16 million, or 1.22% of total loans, as of December 31, 2023. The allowance for credit losses for unfunded commitments was $597,000 as of September 30, 2024, compared to $473,000 as of December 31, 2023.

Review of Financial Results

For the three-month periods ended September 30, 2024, and 2023

Net income for the three-month period ended September 30, 2024, was $129,000, as compared to net income of $551,000 for the three-month period ended September 30, 2023. The decrease is primarily the result of a $614,000 increase in interest expense on deposits and a $126,000 increase in interest expense on short-term borrowings, a $287,000 decrease in interest and dividends on securities, a $170,000 increase in the provision for credit losses on loans and a $197,000 increase in noninterest expenses. These decreases were partially offset by an increase of $763,000 in loan interest income and fees, and a $133,000 increase in interest on deposits with banks. The Company’s need to defend its deposit base as well as grow interest-earning asset balances necessitated a strategic change in direction that resulted in the increased interest expense.

Net interest income for the three-month period ended September 30, 2024, totaled $2.8 million, a decrease of $131,000 from the three-month period ended September 30, 2023. The decrease in net interest income was due to a $740,000 increase in the cost of interest-bearing deposits and borrowings driven by a $17.3 million increase in the average balance of interest-bearing funds and a $16.6 million decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $609,000 increase in total interest income due to a 0.66% increase in the yield of interest earning assets.

Net interest margin for the three-month period ended September 30, 2024, was 3.06%, compared to 3.21% for the same period of 2023. Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds, partially offset by higher average yields and balances on interest-earning assets were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $17.3 million and decreased $16.6 million, respectively, and the cost of funds increased 0.86%, when comparing the three-month periods ending September 30, 2023, and 2024. The average balance of interest-earning assets increased $0.8 million while the yield increased 0.66% from 3.64% to 4.30%, when comparing the three-month periods ending September 30, 2023, and 2024, respectively.

The average balance of interest-bearing deposits in banks and investment securities decreased $25.3 million from $188.2 million to $162.9 million for the third quarter of 2024, compared to the same period of 2023, while the yield remained unchanged during that same period.

Average loan balances increased $26.1 million to $203.3 million for the three-month period ended September 30, 2024, compared to $177.2 million for the same period of 2023, while the yield increased 0.89% from 4.80% to 5.69% during that same period. The increase in loan yields for the third quarter of 2024 reflected the runoff of the lower yielding loans and the origination of higher yielding loans in the current higher rate environment.

The provision of allowance for credit loss on loans for the three-month period ended September 30, 2024, was $78,000, compared to a release of allowance for credit loss of $92,000 for the same period of 2023. The $170,000 increase in the provision for the three-month period ended September 30, 2024, when compared to the three-month period ended September 30, 2023, primarily reflects a $32.0 million increase in the reservable balance of the loan portfolio and a 0.13% increase in the current expected credit loss percentage.

For the three-month period ended September 30, 2024, noninterest expense was $3.0 million, compared to $2.8 million for the three-month period ended September 30, 2023, an increase of $200,000. The primary contributors to the $200,000 increase, when compared to the three-month period ended September 30, 2023, were increases in legal, accounting, and other professional fees, data processing and item processing services, advertising and marketing related expenses, and other expenses (primarily allowance for unfunded commitments), offset by decreases in salary and employee benefits.

For the nine-month periods ended September 30, 2024, and 2023

Net loss for the nine-month period ended September 30, 2024, was $72,000, as compared to net income of $1.3 million for the nine-month period ended September 30, 2023. The decrease is primarily the result of a $460,000 decrease in interest and dividends on securities, a $1.0 million increase in interest expense on short-term borrowings, a $1.4 million increase in interest expense on deposits and a $780,000 increase in the provision for credit losses on loans, partially offset by an increase of $1.3 million in loan interest income and fees, a $535,000 increase in interest on deposits with banks and a $569,000 decrease in the provision for income taxes.

Net interest income for the nine-month period ended September 30, 2024, totaled $8.2 million, a decrease of $1.1 million from the nine-month period ended September 30, 2023. The decrease in net interest income was due to a $2.4 million increase in the cost of interest-bearing deposits and borrowings driven by a $17.3 million increase in the average balance of interest-bearing funds and a $20.0 million decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $1.3 million increase in total interest income due to a 0.51% increase in the yield of interest earning assets.

Net interest margin for the nine-month period ended September 30, 2024, was 2.98%, compared to 3.35% for the same period of 2023. Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds, partially offset by higher average yields on interest-earning assets, were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $17.3 million and decreased $20.0 million, respectively, and the cost of funds increased 0.94%, when comparing the nine-month periods ending September 30, 2023, and 2024. The average balance of interest-earning assets decreased $2.7 million, while the yield increased 0.51% from 3.59% to 4.10%, when comparing the nine-month periods ending September 30, 2023, and 2024, respectively.

The average balance of interest-bearing deposits in banks and investment securities decreased $10.1 million from $187.9 million to $177.8 million for the first nine months of 2024, compared to the same period of 2023, while the yield increased 0.20% from 2.51% to 2.71% during that same period. The increase in yields is attributed to the higher interest rate environment and its positive impact on cash balances and investment yields.

Average loan balances increased $7.4 million to $188.6 million for the nine-month period ended September 30, 2024, compared to $181.2 million for the same period of 2023, while the yield increased 0.72% from 4.70% to 5.42% during that same period. The increase in loan yields for the first nine months of 2024 reflected the runoff of the lower yielding loans and origination of higher yielding loans in the current higher rate environment.

The Company recorded a provision of allowance for credit loss on loans of $773,000 for the nine-month period ending September 30, 2024, compared to a release of allowance for credit loss of $7,000 for the same period in 2023. The $780,000 increase in the provision in 2024, compared to 2023, primarily reflects a $32.0 million increase in the reservable balance of the loan portfolio and a 0.13% increase in the current expected credit loss percentage. As a result, the allowance for credit loss on loans was $2.75 million on September 30, 2024, representing 1.33% of total loans, compared to $2.09 million, or 1.20% of total loans on September 30, 2023.

For the nine-month period ended September 30, 2024, noninterest expense was $8.8 million, compared to $8.7 million for the nine-month period ended September 30, 2023. The primary contributors when comparing to the nine-month period ended September 30, 2023, were increases in occupancy and equipment expenses, legal, accounting, and other professional fees, advertising and marketing related expenses, and other expenses (primarily allowance for unfunded commitments), offset by decreases in salary and employee benefits costs.

Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland. Founded in 1949, The Bank of Glen Burnie® is a locally owned community bank with 8 branch offices serving Anne Arundel County. The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships, and corporations. The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans. The Bank also originates automobile loans through arrangements with local automobile dealers. Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission.

For further information contact:

Jeffrey D. Harris, Chief Financial Officer
410-768-8883
jdharris@bogb.net
106 Padfield Blvd
Glen Burnie, MD 21061

GLEN BURNIE BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

	September 30,			June 30,			December 31,			September 30,
		2024			2024			2023		2023
	(unaudited)			(unaudited)			(audited)			(unaudited)
ASSETS
Cash and due from banks	$	2,255		$	1,804		$	1,940		2,380
Interest-bearing deposits in other financial institutions		20,207			14,982			13,301		12,142
Total Cash and Cash Equivalents		22,462			16,786			15,241		14,522

Investment securities available for sale, at fair value		119,958			117,180			139,427		142,705
Restricted equity securities, at cost		246			246			1,217		980

Loans, net of deferred fees and costs		206,975			201,500			176,307		174,796
Less: Allowance for credit losses⁽¹⁾		(2,748	)		(2,625	)		(2,157	)	(2,094	)
Loans, net		204,227			198,875			174,150		172,702

Premises and equipment, net		2,723			2,833			3,046		3,177
Bank owned life insurance		8,789			8,744			8,657		8,614
Deferred tax assets, net		6,879			8,329			7,897		10,187
Accrued interest receivable		1,478			1,358			1,192		1,373
Accrued taxes receivable		497			552			121		189
Prepaid expenses		486			355			475		538
Other assets		614			458			390		377
Total Assets	$	368,359		$	355,716		$	351,813		355,364

LIABILITIES
Noninterest-bearing deposits	$	115,938		$	109,631		$	116,922		126,898
Interest-bearing deposits		198,335			196,235			183,145		187,943
Total Deposits		314,273			305,866			300,067		314,841

Short-term borrowings		30,000			30,000			30,000		25,000
Defined pension liability		329			328			324		322
Accrued expenses and other liabilities		2,597			2,051			2,097		2,040
Total Liabilities		347,199			338,245			332,488		342,203

STOCKHOLDERS’ EQUITY
Common stock, par value $1, authorized 15,000,000 shares, issued and outstanding 2,900,681; 2,893,648; 2,882,627; 2,877,084 shares as of September 30, 2024, June 30, 2024, December 31, 2023, and September 30,2023 respectively.		2,901			2,894			2,883		2,877
Additional paid-in capital		11,037			11,014			10,964		10,940
Retained earnings		22,921			23,081			23,859		23,980
Accumulated other comprehensive loss		(15,699	)		(19,518	)		(18,381	)	(24,636	)
Total Stockholders’ Equity		21,160			17,471			19,325		13,161
Total Liabilities and Stockholders’ Equity	$	368,359		$	355,716		$	351,813		355,364

GLEN BURNIE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Interest income
Interest and fees on loans	$	2,908		$	2,145		$	7,648		$	6,368
Interest and dividends on securities		814			1,101			2,605			3,065
Interest on deposits with banks and federal funds sold		237			104			1,004			469
Total Interest Income		3,959			3,350			11,257			9,902

Interest expense
Interest on deposits		730			116			1,716			337
Interest on short-term borrowings		408			282			1,363			320
Total Interest Expense		1,138			398			3,079			657

Net Interest Income		2,821			2,952			8,178			9,245
Provision (release) of credit loss allowance		78			(92	)		773			(7	)
Net interest income after provision of credit loss provision		2,743			3,044			7,405			9,252

Noninterest income
Service charges on deposit accounts		36			40			109			120
Other fees and commissions		273			233			584			560
Income on life insurance		45			42			132			120
Total Noninterest Income		354			315			825			800

Noninterest expenses
Salary and employee benefits		1,654			1,691			4,872			5,089
Occupancy and equipment expenses		327			329			996			955
Legal, accounting and other professional fees		267			194			769			692
Data processing and item processing services		263			206			755			755
FDIC insurance costs		41			40			119			122
Advertising and marketing related expenses		40			26			88			72
Loan collection costs		5			10			11			13
Telephone costs		41			38			110			113
Other expenses		380			287			1,052			880
Total Noninterest Expenses		3,018			2,821			8,772			8,691

Income (loss) before income taxes		79			538			(542	)		1,361
Income tax (benefit) expense		(50	)		(13	)		(470	)		99

Net income (loss)	$	129		$	551		$	(72	)	$	1,262

Basic and diluted net income (loss) per common share	$	0.04		$	0.19		$	(0.02	)	$	0.44

GLEN BURNIE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the nine months ended September 30, 2024 and 2023
(dollars in thousands)
(unaudited)

								Accumulated
			Additional					Other			Total
	Common		Paid-in		Retained			Comprehensive			Stockholders’
	Stock		Capital		Earnings			Loss			Equity
Balance, December 31, 2022	$	2,865	$	10,862	$	23,579		$	(21,252	)	$	16,054

Net income		–		–		1,262			–			1,262
Cash dividends, $0.30 per share		–		–		(861	)		–			(861	)
Dividends reinvested under
dividend reinvestment plan		12		78		–			–			90
Other comprehensive loss		–		–		–			(3,384	)		(3,384	)
Balance, September 30, 2023	$	2,877	$	10,940	$	23,980		$	(24,636	)	$	13,161


								Accumulated
			Additional					Other			Total
	Common		Paid-in		Retained			Comprehensive			Stockholders’
	Stock		Capital		Earnings			(Loss) Income			Equity
Balance, December 31, 2023	$	2,883	$	10,964	$	23,859		$	(18,381	)	$	19,325

Net loss		–		–		(72	)		–			(72	)
Cash dividends, $0.30 per share		–		–		(866	)		–			(866	)
Dividends reinvested under
dividend reinvestment plan		18		73		–			–			91
Other comprehensive income		–		–		–			2,682			2,682
Balance, September 30, 2024	$	2,901	$	11,037	$	22,921		$	(15,699	)	$	21,160

THE BANK OF GLEN BURNIE
CAPITAL RATIOS
(dollars in thousands)
(unaudited)

									To Be Well
									Capitalized Under
					To Be Considered				Prompt Corrective
					Adequately Capitalized				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of September 30, 2024:
Common Equity Tier 1 Capital	$	36,755	15.47	%	$	10,691	4.50	%	$	15,443	6.50	%
Total Risk-Based Capital	$	39,729	16.72	%	$	19,006	8.00	%	$	23,758	10.00	%
Tier 1 Risk-Based Capital	$	36,755	15.47	%	$	14,255	6.00	%	$	19,006	8.00	%
Tier 1 Leverage	$	36,755	10.11	%	$	14,539	4.00	%	$	18,173	5.00	%

As of June 30, 2024:
Common Equity Tier 1 Capital	$	36,896	15.59	%	$	10,652	4.50	%	$	15,386	6.50	%
Total Risk-Based Capital	$	39,857	16.84	%	$	18,937	8.00	%	$	23,671	10.00	%
Tier 1 Risk-Based Capital	$	36,896	15.59	%	$	14,202	6.00	%	$	18,937	8.00	%
Tier 1 Leverage	$	36,896	10.10	%	$	14,617	4.00	%	$	18,271	5.00	%

As of December 31, 2023:
Common Equity Tier 1 Capital	$	37,975	17.37	%	$	9,840	4.50	%	$	14,213	6.50	%
Total Risk-Based Capital	$	40,237	18.40	%	$	17,493	8.00	%	$	21,867	10.00	%
Tier 1 Risk-Based Capital	$	37,975	17.37	%	$	13,120	6.00	%	$	17,493	8.00	%
Tier 1 Leverage	$	37,975	10.76	%	$	14,113	4.00	%	$	17,641	5.00	%

As of September 30, 2023:
Common Equity Tier 1 Capital	$	38,053	17.12	%	$	10,004	4.50	%	$	14,450	6.50	%
Total Risk-Based Capital	$	40,227	18.10	%	$	17,785	8.00	%	$	22,231	10.00	%
Tier 1 Risk-Based Capital	$	38,053	17.12	%	$	13,338	6.00	%	$	17,785	8.00	%
Tier 1 Leverage	$	38,053	10.56	%	$	14,420	4.00	%	$	18,026	5.00	%

GLEN BURNIE BANCORP AND SUBSIDIARY
SELECTED FINANCIAL DATA
(dollars in thousands, except per share amounts)

	Three Months Ended									Year Ended
	September 30,			June 30,			September 30,			December 31,
		2024			2024			2023			2023
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

Financial Data
Assets	$	368,359		$	355,716		$	355,364		$	351,813
Investment securities		119,958			117,180			142,705			139,427
Loans, (net of deferred fees & costs)		206,975			201,500			174,796			176,307
Allowance for loan losses		2,748			2,625			2,094			2,157
Deposits		314,273			305,866			314,841			300,067
Borrowings		30,000			30,000			25,000			30,000
Stockholders’ equity		21,160			17,471			13,161			19,325
Net income (loss)		129			(204	)		551			1,429

Average Balances
Assets	$	364,127		$	366,071		$	360,767		$	361,731
Investment securities		142,972			148,690			177,856			173,902
Loans, (net of deferred fees & costs)		203,316			186,650			177,223			179,790
Deposits		312,019			307,427			321,318			330,095
Borrowings		30,001			38,891			19,946			12,580
Stockholders’ equity		19,559			17,369			17,548			17,105

Performance Ratios
Annualized return on average assets		0.14	%		-0.22	%		0.61	%		0.40	%
Annualized return on average equity		2.63	%		-4.72	%		12.47	%		8.35	%
Net interest margin		3.06	%		3.02	%		3.21	%		3.31	%
Dividend payout ratio		224	%		-142	%		52	%		80	%
Book value per share	$	7.29		$	6.04		$	4.57		$	6.70
Basic and diluted net income per share		0.04			(0.07	)		0.19			0.50
Cash dividends declared per share		0.10			0.10			0.10			0.40
Basic and diluted weighted average shares outstanding		2,897,929			2,891,203			2,875,329			2,873,500

Asset Quality Ratios
Allowance for loan losses to loans		1.33	%		1.30	%		1.20	%		1.22	%
Nonperforming loans to avg. loans		0.14	%		0.17	%		0.33	%		0.29	%
Allowance for loan losses to nonaccrual & 90+ past due loans		937.5	%		827.1	%		359.4	%		409.3	%
Net charge-offs annualize to avg. loans		-0.09	%		-0.14	%		0.09	%		0.06	%

Capital Ratios
Common Equity Tier 1 Capital		15.47	%		15.59	%		17.12	%		17.37	%
Tier 1 Risk-based Capital Ratio		15.47	%		15.59	%		17.12	%		17.37	%
Leverage Ratio		10.11	%		10.10	%		10.56	%		10.76	%
Total Risk-Based Capital Ratio		16.72	%		16.84	%		18.10	%		18.40	%

MIL-OSI Security: Defense News: Deputy Under Secretary of the Navy for Intelligence and Security Visits NAVSCIATTS

Source: United States Navy

Minella, John Keast, U.S. Senate Armed Services Committee (SASC) staff director; Pat Thompson, Adam Barker, and Chris Vignes, members of the senator’s staff, received updates from NAVSCIATTS Cmdr. Robert LeClerc and members of U.S. Naval Special Warfare (NSW) Command’s staff regarding the direction of the command and its continued support to combatant commanders’ theater security cooperation priorities.

