Category: Intelligence Agencies

MIL-OSI: IntelliTrans Appoints Mayank Sharma as Chief Product Officer to Drive Product Innovation

Source: GlobeNewswire (MIL-OSI)

ATLANTA, Oct. 30, 2024 (GLOBE NEWSWIRE) — IntelliTrans, a global leader in multimodal transportation management solutions, has named Mayank Sharma as its new Chief Product Officer. In this role, Sharma will drive product strategy and direction, guiding the development and improvement of IntelliTrans’ product lineup to deliver smarter, simpler solutions for customers. With over 20 years of experience in product innovation and leading global teams, he brings forward-looking insights into the company’s growth and commitment to making complex logistics easier.

Sharma has a strong background in creating innovative products across different sectors. Most recently, he led the launch of a top-rated dash camera and safety solution at Teletrac Navman, which helped transportation customers improve safety and efficiency. He also worked on strategic partnerships to develop solutions for customers transitioning their truck fleets to cleaner energy options like electric, hydrogen, and CNG/RNG, supporting their shift towards sustainability.

“We are excited to welcome Mayank to the IntelliTrans team,” said Chad Raube, President and CEO of IntelliTrans. “His vast experience in product management and innovation will be instrumental as we continue to strengthen our product portfolio. Mayank’s unique approach to developing market-leading solutions, commercial focus, and fostering agile teams will help propel IntelliTrans forward in achieving our long-term goals.”

“I’m thrilled to join the IntelliTrans team and work on delivering high-value solutions that address the real-world challenges our clients face in their supply chains,” said Sharma. “I see a great opportunity to use emerging technologies to make our products smarter and more user-friendly, simplifying how our customers manage their operations. I look forward to enhancing the overall experience for IntelliTrans customers and driving innovation in our product suite.”

Sharma holds an MBA from the Kellogg School of Management and has multiple advanced degrees in Engineering, Design, and Anthropology. This diverse educational background gives him a well-rounded approach to product development and leadership.

By bringing Sharma on board, IntelliTrans reinforces its dedication to product innovation and growth. The company remains focused on enhancing its multimodal SaaS-based TMS solution, making logistics operations more streamlined, visible, and efficient for its global customers.

About IntelliTrans Multimodal Transportation Solutions

IntelliTrans, a Roper Technologies business (Nasdaq: ROP), empowers businesses to optimize their supply chains with seamless freight management and shipment execution across all modes of transportation, including rail, truck, ocean, and barge. IntelliTrans’ trusted transportation management solutions enable customers to solve complex business challenges and help achieve a holistic digital strategy by incorporating multimodal solutions backed by extensive industry knowledge. Recognized as a top transportation management provider, IntelliTrans has recently received the Inbound Logistics Top 100 Logistics IT Provider Award, the 2023 BIG Innovation Award, the Cloud Computing Product of the Year Award, and the Food Logistics/SDCE Top Software and Technology Award. Unlock hidden efficiencies in your supply chain. Visit our website to see how IntelliTrans can help.

Media Contact for IntelliTrans:
Becky Boyd
MediaFirst PR (M1PR.com)
404.421.8497
becky@mediafirst.net

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/060fceb0-b427-493e-a790-3336ff225870

MIL-OSI Security: Miami Resident Charged with Kidnapping Resulting in Death

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

MIAMI – Today, Miami resident Gustavo Alfonso Castano Restrepo, 55, appeared before a U.S. Magistrate Judge on an indictment charging him with kidnapping resulting in death.

According to the unsealed indictment, on or about May 30, 2016, in Miami-Dade County, in the Southern District of Florida, and elsewhere, Restrepo, did willfully and unlawfully seize, confine, inveigle, decoy, kidnap, abduct, and carry away and hold a person, that is, Liliana Moreno, for reward and otherwise, and did use a means, facility, and instrumentality of interstate commerce, that is, a cellular telephone, the internet, a motor vehicle, and the Homestead Extension of Florida’s Turnpike, in the commission and in furtherance of the offense. The kidnapping resulted in the deaths of Liliana Moreno and Daniella Moreno.

Restrepo is currently being detained, following today’s hearing in Miami. A pre-trial detention hearing in Miami Magistrate Court is scheduled for Nov. 1.

If Restrepo is convicted of the charged offense, the mandatory minimum sentence is life in prison and the maximum penalty is death.

U.S. Attorney Markenzy Lapointe for the Southern District of Florida, Special Agent in Charge Jeffrey B. Veltri of the FBI, Miami Field Office, Chief Edwin Lopez of the Doral Police Department, and Director Stephanie V. Daniels of the Miami-Dade Police Department (MDPD) made the announcement.

FBI Miami, the Doral Police Department, MDPD, and FBI’s South Florida Violent Crime/Fugitive Task Force are investigating this matter. Assistant U.S. Attorney Dwayne Williams is prosecuting the case.

Anyone with information about this matter or any other federal crime is urged to contact the FBI by calling 1-800-CALL-FBI or filing a report at tips.fbi.gov.

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

You may find a copy of this press release (and any updates) on the website of the United States Attorney’s Office for the Southern District of Florida at www.justice.gov/usao-sdfl.

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-20463

###

MIL-OSI Security: U.S. Attorney’s Office and FBI Announce Charges in Domestic Violence and Firearms Case

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

ALBUQUERQUE – A Red Valley, Arizona man was charged by indictment with kidnapping, assault and federal firearms offenses stemming from a domestic violence incident in Shiprock, New Mexico.

Curley Nakai Jr., 23, an enrolled member of the Navajo Nation, appeared before a federal judge and will remain in custody pending trial.

According to court records, on August 24, 2024, Nakai allegedly assaulted his girlfriend, Jane Doe, in Shiprock, New Mexico. A witness observed Nakai dragging Jane Doe by her shirt and striking her. Nakai then forced Jane Doe into the backseat of a pickup truck. Concerned for Jane Doe’s safety, the witness followed the pickup and attempted to get identifying information. While following, the witness saw Nakai appear to punch Jane Doe in the vehicle.

The situation escalated when Nakai and Jane Doe arrived at a supermarket parking lot. As police were contacted by the witness, Nakai exited the pickup and pointed a rifle at her while yelling aggressively. At this point, the witness was approximately thirty feet away with her car window down. After driving past the pickup and parking nearby, the witness observed that Jane Doe managed to exit the vehicle and walk awayy.

If convicted, Nakai faces up to life in prison.

U.S. Attorney Alexander M.M. Uballez and Raul Bujanda, Special Agent in Charge of the FBI Albuquerque Field Office, made the announcement today.

The Farmington Resident Agency of the FBI’s Albuquerque Field Office investigated this case with assistance from the Navajo Police Department and Department of Criminal Investigations. Assistant United States Attorney Nicholas J. Marshall is prosecuting the case.

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

# # #

MIL-OSI Security: Father and Son from New Jersey Arrested for Actions During Jan. 6 Capitol Breach

Source: Office of United States Attorneys

WASHINGTON — Two men from New Jersey have been arrested on various felony and misdemeanor charges stemming from their alleged conduct during the Jan. 6, 2021, breach of the U.S. Capitol. Their alleged actions and the actions of others disrupted a joint session of the U.S. Congress convened to ascertain and count the electoral votes related to the 2020 presidential election.

Richard Andrews, 72, of Brick, New Jersey, is charged in a criminal complaint filed in the District of Columbia with a felony offense of assaulting, resisting, or impeding certain officers and obstruction of law enforcement during a civil disorder. In addition to the felonies, Richard Andrews is charged with misdemeanor offenses of knowingly entering or remaining in any restricted building or grounds without lawful authority, disorderly and disruptive conduct in a restricted building or grounds and disorderly conduct in a capitol building.

Also charged is Keith Andrews, 49, of Howell, New Jersey. Keith Andrews is charged with misdemeanor offenses of knowingly entering or remaining in any restricted building or grounds without lawful authority, disorderly and disruptive conduct in a restricted building or grounds, disorderly conduct in a Capitol building, and parading, demonstrating, or picketing in any of the Capitol buildings.

The FBI arrested the two men on Oct. 29, 2024, in New Jersey, and they will make their initial appearance in the District of New Jersey.

According to court documents, on Jan. 6, 2021, Richard and Keith Andrews attended the “Stop the Steal” rally at the Ellipse in Washington, D.C., before proceeding to the restricted Capitol grounds. Richard Andrews wore a black zip-up jacket, blue tee, and gray knit skull cap, while Keith Andrews was dressed in a dark gray hoodie, black tee with white lettering, jeans, dark sneakers, and a camouflage “Trump 2020” hat. Keith also carried a camouflage backpack.

Upon arriving at the Capitol, the two men ascended the north scaffolding to reach the Upper West Terrace. At approximately 2:49 p.m., it is alleged that Keith Andrews entered the Capitol through a window near the Senate Wing Door as Capitol Police struggled to hold back the crowd. Keith then momentarily exited, encouraging others to enter, and reentered minutes later. While inside, Keith stayed in the Senate Wing hallway for ten minutes, encouraging additional rioters to come in before leaving the building himself temporarily.

Keith Andrews then reentered the Capitol at about 3:01 p.m., making his way to the Crypt while using his phone. He allegedly remained inside for approximately twelve minutes before exiting at 3:13 p.m. Shortly after, police efforts to secure the Senate Wing intensified, including by closing the shutters on the window Keith had used to enter the building.

Later, at about 3:16 p.m., it is alleged that Richard Andrews threw a chair through the closed shutters, reopening them and striking an officer in the process.

Minutes later, Keith allegedly reentered the Capitol a third time, engaging in a brief dispute with officers trying to clear the building before exiting by 3:20 p.m. Later that afternoon, as officers tried to remove rioters from the Upper West Terrace, Richard Andrews shoved a police officer on the head. In response, officers deployed a chemical agent, causing Richard to retreat into the crowd.

This case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Department of Justice National Security Division’s Counterterrorism Section. Valuable assistance was provided by the U.S. Attorney’s Office for the District of New Jersey.

This case is being investigated by the FBI’s Newark and Washington Field Offices. Richard Andrews was identified as BOLO (Be on the Lookout) # 446 on the FBI’s seeking information images. Valuable assistance was provided by the United States Capitol Police and the Metropolitan Police Department.

In the 45 months since Jan. 6, 2021, more than 1,532 individuals have been charged in nearly all 50 states for crimes related to the breach of the U.S. Capitol, including more than 571 individuals charged with assaulting or impeding law enforcement, a felony. The investigation remains ongoing.

Anyone with tips can call 1-800-CALL-FBI (800-225-5324) or visit tips.fbi.gov.

A complaint is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

MIL-OSI Security: Justice Department Releases Information on Efforts to Protect the Right to Vote, Prosecute Election Fraud, and Secure Elections

Source: Office of United States Attorneys

Consistent with longstanding Justice Department practices and procedures, the department today is providing information about its efforts, through the Civil Rights Division, Criminal Division, National Security Division (NSD), and U.S. Attorneys’ Offices throughout the country, to ensure that all qualified voters have the opportunity to cast their ballots and have their votes counted free of discrimination, intimidation, or criminal activity in the election process, and to ensure that our elections are secure and free from foreign malign influence and interference.

Civil Rights Division

The department’s Civil Rights Division is responsible for ensuring compliance with the civil provisions of federal statutes that protect the right to vote and with the criminal provisions of federal statutes prohibiting discriminatory interference with that right. This work is often performed in partnership with U.S. Attorneys’ Offices.

The Civil Rights Division’s Voting Section enforces the civil provisions of a wide range of federal statutes that protect the right to vote including: the Voting Rights Act; National Voter Registration Act; Uniformed and Overseas Citizens Absentee Voting Act; Help America Vote Act; and Civil Rights Acts. Among other things, collectively, these laws:

Prohibit election practices that have either a discriminatory purpose or a discriminatory result on account of race, color, or language minority status;
Prohibit intimidation of voters;
Allow voters who need assistance in voting because of disability or inability to read or write to receive assistance from a person of their choice (other than agents of their employer or union);
Require minority language election materials and assistance in certain jurisdictions;
Require accessible voting systems for voters with disabilities;
Require that provisional ballots be offered to voters who assert they are registered and eligible to vote in the jurisdiction, but whose names do not appear on poll books;
Require states to provide for absentee voting for uniformed service members serving away from home, their family members also away from home due to that service, and U.S. citizens living abroad; and
Require covered states to offer the opportunity to register to vote through offices that provide driver licenses, public assistance, and disability services, as well as through the mail, and to take steps regarding maintaining voter registration lists.