During their visit to the Stennis Space Center, Minella and the SASC staff members also received a tour and command brief from Special Boat Team 22, NSW’s only riverine capability. The tour included a Special Operations Craft-Riverine demonstration and also M134 machine gun familiarization.

NAVSCIATTS trains and educates strategic allied and partner security force professionals across the tactical, operational, and strategic spectrums; and serves as the U.S. Navy’s premier security force assistance training asset. More than 14,000 partners from 129 partner nations have trained with this historic command since 1963.

MIL-OSI Security: U.S. Attorney’s Office Announces Guilty Plea in Fatal DUI Crash on Navajo Nation

Source: Office of United States Attorneys

ALBUQUERQUE – A Vanderwagen man pleaded guilty in federal court to two counts of involuntary manslaughter in connection with a fatal drunk driving crash that occurred on the Navajo Nation reservation in 2022.

According to court documents, on October 2, 2022, Sheldon Carlton Daye, 30, an enrolled member of the Navajo Nation, drove while impaired by alcohol. He knew that driving drunk would pose a risk to others on the road. While driving on Highway 602 near Bread Springs, New Mexico, within the boundaries of the Navajo Nation reservation, Daye struck and killed two motorists who were stopped on the side of the highway changing a tire.

Daye will remain on conditions of release pending sentencing, which has not yet been scheduled. At sentencing, Daye faces up to 16 years in prison. Upon his release from prison, Daye will be subject to up to three years of supervised release.

U.S. Attorney Alexander M.M. Uballez and Raul Bujanda, Special Agent in Charge of the Federal Bureau of Investigation’s Albuquerque Field Office, made the announcement today.

The Gallup Resident Agency of the FBI Albuquerque Field Office investigated this case with assistance from the Navajo Police Department and Department of Criminal Investigations. Assistant U.S. Attorneys Mark A. Probasco and Meg P. Tomlinson is prosecuting the case.

# # #

MIL-OSI Security: Missouri Sex Offender Sentenced to 10 Years on New Child Pornography Charge

Source: Office of United States Attorneys

ST. LOUIS – U.S. District Judge Sarah E. Pitlyk on Wednesday sentenced a registered sex offender who was caught with child pornography to 10 years in prison.

James Darrick Beeler, 53, of Glenwood, Missouri, had more than 200 videos containing child sexual abuse material on a laptop and more than 200 videos on two thumb drives. On June 29, 2022, the Missouri State Highway Patrol discovered that someone was sharing two videos of child pornography on a peer-to-peer file sharing program. They traced the videos to Beeler’s home. Beeler later admitted to investigators that he used his laptop to search for and download child sexual abuse material.

Beeler pleaded guilty in U.S. District Court in St. Louis in May to one count of possession of child pornography. In 2007, he was convicted in Schuyler County of abuse of a child.

The Missouri State Highway Patrol and the FBI investigated the case. Assistant U.S. Attorney Kyle Bateman prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

MIL-OSI Security: New Braunfels Man Pleads Guilty After Planned Mass Murder Attacks Thwarted by Federal and Local Law Enforcement

Source: Office of United States Attorneys

SAN ANTONIO – A New Braunfels man pleaded guilty in a federal court in San Antonio to one count of attempt to receive firearm to use to commit a felony.

According to court documents, Cameron Darrick Peterson, 20, began planning mass shootings since November 2022. On Jan. 4, 2024, Peterson attempted to purchase a 12-gauge shotgun from a New Braunfels pawn shop. He completed the required background check and was denied due to his age and the type of firearm he was attempting to purchase. On May 31, he attempted to purchase an assault weapon-style 12-gauge shotgun from the pawn shop and was denied a second time.

FBI agents obtained an arrest warrant on June 5, and Peterson was immediately taken into custody by the New Braunfels Police Department. During a search of his home, FBI agents found and seized an altered .22 caliber long rifle with a sawed-off buttstock and six magazines loaded with 60 rounds.

On June 6, as part of a federal search warrant, agents reviewed Peterson’s Instagram account, revealing statements Peterson had made about plans to attack a gas station. Also on June 6, Peterson was recorded from jail instructing a witness to hide or destroy a videotape he had made in which he surveilled a grocery store to plan a future attack.

On June 10, another search of Peterson’s home revealed a box that contained 11 aerosol containers and other ingredients to manufacture destructive devices. One of the containers was determined that it could be readily made operational and was categorized as an Improvised Explosive Device. The IED was not registered in the National Firearms Registry, nor could it be due to Peterson’s age.

Peterson is scheduled to be sentenced on Feb. 5, 2025 and faces up to 10 years in prison and a $250,000 fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney Jaime Esparza for the Western District of Texas made the announcement.

The FBI’s Joint Terrorism Task Force, San Antonio Fire Department, New Braunfels Police Department, and Bureau of Alcohol, Tobacco, Firearms and Explosives are investigating the case.

Assistant U.S. Attorneys Mark Roomberg and Eric Yuen are prosecuting the case.

###

MIL-OSI: Q3 & 9 MONTHS 2024 RESULTS

Source: GlobeNewswire (MIL-OSI)

Paris (France), October 31^st, 2024, 17h45 CET

Q3 & 9 MONTHS 2024 RESULTS

DELIVERING ON CASH GENERATION AND FINANCIAL ROADMAP

ON TRACK TO HIT OUR FULL YEAR TARGET

	Q3	9M¹
*Revenue*²	*$246m*	*$778m (-3%)*
*Adjusted EBITDA*²	*$98m*	*$298m (+7%)*
*Net Cash-Flow*	*$10m*	*$34m (vs -$15m in 9M 2023)*

Sophie Zurquiyah, Chief Executive Officer of Viridien, said:

“Our results since the start of the year demonstrate the strength of our strategic vision, with technology leadership, new business growth, and cash flow all showing significant progress.

Geoscience was particularly strong this quarter, leveraging its clear differentiation, best-in class imaging technology and HPC computing power to achieve a record high order book. In Earth Data, the Laconia project, using our most advanced technology, saw increased prefunding and is continuing to progress well.

Sensing & Monitoring is actively implementing its adaption plan and is on track to achieve in 2025 the expected outcomes in cost reduction and operational flexibility to improve performance across the industry cycles.

Lastly, we continue to address our financial roadmap with the implementation of the bond buyback program and looking forward, reaffirm our full-year targets”.

Third Quarter Highlights²

Group²
- IFRS Revenue, EBITDA and Net Income of respectively $219 million, $71 million, $(10) million.
- Overall group revenue decline in absence of mega crew in Sensing & Monitoring (SMO, revenue down 50%) compared to Q3 2023. Stable DDE revenue, with very strong momentum at Geoscience (revenue + 32% and order intake +91%).
- Group adjusted EBITDA of $98M, including -$12M penalty fees from vessel commitment. DDE Adjusted EBITDA of $108 million, up 5% thanks to strong Geoscience performance. SMO adjusted EBITDA of $1M (vs $12M).

Net Cash flow of $10 million, including -$18 million contractual fees from vessel commitment.
Implementation of the bond buy back program. $25M already bought on the $30M 2024 program as of October 31 (o.w. $12M bought and cancelled as of September 30).
Liquidity at $442 million (including $100 million undrawn RCF).

Digital, Data and Energy Transition (DDE)
- Revenue $187 million, up 1%: strong revenue growth at Geoscience offset by lower level of aftersale at Earth Data.
- Adjusted EBITDA $108 million, up 5%: profitability impacted by -$12 million in penalty fees from vessel commitments (vs -$20 million during Q3 2003).
- Geoscience
  - Revenue at $103 million (+32%).
  - Geoscience performance continues to be driven by technology leadership. Order intake (up 91%) benefits from best in class imaging technology, new UK HPC hub and increased activity in the Middle East.
  - The new businesses confirm positive momentum, both in CCUS with the release of the latest phase of Gulf of Mexico Carbon Storage Study to support upcoming lease rounds and in Minerals & Mining with the award of a sensing program in Oman, to identify, map and rank mineralization prospectivity potential.
- Earth Data
  - Revenue: $83 million (-22%).
  - Prefunding revenue at $58 million (+4%). First contribution of the Laconia project in the Gulf of Mexico. Weaker after-sales in Q3 (down 50% at $26 million) with unfavorable cut offs.
  - New businesses: revenue from the Norwegian survey for Carbon storage leading to the reprocessing of legacy data in the area.
Sensing and Monitoring (SMO)
- Revenue at $59 million, down 51% across land and marine products, following delivery of the “mega crew” systems in 2023.
- Adjusted EBITDA at $1 million (vs $12M).
- Transformation plan on track to achieve the expected cost reduction and operational flexibility.
- New businesses representing 17% of revenue. Delivery of land seismic nodes for large-scale seismic surveys planned in urban areas to target energy resources, including geothermal.
2024 Financial objectives
- The Group reiterates its 2024 financial objectives and confirms its 2024-2025 financial roadmap.
  - Revenue expected to be in line with 2023
  - EBITDA to be positively impacted by business mix
  - Earth Data cash Capex expected at $230-250M
  - Net Cash Flow to reach similar level as 2023
Q3 2024 Conference call
- The press release and the presentation are available on our website www.viridiengroup.com at 5:45 pm (CET)
- An English language analysts conference call is scheduled today at 6.00 pm (CET)

Participants should register for the call here to receive a dial-in number and code or participate in the live webcast from here.

A replay of the conference call will be made available the day after for a period of 12 months in audio format on the Company’s website.

The Board of Directors met on October 31, 2024 and approved the consolidated financial statements ending September 30, 2024.

About Viridien:

Viridien (www.viridiengroup.com) is an advanced technology, digital and Earth data company that pushes the boundaries of science for a more prosperous and sustainable future. With our ingenuity, drive and deep curiosity we discover new insights, innovations, and solutions that efficiently and responsibly resolve complex natural resource, digital, energy transition and infrastructure challenges. Viridien employs around 3,500 people worldwide and is listed as VIRI on the Euronext Paris SA (ISIN until July 30: FR0013181864 and ISIN as from July 31: FR001400PVN6).

Contact:

VP Corporate Finance

Jean-Baptiste Roussille
jean-baptiste.roussille@viridiengroup.com

Q3 2024 – Financial Results

CONSOLIDATED FINANCIAL STATEMENTS – September 30^th, 2024

Unaudited Interim Consolidated statement of operations – Year-To-Date

		Nine months ended September 30,
(In millions of US$, except per share data)	Notes	2024	2023
Operating revenues		784.8	810.4
Other income from ordinary activities		0.1	0.2
Total income from ordinary activities		784.9	810.6
Cost of operations		(587.1)	(578.0)
Gross profit		197.8	232.6
Research and development expenses – net		(15.2)	(20.5)
Marketing and selling expenses		(28.6)	(26.6)
General and administrative expenses		(55.9)	(54.2)
Other revenues (expenses) – net	8	(3.6)	(0.9)
Operating income (loss)		94.6	130.4
Cost of financial debt – gross		(82.3)	(79.5)
Income provided by cash and cash equivalents		8.7	4.0
Cost of financial debt, net		(73.6)	(75.5)
Other financial income (loss)	9	(0.9)	(1.6)
Income (loss) before incomes taxes and share of income (loss) from companies accounted for under the equity method		20.1	53.3
Income taxes		(14.2)	(24.6)
Net income (loss) before share of income (loss) from companies accounted for under the equity method		6.0	28.7
Net income (loss) from companies accounted for under the equity method		0.9	0.5
Net income (loss) from continuing operations		6.9	29.2
Net income (loss) from discontinued operations	3	14.7	2.3
Consolidated net income (loss)		21.6	31.5
Attributable to :
Owners of Viridien S.A	$	21.2	28.0
Non-controlling interests	$	0.4	3.5
Net income (loss) per share
Basic	$	2.97	0.04
Diluted	$	2.95	0.04
Net income (loss) from continuing operations per share
Basic	$	0.91	0.04
Diluted	$	0.91	0.04
Net income (loss) from discontinued operations per share ^(a)
Basic	$	2.06	–
Diluted	$	2.05	–

(a) Earning per share is presented as nil being less than US$0.01 at September 30,2023.

See the notes to the Unaudited Interim Consolidated Financial Statements

Unaudited Interim Consolidated statement of comprehensive income (loss) – Year-To-Date

		Nine months ended September 30,
(In millions of US$)	Notes	2024 ^(a)	2023 ^(a)
Net income (loss) from statements of operations		21.6	31.5
Net gain (loss) on cash flow hedges		0.2	0.2
Variation in translation adjustments		3.3	10.5
Net other comprehensive income (loss) to be reclassified in profit (loss) in subsequent period (1)		3.5	10.7
Net gain (loss) on actuarial changes on pension plan		0.4	(0.7)
Net other comprehensive income (loss) not to be reclassified in profit (loss) in subsequent period (2)		0.4	(0.7)
Total other comprehensive income (loss) for the period. net of taxes (1) + (2)		3.9	10.0
Total comprehensive income (loss) for the period		25.5	41.5
Attributable to:		–
Owners of Viridien S.A.		24.7	39.2
Non-controlling interests		0.8	2.3

(a) Including other comprehensive income related to the discontinued operations.