The Civil Rights Division’s Disability Rights Section enforces the Americans with Disabilities Act (ADA), which prohibits discrimination in voting based on disability. The ADA applies to all aspects of voting, including voter registration, selection and accessibility of voting facilities, and the casting of ballots on Election Day or during early voting, whether in-person or absentee.

The Civil Rights Division’s Criminal Section enforces federal criminal statutes that prohibit voter intimidation and voter interference based on race, color, national origin, or religion.

Throughout the election cycle, Civil Rights Division attorneys in the Voting, Disability Rights, and Criminal Sections in Washington, D.C., will be ready to receive complaints of potential violations of any of the statutes the Civil Rights Division enforces. The Civil Rights Division will work closely with counterparts at U.S. Attorneys’ Offices and other department components to review and take appropriate action concerning these complaints.
Individuals with complaints related to possible violations of the federal voting rights laws can call the Justice Department’s toll-free telephone line at 800-253-3931, and can also submit complaints at www.civilrights.justice.gov.
Individuals with questions or complaints related to the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 833-610-1264 (TTY) or submit a complaint through a link on the department’s ADA website at www.ada.gov.

Complaints related to violence, threats of violence, or intimidation at a polling place should always be reported immediately to local authorities by calling 911. They should also be reported to the department after local authorities are contacted.

Criminal Division and the Department’s 94 U.S. Attorneys’ Offices

The department’s Criminal Division oversees the enforcement of federal laws that criminalize certain forms of election fraud and vindicate the integrity of the federal election process.

The Criminal Division’s Public Integrity Section and U.S. Attorneys’ Offices are responsible for enforcing the federal criminal laws that prohibit various forms of election crimes, such as destruction of ballots, vote-buying, multiple voting, submission of fraudulent ballots or registrations, alteration of votes, and malfeasance by postal or election officials and employees. See Justice Manual 9-85.210 (discussing requirements regarding election crime matters); 9-85.300 (discussing approach to ballot fraud); 9-85.400 (discussing application of 18 U.S.C. § 592); 9-85.500 (discussing timing of actions).

The Criminal Division and the U.S. Attorneys’ Offices are also responsible for enforcing federal criminal law prohibiting unlawful threats of violence against election workers, and prohibiting voter intimidation and voter suppression for reasons other than race, color, national origin, or religion (as noted above, voter intimidation and voter suppression that has a basis in race, color, national origin, or religion is addressed by the Civil Rights Division often in partnership with the U.S. Attorneys’ Offices).

U.S. Attorneys’ Offices around the country designate Assistant U.S. Attorneys who serve as District Election Officers (DEOs) in their respective districts. DEOs are responsible for overseeing potential election-crime matters in their districts, and for coordinating with the department’s election-crime experts in Washington, D.C.

The U.S. Attorneys’ Offices work with specially trained FBI personnel in each district to ensure that complaints from the public involving possible election crimes are handled appropriately. Specifically:

In consultation with federal prosecutors at the Public Integrity Section in Washington, D.C., the DEOs in U.S. Attorneys’ Offices, FBI officials at headquarters in Washington, D.C., and FBI special agents serving as Election Crime Coordinators in the FBI’s 56 field offices will be on duty while polls are open to receive complaints from the public.
Election-crime complaints should be directed to the local U.S. Attorney’s Office or the local FBI field office. A list of U.S. Attorneys’ Offices and their telephone numbers can be found at www.justice.gov/usao/districts. A list of FBI field offices and accompanying telephone numbers can be found at www.fbi.gov/contact-us.
Public Integrity Section prosecutors are available to consult and coordinate with the U.S. Attorneys’ Offices and the FBI regarding the handling of election-crime allegations.

All complaints related to violence, threats of violence, or intimidation at a polling place should be reported first to local police authorities by calling 911. After alerting local law enforcement to such emergencies by calling 911, the public should contact the Justice Department.

National Security Division

The department’s National Security Division (NSD) supervises the investigation and prosecution of cases affecting or relating to national security, including any cases involving foreign malign influence and interference in elections or violent extremist threats to elections. In this context:

NSD oversees matters involving a range of malign influence activities that foreign governments may attempt.
NSD’s Counterintelligence and Export Control Section oversees matters involving covert information operations (e.g., to promulgate disinformation through social media); covert efforts to support or denigrate political candidates or organizations; and other covert influence operations that might violate various criminal statutes.
NSD’s National Security Cyber Section oversees such matters when they are cyber-enabled (i.e., when online platforms, such as social media and other online services, are central to the commission of the offense), as well as those involving computer hacking of election or campaign infrastructure.
NSD’s Counterterrorism Section oversees matters involving international and domestic terrorism and supports law enforcement in preventing any acts of terrorism that impact Americans, including any violent extremism that might threaten election security.

As in past elections, the National Security Division will work closely with counterparts at the FBI and our U.S. Attorneys’ Offices to protect our nation’s elections from any national security threats. Attorneys from National Security Division sections will be partnered with FBI Headquarters components to provide support to U.S. Attorneys’ Offices and FBI field offices to counter any such threats. The Department of Homeland Security also plays its own important role in safeguarding critical election infrastructure from cyber and other threats.

Complaints related to violence, threats of violence, or intimidation at a polling place should always be reported immediately to local authorities by calling 911 and, after local authorities are contacted, then should be reported also to the department.

Protecting the right to vote, prosecuting election crimes, and securing our elections are all essential to maintaining the confidence of all Americans in our democratic system of government. The department encourages anyone with information regarding concerns in these subject areas to contact the appropriate authorities.

For more information about the department’s work to ensure compliance with federal civil and criminal laws related to voting, please visit www.justice.gov/voting and www.justice.gov/criminal/criminal-pin/election-crimes-branch.

MIL-OSI Security: Louisville Man Pleads Guilty to Carjacking Resulting in Death

Source: Office of United States Attorneys

Louisville, KY – This week, a Louisville, Kentucky, man pleaded guilty to carjacking which resulted in the death of teenage motorist.

U.S. Attorney Michael A. Bennett of the Western District of Kentucky, Special Agent in Charge Michael E. Stansbury of the FBI Louisville Field Office, Chief Paul Humphrey of the Louisville Metro Police Department, and Shelby County Sheriff Mark Moore made the announcement.

According to court documents, Michael Dewitt, pleaded guilty to a single count indictment charging him with carjacking resulting in death. According to court records, Dewitt committed a carjacking at gunpoint on March 1, 2021, and stole a 2011 Ford F350 from its owner in Simpsonville, Kentucky. During the immediate flight from the carjacking, and while still in possession of the stolen truck, Dewitt collided with a vehicle on Dixie Highway in Louisville, causing the death of 17-year-old.

Sentencing is scheduled for January 27, 2025. The maximum penalty is life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. If the plea agreement in the case is accepted by the court, the defendant will be sentenced to serve 29 years and 4 months in prison.

There is no parole in the federal system.

This case is being investigated by the FBI Louisville Field Office, the Louisville Metro Police Department, and the Shelby County Sheriff’s Office.

Assistant U.S. Attorneys Robert Bonar and Mac Shannon are prosecuting this 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 violent crime and gun violence, 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.

###

MIL-OSI Security: Atlantic County Doctor Sentenced to 15 Months in Prison for Health Care Fraud Conspiracy

Source: Office of United States Attorneys

CAMDEN, N.J. – An Atlantic County, New Jersey, doctor was sentenced to 15 months in prison for his role in defrauding New Jersey state and local health benefits programs and other insurers by submitting fraudulent claims for medically unnecessary prescriptions, Attorney for the United States Vikas Khanna announced.

Brian Sokalsky, 46, of Margate, New Jersey, previously pleaded guilty before U.S. District Judge Robert B. Kugler to a superseding information charging him with one count of conspiring to commit health care fraud. U.S. District Judge Edward S. Kiel imposed the sentence on Oct. 29, 2024, in Camden federal court.

Sokalsky, pharmaceutical sales representative Vincent Tornari, 50, of Linwood, New Jersey, and former advanced nurse practitioner Ashley Lyons-Valenti, 67, of Swedesboro, New Jersey, were charged in a 33-count indictment in June 2020. Tornari pleaded guilty on March 14, 2023, and Lyons-Valenti pleaded guilty on Feb. 28, 2023, to their respective roles in the conspiracy. Tornari and Lyons-Valenti are both awaiting sentencing.

According to court documents filed in this case and statements made in court:

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredient.

The conspirators learned that certain medications made by compounding pharmacies reimbursed for up to thousands of dollars for an individual’s one-month supply. They learned that certain insurance plans – including insurance plans for state and local government employees and certain other insurance plans – covered these medications.

Sokalsky agreed to authorize prescriptions for former pharmaceutical sales representative Matthew Tedesco, 49, of Linwood, New Jersey, who pleaded guilty to health care fraud conspiracy in June 2017, and others working with Tedesco. In exchange for authorizing those prescriptions, Tedesco referred approximately 30 patients to Sokalsky’s new medical practice. Sokalsky, in turn, billed insurance for patient visits for those people steered to his practice by Tedesco. Sokalsky also authorized prescriptions for the medications for existing patients of his practice, which he did to financially benefit Tedesco and encourage him to refer more patients to his new practice. Sokalsky authorized medically unnecessary medications, including libido creams for young females and excessive quantities of the medications with the maximum number of refills selected. When insurance stopped covering certain formulations of the medications, Tedesco informed Sokalsky that he needed to authorize new prescriptions. Sokalsky did so, often without seeing the individual for a follow-up visit or informing the person of the change in medication. In total, insurance paid more than $5 million for fraudulent prescriptions authorized by Sokalsky.

In addition to the prison term, Judge Kiel sentenced Sokalsky to three years of supervised release and ordered restitution of $5.13 million.

Attorney for the United States Khanna credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Nelson I. Delgado in Newark; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark; and the U.S. Department of Labor Office of Inspector General, New York Region, under the direction of Special Agent in Charge Jonathan Mellone, with the investigation leading to the sentencing.

The government is represented by R. David Walk Jr., Deputy Chief of the Criminal Division; and Assistant U.S. Attorney Daniel A. Friedman of the Camden office.

MIL-OSI Security: FBI Dallas Unveils Public Service Announcements in Different Languages to Increase Hate Crime Reporting

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

DALLAS, TX—The FBI Dallas Division developed a series of videos in five different languages to urge the community to report hates crimes to the FBI. The languages represented in the videos are English, Spanish, Korean, Chinese, and Urdu. The goal is to reach people throughout the Dallas Division’s territory where English is not the first language.

Hate crimes are the highest priority of the FBI’s civil rights program because of the devastating impact they have on families and communities. The FBI defines a hate crime as a criminal offense against a person or property motivated in whole or in part by an offender’s bias against a race, religion, disability, sexual orientation, ethnicity, gender, or gender identity.

The FBI is the lead investigative agency for criminal violations of federal civil rights statutes and works closely with local, state, tribal, and other federal law enforcement partners in many of these cases, even when federal charges are not pursued.

“The FBI is committed to increasing awareness of how to report hate crimes. It is important for the communities we serve to understand this message. This is why we decided to translate our call to action into multiple languages,” said P.J. O’Brien, acting special agent in charge of the FBI Dallas Division. “We want to reassure the public that the FBI will hold people accountable for committing these serious crimes.”

The FBI protects all victims of crimes, regardless of their country of national origin or immigration status. If you believe you are a victim or a witness of a hate crime, you are encouraged to report it to the FBI by calling 1-800-CALL-FBI or submitting an online tip at tips.fbi.gov. You may remain anonymous, and reports can be made in an individual’s preferred language.