Unaudited Interim Consolidated statement of financial position

(In millions of US$)	Notes	September 30, 2023		December 31, 2023
ASSETS
Cash and cash equivalents		341.7	327.0
Trade accounts and notes receivable, net		287.3	310.9
Inventories and work-in-progress, net		207.1	212.9
Income tax assets		37.0	30.8
Other current assets, net		67.4	92.1
Total current assets		940.5	973.7
Deferred tax assets		35.5	29.9
Other non-current assets, net		7.8	6.8
Investments and other financial assets, net		25.3	22.7
Investments in companies under the equity method		2.6	2.2
Property, plant and equipment, net	4	230.7	206.1
Intangible assets, net		611.5	579.7
Goodwill, net		1 098.1	1 095.5
Total non-current assets		2 011.4	1 942.9
TOTAL ASSETS		2 951.9	2 916.6
LIABILITIES AND EQUITY
Financial debt – current portion	5	79.8	58.0
Trade accounts and notes payables		94.1	86.4
Accrued payroll costs		87.9	89.1
Income taxes payable		21.2	12.5
Advance billings to customers		19.1	24.0
Provisions — current portion		8.1	8.7
Other current financial liabilities		5.9	21.3
Other current liabilities		233.6	250.3
Total current liabilities		549.8	550.3
Deferred tax liabilities		22.1	24.3
Provisions — non-current portion		32.8	30.1
Financial debt – non-current portion	5	1 265.1	1 242.8
Other non-current financial liabilities		–	0.5
Other non-current liabilities		1.7	4.3
Total non-current liabilities		1 321.7	1 302.0
Common stock: 11,212,215 shares authorized and 7,161,465 shares with a €1.00 nominal value outstanding at September 30, 2024		8.7	8.7
Additional paid-in capital		118.7	118.7
Retained earnings		1 004.0	980.4
Other Reserves		19.8	27.3
Treasury shares		(20.1)	(20.1)
Cumulative income and expense recognized directly in equity		(1.2)	(1.4)
Cumulative translation adjustment		(87.9)	(90.8)
Equity attributable to owners of Viridien S.A.		1 042.0	1 022.8
Non-controlling interests		38.5	41.5
Total equity		1 080.5	1 064.3
TOTAL LIABILITIES AND EQUITY		2 951.9	2 916.6

See the notes to the Unaudited Interim Consolidated Financial Statements

Unaudited Interim Consolidated statement of cash flows

		Nine months ended September 30,
(In millions of US$)	Notes	2024	2023
OPERATING ACTIVITIES
Consolidated net income (loss)		21.6	31.5
Less: Net income (loss) from discontinued operations	3	(14.7)	(2.3)
Net income (loss) from continuing operations		6.9	29.2
Depreciation, amortization and impairment		71.8	63.3
Earth Data surveys impairment and amortization		144.0	99.8
Depreciation and amortization capitalized in Earth Data surveys		(11.6)	(11.8)
Variance on provisions		0.2	0.5
Share-based compensation expenses		2.2	1.7
Net (gain) loss on disposal of fixed and financial assets		0.1	0.1
Share of (income) loss in companies recognized under equity method		(0.9)	(0.5)
Other non-cash items		(2.5)	1.8
Net cash-flow including net cost of financial debt and income tax		210.2	184.1
Less : Cost of financial debt		73.6	75.5
Less : Income tax expense (gain)		14.2	24.6
Net cash-flow excluding net cost of financial debt and income tax		297.9	284.2
Income tax paid		(10.0)	(3.8)
Net cash-flow before changes in working capital		287.9	280.4
Changes in working capital		10.0	(23.5)
– change in trade accounts and notes receivable		(2.3)	(29.4)
– change in inventories and work-in-progress		7.0	17.4
– change in other current assets		14.9	6.6
– change in trade accounts and notes payable		10.6	(0.4)
– change in other current liabilities		(20.2)	(17.7)
Net cash-flow from operating activities		297.8	256.9
INVESTING ACTIVITIES
Total capital expenditures (tangible and intangible assets) net of variation of fixed assets suppliers, excluding Earth Data surveys)	4	(24.3)	(48.3)
Investment in Earth Data surveys		(180.1)	(141.7)
Proceeds from disposals of tangible and intangible assets		1.1	–
Dividends received from investments in companies under the equity method		0.5	–
Total net proceeds from financial assets		–	(1.9)
Variation in other non-current financial assets		(2.1)	(2.9)
Net cash-flow used in investing activities		(205.0)	(194.8)

		Nine months ended September 30
(In millions of US$)	Notes	2024	2023
FINANCING ACTIVITIES
Repayment of long-term debt	5	(12.2)	(1.5)
Total issuance of long-term debt	5	0.1	23.0
Lease repayments	5	(43.4)	(37.9)
Financial expenses paid	5	(42.2)	(46.5)
Dividends paid and share capital reimbursements:		–
— to owners of Viridien		0.0	–
— to non-controlling interests of integrated companies		(3.8)	(0.8)
Net cash-flow provided by (used in) financing activities		(101.6)	(63.7)
Effects of exchange rates on cash		1.1	(4.3)
Net cash flows incurred by discontinued operations	3	22.4	(17.0)
Net increase (decrease) in cash and cash equivalents		14.7	(22.9)
Cash and cash equivalents at beginning of year		327.0	298.0
Cash and cash equivalents at end of period		341.7	275.1

See the notes to the Interim Consolidated Financial Statements

Unaudited Interim Consolidated statements of changes in equity

Amounts in millions of US$. except share data	Number of Shares issued	Share capital	Additional paid-in capital	Retained earnings	Other reserves	Treasury shares	Income and expense recognized directly in equity	Cumulative translation adjustment	Equity attributable to owners of Viridien S.A.	Non-controlling interests	Total equity
Balance at January 1, 2023	7 123 573	8.7	118.6	967.9	50.0	(20.1)	(3.4)	(102.4)	1 019.3	39.5	1 058.8
Net gain (loss) on actuarial changes on pension plan (1)				(0.7)					(0.7)		(0.7)
Net gain (loss) on cash flow hedges (2)							0.2		0.2		0.2
Net gain (loss) on translation adjustments (3)								11.7	11.7	(1.2)	10.5
Other comprehensive income (1)+(2)+(3)	–	–	–	(0.7)	–	–	0.2	11.7	11.2	(1.2)	10.0
Net income (loss) (4)				28.0					28.0	3.5	31.5
Comprehensive income (1)+(2)+(3)+(4)	–	–	–	27.3	–	–	0.2	11.7	39.2	2.3	41.5
Exercise of warrants	238		0.1						0.1		0.1
Dividends									–	(0.9)	(0.9)
Cost of share-based payment	12 951			1.7					1.7		1.7
Variation in translation adjustments generated by the parent company					(10.7)				(10.7)		(10.7)
Balance at September 30, 2023	7 136 763⁽^a)	8.7	118.7	996.9	39.3	(20.1)	(3.2)	(90.7)	1 049.6	40.9	1 090.5

Amounts in millions of US$. except share data	Number of Shares issued	Share capital	Additional paid-in capital	Retained earnings	Other reserves	Treasury shares	Income and expense recognized directly in equity	Cumulative translation adjustment	Equity attributable to owners of Viridien S.A.	Non-controlling interests	Total equity
Balance at January 1, 2024	7 136 763	8.7	118.7	980.4	27.3	(20.1)	(1.4)	(90.8)	1 022.8	41.5	1 064.3
Net gain (loss) on actuarial changes on pension plan (1)				0.4					0.4		0.4
Net gain (loss) on cash flow hedges (2)							0.2		0.2		0.2
Net gain (loss) on translation adjustments (3)								2.9	2.9	0.4	3.3
Other comprehensive income (1)+(2)+(3)	–	–	–	0.4	–	–	0.2	2.9	3.5	0.4	3.9
Net income (loss) (4)				21.2					21.2	0.4	21.6
Comprehensive income (1)+(2)+(3)+(4)	–	–	–	21.6	–	–	0.2	2.9	24.7	0,8	25.5
Dividends									–	(3.8)	(3.8)
Cost of share-based payment	24 703			2.0					2.0		2.0
Variation in translation adjustments generated by the parent company					(7.5)				(7.5)		(7.5)
Balance at September 30, 2024	7 161 465⁽^b)	8.7	118.7	1 004.0	19.8	(20.1)	(1.2)	(87.9)	1 042.0	38.5	1 080.5

(a) Pro forma following Reverse Share Split

(b) Reverse Share Split: Pursuant to a delegation from the Combined General Meeting of shareholders of May 15, 2024, and a sub-delegation from the Board of Directors held on the same day, the Company’s Chief Executive Officer has decided to implement a reverse share split on the basis of 1 new share of €1.00 nominal value for 100 old shares of €0.01 nominal value.

¹All variations refer to the same period last year
²Unless otherwise stated, all figures and comments are referring to “Segment” (i.e. pre-IFRS 15), as defined in the 2023 Universal Registration Document’s glossary, under section 8.7

Attachment

Q3 2024 PR VEnglish final

MIL-OSI Security: Felon in Possession of Firearm Sentenced to 12 Years in Prison Following Shooting at the Palm Beach Gardens Mall

Source: Federal Bureau of Investigation (FBI) State Crime News

MIAMI – A felon in possession of a firearm was sentenced to 144 months in prison, following a shooting at the Palm Beach Gardens Mall (The Gardens Mall) on Valentine’s Day.

Yesterday, U.S. District Judge Aileen M. Cannon imposed an upward variance in sentencing Devon Jamal Graham, 29, to 144 months in prison. Graham previously pled guilty to possession of ammunition by a convicted felon, possession of a firearm and ammunition by a convicted felon, possession with the intent to distribute a controlled substance containing fentanyl and cocaine, and possession of a firearm in furtherance of a drug trafficking crime.

Kamarcio Mitchell, 29, a second man who was arrested following the shooting at The Gardens Mall, is scheduled to be sentenced on Nov. 21 at 9:30 a.m. before Judge Cannon in Fort Pierce, Fla. Mitchell previously pled guilty to possession of a firearm and ammunition as a convicted felon, and possession with intent to distribute fentanyl.

On Feb. 14, both Mitchell and Graham were at The Gardens Mall, both separately in possession of a firearm. Mitchell was on the second level of The Gardens Mall near a retail store. Mitchell followed Graham onto the escalator and was manipulating an object under his shirt. Mitchell was then fired upon by Graham and shot. Mitchell fled the mall to the parking lot, leaving a trail of blood. A loaded firearm that had been disassembled was found in the parking lot by police, near the blood trail. Mitchell was later treated for his injury at a local hospital. Upon his later arrest on a federal warrant, authorities discovered Mitchell in possession of a distribution quantity of fentanyl after he unsuccessfully tried to toss the drugs.

Two firearms were recovered from the vehicle Graham used to travel to the mall, along with a bag containing 35 capsules with a mixture containing fentanyl and a pill bottle with approximately 16 grams of cocaine.

The recovered firearms had previously travelled in interstate commerce.

U.S. Attorney Markenzy Lapointe for the Southern District of Florida, Special Agent in Charge Jeffrey B. Veltri of the FBI, Miami Field Office, Special Agent in Charge Christopher A. Robinson of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Miami Field Division, U.S. Marshal Gadyaces S. Serralta of the U.S. Marshals Service, Chief Dominick Pape of the Palm Beach Gardens Police Department, and Sheriff Ric Bradshaw of the Palm Beach County Sheriff’s Office announced the sentencing.

The Office of State Attorney Dave Aronberg for the 15^th Judicial Circuit – Palm Beach County provided invaluable assistance. Assistant U.S. Attorneys John McMillan and Shannon O’Shea Darsch are prosecuting the case.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce gun violence and other violent crime, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results. For more information about Project Safe Neighborhoods, please visit Justice.gov/PSN.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 24-cr-80022.

###

MIL-OSI: BOUSSARD & GAVAUDAN HOLDING LIMITED (GBP) : Transaction in Own Shares

Source: GlobeNewswire (MIL-OSI)

BOUSSARD & GAVAUDAN HOLDING LIMITED
October 2024 TRANSACTION IN OWN SECURITIES ACTIVITY REPORT¹

The Company announces that pursuant to the general authority granted by shareholders of the Company on 28 May 2019 to make market purchases of its own Ordinary shares, it repurchased 0 Euro shares in October 2024.

Figure of the share buy back programme for October 2024

	Share Buy Back Programme	Liquidity Enhancement Agreement
Aggregate number of transactions conducted in October 2024	0	0
Average size of the transactions	0	0

Following this transaction, the Company has:

Euro share outstanding excluding share held in treasury	12,299,516
Euro share held in treasury	0
GBP share outstanding excluding share held in treasury	123,090
GBP share held in treasury	0
Total number of shares	12,422,606

31^stOctober 2024

For further information please contact:
Boussard & Gavaudan Investment Management, LLP

Emmanuel Gavaudan (London) +44 203 751 5389

The Company is established as a closed-ended investment company domiciled in Guernsey. The Company has received the necessary approval of the Guernsey Financial Services Commission and the States of Guernsey Policy Council. The Company is registered with the Dutch Authority for the Financial Markets as a collective investment scheme pursuant to article 2:73 in conjunction with 2:66 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). The shares of the Company (the “Shares”) are listed on Euronext Amsterdam. The Shares are also listed on the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange plc’s main market for listed securities.

This is not an offer to sell or a solicitation of any offer to buy any securities in the United States or in any other jurisdiction. This announcement is not intended to and does not constitute, or form part of, any offer or invitation to purchase any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law.

Neither the Company nor Boussard & Gavaudan Fund Plc has been, and neither will be, registered under the US Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition the securities referenced in this announcement have not been and will not be registered under the US Securities Act of 1933, as amended (the “Securities Act”). Consequently any such securities June not be offered, sold or otherwise transferred within the United States or to, or for the account or benefit of, US persons except in accordance with the Securities Act or an exemption therefrom and under circumstances which will not require the issuer of such securities to register under the Investment Company Act. No public offering of any securities will be made in the United States.

You should always bear in mind that: all investment is subject to risk;

results in the past are no guarantee of future results;
the investment performance of BGHL may go down as well as up. You may not get back all of your original investment; and
if you are in any doubt about the contents of this communication or if you consider making an investment decision, you are advised to seek expert financial advice.

This communication is for information purposes only and the information contained in this communication should not be relied upon as a substitute for financial or other professional advice.

¹ This report includes the transactions conducted by both BGHL, for the share buy back programme and Exane, for the Liquidity Enhancement Agreement.

Attachment

Monthly Report Share Buy Back October 2024

MIL-OSI: BOUSSARD & GAVAUDAN HOLDING LIMITED (EUR) : Transaction in Own Shares

Source: GlobeNewswire (MIL-OSI)

BOUSSARD & GAVAUDAN HOLDING LIMITED
October 2024 TRANSACTION IN OWN SECURITIES ACTIVITY REPORT¹

The Company announces that pursuant to the general authority granted by shareholders of the Company on 28 May 2019 to make market purchases of its own Ordinary shares, it repurchased 0 Euro shares in October 2024.

Figure of the share buy back programme for October 2024

	Share Buy Back Programme	Liquidity Enhancement Agreement
Aggregate number of transactions conducted in October 2024	0	0
Average size of the transactions	0	0

Following this transaction, the Company has:

Euro share outstanding excluding share held in treasury	12,299,516
Euro share held in treasury	0
GBP share outstanding excluding share held in treasury	123,090
GBP share held in treasury	0
Total number of shares	12,422,606

31^stOctober 2024

For further information please contact:
Boussard & Gavaudan Investment Management, LLP

Emmanuel Gavaudan (London) +44 203 751 5389

The Company is established as a closed-ended investment company domiciled in Guernsey. The Company has received the necessary approval of the Guernsey Financial Services Commission and the States of Guernsey Policy Council. The Company is registered with the Dutch Authority for the Financial Markets as a collective investment scheme pursuant to article 2:73 in conjunction with 2:66 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). The shares of the Company (the “Shares”) are listed on Euronext Amsterdam. The Shares are also listed on the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange plc’s main market for listed securities.

This is not an offer to sell or a solicitation of any offer to buy any securities in the United States or in any other jurisdiction. This announcement is not intended to and does not constitute, or form part of, any offer or invitation to purchase any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law.

Neither the Company nor Boussard & Gavaudan Fund Plc has been, and neither will be, registered under the US Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition the securities referenced in this announcement have not been and will not be registered under the US Securities Act of 1933, as amended (the “Securities Act”). Consequently any such securities June not be offered, sold or otherwise transferred within the United States or to, or for the account or benefit of, US persons except in accordance with the Securities Act or an exemption therefrom and under circumstances which will not require the issuer of such securities to register under the Investment Company Act. No public offering of any securities will be made in the United States.

You should always bear in mind that: all investment is subject to risk;

results in the past are no guarantee of future results;
the investment performance of BGHL may go down as well as up. You may not get back all of your original investment; and
if you are in any doubt about the contents of this communication or if you consider making an investment decision, you are advised to seek expert financial advice.

This communication is for information purposes only and the information contained in this communication should not be relied upon as a substitute for financial or other professional advice.

¹ This report includes the transactions conducted by both BGHL, for the share buy back programme and Exane, for the Liquidity Enhancement Agreement.

Attachment

Monthly Report Share Buy Back October 2024

MIL-OSI USA: Gov. Polis and Secretary of State Griswold Announce Additional State Resources are Being Deployed to Ensure Election Security

Source: US State of Colorado

DENVER – This week, Secretary Griswold announced that a spreadsheet located on the Department’s website improperly included a hidden tab including partial passwords (one factor among layers of security that include multiple passwords and physical presence in a badged entry area) to certain machines of Colorado voting systems. Today, Governor Polis announced that the executive branch is providing the Secretary of State (SOS) human capital, air and ground assets, and other logistical support to complete changes to all the impacted passwords and review logs to ensure that no tampering occurred. The Secretary of State will deputize certain state employees, who have cybersecurity and technology expertise and have undergone appropriate background checks and training. In addition to the Department of State Employees and in coordination with county clerks, these employees will only enter badged areas in pairs to update the passwords for election equipment in counties and will be directly observed by local elections officials from the county clerk’s office. The goal is to complete the password updates by this evening and verify the security of the voting components, which are secured behind locked doors by county clerks.

“We are deploying additional state resources to address this unfortunate leak. We want to resolve the current situation quickly by lending resources to help get the necessary passwords changed as quickly as possible with minimal impact on county clerk operations. We are dedicated to process improvements to instill confidence in our elections. We want to be able to provide assurances that all votes are counted fairly and accurately for this election and all elections, and are grateful for the work of the county clerks for overseeing this process with the state’s support,” said Governor Polis.

“Colorado has countless layers of security to ensure voter’s voices are heard. I’m thankful to the Governor for his support to quickly resolve this unfortunate mistake,” said Secretary of State Jena Griswold.

On Wednesday morning, Governor Polis was briefed on the disclosure and the overall elections security environment by the Colorado Department of Public Safety (CDPS). He spoke with Secretary Griswold Wednesday afternoon, and, acting on her request, the Governor worked with his team to identify and deploy more state resources and staff to update the passwords and download access logs.

The state is leveraging resources from across various departments and coordinating with the Secretary of State and numerous local and federal partners. CDPS divisions, including the Division of Homeland Security and Emergency Management (DHSEM) and the Colorado State Patrol (CSP), and the Governor’s Office of Information Technology are collaborating closely with the Secretary of State’s Office, county clerks, and state, local, and federal law enforcement.

DHSEM is coordinating the state’s overall elections response through the activation of the Colorado State Emergency Operations Center (SEOC) to ensure all voters can vote safely and peacefully. The Colorado Information Analysis Center (CIAC) serves as the state’s information analysis center, responsible for collecting, analyzing, and disseminating election-related threat and hazard intelligence.

If you see something suspicious near an election site or experience election intimidation, please report it to the CIAC through their online Community Member Suspicious Activity Report Form.

MIL-OSI Security: Beckley Man Pleads Guilty to Role in Drug Trafficking Organization

Source: United States Bureau of Alcohol Tobacco Firearms and Explosives (ATF)

BECKLEY, W.Va. – Demetrius Terrell Burns, 32, of Beckley, pleaded guilty today to conspiracy to distribute methamphetamine, fentanyl and cocaine base. Burns admitted to his role in a drug trafficking organization (DTO) that distributed methamphetamine, fentanyl and cocaine base, also known as “crack,” in Beckley and elsewhere within the Southern District of West Virginia.

According to court documents and statements made in court, in April 2024 Burns received fentanyl from a supplier in Beckley that he used to supply Tilford Joe Bradley Jr., a co-defendant. Burns admitted that on April 12, 2024, he told Bradley by phone that he had received a shipment of “raw” fentanyl. Burns further admitted that he offered to sell Bradley $1,800 worth of raw fentanyl, and they discussed adding cutting agent to the fentanyl to make a larger profit when it was sold. Burns also admitted that he knew Bradley intended to redistribute these drugs in and around the Southern District of West Virginia.

Burns is scheduled to be sentenced on February 14, 2025, and faces a maximum penalty of 20 years in prison, at least three years of supervised release, and a $1 million fine.

Burns is among 12 individuals indicted on charges alleging the defendants conspired to distribute methamphetamine, fentanyl, and crack within the Southern District of West Virginia from in or about June 2023 to in or about May 2024. Burns is also among four defendants who have pleaded guilty. The charges against Bradley and the other defendants are pending. An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

United States Attorney Will Thompson made the announcement and commended the investigative work of the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Beckley/Raleigh County Drug and Violent Crime Unit, which consists of officers from the West Virginia State Police, the Raleigh County Sheriff’s Department, and the Beckley Police Department.

United States Magistrate Judge Omar J. Aboulhosn presided over the hearing. Assistant United States Attorney Andrew D. Isabell is prosecuting the case.

The investigation was part of the Department of Justice’s Organized Crime Drug Enforcement Task Force (OCDETF). The program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations and is the keystone of the Department of Justice’s drug reduction strategy. OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking organizations, transnational criminal organizations and money laundering organizations that present a significant threat to the public safety, economic, or national security of the United States.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 5:24-cr-90.

###

MIL-OSI: Asure Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Reports Third Quarter Revenues of $29.3 Million

Recurring Revenues Grew 20% Versus Prior Year Third Quarter

AUSTIN, Texas, Oct. 31, 2024 (GLOBE NEWSWIRE) — Asure Software, Inc. (“we”, “us”, “our”, “Asure” or the “Company”) (Nasdaq: ASUR), a leading provider of cloud-based Human Capital Management (“HCM”) software solutions, today reported results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial Highlights

Revenue of $29.3 million, nearly unchanged versus the same period of the prior year
Revenue (excluding ERTC revenue) of $29.2 million, up 20% from $24.4 million versus the same period of the prior year
Recurring revenue of $28.6 million, up 20% year over year. Recurring revenue was 98% of total revenue versus 81% the same period of the prior year
Net loss of $3.9 million versus a net loss of $2.2 million during the same period of the prior year
EBITDA⁽¹⁾ of $2.2 million versus $3.0 million during the same period of the prior year
Adjusted EBITDA⁽¹⁾ of $5.4 million versus $6.2 million during the same period of the prior year
Gross profit of $19.7 million versus $21.3 million during the same period of the prior year
Non-GAAP gross profit⁽¹⁾ of $21.4 million (Non-GAAP gross margin⁽¹⁾ of 73%) versus $22.4 million (and 76% during the same period of the prior year)

Nine Months 2024 Financial Highlights

Revenue of $89.0 million down 4% versus the first nine months of prior year
Revenue (excluding ERTC revenue) of $87.4 million up 15% from $75.7 million in the first nine months of prior year
Recurring revenue (excluding ERTC revenue) of $86.0 million up 16% from $74.4 million in the first nine months of prior year
Net loss of $8.6 million versus a net loss of $5.6 million the first nine months of prior year
EBITDA⁽¹⁾ of $8.0 million versus $13.2 million the first nine months of prior year
Adjusted EBITDA⁽¹⁾ of $16.3 million versus $20.5 million the first nine months of prior year
Gross profit of $61.2 million versus $67.7 million during the first nine months of the prior year
Non-GAAP gross profit⁽¹⁾ of $65.6 million (Non-GAAP gross margin⁽¹⁾ of 74%) versus $71.5 million (and 77% during the first nine months of the prior year)

_______________
(1)This financial measure is not calculated in accordance with GAAP and is defined on page 4 of this press release. A reconciliation of this non-GAAP measure to the most applicable GAAP measure begins on page 11 of this release.

Recent Business Highlights

Payroll Tax Management Expansion: Asure’s Payroll Tax Management product gained significant momentum, going live with additional Workday and SAP clients during the third quarter. Key sales wins include one of America’s largest grocery chains and a nationally known HCM system integrator who assists large enterprises with Workday, SAP, and Oracle HCM implementations. These enterprise bookings have grown our backlog and still represent additional product and professional services opportunities.
HCM Architectural Milestone: Employee self-service capabilities have been decoupled from disparate payroll platforms and modularized as a single API-based service. This enhancement improves scalability and stability of the end-to-end HCM suite and further consolidates our technical footprint to a more flexible service-oriented architecture.
Entering Beta of New AI Agent: More than a chatbot, this new Generative-AI Agent handles inquiries related to payroll and payroll taxes takes secure action on behalf of the user. Through dynamic, interactive sessions, the AI Agent will answer questions and take actions on HR requests including time off requests, demographic changes, or changes to W-4 allowances.
Leadership Recognition: Asure Chairman and CEO, Pat Goepel, was named Austin Business Journal’s Best CEO of a Public Company for 2024, recognizing his leadership and commitment to Asure’s growth and success.
New financial services product to launch November 2024: Asure is introducing AsurePay™, an innovative financial solution offering working Americans a comprehensive online banking alternative. AsurePay™ combines features such as debit card access, fee-free ATM withdrawals, and paycheck advances through a unique interest-bearing banking solution, designed to improve employee engagement, while also improving overall employer efficiency. This solution is easily accessible through an intuitive mobile app.

Management Commentary

Asure Chairman and CEO, Pat Goepel, stated, “Our third quarter performance reflects strong, continued growth, with recurring revenue up 20% year-over-year. We’ve made great strides in transitioning to a more valuable revenue model, with 98% of our revenues now recurring, compared to 81% in the same quarter last year. Additionally, new bookings were up 141% year-over-year. Our backlog has grown significantly — over 35% from Q2 2024 and over 250% from Q3 2023. While large enterprise tax product deals have contributed to our success, their pace of implementation can vary. That said, we remain confident in our ability to maintain this positive trajectory.”

Goepel continued, “We’re seeing strong demand for our Payroll Tax Management product, we’re introducing new solutions, upgrading our technology, and making strategic acquisitions. Earlier in the year, we faced the challenge of replacing ERTC revenue, but those headwinds have now dissipated as we close out 2024 and this change in the composition of our revenues offers us strong momentum going into 2025. We are optimistic about the opportunities ahead for both the remainder of this year and into next year.”

Fourth Quarter 2024 and Full Year 2025 Revenue Guidance Ranges

The Company is providing the following guidance for the fourth quarter 2024 based on the Company’s year-to-date results and recent business trends. Management is initiating full year 2025 guidance to a range of $134M-$138M which does not include revenue from potential future acquisitions.

Guidance for 2024

Guidance Range		Q4-2024		FY-2024
Revenue	$	30M – 32M	$	119M -121M
Adjusted EBITDA⁽¹⁾	$	6M -7M		18% -19%

Guidance for 2025

Guidance Range		FY-2025
Revenue	$	134M – 138M
Adjusted EBITDA⁽¹⁾		23% – 24%

Management uses GAAP, non-GAAP and adjusted measures when planning, monitoring, and evaluating the Company’s performance. The primary purpose of using non-GAAP and adjusted measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the Company’s results in the same way that management does.

Management believes that supplementing GAAP disclosures with non-GAAP and adjusted disclosures provides investors with a more complete view of the Company’s operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the Company’s business. Further, to the extent that other companies use similar methods in calculating adjusted financial measures, the provision of supplemental non-GAAP and adjusted information can allow for a comparison of the Company’s relative performance against other companies that also report non-GAAP and adjusted operating results.

Management has not provided a reconciliation of guidance of GAAP to non-GAAP or adjusted disclosures because management is unable to predict the nature and materiality of non-recurring expenses without unreasonable effort.

Management’s projections are based on management’s current beliefs and assumptions about the Company’s business, and the industry and markets in which it operates; there are known and unknown risks and uncertainties associated with these projections. There can be no assurance that our actual results will not differ from the guidance set forth above. The Company assumes no obligation to update publicly any forward-looking statements, including its 2024 and 2025 earnings guidance, whether as a result of new information, future events or otherwise. Please refer to the “Use of Forward-Looking Statements” disclosures on page 6 of this press release as well as the risk factors in our quarterly and annual reports on file with the Securities and Exchange Commission for more information about risk that affect our business and industry.

Conference Call Details

Asure management will host a conference call on Thursday, October 31, 2024, at 3:30 pm Central (4:30 pm Eastern). Asure Chairman and CEO Pat Goepel and CFO John Pence will participate in the conference call followed by a question-and-answer session. The conference call will be broadcast live and available for replay via the investor relations section of the Company’s website. Analysts may participate on the conference call by dialing 877-407-9219 or 201-689-8852.

About Asure Software, Inc.

Asure Software (Nasdaq: ASUR) is a leading provider of Human Capital Management (“HCM”) software solutions. We help small and mid-sized companies grow by assisting them in building better teams with skills to stay compliant with ever-changing federal, state, and local tax jurisdictions and labor laws, and better allocate cash so they can spend their financial capital on growing their business rather than back-office overhead expenses. Asure’s Human Capital Management suite, named AsureHCM®, includes cloud-based Payroll, Tax Services, and Time & Attendance software and Asure Marketplace™ as well as human resources (“HR”) services ranging from HR projects to completely outsourcing payroll and HR staff. We also offer these products and services through our network of reseller partners. Visit us at asuresoftware.com.

Non-GAAP and Adjusted Financial Measures

This press release includes information about non-GAAP gross profit, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP research and development expense, EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin. These non-GAAP and adjusted financial measures are measurements of financial performance that are not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those used by other companies. Non-GAAP and adjusted financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s Condensed Consolidated Financial Statements prepared in accordance with GAAP. Non-GAAP and adjusted financial measures are reconciled to GAAP in the tables set forth in this release and are subject to reclassifications to conform to current period presentations.

Non-GAAP gross profit differs from gross profit in that it excludes amortization, share-based compensation, and one-time items.

Non-GAAP sales and marketing expense differs from sales and marketing expense in that it excludes share-based compensation and one-time items.

Non-GAAP general and administrative expense differs from general and administrative expense in that it excludes share-based compensation and one-time items.

Non-GAAP research and development expense differs from research and development expense in that it excludes share-based compensation and one-time items.

EBITDA differs from net income (loss) in that it excludes items such as interest, income taxes, depreciation, and amortization. Asure is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort.

Adjusted EBITDA differs from EBITDA in that it excludes share-based compensation, other income (expense), net and one-time expenses. Asure is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort.

All adjusted and non-GAAP measures presented as “margin” are computed by dividing the applicable adjusted financial measure by total revenue.

Specifically, as applicable to the respective financial measure, management is adjusting for the following items when calculating non-GAAP and adjusted financial measures as applicable for the periods presented. No additional adjustments have been made for potential income tax effects of the adjustments based on the Company’s current and anticipated de minimis effective federal tax rate, resulting from the Company’s continued losses for federal tax purposes and its tax net operating loss balances.

Share-Based Compensation Expenses. The Company’s compensation strategy includes the use of share-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than motivating or rewarding operational performance for any particular period. Thus, share-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

Depreciation. The Company excludes depreciation of fixed assets. Also included in the expense is the depreciation of capitalized software costs.

Amortization of Purchased Intangibles. The Company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, and acquired lease intangibles, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.

Interest Expense, Net. The Company excludes accrued interest expense, the amortization of debt discounts and deferred financing costs.

Income Taxes. The Company excludes income taxes, both at the federal and state levels.

One-Time Expenses. The Company’s adjusted financial measures exclude the following costs to normalize comparable reporting periods, as these are generally non-recurring expenses that do not reflect the ongoing operational results. These items are typically not budgeted and are infrequent and unusual in nature.

Settlements, Penalties and Interest. The Company excludes legal settlements, including separation agreements, penalties and interest that are generally one-time in nature and not reflective of the operational results of the business.

Acquisition and Transaction Related Costs. The Company excludes these expenses as they are transaction costs and expenses that are generally one-time in nature and not reflective of the underlying operational results of our business. Examples of these types of expenses include legal, accounting, regulatory, other consulting services, severance and other employee costs.

Other non-recurring Expenses. The Company excludes these as they are generally non-recurring items that are not reflective of the underlying operational results of the business and are generally not anticipated to recur. Some examples of these types of expenses, historically, have included write-offs or impairments of assets, demolition of office space and cybersecurity consultants.