Hate Crime Video Links

MIL-OSI: Expand Energy Corporation Reports Third Quarter 2024 Results, Provides Preliminary 2025 Capital and Operating Plan and Announces Enhanced Capital Return Framework

Source: GlobeNewswire (MIL-OSI)

OKLAHOMA CITY, Oct. 29, 2024 (GLOBE NEWSWIRE) — Expand Energy Corporation (NASDAQ: EXE) (“Expand Energy” or the “company”) today reported third quarter 2024 financial and operating results. In addition, the company provided its preliminary 2025 capital and operating plan and announced details regarding its enhanced capital return framework. On October 1, 2024, Expand Energy announced the completion of the previously disclosed merger between Chesapeake Energy Corporation (“Chesapeake”) and Southwestern Energy Company (“Southwestern”).

Legacy Chesapeake Third Quarter Highlights

Net cash provided by operating activities of $422 million
Net loss of $114 million, or $0.85 per fully diluted share; adjusted net income⁽¹⁾of $22 million, or $0.16 per share
Adjusted EBITDAX⁽¹⁾of $365 million
Produced approximately 2.65 bcf/d net (100% natural gas)

Expand Energy Highlights

Raised annual synergy target by $100 million; expected to achieve approximately $225 million in 2025 and approximately $500 million in annual synergies by year end 2027
Upgraded at the start of fourth quarter to Investment Grade credit rating from S&P (BBB-) and Fitch (BBB-)
Quarterly base dividend of $0.575 per common share to be paid in December 2024, 15th straight quarter paying a dividend
2025 capital expenditures expected to be approximately $2.7 billion, yielding net production of approximately 7 bcf/day (~91% natural gas)
Enhanced capital return framework to more effectively return cash to shareholders and reduce net debt; announced new $1 billion share repurchase authorization

^{(1) Definitions of non-GAAP financial measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure are included at the end of this news release.}

“Our strong third quarter results, recent Investment Grade rating and preliminary 2025 outlook demonstrate the power of our advantaged portfolio and resilient financial foundation,” said Nick Dell’Osso, Expand Energy’s President and Chief Executive Officer. “Our integration efforts are already delivering, allowing us to raise our annual synergy expectations by 25% to $500 million, as we drive to lower our breakeven costs and more efficiently reach markets in need. As the largest domestic producer of natural gas, and a top producer globally, we are built to answer the call for affordable, reliable, lower carbon energy and expand opportunity for all stakeholders.”
Operations Update

In the third quarter, legacy Chesapeake operated an average of seven rigs to drill 30 wells and turned seven wells in line, resulting in net production of approximately 2.65 bcfe per day (100% natural gas). Additionally, the company built an inventory of 18 drilled but uncompleted (“DUCs”) wells and 12 deferred turn in lines (“TILs”). A detailed breakdown of third quarter production, capital expenditures and activity can be found in supplemental slides which have been posted at https://investors.expandenergy.com/events-presentations.

Expand Energy continues to execute its previously disclosed plan to defer completions and new TILs. As of October 1, 2024, the combined company had 58 DUCs, excluding working inventory, and 58 deferred TILs. The company intends to prudently activate production as market conditions warrant.

Expand Energy is currently running 12 rigs (8 in Haynesville, 2 in Northeast Appalachia, and 2 in Southwest Appalachia) and 6 completion crews (3 in Haynesville, 2 in Northeast Appalachia, and 1 in Southwest Appalachia). At current market conditions, the company expects to drop two rigs in the first quarter of 2025.

Annual Synergy Outlook and Preliminary 2025 Capital & Operating Program

Expand Energy increased its expected annual synergy outlook by $100 million to $500 million. The company expects to achieve approximately $225 million in synergies in 2025 and to achieve the full $500 million in annual synergies by year end 2027.

In 2025, at current market conditions, the company expects to run 10 to 12 rigs and invest approximately $2.7 billion yielding an estimated daily production of approximately 7 bcfe per day. Expand Energy will provide complete guidance in early 2025.

Shareholder Returns Update

Expand Energy plans to pay its quarterly base dividend of $0.575 per share on December 4, 2024 to shareholders of record at the close of business on November 14, 2024.

The company announced today its enhanced capital return framework which is designed to more effectively return cash to shareholders and reduce net debt. The plan is expected to go into effect January 1, 2025, and prioritizes the base dividend of $2.30 per share and $500 million of annual net debt reduction. Once both have been funded, it is anticipated that 75% of remaining free cash flow be distributed as market conditions warrant, between share repurchases and additional dividend payments. The remaining free cash flow would be maintained on the balance sheet.

In conjunction with the enhanced framework, Expand Energy’s Board of Directors approved a $1 billion repurchase authorization.

Conference Call Information

A conference call to discuss the results and preliminary 2025 plan has been scheduled for 9 a.m. EDT on October 30, 2024. Participants can view the live webcast here. Participants who would like to ask a question, can register here, and will receive the dial-in info and a unique PIN to join the call. Links to the conference call will be provided on Expand Energy’s website. A replay will be available on the website following the call.

Financial Statements, Non-GAAP Financial Measures and 2024 Guidance and Outlook Projections

Reconciliations of each non-GAAP financial measure used in this news release to the most directly comparable GAAP financial measure are provided below. Additional detail on the company’s 2024 third quarter financial and operational results, along with non-GAAP measures that adjust for items typically excluded by certain securities analysts, are available on the company’s website. Non-GAAP measures should not be considered as an alternative to GAAP measures. Management’s updated guidance for 2024 and preliminary plan for 2025 can be found on the company’s website at www.expandenergy.com.

Expand Energy Corporation (NASDAQ: EXE) is the largest independent natural gas producer in the United States, powered by dedicated and innovative employees focused on disrupting the industry’s traditional cost and market delivery model to responsibly develop assets in the nation’s most prolific natural gas basins. Expand Energy’s returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. Expand Energy is committed to expanding America’s energy reach to fuel a more affordable, reliable, lower carbon future.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include our current expectations or forecasts of future events, including matters relating to the combined company after the merger with Southwestern Energy Company (“Southwestern”), armed conflict and instability in Europe and the Middle East, along with the effects of the current global economic environment, and the impact of each on our business, financial condition, results of operations and cash flows, actions by, or disputes among or between, members of OPEC+ and other foreign oil-exporting countries, market factors, market prices, our ability to meet debt service requirements, our ability to continue to pay cash dividends, the amount and timing of any cash dividends and our ESG initiatives. Forward-looking and other statements in this release regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “expect,” “could,” “may,” “anticipate,” “intend,” “plan,” “ability,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “guidance,” “outlook,” “opportunity” or “strategy.” The absence of such words or expressions does not necessarily mean the statements are not forward-looking.

Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

conservation measures and technological advances could reduce demand for natural gas and oil;
negative public perceptions of our industry;
competition in the natural gas and oil exploration and production industry;
the volatility of natural gas, oil and NGL prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles;
risks from regional epidemics or pandemics and related economic turmoil, including supply chain constraints;
write-downs of our natural gas and oil asset carrying values due to low commodity prices;
significant capital expenditures are required to replace our reserves and conduct our business;
our ability to replace reserves and sustain production;
uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;
drilling and operating risks and resulting liabilities;
our ability to generate profits or achieve targeted results in drilling and well operations;
leasehold terms expiring before production can be established;
risks from our commodity price risk management activities;
uncertainties, risks and costs associated with natural gas and oil operations;
our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used;
pipeline and gathering system capacity constraints and transportation interruptions;
our plans to participate in the LNG export industry;
terrorist activities and/or cyber-attacks adversely impacting our operations;
risks from failure to protect personal information and data and compliance with data privacy and security laws and regulations;
disruption of our business by natural or human causes beyond our control;
a deterioration in general economic, business or industry conditions;
the impact of inflation and commodity price volatility, including as a result of armed conflict and instability in Europe and the Middle East, along with the effects of the current global economic environment, on our business, financial condition, employees, contractors, vendors and the global demand for natural gas and oil and on U.S. and global financial markets;
our inability to access the capital markets on favorable terms;
the limitations on our financial flexibility due to our level of indebtedness and restrictive covenants from our indebtedness;
our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information;
risks related to acquisitions or dispositions, or potential acquisitions or dispositions, including risks related to the merger with Southwestern, such as risks related to loss of management personnel, other key employees, customers, suppliers, vendors, landlords, joint venture partners and other business partners following the merger; risks related to disruption of management time from ongoing business operations due to integration; the risk of any litigation relating to the transaction; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; and the risk that the combined company may be unable to achieve synergies or other anticipated benefits of the transaction or it may take longer than expected to achieve those synergies or benefits;
our ability to achieve and maintain ESG certifications, goals and commitments;
legislative, regulatory and ESG initiatives, addressing environmental concerns, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring or water disposal;
federal and state tax proposals affecting our industry;
risks related to an annual limitation on the utilization of our tax attributes, as well as trading in our common stock, additional issuance of common stock, and certain other stock transactions, which could lead to an additional, potentially more restrictive, annual limitation; and
other factors that are described under Risk Factors in Item 1A of Part I of our Annual Report on Form 10-K.

We caution you not to place undue reliance on the forward-looking statements contained in this release, which speak only as of the filing date, and we undertake no obligation to update this information. We urge you to carefully review and consider the disclosures in this release and our filings with the SEC that attempt to advise interested parties of the risks and factors that may affect our business.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

($ in millions, except per share data)	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	1,044		$	1,079
Restricted cash		76			74
Accounts receivable, net		261			593
Derivative assets		199			637
Other current assets		217			226
Total current assets		1,797			2,609
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties		12,373			11,468
Unproved properties		1,806			1,806
Other property and equipment		518			497
Total property and equipment		14,697			13,771
Less: accumulated depreciation, depletion and amortization		(4,743	)		(3,674	)
Total property and equipment, net		9,954			10,097
Long-term derivative assets		15			74
Deferred income tax assets		1,038			933
Other long-term assets		588			663
Total assets	$	13,392		$	14,376

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	264		$	425
Accrued interest		41			39
Derivative liabilities		5			3
Other current liabilities		589			847
Total current liabilities		899			1,314
Long-term debt, net		2,017			2,028
Long-term derivative liabilities		—			9
Asset retirement obligations, net of current portion		271			265
Other long-term liabilities		17			31
Total liabilities		3,204			3,647
Contingencies and commitments
Stockholders’ equity:
Common stock, $0.01 par value, 450,000,000 shares authorized: 135,107,576 and 130,789,936 shares issued		1			1
Additional paid-in capital		5,778			5,754
Retained earnings		4,409			4,974
Total stockholders’ equity		10,188			10,729
Total liabilities and stockholders’ equity	$	13,392		$	14,376

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
($ in millions, except per share data)
Revenues and other:
Natural gas, oil and NGL	$	407		$	682		$	1,374		$	2,784
Marketing		193			724			641			1,987
Natural gas and oil derivatives		46			106			207			1,195
Gains on sales of assets		2			—			12			807
Total revenues and other		648			1,512			2,234			6,773
Operating expenses:
Production		50			73			158			293
Gathering, processing and transportation		152			192			479			663
Severance and ad valorem taxes		11			27			58			136
Exploration		2			4			7			19
Marketing		192			723			656			1,985
General and administrative		39			29			133			95
Separation and other termination costs		—			—			23			3
Depreciation, depletion and amortization		335			382			1,082			1,148
Other operating expense, net		22			3			55			15
Total operating expenses		803			1,433			2,651			4,357
Income (loss) from operations		(155	)		79			(417	)		2,416
Other income (expense):
Interest expense		(20	)		(23	)		(59	)		(82	)
Losses on purchases, exchanges or extinguishments of debt		—			—			(2	)		—
Other income		17			15			58			48
Total other income (expense)		(3	)		(8	)		(3	)		(34	)
Income (loss) before income taxes		(158	)		71			(420	)		2,382
Income tax expense (benefit)		(44	)		1			(105	)		532
Net income (loss)	$	(114	)	$	70		$	(315	)	$	1,850
Earnings (loss) per common share:
Basic	$	(0.85	)	$	0.53		$	(2.39	)	$	13.86
Diluted	$	(0.85	)	$	0.49		$	(2.39	)	$	12.90
Weighted average common shares outstanding (in thousands):
Basic		133,794			132,153			131,958			133,460
Diluted		133,794			142,348			131,958			143,463

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)		2024			2023			2024			2023
Cash flows from operating activities:
Net income (loss)	$	(114	)	$	70		$	(315	)	$	1,850
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		335			382			1,082			1,148
Deferred income tax expense (benefit)		(44	)		(80	)		(105	)		319
Derivative gains, net		(46	)		(106	)		(207	)		(1,195	)
Cash receipts on derivative settlements, net		207			216			695			167
Share-based compensation		10			9			29			25
Gains on sales of assets		(2	)		—			(12	)		(807	)
Losses on purchases, exchanges or extinguishments of debt		—			—			2			—
Other		(9	)		6			(16	)		35
Changes in assets and liabilities		85			9			30			368
Net cash provided by operating activities		422			506			1,183			1,910
Cash flows from investing activities:
Capital expenditures		(298	)		(423	)		(1,021	)		(1,450	)
Receipts of deferred consideration		—			—			116			—
Contributions to investments		(26	)		(61	)		(71	)		(149	)
Proceeds from divestitures of property and equipment		5			4			17			1,967
Net cash provided by (used in) investing activities		(319	)		(480	)		(959	)		368
Cash flows from financing activities:
Proceeds from Credit Facility		—			—			—			1,125
Payments on Credit Facility		—			—			—			(2,175	)
Funds held for transition services		—			(6	)		—			91
Proceeds from warrant exercise		—			—			1			—
Debt issuance and other financing costs		—			—			(4	)		—
Cash paid to repurchase and retire common stock		—			(132	)		—			(313	)
Cash paid for common stock dividends		(78	)		(77	)		(254	)		(412	)
Net cash used in financing activities		(78	)		(215	)		(257	)		(1,684	)
Net increase (decrease) in cash, cash equivalents and restricted cash		25			(189	)		(33	)		594
Cash, cash equivalents and restricted cash, beginning of period		1,095			975			1,153			192
Cash, cash equivalents and restricted cash, end of period	$	1,120		$	786		$	1,120		$	786

Cash and cash equivalents	$	1,044		$	713		$	1,044		$	713
Restricted cash		76			73			76			73
Total cash, cash equivalents and restricted cash	$	1,120		$	786		$	1,120		$	786

NATURAL GAS, OIL AND NGL PRODUCTION AND AVERAGE SALES PRICES (unaudited)

	Three Months Ended September 30, 2024
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,531	1.51	—	—	—	—	1,531	1.51
Haynesville	1,116	1.88	—	—	—	—	1,116	1.88
Total	2,647	1.67	—	—	—	—	2,647	1.67

Average NYMEX Price		2.16		—
Average Realized Price (including realized derivatives)		2.51		—		—		2.51

	Three Months Ended September 30, 2023
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,734	1.63	—	—	—	—	1,734	1.63
Haynesville	1,568	2.15	—	—	—	—	1,568	2.15
Eagle Ford	76	2.52	9	82.33	10	25.76	193	6.36
Total	3,378	1.89	9	82.33	10	25.76	3,495	2.12

Average NYMEX Price		2.55		82.26
Average Realized Price (including realized derivatives)		2.58		82.33		25.76		2.79

	Nine Months Ended September 30, 2024
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,601	1.65	—	—	—	—	1,601	1.65
Haynesville	1,261	1.88	—	—	—	—	1,261	1.88
Total	2,862	1.75	—	—	—	—	2,862	1.75

Average NYMEX Price		2.10		—
Average Realized Price (including realized derivatives)		2.64		—		—		2.64

	Nine Months Ended September 30, 2023
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,845	2.24	—	—	—	—	1,845	2.24
Haynesville	1,569	2.26	—	—	—	—	1,569	2.26
Eagle Ford	96	2.22	26	77.41	12	25.61	323	7.82
Total	3,510	2.25	26	77.41	12	25.61	3,737	2.73

Average NYMEX Price		2.69		77.39
Average Realized Price (including realized derivatives)		2.56		72.10		25.61		2.99

CAPITAL EXPENDITURES ACCRUED (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
($ in millions)
Drilling and completion capital expenditures:
Marcellus	$	82	$	91	$	280	$	324
Haynesville		151		191		477		704
Eagle Ford		—		9		—		222
Total drilling and completion capital expenditures		233		291		757		1,250
Non-drilling and completion – field		32		48		106		100
Non-drilling and completion – corporate		24		18		73		56
Total capital expenditures	$	289	$	357	$	936	$	1,406

NON-GAAP FINANCIAL MEASURES

As a supplement to the financial results prepared in accordance with U.S. GAAP, Expand Energy’s quarterly earnings releases contain certain financial measures that are not prepared or presented in accordance with U.S. GAAP. These non-GAAP financial measures include Adjusted Net Income, Adjusted Diluted Earnings Per Common Share, Adjusted EBITDAX, Free Cash Flow, Adjusted Free Cash Flow and Net Debt. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below. Management believes these adjusted financial measures are a meaningful adjunct to earnings and cash flows calculated in accordance with GAAP because (a) management uses these financial measures to evaluate the company’s trends and performance, (b) these financial measures are comparable to estimates provided by certain securities analysts, and (c) items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

Expand Energy’s definitions of each non-GAAP measure presented herein are provided below. Because not all companies or securities analysts use identical calculations, Expand Energy’s non-GAAP measures may not be comparable to similarly titled measures of other companies or securities analysts.

Adjusted Net Income: Adjusted Net Income is defined as net income (loss) adjusted to exclude unrealized (gains) losses on natural gas and oil derivatives, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Expand Energy believes that Adjusted Net Income facilitates comparisons of the company’s period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Net Income should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

Adjusted Diluted Earnings Per Common Share: Adjusted Diluted Earnings Per Common Share is defined as diluted earnings (loss) per common share adjusted to exclude the per diluted share amounts attributed to unrealized (gains) losses on natural gas and oil derivatives, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Expand Energy believes that Adjusted Diluted Earnings Per Common Share facilitates comparisons of the company’s period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Diluted Earnings Per Common Share should not be considered an alternative to, or more meaningful than, earnings (loss) per common share as presented in accordance with GAAP.

Adjusted EBITDAX: Adjusted EBITDAX is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense, exploration expense, unrealized (gains) losses on natural gas and oil derivatives, separation and other termination costs, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results. Adjusted EBITDAX is presented as it provides investors an indication of the company’s ability to internally fund exploration and development activities and service or incur debt. Adjusted EBITDAX should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

Free Cash Flow: Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures. Free Cash Flow is a liquidity measure that provides investors additional information regarding the company’s ability to service or incur debt and return cash to shareholders. Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

Adjusted Free Cash Flow: Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures and cash contributions to investments, adjusted to exclude certain items management believes affect the comparability of operating results. Adjusted Free Cash Flow is a liquidity measure that provides investors additional information regarding the company’s ability to service or incur debt and return cash to shareholders and is used to determine Expand Energy’s returns framework payout. Adjusted Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

Net Debt: Net Debt is defined as GAAP total debt excluding premiums, discounts, and deferred issuance costs less cash and cash equivalents. Net Debt is useful to investors as a widely understood measure of liquidity and leverage, but this measure should not be considered as an alternative to, or more meaningful than, total debt presented in accordance with GAAP.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)		2024			2023			2024			2023
Net income (loss) (GAAP)	$	(114	)	$	70		$	(315	)	$	1,850

Adjustments:
Unrealized (gains) losses on natural gas and oil derivatives		160			110			489			(931	)
Separation and other termination costs		—			—			23			3
Gains on sales of assets		(2	)		—			(12	)		(807	)
Other operating expense, net		23			3			58			18
Losses on purchases, exchanges or extinguishments of debt		—			—			2			—
Other		(4	)		(4	)		(17	)		(19	)
Tax effect of adjustments^(a)		(41	)		(24	)		(125	)		403
Adjusted net income (Non-GAAP)	$	22		$	155		$	103		$	517

(a)	The three- and nine-month periods ended September 30, 2024 and September 30, 2023 include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%.

RECONCILIATION OF EARNINGS (LOSS) PER COMMON SHARE TO ADJUSTED DILUTED EARNINGS PER COMMON SHARE (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($/share)		2024			2023			2024			2023
Earnings (loss) per common share (GAAP)	$	(0.85	)	$	0.53		$	(2.39	)	$	13.86
Effect of dilutive securities		—			(0.04	)		—			(0.96	)
Diluted earnings (loss) per common share (GAAP)	$	(0.85	)	$	0.49		$	(2.39	)	$	12.90

Adjustments:
Unrealized (gains) losses on natural gas and oil derivatives		1.20			0.78			3.70			(6.49	)
Separation and other termination costs		—			—			0.17			0.02
Gains on sales of assets		(0.02	)		—			(0.09	)		(5.63	)
Other operating expense, net		0.17			0.02			0.44			0.13
Losses on purchases, exchanges or extinguishments of debt		—			—			0.01			—
Other		(0.03	)		(0.03	)		(0.13	)		(0.13	)
Tax effect of adjustments^(a)		(0.31	)		(0.17	)		(0.95	)		2.81
Effect of dilutive securities		—			—			(0.03	)		—
Adjusted diluted earnings per common share (Non-GAAP)	$	0.16		$	1.09		$	0.73		$	3.61

(a)	The three- and nine-month periods ended September 30, 2024 and September 30, 2023 include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDAX (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
($ in millions)
Net income (loss) (GAAP)	$	(114	)	$	70		$	(315	)	$	1,850

Adjustments:
Interest expense		20			23			59			82
Income tax expense (benefit)		(44	)		1			(105	)		532
Depreciation, depletion and amortization		335			382			1,082			1,148
Exploration		2			4			7			19
Unrealized (gains) losses on natural gas and oil derivatives		160			110			489			(931	)
Separation and other termination costs		—			—			23			3
Gains on sales of assets		(2	)		—			(12	)		(807	)
Other operating expense, net		23			3			58			18
Losses on purchases, exchanges or extinguishments of debt		—			—			2			—
Other		(15	)		(13	)		(57	)		(36	)
Adjusted EBITDAX (Non-GAAP)	$	365		$	580		$	1,231		$	1,878

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
($ in millions)
Net cash provided by operating activities (GAAP)	$	422		$	506		$	1,183		$	1,910
Cash capital expenditures		(298	)		(423	)		(1,021	)		(1,450	)
Free cash flow (Non-GAAP)		124			83			162			460
Cash contributions to investments		(26	)		(61	)		(71	)		(149	)
Free cash flow associated with divested assets^(a)		—			(57	)		—			(195	)
Adjusted free cash flow (Non-GAAP)	$	98		$	(35	)	$	91		$	116

(a)

In March and April of 2023, we closed two divestitures of certain Eagle Ford assets. Due to the structure of these transactions, both of which had an effective date of October 1, 2022, the cash generated by these assets was delivered to the respective buyers through a reduction in the proceeds we received at the closing of each transaction. Additionally, in August 2023, we entered into an agreement to sell the final portion of our Eagle Ford assets, with an economic effective date of February 1, 2023. Included within the adjustment above reflects the cash flows from the three months ended September 30, 2023, associated with the final portion of our Eagle Ford assets as the cash generated by those assets were delivered to the buyer through a reduction in the proceeds we received once the transaction closed during the fourth quarter of 2023.

RECONCILIATION OF TOTAL DEBT TO NET DEBT (unaudited)

($ in millions)	September 30, 2024
Total debt (GAAP)	$	2,017
Premiums and issuance costs on debt		(67	)
Principal amount of debt		1,950
Cash and cash equivalents		(1,044	)
Net debt (Non-GAAP)	$	906

INVESTOR CONTACT:	MEDIA CONTACT:	EXPAND ENERGY CORPORATION
Chris Ayres	Brooke Coe	6100 North Western Avenue
(405) 935-8870	(405) 935-8878	P.O. Box 18496
ir@expandenergy.com	media@expandenergy.com	Oklahoma City, OK 73154

MIL-OSI: Qorvo® Announces Fiscal 2025 Second Quarter Financial Results

Source: GlobeNewswire (MIL-OSI)

GREENSBORO, N.C., Oct. 29, 2024 (GLOBE NEWSWIRE) — Qorvo® (Nasdaq:QRVO), a leading global provider of connectivity and power solutions, today announced financial results for the Company’s fiscal 2025 second quarter ended September 28, 2024.