Other (Expense) Income, Net. The Company’s adjusted financial measures exclude Other (Expense) Income, Net because it includes items that are not reflective of the underlying operational results of the business, such as loan forgiveness, adjustments to contingent liabilities and credits earned as part of the CARES Act, passed by Congress in the wake of the coronavirus pandemic.

Use of Forward-Looking Statements

This press release contains certain statements made by management that may constitute “forward-looking” statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements about our financial results may include expected or projected U.S GAAP and other operating and non-operating results. The words “believe,” “may,” “will,” “estimate,” “projects,” “anticipate,” “intend,” “expect,” “should,” “plan,” and similar expressions are intended to identify forward-looking statements. Examples of “forward-looking statements” include statements we make regarding our operating performance, future results of operations and financial position, revenue growth, earnings or other projections. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions, over many of which we have no control. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.

The risks and uncertainties referred to above include—but are not limited to—the expiration of major revenue streams such as Employee Retention Tax Credits (“ERTC”) and the impact of the Internal Revenue Service recent measures regarding ERTC claims; risks associated with breaches of the Company’s security measures; risks associated with the Company’s rate of growth and anticipated revenue run rate, including impact of the current economic environment; the Company’s ability to convert deferred revenue and unbilled deferred revenue into revenue and cash flow, and ability to maintain continued growth of deferred revenue and unbilled deferred revenue; privacy concerns and laws and other regulations may limit the effectiveness of our applications; the financial and other impact of any previous and future acquisitions; the Company’s ability to continue to release, gain customer acceptance of and provide support for new and improved versions of the Company’s services; successful customer deployment and utilization of the Company’s existing and future services; interruptions to supply chains and extended shut down of businesses; issues in the use of artificial intelligence in our HCM products and services; political unrest, including the current conflict between Russia and Ukraine and the ongoing conflict involving Israel in the Middle East; reductions in employment and an increase in business failures, specifically among our clients; possible fluctuations in the Company’s financial and operating results; regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs; domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws; technological developments; the nature of the Company’s business model; interest rates; competition; various financial aspects of the Company’s subscription model; impairment of intangible assets; interruptions or delays in the Company’s services or the Company’s Web hosting; access to additional capital; the Company’s ability to hire, retain and motivate employees and manage the Company’s growth; litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations; volatility and weakness in bank and capital markets; factors affecting the Company’s deferred tax assets and ability to value and utilize them; volatility and low trading volume of our common stock; collection of receivables; and general developments in the economy, financial markets, credit markets and the impact of current and future accounting pronouncements and other financial reporting standards. Please review the Company’s risk factors in its annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2024, and its quarterly reports on Form 10-Q filed with the SEC on August 1, 2024, and October 31, 2024.

The forward-looking statements, including the financial guidance 2024 and 2025 outlooks, contained in this press release represent the judgment of the Company as of the date of this press release, and the Company expressly disclaims any intent, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations with regard to these forward looking statements or any change in events, conditions or circumstances on which any such statements are based.

ASURE SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (Unaudited)

	September 30, 2024			December 31, 2023

ASSETS
Current assets:
Cash and cash equivalents	$	11,248		$	30,317
Accounts receivable, net of allowance for credit losses of $6,150 and $4,787 at September 30, 2024 and December 31, 2023, respectively		17,233			14,202
Inventory		233			155
Prepaid expenses and other current assets		4,586			3,471
Total current assets before funds held for clients		33,300			48,145
Funds held for clients		193,589			219,075
Total current assets		226,889			267,220
Property and equipment, net		18,490			14,517
Goodwill		94,724			86,011
Intangible assets, net		73,429			62,082
Operating lease assets, net		4,401			4,991
Other assets, net		10,176			9,047
Total assets	$	428,109		$	443,868
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of notes payable	$	—		$	27
Accounts payable		1,317			2,570
Accrued compensation and benefits		4,277			6,519
Operating lease liabilities, current		1,600			1,490
Other accrued liabilities		8,287			3,862
Deferred revenue		3,029			6,853
Total current liabilities before client fund obligations		18,510			21,321
Client fund obligations		193,951			220,019
Total current liabilities		212,461			241,340
Long-term liabilities:
Deferred revenue		2,276			16
Deferred tax liability		2,116			1,728
Notes payable, net of current portion		7,506			4,282
Operating lease liabilities, noncurrent		3,832			4,638
Other liabilities		765			209
Total long-term liabilities		16,495			10,873
Total liabilities		228,956			252,213
Stockholders’ equity:
Preferred stock, $0.01 par value; 1,500 shares authorized; none issued or outstanding		—			—
Common stock, $0.01 par value; 44,000 shares authorized; 26,540 and 25,382 shares issued, 26,540 and 24,998 shares outstanding at September 30, 2024 and December 31, 2023, respectively		265			254
Treasury stock at cost, zero(1) and 384 shares at September 30, 2024 and December 31, 2023, respectively		—			(5,017	)
Additional paid-in capital		502,920			487,973
Accumulated deficit		(304,022	)		(290,440	)
Accumulated other comprehensive loss		(10	)		(1,115	)
Total stockholders’ equity		199,153			191,655
Total liabilities and stockholders’ equity	$	428,109		$	443,868
(1) The aggregate Treasury stock of prior repurchases of the Company’s own common stock was retired and subsequently issued effective January 1, 2024. See the Condensed Consolidated Statement of Changes in Stockholders’ Equity for the impact of this transaction.

ASURE SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands, except per share amounts) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023

Revenue:
Recurring	$	28,626		$	23,833		$	85,950		$	74,749
Professional services, hardware and other		678			5,501			3,050			18,069
Total revenue		29,304			29,334			89,000			92,818
Cost of sales		9,600			8,054			27,821			25,120
Gross profit		19,704			21,280			61,179			67,698
Operating expenses:
Sales and marketing		6,680			6,597			21,371			22,312
General and administrative		10,378			9,294			30,559			29,586
Research and development		1,973			1,803			5,704			5,107
Amortization of intangible assets		4,295			3,333			11,790			9,929
Total operating expenses		23,326			21,027			69,424			66,934
(Loss) income from operations		(3,622	)		253			(8,245	)		764
Interest income		165			437			762			1,015
Interest expense		(274	)		(1,219	)		(662	)		(5,336	)
Loss on extinguishment of debt		—			(1,517	)		—			(1,517	)
Other (expense) income, net		—			(283	)		10			(291	)
Loss from operations before income taxes		(3,731	)		(2,329	)		(8,135	)		(5,365	)
Income tax expense (benefit)		170			(123	)		434			267
Net loss		(3,901	)		(2,206	)		(8,569	)		(5,632	)
Other comprehensive loss:
Unrealized income (loss) on marketable securities		1,340			(201	)		1,105			(213	)
Comprehensive loss	$	(2,561	)	$	(2,407	)	$	(7,464	)	$	(5,845	)

Basic and diluted loss per share
Basic	$	(0.15	)	$	(0.10	)	$	(0.33	)	$	(0.27	)
Diluted	$	(0.15	)	$	(0.10	)	$	(0.33	)	$	(0.27	)

Weighted average basic and diluted shares
Basic		26,429			22,591			25,870			21,204
Diluted		26,429			22,591			25,870			21,204

ASURE SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

	Nine Months Ended September 30,
		2024			2023

Cash flows from operating activities:
Net loss	$	(8,569	)	$	(5,632	)
Adjustments to reconcile loss to net cash (used) in provided by operations:
Depreciation and amortization		16,200			14,243
Amortization of operating lease assets		1,025			1,129
Amortization of debt financing costs and discount		531			548
Non-cash interest expense		—			1,471
Net accretion of discounts on available-for-sale securities		(273	)		(63	)
Provision for expected losses		111			2,004
Provision for deferred income taxes		388			111
Loss on extinguishment of debt		—			1,208
Net realized gains on sales of available-for-sale securities		(1,929	)		(1,645	)
Share-based compensation		4,981			4,170
Loss on disposals of long-term assets		—			132
Change in fair value of contingent purchase consideration		—			175
Changes in operating assets and liabilities:
Accounts receivable		(3,142	)		(5,014	)
Inventory		(78	)		159
Prepaid expenses and other assets		(1,656	)		4,031
Operating lease right-of-use assets		—			473
Accounts payable		(1,253	)		(498	)
Accrued expenses and other long-term obligations		(1,052	)		918
Operating lease liabilities		(1,139	)		(895	)
Deferred revenue		(4,539	)		(5,190	)
Net cash (used) in provided by operating activities		(394	)		11,835
Cash flows from investing activities:
Acquisition of intangible asset		(12,397	)		(697	)
Purchases of property and equipment		(546	)		(1,365	)
Software capitalization costs		(7,677	)		(5,029	)
Purchases of available-for-sale securities		(10,914	)		(21,513	)
Proceeds from sales and maturities of available-for-sale securities		13,325			10,428
Net cash used in investing activities		(18,209	)		(18,176	)
Cash flows from financing activities:
Payments of notes payable		(420	)		(35,627	)
Debt extinguishment costs		—			(468	)
Payments made on amounts due for the acquisition of intangible assets		(658	)		—
Net proceeds from issuance of common stock		902			45,986
Capital raise fees		(47	)		(258	)
Net change in client fund obligations		(26,068	)		(31,033	)
Net cash used in financing activities		(26,291	)		(21,400	)
Net decrease in cash and cash equivalents		(44,894	)		(27,741	)
Cash and cash equivalents, beginning of period		177,622			164,042
Cash and cash equivalents, end of period	$	132,728		$	136,301

ASURE SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands) (Unaudited)

	Nine Months Ended September 30,
		2024		2023

Reconciliation of cash and cash equivalents to the Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	11,248	$	32,787
Cash and cash equivalents included in funds held for clients		121,480		103,514
Total cash and cash equivalents	$	132,728	$	136,301

Supplemental information:
Cash paid for interest	$	—	$	3,140
Cash paid for income taxes	$	15	$	532

Non-cash investing and financing activities:
Acquisition of intangible assets	$	6,918	$	332
Notes payable issued for acquisitions	$	3,138	$	—
Shares issued for acquisitions	$	9,125	$	2,543

ASURE SOFTWARE, INC. RECONCILIATION OF NON-GAAP AND ADJUSTED FINANCIAL MEASURES (unaudited)

(in thousands)	Q3-24			Q2-24			Q1-24			Q4-23			Q3-23			Q2-23			Q1-23			Q4-22
Revenue⁽¹⁾	$	29,304		$	28,044		$	31,652		$	26,264		$	29,334		$	30,420		$	33,064		$	29,292

Gross Profit to non-GAAP Gross Profit
Gross Profit	$	19,704		$	18,868		$	22,607		$	17,839		$	21,280		$	22,018		$	24,400		$	21,139
Gross Margin		67.2	%		67.3	%		71.4	%		67.9	%		72.5	%		72.4	%		73.8	%		72.2	%

Share-based Compensation		44			43			40			32			28			46			31			34
Depreciation		1,232			1,145			1,110			921			984			1,309			1,009			871
Amortization – intangibles		50			50			50			50			50			50			268			298
One-time expenses
Settlements, penalties & interest		2			3			—			(6	)		8			—			4			3
Acquisition and transaction costs		367			264			39			—			—			—			—			—
Non-GAAP Gross Profit	$	21,399		$	20,373		$	23,846		$	18,836		$	22,350		$	23,423		$	25,712		$	22,345
Non-GAAP Gross Margin		73.0	%		72.6	%		75.3	%		71.7	%		76.2	%		77.0	%		77.8	%		76.3	%

Sales and Marketing Expense to non-GAAP Sales and Marketing Expense
Sales and Marketing Expense	$	6,680		$	6,924		$	7,767		$	6,422		$	6,597		$	8,515		$	7,200		$	6,022

Share-based Compensation		269			237			243			180			210			149			124			93
Depreciation		1			—			1			1			—			—			—			—
One-time expenses
Settlements, penalties & interest		(5	)		5			18			6			30			4			11			—
Acquisition and transaction costs		68			37			11			—			—			—			—			—
Other non-recurring expenses		—			—			—			—			—			180			—			—
Non-GAAP Sales and Marketing Expense	$	6,347		$	6,645		$	7,494		$	6,235		$	6,357		$	8,182		$	7,065		$	5,929

General and Administrative Expense to non-GAAP General and Administrative Expense
General and Administrative Expense	$	10,378		$	10,118		$	10,063		$	9,747		$	9,294		$	10,336		$	9,956		$	9,720

Share-based Compensation		1,187			1,122			1,535			980			936			1,298			1,142			641
Depreciation		264			256			251			225			200			234			210			168
One-time expenses
Settlements, penalties & interest		377			304			98			284			101			432			102			34
Acquisition and transaction costs		371			245			57			51			—			—			—			—
Other non-recurring expenses		253			—			86			53			—			453			—			—
Non-GAAP General and Administrative Expense	$	7,926		$	8,191		$	8,036		$	8,154		$	8,057		$	7,919		$	8,502		$	8,877

Research and Development Expense to non-GAAP Research and Development Expense
Research and Development Expense	$	1,973		$	1,962		$	1,769		$	1,739		$	1,803		$	1,325		$	1,979		$	1,627

Share-based Compensation		90			86			85			69			76			89			40			70
One-time expenses
Settlements, penalties & interest		—			27			31			—			—			—			—			25
Acquisition and transaction costs		195			369			147			—			—			—			—			—
Non-GAAP Research and Development Expense	$	1,688		$	1,480		$	1,506		$	1,670		$	1,727		$	1,236		$	1,939		$	1,532

⁽¹⁾Note that first quarters are seasonally strong as recurring year-end W2/ACA revenue is recognized in this period.

ASURE SOFTWARE, INC. RECONCILIATION OF NON-GAAP AND ADJUSTED FINANCIAL MEASURES (cont.) (unaudited)

(in thousands)	Q3-24			Q2-24			Q1-24			Q4-23			Q3-23			Q2-23			Q1-23			Q4-22
Revenue⁽¹⁾	$	29,304		$	28,044		$	31,652		$	26,264		$	29,334		$	30,420		$	33,064		$	29,292

GAAP Net (Loss) Income to Adjusted EBITDA
GAAP Net (Loss) Income	$	(3,901	)	$	(4,360	)	$	(308	)	$	(3,582	)	$	(2,206	)	$	(3,765	)	$	339		$	(1,056	)

Interest expense, net		109			(53	)		(156	)		(24	)		782			1,593			1,944			1,429
Income taxes		170			231			33			(158	)		(123	)		627			(237	)		(94	)
Depreciation		1,497			1,402			1,361			1,148			1,185			1,542			1,219			1,039
Amortization – intangibles		4,345			4,096			3,499			3,743			3,384			3,343			3,570			3,648
EBITDA	$	2,220		$	1,316		$	4,429		$	1,127		$	3,022		$	3,340		$	6,835		$	4,966
EBITDA Margin		7.6	%		4.7	%		14.0	%		4.3	%		10.3	%		11.0	%		20.7	%		17.0	%

Share-based Compensation		1,591			1,488			1,902			1,260			1,251			1,582			1,337			838
One Time Expenses
Settlements, penalties & interest		375			339			147			283			140			436			117			62
Acquisition and transaction costs		1,001			914			254			51			—			—			—			—
Other non-recurring expenses		253			—			86			53			—			633			—			—
Other (expense) income, net		—			—			(10	)		1			1,800			93			(83	)		139
Adjusted EBITDA	$	5,440		$	4,057		$	6,808		$	2,775		$	6,213		$	6,084		$	8,206		$	6,005
Adjusted EBITDA Margin		18.6	%		14.5	%		21.5	%		10.6	%		21.2	%		20.0	%		24.8	%		20.5	%

⁽¹⁾Note that first quarters are seasonally strong as recurring year-end W2/ACA revenue is recognized in this period.