On a GAAP basis, revenue for Qorvo’s fiscal 2025 second quarter was $1.047 billion, gross margin was 42.6%, operating income was $9.7 million, and loss per share was $0.18. On a non-GAAP basis, gross margin was 47.0%, operating income was $212.2 million, and diluted earnings per share was $1.88.

Bob Bruggeworth, president and chief executive officer of Qorvo, said, “In the September quarter, ACG successfully supported our largest customer’s seasonal smartphone ramp. In HPA, we expanded our D&A business while building a broad-based business in power management. In CSG, we maintained our leadership in Wi-Fi applications while investing to grow in diverse businesses including automotive solutions and SoCs for ultra-wideband and Matter. HPA and CSG are on pace to achieve mid-teen year-over-year growth in fiscal 2025.”

Financial Commentary and Outlook

Grant Brown, chief financial officer of Qorvo, said, “In the September quarter, we exceeded the midpoint of guidance in revenue, gross margin and EPS. Looking forward, the flagship and premium tiers in the smartphone market are holding up well, however, content and ramp profiles vary by model, and we are experiencing unfavorable mix. We expect this to continue in the second half of fiscal 2025. In addition, in the mid and entry tiers of Android 5G smartphones, mix has shifted toward entry-tier 5G at the expense of mid-tier 5G. In our current view, we don’t expect this mix shift in Android 5G from mid-tier to entry-tier to reverse. As a result, we are taking appropriate actions, including factory consolidation and operating expense reductions as well as focusing on opportunities that align with our long-term profitability objectives. We currently expect full-year fiscal 2025 revenue and gross margin will be slightly down versus fiscal 2024.”

Qorvo’s current outlook for the December 2024 quarter is:

Quarterly revenue of approximately $900 million, plus or minus $25 million
Non-GAAP gross margin of approximately 45%
Non-GAAP diluted earnings per share between $1.10 and $1.30

See “Forward-looking non-GAAP financial measures” below. Qorvo’s actual quarterly results may differ from these expectations and projections, and such differences may be material.

Selected Financial Information

The following tables set forth selected GAAP and non-GAAP financial information for Qorvo for the periods indicated. See the more detailed financial information for Qorvo, including reconciliations of GAAP and non-GAAP financial information, attached.

SELECTED GAAP RESULTS
(In millions, except for percentages and EPS)
(Unaudited)

	Q2 Fiscal 2025			Q1 Fiscal 2025			Q2 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue	$	1,046.5		$	886.7		$	1,103.5		$	159.8		$	(57.0	)
Gross profit	$	445.3		$	332.3		$	489.7		$	113.0		$	(44.4	)
Gross margin		42.6	%		37.5	%		44.4	%	5.1 ppt			(1.8) ppt
Operating expenses	$	435.6		$	327.7		$	338.3		$	107.9		$	97.3
Operating income	$	9.7		$	4.6		$	151.4		$	5.1		$	(141.7	)
Net (loss) income	$	(17.4	)	$	0.4		$	97.5		$	(17.8	)	$	(114.9	)
Weighted-average diluted shares		94.9			96.5			98.6			(1.6	)		(3.7	)
Diluted EPS (loss per share)	$	(0.18	)	$	0.00		$	0.99		$	(0.18	)	$	(1.17	)


SELECTED NON-GAAP RESULTS⁽¹⁾
(In millions, except for percentages and EPS)
(Unaudited)

	Q2 Fiscal 2025			Q1 Fiscal 2025			Q2 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue	$	1,046.5		$	886.7		$	1,103.5		$	159.8		$	(57.0	)
Gross profit	$	492.0		$	362.7		$	525.2		$	129.3		$	(33.2	)
Gross margin		47.0	%		40.9	%		47.6	%		6.1 ppt			(0.6) ppt
Operating expenses	$	279.8		$	264.5		$	245.8		$	15.3		$	34.0
Operating income	$	212.2		$	98.1		$	279.4		$	114.1		$	(67.2	)
Net income	$	179.8		$	83.5		$	235.5		$	96.3		$	(55.7	)
Weighted-average diluted shares		95.8			96.5			98.6			(0.7	)		(2.8	)
Diluted EPS	$	1.88		$	0.87		$	2.39		$	1.01		$	(0.51	)

(1) Adjusted for stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill and other asset impairments, gain or loss on assets, other expense or income, gain or loss on investments, and an adjustment of income taxes.

SELECTED GAAP RESULTS BY OPERATING SEGMENT
(In millions, except percentages)
(Unaudited)
	Q2 Fiscal 2025			Q1 Fiscal 2025			Q2 Fiscal 2024			Sequential Change			Year-over-Year Change
Revenue
HPA	$	148.3		$	129.5		$	149.8			14.5	%		(1.0	)%
CSG		146.8			114.9			103.6			27.8	%		41.7	%
ACG		751.4			642.3			850.1			17.0	%		(11.6	)%
Total revenue	$	1,046.5		$	886.7		$	1,103.5			18.0	%		(5.2	)%
Operating income (loss)
HPA	$	13.1		$	4.9		$	25.4			167.3	%		(48.4	)%
CSG		(9.0	)		(19.5	)		(27.7	)		53.8	%		67.5	%
ACG		215.1			116.4			284.8			84.8	%		(24.5	)%
All other⁽¹⁾		(209.5	)		(97.2	)		(131.1	)		(115.5	)%		(59.8	)%
Total operating income	$	9.7		$	4.6		$	151.4			110.9	%		(93.6	)%
Operating income (loss) as a % of revenue
HPA		8.8	%		3.8	%		17.0	%		5.0 ppt			(8.2) ppt
CSG		(6.1	)		(17.0	)		(26.7	)		10.9 ppt			20.6 ppt
ACG		28.6			18.1			33.5			10.5 ppt			(4.9) ppt
Total operating income as a % of revenue		0.9	%		0.5	%		13.7	%		0.4 ppt			(12.8) ppt

(1) Includes stock-based compensation expense, amortization of intangible assets, restructuring-related charges, acquisition and integration-related costs, goodwill and other asset impairments, gain or loss on assets, other expense or income, and other miscellaneous corporate overhead expenses.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains some or all of the following non-GAAP financial measures: (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating expenses, operating income and operating margin, (iii) non-GAAP net income, (iv) non-GAAP net income per diluted share, (v) free cash flow, (vi) EBITDA, (vii) non-GAAP return on invested capital (ROIC), and (viii) net debt or positive net cash. Each of these non-GAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the “Reconciliation of GAAP to Non-GAAP Financial Measures” tables, attached, and the “Additional Selected Non-GAAP Financial Measures and Reconciliations” tables, attached.

In managing Qorvo’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In developing and monitoring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing gross margin and operating margin. In addition, management relies upon these non-GAAP financial measures to assess whether research and development efforts are at an appropriate level, and when making decisions about product spending, administrative budgets, and other operating expenses. Also, we believe that non-GAAP financial measures provide useful supplemental information to investors and enable investors to analyze the results of operations in the same way as management. We have chosen to provide this supplemental information to enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, and stock-based compensation expense, which may obscure trends in Qorvo’s underlying performance.

We believe that these non-GAAP financial measures offer an additional view of Qorvo’s operations that, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of Qorvo’s results of operations and the factors and trends affecting Qorvo’s business. However, these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of Qorvo’s operations, are outlined below:

Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude amortization of intangible assets, stock-based compensation expense, restructuring-related charges, acquisition and integration-related costs, and certain other expense (income). We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin facilitates a useful evaluation of our historical performance and projected costs and the potential for realizing cost efficiencies.

We view 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, and customer relationships, as items arising from pre-acquisition activities, determined at the time of an acquisition, rather than ongoing costs of operating Qorvo’s business. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangible assets is a static expense, which is not typically affected by operations during any particular period. Although we exclude the amortization of purchased intangible assets from these non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase price accounting and contribute to revenue generation.

We believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of stock-based compensation expense assists management and investors in evaluating the period-over-period performance of Qorvo’s ongoing operations because (i) the expenses are non-cash in nature, and (ii) although the size of the grants is within our control, the amount of expense varies depending on factors such as short-term fluctuations in stock price volatility and prevailing interest rates, which can be unrelated to the operational performance of Qorvo during the period in which the expense is incurred and generally are outside the control of management. Moreover, we believe that the exclusion of stock-based compensation expense in presenting non-GAAP gross profit and gross margin and other non-GAAP financial measures is useful to investors to understand the impact of the expensing of stock-based compensation to Qorvo’s gross profit and gross margins and other financial measures in comparison to prior periods. We also believe that the adjustments to profit and margin related to restructuring-related charges, and acquisition and integration-related costs do not constitute part of Qorvo’s ongoing operations and therefore the exclusion of these items provides management and investors with better visibility into the actual costs required to generate revenues over time and facilitates a useful evaluation of our historical and projected performance. We believe disclosure of non-GAAP gross profit and gross margin has economic substance because the excluded expenses do not represent continuing cash expenditures and, as described above, we have little control over the timing and amount of the expenses in question.

Non-GAAP operating expenses, operating income and operating margin. Non-GAAP operating expenses, operating income and operating margin exclude stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, (gain) loss on assets and certain other expense (income). We believe that presentation of a measure of operating expenses, operating income and operating margin that excludes amortization of intangible assets and stock-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, (gain) loss on assets and certain other expense (income) do not constitute part of Qorvo’s ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and facilitates a useful evaluation of our historical and projected performance. We believe disclosure of non-GAAP operating expenses, operating income and operating margin has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.

Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of stock-based compensation expense, amortization of intangible assets, acquisition and integration-related costs, goodwill and other asset impairments, restructuring-related charges, (gain) loss on assets, certain other expense (income), gain or loss on investments, and also reflect an adjustment of income taxes. The income tax adjustment primarily represents the use of research and development tax credit carryforwards, deferred tax expense (benefit) items not affecting taxes payable, adjustments related to the deemed and actual repatriation of historical foreign earnings, non-cash expense (benefit) related to uncertain tax positions and other items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating expenses, operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to ongoing operations or do not represent current cash expenditures.

Free cash flow. Qorvo defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period, and free cash flow margin is calculated as free cash flow as a percentage of revenue. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.

EBITDA. Qorvo adjusts GAAP net income for interest expense, interest income, income tax expense (benefit), depreciation and intangible amortization expense, stock-based compensation and other charges that are not representative of Qorvo’s ongoing operations (including goodwill and other asset impairments, investment activity, acquisition-related costs and restructuring-related costs) when presenting EBITDA. Management believes that this measure is useful to evaluate our ongoing operations and as a general indicator of our operating cash flow (in conjunction with a cash flow statement which also includes among other items, changes in working capital and the effect of non-cash charges).

Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations’ use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of an adjustment for income taxes (as described above), by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of equity plus net debt, less certain goodwill.

Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus any borrowings under our credit facility and the principal balance of our senior unsecured notes. Management believes that net debt or positive net cash provides useful information regarding the level of Qorvo’s indebtedness by reflecting cash and investments that could be used to repay debt.

Inventory days on hand. Inventory days on hand is defined as (a) average net inventory for the period, divided by (b) the result of non-GAAP cost of goods sold for the period divided by the number of days in the period.

Forward-looking non-GAAP financial measures. Our earnings release contains forward-looking free cash flow, gross margin, income tax rate and diluted earnings per share. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth above) that we provide them to investors on a historical basis. We are unable to provide a reconciliation of the forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures without unreasonable effort due to variability and difficulty in making accurate projections for items that would be required to be included in the GAAP measures, such as stock-based compensation, acquisition and integration-related costs, restructuring-related charges, gain or loss on assets, goodwill and other asset impairments, gain or loss on investments and the provision for income taxes, which could have a potentially significant impact on our future GAAP results.

Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP financial measures as an analytical tool compared to the most directly comparable GAAP financial measures are these non-GAAP financial measures (i) may not be comparable to similarly titled measures used by other companies in our industry, and (ii) exclude financial information that some may consider important in evaluating our performance, thus limiting their usefulness as a comparative tool. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities. We further compensate for the limitations of our use of non-GAAP financial measures by presenting the corresponding GAAP measures more prominently.

Qorvo will conduct a conference call at 5:00 p.m. ET today to discuss today’s press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at the following URL: https://ir.qorvo.com (under “Events & Presentations”). A telephone playback of the conference call will be available approximately two hours after the call’s completion and can be accessed by dialing 1-412-317-0088 and using the passcode 2723791. The playback will be available through the close of business November 5, 2024.

About Qorvo

Qorvo (Nasdaq:QRVO) supplies innovative semiconductor solutions that make a better world possible. We combine product and technology leadership, systems-level expertise and global manufacturing scale to quickly solve our customers’ most complex technical challenges. Qorvo serves diverse high-growth segments of large global markets, including automotive, consumer, defense & aerospace, industrial & enterprise, infrastructure and mobile. Visit www.qorvo.com to learn how our diverse and innovative team is helping connect, protect and power our planet.

Qorvo is a registered trademark of Qorvo, Inc. in the U.S. and in other countries. All other trademarks are the property of their respective owners.

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “forecast”, “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management’s current judgment and expectations as of the date the statement is first made, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We caution you not to place undue reliance upon any such forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under U.S. federal securities laws. Our business is subject to numerous risks and uncertainties, including those relating to fluctuations in our operating results on a quarterly and annual basis; our substantial dependence on developing new products and achieving design wins; our dependence on several large customers for a substantial portion of our revenue; a loss of revenue if defense and aerospace contracts are canceled or delayed; our dependence on third parties; risks related to sales through distributors; risks associated with the operation of our manufacturing facilities; business disruptions; poor manufacturing yields; increased inventory risks and costs, due to timing of customers’ forecasts; our inability to effectively manage or maintain relationships with chipset suppliers; our ability to continue to innovate in a very competitive industry; underutilization of manufacturing facilities; unfavorable changes in interest rates, pricing of certain precious metals, utility rates and foreign currency exchange rates; our acquisitions, divestitures and other strategic investments failing to achieve financial or strategic objectives; our ability to attract, retain and motivate key employees; warranty claims, product recalls and product liability; changes in our effective tax rate; enactment of international or domestic tax legislation, or changes in regulatory guidance; changes in the favorable tax status of certain of our subsidiaries; risks associated with social, environmental, health and safety regulations, and climate change; risks from international sales and operations; economic regulation in China; changes in government trade policies, including imposition of tariffs and export restrictions; we may not be able to generate sufficient cash to service all of our debt; restrictions imposed by the agreements governing our debt; our reliance on our intellectual property portfolio; claims of infringement of third-party intellectual property rights; security breaches, failed system upgrades or regular maintenance and other similar disruptions to our IT systems; theft, loss or misuse of personal data by or about our employees, customers or third parties; provisions in our governing documents and Delaware law may discourage takeovers and business combinations that our stockholders might consider to be in their best interests; and volatility in the price of our common stock. These and other risks and uncertainties, which are described in more detail under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024, and Qorvo’s subsequent reports and statements that we file with the SEC, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

Financial Tables to Follow

QORVO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

	Three Months Ended						Six Months Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Revenue	$	1,046,509		$	1,103,493		$	1,933,180		$	1,754,657

Costs and expenses:
Cost of goods sold		601,203			613,803			1,155,570			1,035,897
Research and development		201,050			174,947			388,652			338,037
Selling, general and administrative		107,760			103,696			222,683			209,119
Other operating expense		126,821			59,619			151,994			68,312
Total costs and expenses		1,036,834			952,065			1,918,899			1,651,365

Operating income		9,675			151,428			14,281			103,292
Interest expense		(22,594	)		(17,121	)		(39,688	)		(34,382	)
Other income, net		15,422			5,211			27,187			18,927

Income before income taxes		2,503			139,518			1,780			87,837
Income tax expense		(19,938	)		(42,057	)		(18,801	)		(33,956	)
Net (loss) income	$	(17,435	)	$	97,461		$	(17,021	)	$	53,881

Net (loss) income per share:
Basic	$	(0.18	)	$	1.00		$	(0.18	)	$	0.55
Diluted	$	(0.18	)	$	0.99		$	(0.18	)	$	0.54

Weighted-average shares of common stock outstanding:
Basic		94,886			97,945			95,116			98,167
Diluted		94,886			98,590			95,116			98,892

QORVO, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (Unaudited)

	Three Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023

GAAP operating income	$	9,675		$	4,606		$	151,428
Stock-based compensation expense		38,181			42,366			39,053
Amortization of intangible assets		29,482			30,474			29,963
Restructuring-related charges		34,396			19,574			8,418
Acquisition and integration-related costs		1,211			2,582			852
Goodwill impairment		96,458			—			48,000
Other expense (income)		2,811			(1,477	)		1,712
Non-GAAP operating income	$	212,214		$	98,125		$	279,426

GAAP net (loss) income	$	(17,435	)	$	414		$	97,461
Stock-based compensation expense		38,181			42,366			39,053
Amortization of intangible assets		29,482			30,474			29,963
Restructuring-related charges		34,396			19,574			8,418
Acquisition and integration-related costs		1,211			2,582			852
Goodwill impairment		96,458			—			48,000
Other expense (income)		379			(3,446	)		2,616
Loss on investments		780			2,499			1,574
Adjustment of income taxes		(3,611	)		(10,939	)		7,576
Non-GAAP net income	$	179,841		$	83,524		$	235,513

GAAP weighted-average outstanding diluted shares		94,886			96,510			98,590
Dilutive stock-based awards		867			—			—
Non-GAAP weighted-average outstanding diluted shares		95,753			96,510			98,590

Non-GAAP net income per share, diluted	$	1.88		$	0.87		$	2.39

QORVO, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)

	Three Months Ended
(in thousands, except percentages)	September 28, 2024					June 29, 2024					September 30, 2023
GAAP gross profit/margin	$	445,306		42.6	%	$	332,304		37.5	%	$	489,690	44.4	%
Stock-based compensation expense		6,047		0.6			5,186		0.6			7,481	0.7
Amortization of intangible assets		25,523		2.4			25,827		2.9			25,591	2.3
Restructuring-related charges		15,414		1.4			—		—			2,482	0.2
Acquisition and integration-related costs		636		0.1			1,925		0.2			1	—
Other income		(885	)	(0.1	)		(2,586	)	(0.3	)		—	—
Non-GAAP gross profit/margin	$	492,041		47.0	%	$	362,656		40.9	%	$	525,245	47.6	%

	Three Months Ended
Non-GAAP Operating Income	September 28, 2024
(as a percentage of revenue)

GAAP operating income		0.9	%
Stock-based compensation expense		3.7
Amortization of intangible assets		2.8
Restructuring-related charges		3.3
Acquisition and integration-related costs		0.1
Goodwill impairment		9.2
Other expense		0.3
Non-GAAP operating income		20.3	%

	Three Months Ended
Free Cash Flow⁽¹⁾	September 28, 2024
(in millions)

Net cash provided by operating activities	$	127.8
Purchases of property and equipment		(33.0	)
Free cash flow	$	94.8

(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.

QORVO, INC. AND SUBSIDIARIES ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (In thousands) (Unaudited)

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP research and development expense	$	201,050	$	187,602	$	174,947
Less:
Stock-based compensation expense		13,468		12,727		11,519
Acquisition and integration-related costs		2		2		2
Non-GAAP research and development expense	$	187,580	$	174,873	$	163,426

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP selling, general and administrative expense	$	107,760	$	114,923	$	103,696
Less:
Stock-based compensation expense		18,488		24,322		20,030
Amortization of intangible assets		3,959		4,647		4,372
Acquisition and integration-related costs		1		—		—
Non-GAAP selling, general and administrative expense	$	85,312	$	85,954	$	79,294

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP other operating expense	$	126,821	$	25,173	$	59,619
Less:
Stock-based compensation expense		178		131		23
Restructuring-related charges		18,982		19,574		5,936
Acquisition and integration-related costs		572		655		849
Goodwill impairment		96,458		—		48,000
Other expense		3,696		1,109		1,712
Non-GAAP other operating expense	$	6,935	$	3,704	$	3,099

	Three Months Ended
	September 28, 2024		June 29, 2024		September 30, 2023
GAAP total operating expense	$	435,631	$	327,698	$	338,262
Less:
Stock-based compensation expense		32,134		37,180		31,572
Amortization of intangible assets		3,959		4,647		4,372
Restructuring-related charges		18,982		19,574		5,936
Acquisition and integration-related costs		575		657		851
Goodwill impairment		96,458		—		48,000
Other expense		3,696		1,109		1,712
Non-GAAP total operating expense	$	279,827	$	264,531	$	245,819

QORVO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	September 28, 2024		March 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	1,096,452	$	1,029,258
Accounts receivable, net		580,963		412,960
Inventories		694,457		710,555
Other current assets		160,587		133,983
Assets of disposal group held for sale		—		159,278
Total current assets		2,532,459		2,446,034

Property and equipment, net		846,540		870,982
Goodwill		2,437,790		2,534,601
Intangible assets, net		445,715		509,383
Long-term investments		24,804		23,252
Other non-current assets		215,767		170,383
Total assets	$	6,503,075	$	6,554,635

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	675,581	$	589,760
Current portion of long-term debt		412,179		438,740
Other current liabilities		245,977		113,215
Liabilities of disposal group held for sale		—		88,372
Total current liabilities		1,333,737		1,230,087

Long-term debt		1,549,244		1,549,272
Other long-term liabilities		209,925		218,904
Total liabilities		3,092,906		2,998,263

Stockholders’ equity		3,410,169		3,556,372
Total liabilities and stockholders’ equity	$	6,503,075	$	6,554,635

At Qorvo^®
Doug DeLieto
VP, Investor Relations
1.336.678.7968

MIL-OSI Security: Pine Ridge Man Sentenced to Federal Prison for Over Three Years for Involuntary Manslaughter

Source: Office of United States Attorneys

RAPID CITY – United States Attorney Alison J. Ramsdell announced that Chief Judge Roberto A. Lange, U.S. District Court, has sentenced a Pine Ridge, South Dakota, man convicted of Involuntary Manslaughter.

Devin White Calf, age 23, was sentenced to 37 months in federal prison, followed by three years of supervised release, and ordered to pay a $100 special assessment to the Federal Crime Victims Fund.

White Calf was indicted for the charge by a federal grand jury in December of 2023. He pleaded guilty on April 5, 2024.

In September of 2023, White Calf consumed alcohol with a group of friends and relatives. At some point, White Calf drove his group to a place called “Top of the World.” This location is just west of Pine Ridge. At this location, the group continued to drink alcohol. While leaving “Top of the World,” White Calf lost control of the vehicle. One of the passengers, a 16-year-old female, was ejected from the vehicle and sustained fatal injuries. Multiple other passengers were also ejected from the car and sustained bodily injuries. Law enforcement was dispatched to the scene because individuals nearby could hear screaming and crying. When law enforcement arrived on scene, White Calf told them that he was not driving and that someone with the last name “Titus” was driving. Several months later, White Calf eventually admitted to law enforcement that he was the driver.

This matter was prosecuted by the U.S. Attorney’s Office because the Major Crimes Act, a federal statute, mandates that certain violent crimes alleged to have occurred in Indian country be prosecuted in Federal court as opposed to State court.

This case was investigated by the Oglala Sioux Tribe – Department of Public Safety and the FBI. Assistant U.S. Attorney Megan Poppen prosecuted the case.

White Calf was immediately remanded to the custody of the U.S. Marshals Service.

MIL-OSI Security: Drug Dealer Sentenced To 15 Years In Federal Prison

Source: Office of United States Attorneys

MOBILE, AL – An Elberta man was sentenced on October 28, 2024, to 15 years in federal prison for his possession with intent to distribute of methamphetamine and fentanyl in Baldwin County, Alabama. Marcus Allen Heaton, 38, was identified during several encounters with Baldwin County sheriff’s investigators from 2019 through 2021.