Investor Relations Contact
Patrick McKillop
Vice President, Investor Relations
617-335-5058
patrick.mckillop@asuresoftware.com

MIL-OSI USA: Hageman Files Amicus Brief in Support of Fourth Amendment Rights

Source: United States House of Representatives – Wyoming Congresswoman Harriet Hageman

Washington, DC – Today, Congresswoman Harriet Hageman, joined by Senators Cynthia Lummis, R-WY, Rand Paul, R-KY, and Ron Wyden, D-OR, and Representatives Dan Bishop, R-NC, Thomas Massie, R-KY, and Nikema Williams, D-GA, filed an amicus brief in the case of Martin v United States, a Federal Tort Claims Act (FTCA) challenge against the U.S. due to a wrongful raid conducted by the FBI.

Representative Hageman stated, “When the government infringes upon a citizen’s Constitutional rights there must be methods of redress for those who were wronged. The FBI clearly violated the Fourth Amendment rights of Ms. Martin and her family, and it is critically important that they have legal redress. Congress has provided Americans with an avenue to protect their individual natural, including those and victims of wrongful federal law enforcement raids. Courts have no right to ignore those protections in order to arbitrarily grant immunity to the FBI, and in doing so in this case the appellate judges have blatantly subverted the laws enacted by Congress. The FBI must be held accountable for the physical and emotional damages it inflicted by wrongfully raiding Curtrina Martin’s home.”

Background:

In 2017, as part of an anti-gang operation, FBI agents executed a warrant for a specific gang member, raiding the wrong home of Curtrina Martin. Martin, her child, and boyfriend were awoken when agents detonated a flash grenade and ripped the door off its hinges. Her boyfriend was handcuffed, and Martin held at gunpoint. After the FBI noticed it was at the wrong address, the agents ended the raid without explanation.
Congress enacted the FTCA in 1946 to allow U.S. persons to sue the federal government for torts, including harms that result in legal liability, committed by persons acting on behalf of the government. Congress expanded this accountability measure in the 1970s to address federal law enforcement actions in response to a series of wrongful drug raids on innocent persons.
Ms. Martin filed for redress against the United States under the FTCA, alleging violation of Fourth Amendment rights. The 11th circuit dismissed her claims on a faulty application of the Constitution’s Supremacy Clause. If allowed to stand, this decision would effectively gut the FTCA, and the accountability it provides, for not just Curtrina Martin, but all Americans, and would deal a serious blow to the separation of powers that underpins our Constitutional republic.

###

Contact: Chris Berardi, Sr. Advisor/Communications Director

MIL-OSI Security: Two sent to prison for roles in cartel-linked human smuggling scheme

Source: Office of United States Attorneys

LAREDO, Texas – Two individuals have been sentenced to prison for their roles in an extensive human smuggling conspiracy involving Cartel del Noreste (CDN), announced U.S. Attorney Alamdar S. Hamdani.

Laredo resident Francisco Suarez, 20, and Luis Daniel Segura Guzman, 26, a Mexican citizen residing in Laredo. Suarez pleaded guilty Dec. 20, 2023, and Jan. 18, respectively.

U.S. District Judge Diana Saldaña has now imposed a 33-month term of imprisonment for Suarez, while Segura received 30 months. Both must serve three years of supervised release following their sentences. Not a U.S. citizen, Guzman is expected to face removal proceedings following his imprisonment. At the hearing, the court heard additional evidence that Suarez and Segura were a part of Los Fantasmas, a gang and alien smuggling organization who works hand-in-hand with Mexican cartels. Judge Saldaña imposed sentencing enhancements that held each responsible for smuggling at least 100 aliens or more. The court commented that both were “committed to this lifestyle” and noted the importance of imposing a sentence that would deter them from becoming involved in this conduct in the future.

Another co-conspirator Bernardo Aniceto Garza, 27, Laredo, also pleaded guilty and is set for sentencing Nov. 4.

“Cartel del Noreste, a Mexican cartel, is known for engaging in ruthless acts of violence and extortion to support its drug trafficking operations, and in recent years it has added human smuggling to its list of illicit money-making operations, with Facebook and social media becoming invaluable tools to facilitate its new venture,” said Hamdani. “CDN uses these platforms to recruit, coordinate and expand its criminal operations, reaching broader audiences, while putting countless lives at risk. For years, Suarez and Guzman used Facebook to exploit and profit from vulnerable individuals while also evading detection, but thanks to the efforts of my office, those days are now over.”

On Aug. 23, 2023, authorities discovered a Facebook post that appeared to be advertising transportation services for undocumented aliens via sleeper cabs of tractor trailers. The investigation revealed Segura coordinated the transportation of three undocumented aliens for approximately $8,000 and arranged for a Garza to make the pickup in Laredo that afternoon.

Authorities were able to apprehend Garza and found two women and a 15-year-old minor inside a parked tractor. All were citizens of Mexico and El Salvador and illegally present in the United States. Law enforcement also discovered a firearm inside the vehicle Garza was driving.

On Sept. 16, 2023, authorities encountered Segura in Laredo. He admitted the CDN had recruited him in Mexico to smuggle aliens and that he worked with Suarez to do so. Law enforcement located a cell phone in Segura’s possession that was still logged into the Facebook account used to advertise and coordinate the August smuggling event.

Suarez was acting as a scout in a separate smuggling attempt Sept. 19, 2023, when law enforcement arrested him. He admitted he worked for Garza and had provided him with the three migrants authorities caught Garza transporting. The investigation also identified Suarez as a stash house operator responsible for harboring undocumented individuals.

An analysis of Segura’s phone revealed his involvement in the smuggling of at least 133 undocumented individuals. Historical data and messages traced Segura’s smuggling activities back to May 2020. The phone also contained detailed information, including photographs and identifying information of suspected migrants, screenshots of smuggling routes and deposit receipts for payments tied to smuggling services.

Authorities found similar information on Suarez’s cell phone which included photos of approximately 300 unique individuals illegally smuggled across the border, including children, dating back to September 2022.

The men will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

Homeland Security Investigations, Laredo Police Department and Border Patrol conducted the Organized Crime Drug Enforcement Task Forces (OCDETF) investigation with the assistance of Customs and Border Protection Air and Marine Operations and the Texas Department of Public Safety. OCDETF identifies, disrupts and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found on the Department of Justice’s OCDETF webpage.

This sentencing is also the result of the coordinated efforts of Joint Task Force Alpha (JTFA). Attorney General Merrick B. Garland established JTFA in June 2021 to marshal the investigative and prosecutorial resources of the Department of Justice, in partnership with the Department of Homeland Security (DHS), to combat the rise in prolific and dangerous human smuggling and trafficking groups operating in Mexico, Guatemala, El Salvador and Honduras. The initiative was expanded to Colombia and Panama to combat human smuggling in the Darién in June 2024. JTFA comprises detailees from U.S. attorneys’ offices along the southwest border including the Southern District of California, districts of Arizona and New Mexico and the Western and Southern Districts of Texas. Dedicated support is provided by numerous components of the Justice Department’s Criminal Division, led by the Human Rights and Special Prosecutions Section, and supported by the Office of Prosecutorial Development, Assistance and Training; Narcotic and Dangerous Drug Section; Money Laundering and Asset Recovery Section; Office of Enforcement Operations; Office of International Affairs; and the Violent Crime and Racketeering Section. JTFA also relies on substantial law enforcement investment from DHS, FBI, Drug Enforcement Adminstration and other partners. To date, JTFA’s work has resulted in over 325 domestic and international arrests of leaders, organizers and significant facilitators of human smuggling, more than 270 U.S. convictions, more than 210 significant jail sentences imposed and forfeitures of substantial assets.

Assistant U.S. Attorney and JTFA detailee Jennifer Day prosecuted this case.

MIL-OSI Security: KC Man Sentenced to 15 Years for Fentanyl Conspiracy

Source: United States Bureau of Alcohol Tobacco Firearms and Explosives (ATF)

KANSAS CITY, Mo. – A Kansas City, Mo., man was sentenced in federal court today for his role in a conspiracy to distribute fentanyl, which resulted in the deaths of three persons.

Luis Manuel Morales, 24, was sentenced by U.S. District Judge Roseann Ketchmark to 15 years in federal prison without parole.

On May 8, 2024, Morales pleaded guilty to one count of conspiracy to distribute fentanyl and one count of conspiracy to commit money laundering.

Morales admitted that he was a source of supply of fentanyl pills for co-defendant Tiger Dean Draggoo, 24, of Kansas City, Mo. On occasion, Draggoo also served as a source of supply of fentanyl pills for Morales. Morales also introduced Draggoo to additional sources of fentanyl pills.

Morales sold at least 1,764 pills to Draggoo over 15 separate transactions from Jan. 17 to Oct. 29, 2022, for which he was paid $2,320 through Cash App and an additional amount in cash. Morales also purchased at least 100 fentanyl pills from Draggoo during this time period, for which he paid $750. In total, those 1,864 pills contained approximately 205 grams of fentanyl.

Morales and Draggoo conspired to conceal and disguise the nature of the transfer of funds through Cash App by referring to the payments as “rent,” “food clothes,” “clothes,” “food and beer,” “food,” “apt rent,” “reimbursement for mechanic,” and “reimbursement car payment.”

Morales was on probation at the time that he was supplying Dragoo with fentanyl pills, following his guilty plea in state court to attempted armed robbery after he and another person robbed a victim at gunpoint.

Morales is the first defendant in this case to be sentenced. On Oct. 16, 2024, Draggoo pleaded guilty to his role in the fentanyl conspiracy and to three counts of distributing fentanyl resulting in death. Five additional defendants have pleaded guilty and await sentencing.

This case is being prosecuted by Assistant U.S. Attorneys Brad K. Kavanaugh and Robert Smith. It was investigated by the Jackson County Drug Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Belton, Mo., Police Department, the Raymore, Mo., Police Department, the Cass County, Mo., Sheriff’s Department, and the FBI.

MIL-OSI: Sound Financial Bancorp, Inc. Q3 2024 Results

Source: GlobeNewswire (MIL-OSI)

SEATTLE, Oct. 30, 2024 (GLOBE NEWSWIRE) — Sound Financial Bancorp, Inc. (the “Company”) (Nasdaq: SFBC), the holding company for Sound Community Bank (the “Bank”), today reported net income of $1.2 million for the quarter ended September 30, 2024, or $0.45 diluted earnings per share, as compared to net income of $795 thousand, or $0.31 diluted earnings per share, for the quarter ended June 30, 2024, and $1.2 million, or $0.45 diluted earnings per share, for the quarter ended September 30, 2023. The Company also announced today that its Board of Directors declared a cash dividend on common stock of $0.19 per share, payable on November 26, 2024 to stockholders of record as of the close of business on November 12, 2024.

Comments from the President and Chief Executive Officer

“For the first time in our history, loans surpassed $900 million, and we continued to grow deposits. These production improvements came as we held operating expenses steady, demonstrating our ability to grow the Bank efficiently,” remarked Laurie Stewart, President and Chief Executive Officer. “We also completed a major upgrade to our online banking services and have received positive feedback on this from our clients,” concluded Ms. Stewart.

“Net income increased 45% from the prior quarter primarily due to the improvement in our net interest margin, which was driven by the repricing and origination of new loans at higher market rates. At the same time, funding costs increased at a slower pace, as the majority of our deposits had already been repriced. We also made progress in transitioning time deposits to savings and money market accounts, which typically carry lower rates and provide more flexibility for future repricing,” explained Wes Ochs, Executive Vice President and Chief Financial Officer.

Mr. Ochs continued, “As always, we remain focused on maintaining strong asset quality. Non-performing loans decreased from the prior quarter-end and we are actively utilizing available remedies to address the remaining problem loans.”

Q3 2024 Financial Performance
Total assets increased $26.1 million or 2.4% to $1.10 billion at September 30, 2024, from $1.07 billion at June 30, 2024, and increased $70.8 million or 6.9% from $1.03 billion at September 30, 2023.				Net interest income increased $425 thousand or 5.7% to $7.9 million for the quarter ended September 30, 2024, from $7.4 million for the quarter ended June 30, 2024, and decreased $295 thousand or 3.6% from $8.2 million for the quarter ended September 30, 2023.

				Net interest margin (“NIM”), annualized, was 2.98% for the quarter ended September 30, 2024, compared to 2.92% for the quarter ended June 30, 2024 and 3.38% for the quarter ended September 30, 2023.
Loans held-for-portfolio increased $12.5 million or 1.4% to $901.7 million at September 30, 2024, compared to $889.3 million at June 30, 2024, and increased $26.3 million or 3.0% from $875.4 million at September 30, 2023.
				An $8 thousand provision for credit losses was recorded for the quarter ended September 30, 2024, compared to a $109 thousand and a $75 thousand release of provision for credit losses for the quarters ended June 30, 2024 and September 30, 2023, respectively. At September 30, 2024, the allowance for credit losses on loans to total loans outstanding was 0.95%, compared to 0.96% at both June 30, 2024 and September 30, 2023.
Total deposits increased $23.4 million or 2.6% to $930.2 million at September 30, 2024, from $906.8 million at June 30, 2024, and increased $69.3 million or 8.1% from $860.9 million at September 30, 2023. Noninterest-bearing deposits increased $4.8 million or 3.8% to $129.7 million at September 30, 2024 compared to $124.9 million at June 30, 2024, and decreased $24.2 million or 15.7% compared to $153.9 million at September 30, 2023.
				Total noninterest income increased $73 thousand or 6.3% to $1.2 million for the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024, and increased $154 thousand or 14.2% compared to the quarter ended September 30, 2023.
The loans-to-deposits ratio was 97% at September 30, 2024, compared to 98% at June 30, 2024 and 102% at September 30, 2023.
				Total noninterest expense decreased $58 thousand or 0.7% to $7.7 million for the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024, and decreased $31 thousand or 0.4% from compared to the quarter ended September 30, 2023.
Total nonperforming loans decreased $420 thousand or 4.7% to $8.5 million at September 30, 2024, from $8.9 million at June 30, 2024, and increased $6.7 million or 381.8% from $1.8 million at September 30, 2023. Nonperforming loans to total loans was 0.94% and the allowance for credit losses on loans to total nonperforming loans was 101.13% at September 30, 2024.
				The Bank continued to maintain capital levels in excess of regulatory requirements and was categorized as “well-capitalized” at September 30, 2024.

Operating Results

Net interest income increased $425 thousand, or 5.7%, to $7.9 million for the quarter ended September 30, 2024, compared to $7.4 million for the quarter ended June 30, 2024, and decreased $295 thousand, or 3.6%, from $8.2 million for the quarter ended September 30, 2023.The increase from the prior quarter was primarily due to a higher average yield on interest-earning assets, particularly loans receivable, and an increase in the average balances of both loans receivable and interest-earning cash. This was partially offset by a more modest rise in the cost of funds, as higher cost earnings interest-bearing deposits decreased by the end of the third quarter of 2024, limiting the growth in funding costs compared to the prior quarter. The decrease in net interest income compared to the same quarter one year ago was primarily due to higher funding costs, specifically, increased rates on and balances of money market and certificate accounts, partially offset by an increase in the average yield earned on interest-earning assets.

Interest income increased $799 thousand, or 5.7%, to $14.8 million for the quarter ended September 30, 2024, compared to $14.0 million for the quarter ended June 30, 2024, and increased $2.2 million, or 17.0%, from $12.7 million for the quarter ended September 30, 2023. The increase from the prior quarter was primarily due to a higher average balance of loans and interest-bearing cash, along with a 14 basis point increase in the average loan yield, reflecting higher rates on newly originated loans and upward adjustments to rates on existing variable rate loans. The increase in interest income compared to the same quarter last year was due primarily to higher average balances of loans and interest-bearing cash, a 41 basis point increase in the average yield on loans, a 20 basis point increase in the average yield on interest-bearing cash, and a seven basis point increase in the average yield on investments, partially offset by a decline in the average balance of investments.