Court documents show that in May of 2021, Heaton was driving a vehicle displaying improper rear lights. Baldwin County sheriff’s deputies stopped the vehicle and initiated an investigation. A drug detecting dog was used to walk around the outside of the vehicle, and the dog gave a positive alert for the odor of drugs emanating from the vehicle. The deputies searched the vehicle and found 132.6 grams of methamphetamine divided among five plastic bags, packaged in that manner for resale. The deputies also found 6.58 grams of fentanyl divided among three other plastic bags, also packaged for resale. Heaton’s phone was seized during the stop and deputies obtained a search warrant to examine the contents. In the phone, deputies found numerous texts and electronic messages relating to Heaton’s distribution of methamphetamine and fentanyl. Heaton pled guilty to two counts of possession with intent to distribute controlled substances, one for methamphetamine and one for fentanyl, in June of 2024.

United States District Court Judge Jeffery Beaverstock imposed a sentence of 15 years imprisonment for Heaton’s illegal possession with intent to distribute methamphetamine. The sentence was the minimum mandatory sentence under federal law based on the amount of methamphetamine involved in the offense and Heaton’s prior convictions for serious drug felonies. On the charge for Heaton’s illegal possession with intent to distribute fentanyl, the judge imposed a sentence of 130 months imprisonment, which will run concurrently with the sentence on the methamphetamine charge. When Heaton is released from custody, he will serve 5 years of supervised release. Heaton’s supervision includes a set of standard conditions as well as a special condition requiring drug testing and treatment and permitting the probation officer to search his person or property upon a showing of reasonable suspicion that he is in violation of any of the conditions of his supervision. No fine was imposed but Heaton was ordered to pay $200 in special mandatory assessments.

The case was investigated by the Baldwin County Sheriff’s Office and the FBI’s Safe Streets Task Force. Assistant U.S. Attorney Gloria Bedwell prosecuted the case on behalf of the United States.

MIL-OSI Security: Former Employee Pleads Guilty to Embezzling More Than $135,000 from Dupo School District

Source: Office of United States Attorneys

EAST ST. LOUIS, Ill. – A Waterloo woman admitted guilt to a federal charge Monday for embezzling more than $135,000 as a former employee of Dupo Community Unit School District #196.

Linda J. Johnson, 58, pleaded guilty in federal court to one count of theft from a federally funded program.

According to court documents, Johnson committed the embezzlement while employed in an administrative support role in the superintendent’s office between 2020 and 2022. In this role, Johnson was responsible for depositing cash and checks into the district’s activities account intended to support student athletics, clubs, and extracurriculars.

To conceal her crime, she would prepare bank deposit slips reflecting the correct amount of cash and checks received, but later she prepared a second set of fraudulent deposit slips that only accounted for the checks, while she kept the cash.

“Stealing funds from student activities directly deprives children of opportunities within their extracurriculars,” said U.S. Attorney Rachelle Aud Crowe. “Although the defendant tried to conceal her crime from school officials by preparing two sets of records, her deceit was discovered, and she will be held accountable.”

The loss to the school district is $135,566.80.

“The FBI works to protect the well-being of our children on many levels, and investigating the embezzlement of school funds is no different,” said FBI Springfield Field Office Special Agent in Charge Christopher Johnson. “FBI Springfield would like to thank the Dupo Police Department for their vital role in this investigation.”

Theft from a federally funded program convictions are punishable by up to 10 years’ imprisonment and fines up to $250,000. Johnson’s sentencing is scheduled for 10:30 a.m. on Feb. 27, 2025, at the federal courthouse in East St. Louis.

Officials with the Dupo School District said the plea agreement reached Monday represents accountability for a serious breach of public trust that impacted their students, staff, and the entire Dupo School District community. They said they are grateful to the U.S. Attorney’s Office for their diligent work in securing justice for our students and taxpayers.

The Dupo Police Department and the FBI Springfield Field Office are directing the investigation, and Assistant U.S. Attorney Steve Weinhoeft is prosecuting the case.

MIL-OSI Security: Pembroke Township Man Sentenced to 6 ½ Years in Prison for Filing False Tax Returns

Source: Office of United States Attorneys

URBANA, Ill. – Larry Dean Gibbs, 63, of Pembroke Township in Kankakee County, Illinois, was sentenced on October 28, 2024, to 6 ½ years of imprisonment for filing false tax returns.

Gibbs was convicted of filing three false federal tax returns following a jury trial held at the U.S. Courthouse in Urbana in March of this year. During the trial, the government presented evidence to establish that, in January 2017, Gibbs filed three federal income tax returns for the tax years 2012, 2013, and 2014, each falsely claiming that he had earned $10 million in annual income from the “Larry Dean Gibbs Estate.” Gibbs further falsely claimed that the IRS withheld over $3 million per year from his earnings each year and that he was entitled to refunds totaling over $6.8 million. In contemporaneous filings, Gibbs claimed that he had changed his name to Mulumbua Humraukn El Taikem Bey and that he was the Ambassador for the Al Moroccan Empire National Republic, which is not officially recognized by the U.S. State Department. At the time Gibbs filed the three false tax returns, he had just been released from federal prison for a prior conviction for filing a false federal tax return in 2005, when he had obtained a $66,282 refund to which he was not entitled.

At the sentencing hearing, U.S. District Judge Colin S. Bruce found that Gibbs had obstructed justice during the trial by falsely claiming that he was a member of the Maipuri Arauan Nation and that a treaty between that tribe and the United States required tribal members to be seated on his jury. Judge Bruce found that Gibbs “continues to file nonsensical sovereign citizen documents with the court, despite the court’s clear warnings against such frivolous, docket-clogging activity.”

The statutory penalties for filing a false tax return are up to three years of imprisonment and up to a $100,000 fine on each of the three counts of conviction. In addition to imprisonment, Judge Bruce sentenced Gibbs to serve one year of supervised release following his release from the federal Bureau of Prisons.

Judge Bruce directed Gibbs to report to the Bureau of Prisons to begin serving his sentence of imprisonment on January 7, 2025. In the meantime, Gibbs remains released on conditions of bond, which include home detention.

“Fraud upon the government ultimately harms honest taxpayers,” said U.S. Attorney Gregory K. Harris. “Our office will vigorously prosecute these important cases, including those involving repeat offenders such as the defendant. We are grateful to our federal law enforcement partners for their dedicated work on this case.”

“Tax fraud undermines the trust between taxpayers and their government,” said Ramsey E. Covington, Acting Special Agent in Charge, IRS Criminal Investigation, Chicago Field Office. “By filing false tax returns, Larry Gibbs not only cheated the system but also imposed an unjust burden on honest taxpayers. His frivolous court filings further clogged our legal system, wasting valuable resources that could be better used to serve the community. IRS Criminal Investigation and its fellow law enforcement partners remain committed to holding accountable those who seek to exploit our tax laws for personal gain.”

“The FBI is proud to work with its law enforcement and prosecutorial partners to ensure that taxpayer dollars aren’t used to line the pockets of repeat offenders,” said Douglas S. DePodesta, Special Agent-in-Charge of the Chicago Field Office of the FBI. “Our tax system is predicated on the principal that every American pays their fair share, and this sentencing reflects the government’s commitment to ensuring equity for hardworking Americans.”

The IRS Criminal Investigation, Chicago Field Office, and FBI, Chicago Field Office, investigated the case. Supervisory Assistant United States Attorney Eugene L. Miller represented the government in the prosecution.

MIL-OSI Security: Federal jury convicts Belgrade man of unlawful possession of firearm and ammunition

Source: Office of United States Attorneys

MISSOULA — A federal jury on Monday convicted a Belgrade man of a firearms crime after he was accused of illegally possessing two handguns and ammunition while he was the subject of a court restraining order, U.S. Attorney Jesse Laslovich said.

After a one-day trial that began on Oct. 28, the jury found the defendant, Jordan Charles Kirsch, 34, guilty of being a prohibited person in possession of a firearm and ammunition. Kirsch faces a maximum of 15 years in prison, a $250,000 fine and three years of supervised release.

U.S. District Judge Dana L. Christensen presided. The court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Sentencing was set for March 12, 2025. Kirsch was detained pending further proceedings.

“Firearms involved in domestic disputes often lead to tragic results. Here, Kirsch was under a court order of protection restraining him from any violence against the petitioner, and yet he illegally possessed two guns in violation of federal law. I am pleased the jury agreed with us and convicted him, and I am grateful to our prosecution team and law enforcement partners for their work to protect the safety of our fellow Montanans,” U.S. Attorney Laslovich said.

In court documents and at trial, the government alleged that on Dec. 19, 2023, a state district court judge in Gallatin County conducted a hearing and issued a final Order of Protection for 10 years against Kirsch. The court’s order found that the petitioner was in danger of harm, restrained Kirsch from committing or threatening to commit any acts of violence to the petitioner and ordered Kirsch not to threaten, harass, abuse, follow, stalk, annoy or disturb the petitioner.

In April 2024, a court order was issued for Kirsch to be removed from a Belgrade residence and for possession of the residence to be delivered to the petitioner. A sheriff’s office detective conducting surveillance observed Kirsch exit the residence with a black semi-automatic handgun and fire it 10 to 20 times toward a berm near the property. On May 2, 2024, Kirsch was arrested and evicted from the property. A search warrant was executed on the property, and law enforcement found two firearms and hundreds of rounds of ammunition in various calibers.

The U.S. Attorney’s Office is prosecuting the case. The FBI, Missouri River Drug Task Force and Gallatin County Sheriff’s Office conducted the investigation.

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 violent crime and gun violence, 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.

XXX

MIL-OSI Security: Crystal Springs Man Sentenced to over 9 Years in Prison for Brandishing a Firearm During a Carjacking in Jackson

Source: Office of United States Attorneys

Jackson, Miss. – A Crystal Springs man was sentenced today to 110 months in prison for brandishing a firearm while carjacking a woman in front of her home in Jackson.

According to court documents, Christopher Lawrence Murray, 31, brandished a pistol during a carjacking in the Jackson area. In May of 2021, Murray and another man approached a woman sitting in her car in front of her home. Working in tandem, both men pointed pistols at the woman and demanded she hand over her cellular phone and the keys to her car. The woman, at gunpoint, complied with the demands and the men left in the woman’s car.

Murray was indicted by a federal grand jury on September 6, 2023, and he pled guilty on July 31, 2024, to brandishing a firearm in relation to a crime of violence.

U.S. Attorney Todd W. Gee of the Southern District of Mississippi and Special Agent in Charge Joshua Jackson of the Bureau of Alcohol, Tobacco, Firearms and Explosives made the announcement.

The Jackson Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated the case.

Assistant U.S. Attorney Bert Carraway prosecuted the case.

In an effort to focus resources on carjacking in Jackson, the U.S. Attorney’s Office, the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Jackson Police Department and the Capitol Police Department formed a carjacking task force in April of 2024. In keeping with the Justice Department’s Comprehensive Strategy for Reducing Violent Crime, the task force represents a strategic enforcement priority for the department, focusing federal resources on identifying, investigating, and prosecuting the most significant drivers of violent crime.

MIL-OSI Security: Leader And Three Members of Poly-Drug Trafficking Organization Are Sentenced To Prison

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

CHARLOTTE, N.C. – The leader and three members of a drug trafficking organization (DTO) were handed down sentences ranging from 70 months to 27 years in prison today for the bulk distribution of methamphetamine, fentanyl, and other narcotics, announced Dena J. King, U.S. Attorney for the Western District of North Carolina.

Robert M. DeWitt, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina, Bennie Mims, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, and Chief Johnny Jennings of the Charlotte Mecklenburg Police Department (CMPD), join U.S. Attorney King in making today’s announcement.

Led by the FBI, ATF, and CMPD, this Organized Crime Drug Enforcement Task Force (OCDETF) operation successfully dismantled a poly-drug network that trafficked large quantities of methamphetamine, fentanyl, heroin, and cocaine in Mecklenburg County.