Interest income on loans increased $556 thousand, or 4.5%, to $12.9 million for the quarter ended September 30, 2024, compared to $12.3 million for the quarter ended June 30, 2024, and increased $1.4 million, or 11.9%, from $11.5 million for the quarter ended September 30, 2023. The average balance of total loans was $898.6 million for the quarter ended September 30, 2024, up from $891.9 million for the quarter ended June 30, 2024 and $862.4 million for the quarter ended September 30, 2023. The average yield on total loans was 5.70% for the quarter ended September 30, 2024, up from 5.56% for the quarter ended June 30, 2024 and 5.29% for the quarter ended September 30, 2023. The increase in the average loan yield during the current quarter, compared to both the prior quarter and the third quarter of 2023, was primarily due to the origination of new loans at higher interest rates. Additionally, variable-rate loans resetting to higher rates contributed to the increase in average yield compared to the third quarter of 2023. The increase in the average balance during the current quarter compared to the prior quarter was primarily due to growth in commercial and multifamily loans, manufactured housing loans and consumer loans, with the growth in consumer loans coming primarily from floating home loans. This was partially offset by a decline in construction and land loans. The average balances for commercial business loans and one-to-four family loans remained relatively flat from the second quarter of 2024. The increase in the average balance of loans during the current quarter compared to the third quarter of 2023 was primarily due to loan growth across all categories, except for one-to-four family loans, construction and land loans, and commercial business loans, with the largest decrease being in construction and land loans.

Interest income on investments was $132 thousand for the quarter ended September 30, 2024, compared to $133 thousand for the quarter ended June 30, 2024, and $139 thousand for the quarter ended September 30, 2023. Interest income on interest-bearing cash increased $244 thousand to $1.8 million for the quarter ended September 30, 2024, compared to $1.6 million for the quarter ended June 30, 2024, and increased $788 thousand from $1.0 million for the quarter ended September 30, 2023. These increases were due to higher average balances of interest-bearing cash, with the increase from the same quarter in the prior year also resulting from a higher average yield.

Interest expense increased $374 thousand, or 5.7%, to $7.0 million for the quarter ended September 30, 2024, from $6.6 million for the quarter ended June 30, 2024, and increased $2.4 million, or 54.2%, from $4.5 million for the quarter ended September 30, 2023. The increase in interest expense during the current quarter from the prior quarter was primarily the result of a $38.8 million increase in the average balance of savings and money market accounts, as well as higher average rates paid on these accounts, partially offset by a $13.9 million decrease in the average balance of certificate accounts. The increase in interest expense during the current quarter from the comparable period a year ago was primarily the result of a $9.8 million increase in the average balance of certificate accounts and a $148.1 million increase in the average balance of savings and money market accounts, as well as higher average rates paid on all interest-bearing deposits. This was partially offset by a $46.3 million decrease in the average balance of demand and NOW accounts and a $2.8 million decrease in the average balance of FHLB advances. The average cost of deposits was 2.74% for the quarter ended September 30, 2024, up from 2.67% for the quarter ended June 30, 2024 and 1.85% for the quarter ended September 30, 2023. The average cost of FHLB advances was 4.32% for both the quarters ended September 30, 2024 and June 30, 2024, and down from 4.38% for the quarter ended September 30, 2023.

NIM (annualized) was 2.98% for the quarter ended September 30, 2024, up from 2.92% for the quarter ended June 30, 2024 and down from 3.38% for the quarter ended September 30, 2023. The increase in NIM from the prior quarter was result of an increase in interest income on interest-earning assets, partially offset by an increase in the cost of funding. The decrease in NIM from the quarter one year ago was primarily due to the cost of funding increasing at a faster pace than the yield earned on interest-earning assets, driven by the higher average balance of higher costing money market and certificate accounts.

A provision for credit losses of $8 thousand was recorded for the quarter ended September 30, 2024, consisting of a provision for credit losses on loans of $106 thousand and a release of provision for credit losses on unfunded loan commitments of $98 thousand. This compared to a release of provision for credit losses of $109 thousand for the quarter ended June 30, 2024, consisting of a release of provision for credit losses on loans of $88 thousand and a release of provision for credit losses on unfunded loan commitments of $21 thousand, and a provision for credit losses of $75 thousand for the quarter ended September 30, 2023, consisting of a provision for credit losses on loans of $224 thousand and a release of the provision for credit losses on unfunded loan commitments of$149 thousand. The increase in the provision for credit losses for the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024 resulted primarily from growth in the loan portfolio and higher quantitative loss rates, which were influenced by a forecast of higher unemployment, and enhancements to the loss model, including an additional qualitative adjustment related to loan review. These adjustments were partially offset by decline in the balance of the construction loan portfolio, which typically has higher loss rates, and a decrease in the qualitative risk adjustment for construction loans as projects were completed and market conditions improved. Expected loss estimates consider various factors, such as market conditions, borrower -specific information, projected delinquencies, and the impact of economic conditions on borrowers’ ability to repay.

Noninterest income increased $73 thousand, or 6.3%, to $1.2 million for the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024, and increased $154 thousand, or 14.2%, compared to the quarter ended September 30, 2023. The increase from the prior quarter was primarily related to a $217 thousand upward adjustment in fair value of mortgage servicing rights and a $52 thousand increase in earnings from bank-owned life insurance (“BOLI”), both influenced by fluctuating market interest rates. These gains were partially offset by a $133 thousand decrease in service charges and fee income, which was elevated in the prior quarter due to the recovery of potential future lost fee income due to vendor error. Additionally, there was a $34 thousand decrease in net gain on sale of loans, due to lower sales volume, and a $30 thousand decrease in gain on disposal of assets due to insurance claims on the loss of fully depreciated assets in second quarter of 2024. The increase in noninterest income from the comparable period in 2023 was primarily due to an $98 thousand increase in earnings on BOLI due to market rate fluctuations, and an $179 thousand increase in the fair value adjustment on mortgage servicing rights due to changes in prepayment speeds, servicing costs, and discount rate. These increases were partially offset by a $72 thousand decrease in service charges and fee income primarily due to a volume incentive paid by Mastercard in 2023, a $36 thousand decrease in net gain on sale of loans for reason similar to those noted above, and a decrease in mortgage servicing income as a result of the portfolio paying down at a faster rate than we are replacing the loans. Additionally, mortgage servicing income decreased by $15 thousand compared to the third quarter of 2023. Loans sold during the quarter ended September 30, 2024, totaled $2.4 million, compared to $4.0 million and $4.4 million of loans sold during the quarters ended June 30, 2024 and September 30, 2023, respectively.

Noninterest expense decreased $58 thousand, or 0.7%, to $7.7 million for the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024, and decreased $31 thousand, or 0.4%, from the quarter ended September 30, 2023. The decrease from the quarter ended June 30, 2024 was primarily a result of lower a $189 thousand decrease in salaries and benefits, primarily due to lower incentive compensation accruals. This was partially offset by an $157 thousand increase in data processing expenses, largely due to a vendor reimbursement received in the previous quarter for software implementation costs. Additionally, regulatory assessments declined $31 thousand due to a lower accrual for exam costs. Compared to same quarter in 2023, the decrease in noninterest expense was primarily due to lower operations, data processing, and occupancy expenses, which were partially offset by a $321 thousand increase in salaries and benefits. Operations expenses decreased due to reduction in loan originations costs, office expenses, marketing costs, legal fees, and charitable contributions, partially offset by an operational loss from a fraudulently obtained loan charged off in the third quarter of 2024. Data processing expenses decreased due to one-time costs related to new technology implemented in 2023, while occupancy expenses decreased primarily due fully amortized leasehold improvements. The increase in salaries and benefits compared to the third quarter of 2023 reflected higher incentive compensation, medical expenses, retirement plan costs, and directors’ fees (due to the addition of a new director), partially offset by lower salaries from a restructuring of positions at the end of 2023.

Balance Sheet Review, Capital Management and Credit Quality

Assets at September 30, 2024 totaled $1.10 billion, an increase from $1.07 billion at June 30, 2024 and $1.03 billion at September 30, 2023. The increase in total assets from June 30, 2024 and one year ago was primarily due to an increase in cash and cash equivalents and in loans held-for-portfolio.

Cash and cash equivalents increased $13.8 million, or 10.2%, to $148.9 million at September 30, 2024, compared to $135.1 million at June 30, 2024, and increased $47.0 million, or 46.2%, from $101.9 million at September 30, 2023. The increase from the prior quarter and from one year ago was primarily due to the increase in deposits exceeding the increase in loans held-for-portfolio.

Investment securities increased $28 thousand, or 0.3%, to $10.2 million at September 30, 2024, compared to $10.1 million at June 30, 2024, and increased $17 thousand, or 0.2%, from $10.2 million at September 30, 2023. Held-to-maturity securities totaled $2.1 million at both September 30, 2024 and June 30, 2024, and totaled $2.2 million at September 30, 2023. Available-for-sale securities totaled $8.0 million at September 30, 2024, June 30, 2024 and September 30, 2023.

Loans held-for-portfolio were $901.7 million at September 30, 2024, compared to $889.3 million at June 30, 2024 and $875.4 million at September 30, 2023. The increase from to June 30, 2024, primarily resulted from growth in one-to-four family home loans, commercial and multifamily loans, as well as manufactured home and floating home loans, partially offset by decreases in construction and land loans and home equity loans. The increase in one-to-four family home loans was primarily due to new originations exceeding prepayments during the quarter, while the increase in commercial and multifamily loans primarily resulted from conversion of construction projects to permanent financing. The increase in manufactured home loans and floating home loans relates to continued strong demand for this type of financing in our market. The decrease in construction and land loans was primarily due to project completions and reduced demand caused by higher interest rates, which limited new financing opportunities. The decrease in home equity loans reflected normal payment fluctuations. Compared to September 30, 2024, the overall increase in loans held-for-portfolio was due to sustained strong loan demand and slower prepayment activity, with increases primarily related to commercial and multifamily loans, home equity loans, manufactured home loans and floating home loans.

Nonperforming assets (“NPAs”), which are comprised of nonaccrual loans (including nonperforming modified loans), other real estate owned (“OREO”) and other repossessed assets, decreased $420 thousand, or 4.7%, to $8.6 million at September 30, 2024, from $9.0 million at June 30, 2024 and increased $6.3 million, or 268.2%, from $2.3 million at September 30, 2023. The decrease in NPAs from June 30, 2024 was primarily due to the payoff of three loans totaling $175 thousand and one loan totaling $421 thousand returning to accrual status, partially offset by the addition of eight loans totaling $260 thousand to nonaccrual. The increase in NPAs from one year ago was primarily due to the placement of an additional $7.7 million of loans on nonaccrual status, which included a $3.7 million matured commercial real estate loan where the borrower is in the process of securing financing from another lender, a $2.4 million floating home loan, and a $985 thousand commercial real estate loan, all of which are well secured, and one manufactured home loan of $115 thousand that was repossessed in the first quarter of 2024. These additions were partially offset by the payoff of seven loans totaling $877 thousand, and normal payment amortization.

NPAs to total assets were 0.78%, 0.84% and 0.23% at September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The allowance for credit losses on loans to total loans outstanding was 0.95% at September 30, 2024, compared to 0.96% at both June 30, 2024 and September 30, 2023. Net loan charge-offs for the third quarter of 2024 totaled $14 thousand, compared to $17 thousand for the second quarter of 2023, and $3 thousand for the third quarter of 2023.

The following table summarizes our NPAs at the dates indicated (dollars in thousands):

	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Nonperforming Loans:
One-to-four family	$	745		$	822		$	835		$	1,108		$	1,137
Home equity loans		338			342			83			84			86
Commercial and multifamily		4,719			5,161			4,747			—			306
Construction and land		25			28			29			—			78
Manufactured homes		230			136			166			228			151
Floating homes		2,377			2,417			3,192			—			—
Commercial business		23			—			—			2,135			—
Other consumer		32			3			1			1			4
Total nonperforming loans		8,489			8,909			9,053			3,556			1,762
OREO and Other Repossessed Assets:
Commercial and multifamily		—			—			575			575			575
Manufactured homes		115			115			115			—			—
Total OREO and repossessed assets		115			115			690			575			575
Total NPAs	$	8,604		$	9,024		$	9,743		$	4,131		$	2,337

Percentage of Nonperforming Loans:
One-to-four family		8.7	%		9.1	%		8.5	%		26.9	%		48.7	%
Home equity loans		3.9			3.8			0.9			2.0			3.7
Commercial and multifamily		54.8			57.2			48.7			—			13.1
Construction and land		0.3			0.3			0.3			—			3.3
Manufactured homes		2.7			1.5			1.7			5.5			6.4
Floating homes		27.6			26.8			32.8			—			—
Commercial business		0.3			—			—			51.7			—
Other consumer		0.4			—			—			—			0.2
Total nonperforming loans		98.7			98.7			92.9			86.1			75.4
Percentage of OREO and Other Repossessed Assets:
Commercial and multifamily		—			—			5.9			13.9			24.6
Manufactured homes		1.3			1.3			1.2			—			—
Total OREO and repossessed assets		1.3			1.3			7.1			13.9			24.6
Total NPAs		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The following table summarizes the allowance for credit losses at the dates and for the periods indicated (dollars in thousands, unaudited):

	At or For the Quarter Ended:
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Allowance for Credit Losses on Loans
Balance at beginning of period	$	8,493		$	8,598		$	8,760		$	8,438		$	8,217
(Release of) Provision for credit losses during the period		106			(88	)		(106	)		337			224
Net charge-offs during the period		(14	)		(17	)		(56	)		(15	)		(3	)
Balance at end of period	$	8,585		$	8,493		$	8,598		$	8,760		$	8,438
Allowance for Credit Losses on Unfunded Loan Commitments
Balance at beginning of period	$	245		$	266		$	193		$	557		$	706
(Release of) Provision for credit		(98	)		(21	)		73			(364	)		(149	)
Balance at end of period		147			245			266			193			557
Allowance for Credit Losses	$	8,732		$	8,738		$	8,864		$	8,953		$	8,995
Allowance for credit losses on loans to total loans		0.95	%		0.96	%		0.96	%		0.98	%		0.96	%
Allowance for credit losses to total loans		0.97	%		0.98	%		0.99	%		1.00	%		1.03	%
Allowance for credit losses on loans to total nonperforming loans		101.13	%		95.33	%		94.97	%		246.34	%		478.89	%
Allowance for credit losses to total nonperforming loans		102.86	%		98.08	%		97.91	%		251.77	%		510.50	%

Deposits increased $23.4 million, or 2.6%, to $930.2 million at September 30, 2024, from $906.8 million at June 30, 2024 and increased $69.3 million, or 8.1%, from $860.9 million at September 30, 2023. The increase in deposits compared to the prior quarter-end was primarily a result of an increase of $17.0 million related to one new depositor relationship, as well as a $5.3 million increase in related party money market deposits. Compared to a year ago, the increase was primarily a result of an increase in certificate accounts and money market accounts, including $50.2 million of related party deposits, which helped fund organic loan growth. These increases were partially offset by decreases in noninterest-bearing and interest-bearing demand accounts and savings accounts, as interest rate sensitive clients shifted funds from lower-cost deposits, such as noninterest-bearing deposits, into higher rate money market and time deposits. Noninterest-bearing deposits increased $4.8 million, or 3.8%, to $129.7 million at September 30, 2024, compared to $124.9 million at June 30, 2024 and decreased $24.2 million, or 15.7%, from $153.9 million at September 30, 2023. Noninterest-bearing deposits represented 14.0%, 13.8% and 17.9% of total deposits at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

FHLB advances totaled $40.0 million at each of September 30, 2024, June 30, 2024, and September 30, 2023. FHLB advances are primarily used to support organic loan growth and to maintain liquidity ratios in line with our asset/liability objectives. FHLB advances outstanding at September 30, 2024 had maturities ranging from late 2024 through early 2028. Subordinated notes, net totaled $11.7 million at each of September 30, 2024, June 30, 2024 and September 30, 2023.

Stockholders’ equity totaled $102.2 million at September 30, 2024, an increase of $892 thousand, or 0.9%, from $101.3 million at June 30, 2024, and an increase of $2.0 million, or 2.0%, from $100.2 million at September 30, 2023. The increase in stockholders’ equity from June 30, 2024 was primarily the result of $1.2 million of net income earned during the current quarter and a $127 thousand decrease in accumulated other comprehensive loss, net of tax, partially offset by the payment of $487 thousand in cash dividends to the Company’s stockholders.

Sound Financial Bancorp, Inc., a bank holding company, is the parent company of Sound Community Bank, which is headquartered in Seattle, Washington and has full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles, Port Ludlow and University Place. Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer with one loan production office located in the Madison Park neighborhood of Seattle. For more information, please visit www.soundcb.com.

Forward-Looking Statements Disclaimer

When used in this press release and in documents filed or furnished by Sound Financial Bancorp, Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”), in the Company’s other press releases or other public or stockholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors listed below or because of other factors that we cannot foresee that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made.

Factors which could cause actual results to differ materially, include, but are not limited to: adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation or deflation, a recession or slowed economic growth, as well as supply chain disruptions; changes in the interest rate environment, including increases and decreases in the Board of Governors of the Federal Reserve System (the Federal Reserve) benchmark rate and the duration at which such interest rate levels are maintained, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; changes in consumer spending, borrowing and savings habits; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; the Company’s ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company’s market area; secondary market conditions for loans; expectations regarding key growth initiatives and strategic priorities; environmental, social and governance goals and targets; results of examinations of the Company or the Bank by their regulators; increased competition; changes in management’s business strategies; legislative changes; changes in the regulatory and tax environments in which the Company operates; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on our third-party vendors; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other documents filed with or furnished to the SEC, which are available at www.soundcb.com and on the SEC’s website at www.sec.gov. The risks inherent in these factors could cause the Company’s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company and could negatively affect the Company’s operating and stock performance.

The Company does not undertake—and specifically disclaims any obligation—to revise any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statement.

CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, unaudited)

	For the Quarter Ended
	September 30, 2024		June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Interest income	$	14,838	$	14,039		$	13,760		$	13,337		$	12,686
Interest expense		6,965		6,591			6,300			5,770			4,518
Net interest income		7,873		7,448			7,460			7,567			8,168
Provision for (release of) credit losses		8		(109	)		(33	)		(27	)		75
Net interest income after provision for (release of) credit losses		7,865		7,557			7,493			7,594			8,093
Noninterest income:
Service charges and fee income		628		761			612			576			700
Earnings on bank-owned life insurance		186		134			177			222			88
Mortgage servicing income		280		279			282			288			295
Fair value adjustment on mortgage servicing rights		101		(116	)		(65	)		(96	)		(78	)
Net gain on sale of loans		40		74			90			76			76
Other income		—		30			—			—			—
Total noninterest income		1,235		1,162			1,096			1,066			1,081
Noninterest expense:
Salaries and benefits		4,469		4,658			4,543			3,802			4,148
Operations		1,540		1,569			1,457			1,537			1,625
Regulatory assessments		189		220			189			198			183
Occupancy		414		397			444			458			458
Data processing		1,067		910			1,017			1,311			1,296
Net (gain) loss on OREO and repossessed assets		—		(17	)		6			—			—
Total noninterest expense		7,679		7,737			7,656			7,306			7,710
Income before provision for income taxes		1,421		982			933			1,354			1,464
Provision for income taxes		267		187			163			143			295
Net income	$	1,154	$	795		$	770		$	1,211		$	1,169

CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, unaudited)

	For the Nine Months Ended September 30
		2024			2023
Interest income	$	42,638		$	37,273
Interest expense		19,856			10,990
Net interest income		22,782			26,283
(Release of) provision for credit losses		(134	)		(246	)
Net interest income after (release of) provision for credit losses		22,916			26,529
Noninterest income:
Service charges and fee income		2,001			1,951
Earnings on bank-owned life insurance		498			957
Mortgage servicing income		841			891
Fair value adjustment on mortgage servicing rights		(81	)		(123	)
Net gain on sale of loans		205			264
Other income		30			—
Total noninterest income		3,494			3,940
Noninterest expense:
Salaries and benefits		13,670			13,333
Operations		4,566			4,557
Regulatory assessments		598			490
Occupancy		1,255			1,352
Data processing		2,995			3,077
Net (gain) loss on OREO and repossessed assets		(10	)		13
Total noninterest expense		23,074			22,822
Income before provision for income taxes		3,336			7,647
Provision for income taxes		617			1,419
Net income	$	2,719		$	6,228

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, unaudited)

	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
ASSETS
Cash and cash equivalents	$	148,930		$	135,111		$	137,977		$	49,690		$	101,890
Available-for-sale securities, at fair value		8,032			7,996			8,115			8,287			7,980
Held-to-maturity securities, at amortized cost		2,139			2,147			2,157			2,166			2,174
Loans held-for-sale		65			257			351			603			1,153
Loans held-for-portfolio		901,733			889,274			897,877			894,478			875,434
Allowance for credit losses – loans		(8,585	)		(8,493	)		(8,598	)		(8,760	)		(8,438	)
Total loans held-for-portfolio, net		893,148			880,781			889,279			885,718			866,996
Accrued interest receivable		3,705			3,413			3,617			3,452			3,415
Bank-owned life insurance, net		22,363			22,172			22,037			21,860			21,638
Other real estate owned (“OREO”) and other repossessed assets, net		115			115			690			575			575
Mortgage servicing rights, at fair value		4,665			4,540			4,612			4,632			4,681
Federal Home Loan Bank (“FHLB”) stock, at cost		2,405			2,406			2,406			2,396			2,783
Premises and equipment, net		4,807			4,906			6,685			5,240			5,204
Right-of-use assets		3,779			4,020			4,259			4,496			4,732
Other assets		6,777			6,995			4,500			6,106			6,955
TOTAL ASSETS	$	1,100,930		$	1,074,859		$	1,086,685		$	995,221		$	1,030,176
LIABILITIES
Interest-bearing deposits	$	800,480		$	781,854		$	788,217		$	699,813		$	706,954
Noninterest-bearing deposits		129,717			124,915			128,666			126,726			153,921
Total deposits		930,197			906,769			916,883			826,539			860,875
Borrowings		40,000			40,000			40,000			40,000			40,000
Accrued interest payable		908			760			719			817			588
Lease liabilities		4,079			4,328			4,576			4,821			5,065
Other liabilities		9,711			9,105			9,578			9,563			9,794
Advance payments from borrowers for taxes and insurance		2,047			812			2,209			1,110			1,909
Subordinated notes, net		11,749			11,738			11,728			11,717			11,707
TOTAL LIABILITIES		998,691			973,512			985,693			894,567			929,938
STOCKHOLDERS’ EQUITY:
Common stock		25			25			25			25			25
Additional paid-in capital		28,296			28,198			28,110			27,990			28,112
Retained earnings		74,840			74,173			73,907			73,627			73,438
Accumulated other comprehensive loss, net of tax		(922	)		(1,049	)		(1,050	)		(988	)		(1,337	)
TOTAL STOCKHOLDERS’ EQUITY		102,239			101,347			100,992			100,654			100,238
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,100,930		$	1,074,859		$	1,086,685		$	995,221		$	1,030,176

KEY FINANCIAL RATIOS
(unaudited)

	For the Quarter Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Annualized return on average assets		0.42	%		0.30	%		0.29	%		0.46	%		0.46	%
Annualized return on average equity		4.50	%		3.17	%		3.06	%		4.78	%		4.60	%
Annualized net interest margin⁽¹⁾		2.98	%		2.92	%		2.95	%		3.04	%		3.38	%
Annualized efficiency ratio⁽²⁾		84.31	%		89.86	%		89.48	%		84.63	%		83.36	%
_{(1) Net interest income divided by average interest earning assets.}
_{(2) Noninterest expense divided by total revenue (net interest income and noninterest income).}

PER COMMON SHARE DATA
(unaudited)

	At or For the Quarter Ended
	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
Basic earnings per share	$	0.45	$	0.31	$	0.30	$	0.47	$	0.45
Diluted earnings per share	$	0.45	$	0.31	$	0.30	$	0.47	$	0.45
Weighted-average basic shares outstanding		2,544,233		2,540,538		2,539,213		2,542,175		2,553,773
Weighted-average diluted shares outstanding		2,569,368		2,559,015		2,556,958		2,560,656		2,571,808
Common shares outstanding at period-end		2,564,095		2,557,284		2,558,546		2,549,427		2,568,054
Book value per share	$	39.87	$	39.63	$	39.47	$	39.48	$	39.03

AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE RATE PAID
(Dollars in thousands, unaudited)

The following tables present, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. Income and yields on tax-exempt obligations have not been computed on a tax equivalent basis. All average balances are daily average balances. Nonaccrual loans have been included in the table as loans carrying a zero yield for the period they have been on nonaccrual (dollars in thousands).

	Three Months Ended
	September 30, 2024							June 30, 2024							September 30, 2023
	Average Outstanding Balance			Interest Earned/ Paid		Yield/Rate		Average Outstanding Balance			Interest Earned/ Paid		Yield/Rate		Average Outstanding Balance			Interest Earned/ Paid		Yield/Rate
Interest-Earning Assets:
Loans receivable	$	898,570		$	12,876	5.70	%	$	891,863		$	12,320	5.56	%	$	862,397		$	11,505	5.29	%
Interest-earning cash		138,240			1,830	5.27	%		120,804			1,586	5.28	%		81,616			1,042	5.07	%
Investments		13,806			132	3.80	%		13,935			133	3.84	%		14,793			139	3.73	%
Total interest-earning assets	$	1,050,616			14,838	5.62	%		1,026,602		$	14,039	5.50	%	$	958,806			12,686	5.25	%
Interest-Bearing Liabilities:
Savings and money market accounts	$	340,281			2,688	3.14	%	$	301,454			2,115	2.82	%	$	192,214			720	1.49	%
Demand and NOW accounts		148,252			151	0.41	%		153,739			148	0.39	%		194,561			173	0.35	%
Certificate accounts		303,632			3,524	4.62	%		317,496			3,731	4.73	%		293,820			2,984	4.03	%
Subordinated notes		11,745			168	5.69	%		11,735			168	5.76	%		11,703			168	5.70	%
Borrowings		40,000			434	4.32	%		40,000			429	4.31	%		42,815			473	4.38	%
Total interest-bearing liabilities	$	843,910			6,965	3.28	%	$	824,424			6,591	3.22	%	$	735,113			4,518	2.44	%
Net interest income/spread				$	7,873	2.34	%				$	7,448	2.28	%				$	8,168	2.81	%
Net interest margin						2.98	%						2.92	%						3.38	%

Ratio of interest-earning assets to interest-bearing liabilities		124	%						125	%						130	%
Noninterest-bearing deposits	$	132,762						$	128,878						$	151,298
Total deposits		924,927		$	6,363	2.74	%		901,567		$	5,994	2.67	%		831,893		$	3,877	1.85	%
Total funding ⁽¹⁾		976,672			6,965	2.84	%		953,302			6,591	2.78	%		886,411			4,518	2.02	%
_{(1) Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.}

	Nine Months Ended
	September 30, 2024							September 30, 2023
	Average Outstanding Balance			Interest Earned/ Paid		Yield/Rate		Average Outstanding Balance			Interest Earned/ Paid		Yield/Rate
Interest-Earning Assets:
Loans receivable	$	895,300		$	37,429	5.58	%	$	865,357		$	34,437	5.32	%
Interest-earning cash		122,194			4,832	5.28	%		70,094			2,447	4.67	%
Investments		12,607			377	3.99	%		13,962			389	3.73	%
Total interest-earning assets	$	1,030,101			42,638	5.53	%	$	949,413			37,273	5.25	%
Interest-Bearing Liabilities:
Savings and money market accounts	$	308,845			6,669	2.88	%	$	173,319			1,197	0.92	%
Demand and NOW accounts		153,897			440	0.38	%		216,753			587	0.36	%
Certificate accounts		312,176			10,950	4.69	%		273,564			7,182	3.51	%
Subordinated notes		11,735			504	5.74	%		11,693			504	5.76	%
Borrowings		40,000			1,293	4.32	%		45,280			1,520	4.49	%
Total interest-bearing liabilities	$	826,653			19,856	3.21	%	$	720,609			10,990	2.04	%
Net interest income/spread				$	22,782	2.32	%				$	26,283	3.21	%
Net interest margin						2.95	%						3.70	%

Ratio of interest-earning assets to interest-bearing liabilities		125	%						132	%
Noninterest-bearing deposits	$	131,365						$	161,051
Total deposits		906,283		$	18,059	2.66	%		824,687		$	8,966	1.45	%
Total funding ⁽¹⁾		958,018			19,856	2.77	%		881,660			10,990	1.67	%
_{(1) Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.}

LOANS
(Dollars in thousands, unaudited)

	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Real estate loans:
One-to-four family	$	271,702		$	268,488		$	279,213		$	279,448		$	280,556
Home equity		25,199			26,185			24,380			23,073			21,313
Commercial and multifamily		358,587			342,632			324,483			315,280			304,252
Construction and land		85,724			96,962			111,726			126,758			118,619
Total real estate loans		741,212			734,267			739,802			744,559			724,740
Consumer Loans:
Manufactured homes		40,371			38,953			37,583			36,193			34,652
Floating homes		86,155			81,622			84,237			75,108			73,716
Other consumer		18,266			18,422			18,847			19,612			18,710
Total consumer loans		144,792			138,997			140,667			130,913			127,078
Commercial business loans		17,481			17,860			19,075			20,688			25,033
Total loans		903,485			891,124			899,544			896,160			876,851
Less:
Premiums		736			754			808			829			850
Deferred fees, net		(2,488	)		(2,604	)		(2,475	)		(2,511	)		(2,267	)
Allowance for credit losses – loans		(8,585	)		(8,493	)		(8,598	)		(8,760	)		(8,438	)
Total loans held-for-portfolio, net	$	893,148		$	880,781		$	889,279		$	885,718		$	866,996

DEPOSITS
(Dollars in thousands, unaudited)

	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
Noninterest-bearing demand	$	129,717	$	124,915	$	128,666	$	126,726	$	153,921
Interest-bearing demand		148,740		152,829		159,178		168,346		185,441
Savings		61,455		63,368		65,723		69,461		76,729
Money market⁽¹⁾		285,655		253,873		241,976		154,044		143,558
Certificates		304,630		311,784		321,340		307,962		301,226
Total deposits	$	930,197	$	906,769	$	916,883	$	826,539	$	860,875
_{(1) Includes $5.0 million of brokered deposits at December 31, 2023.}

CREDIT QUALITY DATA
(Dollars in thousands, unaudited)

	At or For the Quarter Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Total nonperforming loans	$	8,489		$	8,909		$	9,053		$	3,556		$	1,762
OREO and other repossessed assets		115			115			690			575			575
Total nonperforming assets	$	8,604		$	9,024		$	9,743		$	4,131		$	2,337
Net charge-offs during the quarter	$	(14	)	$	(17	)	$	(56	)	$	(15	)	$	(3	)
Provision for (release of) credit losses during the quarter		8			(109	)		(33	)		(27	)		75
Allowance for credit losses – loans		8,585			8,493			8,598			8,760			8,438
Allowance for credit losses – loans to total loans		0.95	%		0.96	%		0.96	%		0.98	%		0.96	%
Allowance for credit losses – loans to total nonperforming loans		101.13	%		95.33	%		94.97	%		246.34	%		478.89	%
Nonperforming loans to total loans		0.94	%		1.00	%		1.01	%		0.40	%		0.20	%
Nonperforming assets to total assets		0.78	%		0.84	%		0.90	%		0.42	%		0.23	%

OTHER STATISTICS
(Dollars in thousands, unaudited)

	At or For the Quarter Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Total loans to total deposits		97.13	%		98.27	%		98.11	%		108.42	%		101.86	%
Noninterest-bearing deposits to total deposits		13.95	%		13.78	%		14.03	%		15.33	%		17.88	%

Average total assets for the quarter	$	1,095,404		$	1,070,579		$	1,062,036		$	1,033,985		$	1,005,223
Average total equity for the quarter	$	102,059		$	100,961		$	101,292		$	100,612		$	100,927

Contact

Financial:
Wes Ochs
Executive Vice President/CFO
(206) 436-8587

Media:
Laurie Stewart
President/CEO
(206) 436-1495