The investigation identified nine members of the DTO who were prosecuted federally in connection with this case. The four sentenced today are:

George Irving Rivens, 38, of Charlotte, and leader of the DTO, was sentenced to 27 years in prison followed by five years of supervised release. He pleaded guilty to conspiracy to distribute and to possess with intent to distribute cocaine, methamphetamine, heroin, and fentanyl.

Paul Alexander Kaber, 29, of Charlotte, was sentenced to 172 months in prison followed by five years of supervised release. He pleaded guilty to conspiracy to distribute and to possess with intent to distribute cocaine, methamphetamine, and heroin.

Christopher Ahmad Townsend, 32, of Charlotte, was sentenced to 130 months in prison followed by five years of supervised release. He pleaded guilty to conspiracy to distribute and to possess with intent to distribute cocaine, methamphetamine, and fentanyl.

Joseph Earl Connor, 34, of Charlotte, was sentenced to 70 months in prison followed by five years of supervised release. He pleaded guilty to distribution of fentanyl.

The five DTO members previously sentenced and the charges they pleaded guilty to are as follows:

Daneon Hansen, 47, of Charlotte, was sentenced to 10 years in prison followed by five years of supervised release. He pleaded guilty to possession with intent to distribute methamphetamine and heroin.

Deion Rashaad Thompson, 30, of Charlotte, was sentenced to 10 years in prison followed by five years of supervised release. He pleaded guilty to conspiracy to distribute and to possess with intent to distribute cocaine, methamphetamine, heroin, and fentanyl; distribution of methamphetamine; and two counts of distribution of fentanyl.

Joseph Stewart, 36, of Charlotte, was sentenced to 15 months in prison followed by three years of supervised release. He pleaded guilty to distribution of fentanyl.

Naliyah Tekayla Herd, 26, of Charlotte, was sentenced to a year and a day in prison followed by three years of supervised release. She pleaded guilty to conspiracy to distribute and to possess with intent to distribute cocaine, methamphetamine, heroin, and fentanyl.

Alexis Taylor, 27, of Mount Holly, N.C., was sentenced to four months in prison followed by three years of supervised release. She pleaded guilty to conspiracy to distribute and to possess with intent to distribute cocaine, methamphetamine, heroin, and fentanyl.

According to court documents and court proceedings, from at least January 1, 2021, to June 3, 2022, Rivens supplied the members of the DTO with methamphetamine, fentanyl, heroin, and cocaine for local distribution in Charlotte. During the investigation, law enforcement identified a residence in Charlotte the DTO was using as a wholesale stash house to store and traffic drugs. On June 3, 2022, investigators executed a search warrant at the stash house, seizing 16.5 kilograms of methamphetamine, more than 5.7 kilograms of fentanyl, over 2.6 kilograms of cocaine, over a kilogram of heroin, 37 kilograms of marijuana, and more than half a kilogram of cocaine base. In addition, 10 firearms and nearly $30,000 in cash drug proceeds were seized. Court record show that, when law enforcement conducted the search warrant, it appeared that some of the occupants of the stash house had been attempting to destroy evidence by flushing methamphetamine down the toilet.

On the same day, investigators also executed a search warrant at another location, seizing 3.6 kilograms of methamphetamine, 1.1 kilograms of heroin, three firearms, and $60,000 in cash. From another residence used by Rivens, law enforcement seized $30,303 in cash and two more firearms. In total, over the course of the investigation, law enforcement seized over a quarter million dollars in drug cash proceeds and other assets, including over $100,000 worth of jewelry, a 2020 Dodge Charger Scat Pack, and a residence used by the DTO to facilitate drug trafficking.

In making today’s announcement, U.S. Attorney King commended the FBI, ATF, and CMPD for leading this OCDETF operation.

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 at https://www.justice.gov/OCDETF.

Assistant U.S. Attorney Alfredo De La Rosa of the U.S. Attorney’s Office in Charlotte prosecuted the case.

MIL-OSI Security: Defense News: Chief of Naval Operations, Master Chief Petty Officer of Navy Visit Gulf Coast to Engage with Warfighters

Source: United States Navy

Chief of Naval Operations (CNO) Adm. Lisa Franchetti and Master Chief Petty Officer of the Navy (MCPON) James Honea traveled to the Gulf Coast, Oct. 24-25, to engage with active and reserve Sailors and Navy civilians serving in America’s Warfighting Navy.

This visit underscores the CNO and MCPON’s commitment to warfighting, warfighters and the foundation that supports them.

“Our greatest strength in our Navy is our people,” said Franchetti. “We can have great technology, great platforms, and all the best equipment around the world, but without our amazing people to operate it, we can’t go anywhere or do anything.”

At Naval Support Activity (NSA) Panama City, Franchetti and Honea had the opportunity to visit Naval Surface Warfare Center (NSWC) Panama City Division to observe the latest advancements in integrating robotic and autonomous systems in littoral operations and hold discussions with experts in the field about how their work advances one of the Project 33 targets outlined in CNO’s Navigation Plan for America’s Warfighting Navy: “Operationalize robotic and autonomous systems: Move proven systems into the hands of the warfighters.”

“Our Sailors assigned in the area possess the education and skills that undoubtedly improve our readiness and enhance our warfighting advantage,” said Honea.

The CNO expressed her appreciation for the innovative work being done.

“I am inspired by the remarkable technological advancements and the dedication of our Sailors and civilians. The Gulf Coast is home to some of the Navy’s most innovative and talented individuals, and it was an honor to witness their achievements firsthand,” said Franchetti. “Our investments in unmanned warfare technologies are critical to maintaining our maritime superiority and ensuring the safety and security of our Nation.”

The leaders also visited the Naval Diving and Salvage Training Center, which trains military divers from all branches. The center includes diving simulation facilities that can reach depths of 300 feet, along with an aquatics training facility that features the second-largest pool in the U.S.

CNO and MCPON continued their visit at Naval Air Station (NAS) Pensacola engaging with students and staff at Information Warfare Training Command Corry Station. This interaction provided an invaluable opportunity for them to gain insights into the training and education of the Navy’s information warfare professionals.

MCPON commended the students for their dedication and highlighted the vital role the Navy’s information warriors play in providing warfighting capabilities from the seabed to space.

“Our Sailors assigned in the area possess the education and skills that undoubtedly improve our readiness and enhance our warfighting advantage,” said Honea.

Next, the CNO presided over a winging ceremony at NAS Pensacola, where she had the honor of presenting 36 “wings of gold” to new pilots, naval flight officers, and an air vehicle pilot. The ceremony is a tradition that marks the completion of a student’s training and their official designation as a naval aviator. The CNO expressed her pride in the newly winged aviators and their commitment to upholding the highest standards of excellence in naval aviation.

“I’d like to leave you with one final thought. The skill sets, tactics, and training you’ve learned during flight school will stay with you for the rest of your lives, forming the foundation of your careers,” said Franchetti. “Remember the importance of Crew Resource Management and Operational Risk Management, and never forget to aviate, navigate, and communicate.”

Following the winging ceremony CNO and MCPON hosted a roundtable discussion with Pensacola area Major Commanders and their senior enlisted leaders to discuss the NAVPLAN and gain their perspective on the experiences of our Sailors, civilians, and families in the “cradle of naval aviation.” They also conducted all hands calls at Panama City, Corry Station, and NAS Pensacola.

They closed out their trip with a visit to the Transaction Service Center (TSC) Pensacola, where CNO and MCPON met with the Sailors and Navy civilians responsible for overseeing all East Coast gains, losses, and military pay, expressing gratitude for their essential work.

Last year, TSC Pensacola utilized the Get Real Get Better toolset, achieving 99.9 percent accuracy in Sailor pay. This milestone was reached by expanding Human Resources (HR) Service Center workflows, enhancing command triad visibility of Sailor pay and HR professional performance, and collaborating closely with Fleet Commanders.

NAS Pensacola, the proud home of the Blue Angels, will host the NAS Pensacola Blue Angels Homecoming Air Show, featuring a combined performance with the U.S. Air Force Thunderbirds, on Nov. 1-2, 2024. This event is one of Pensacola’s largest, attracting between 150,000 and 180,000 spectators over the two days. Admission is free and open to the public, with gates opening at 8 a.m. Attendees are encouraged to bring their own seating, or they can opt for paid seating available for purchase.

View the Rawls information.

MIL-OSI Security: Six Charged in Scheme to Defraud the Federal Government

Source: United States Attorneys General 8

Six defendants have been charged for their roles in schemes to rig bids, defraud the government and pay bribes and kickbacks in connection with the sale of IT products and services to federal government purchasers, which resulted in overcharges of millions of dollars to the U.S. government, including the Department of Defense (DoD).

On Oct. 9 and Oct. 16, a federal grand jury in Baltimore returned indictments against two additional defendants. Four other defendants were also charged. These are the first charges in the Justice Department’s ongoing investigation into IT manufacturers, distributors and resellers who sell products and services to government purchasers, including to the intelligence community.

“Antitrust crimes can undermine competition for products and services that are vital to our national security,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “When fraudsters siphon taxpayer funds, the Antitrust Division and its Procurement Collusion Strike Force (PCSF) partners across the government will hold accountable those who collude to subvert competition, line their pockets with federal procurement dollars and compromise the integrity of our intelligence community programs.”

“This office and our partners will use all available resources to hold accountable those who would undermine and distort the government’s procurement of goods and services, especially those related to our cybersecurity infrastructure,” said U.S. Attorney Erek L. Barron for the District of Maryland.

“This investigation demonstrates the vital need to protect the DoD procurement process, particularly within the Intelligence Community,” said Special Agent in Charge Christopher Dillard of the DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office. “The Defense Criminal Investigative Service is committed to identifying fraudsters who abuse public trust and enrich themselves through criminal schemes.”

“There is no place for fraudsters and crooks scheming to manipulate the government bidding process for personal gain,” said Special Agent in Charge William J. DelBagno of the FBI Baltimore Field Office. “The FBI remains steadfastly committed to identifying, investigating and bringing to justice those conspiring to enrich themselves by cheating taxpayers.”

“Investigating complex fraud schemes is a top priority of ours,” said National Security Agency Acting Inspector General Kevin Gerrity. “I commend our team, our law enforcement partners and the Justice Department for their work protecting the integrity of federal contracting.”

“Each part of the government must do its part to detect and prosecute instances of waste, fraud and abuse, and CIA’s Office of Inspector General was pleased to join its law enforcement partners in investigating this egregious case,” said CIA Inspector General Robin C. Ashton.

United States v. Victor Marquez

Victor M. Marquez, a Maryland resident and owner of two IT companies with significant government contracts, was charged in a four-count indictment with wire fraud conspiracy, wire fraud and major fraud against the United States for rigging bids and inflating the amount of money obtained from valuable IT contracts.

Antwann C.K. Rawls, an employee of one of Marquez’s companies, and Scott A. Reefe, an IT sales executive, have been charged for their respective roles in the conspiracy.

As alleged in the indictment, Marquez, Rawls, Reefe and their co-conspirators used their positions of trust to learn sensitive, confidential procurement information, including procurement budgets for large U.S. government IT contracts. The co-conspirators used that inside information to craft bids at artificially determined, non-competitive and non-independent prices, ensuring Marquez’s company would win the procurement.

According to court documents, the co-conspirators shared their bids in advance of submitting them to the government, with one co-conspirator emailing that he would submit a “high price third bid.” Marquez and his co-conspirators submitted their collusive bids despite knowing the government sought independent, competitive bids for the valuable contracts, and despite Marquez’s certification of independent bidding.

If convicted, Marquez faces maximum penalties of 20 years in prison for each conspiracy and wire fraud count and 10 years in prison for the major fraud charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

United States v. Breal L. Madison Jr.

Breal L. Madison Jr., a Maryland resident, was charged in a 13-count indictment with conspiracy, bribery of a public official, mail fraud and money laundering for orchestrating a years-long scheme to defraud his employer and the United States out of over $7 million in connection with the sale of IT products to various government agencies.

Brandon Scott Glisson, an IT contractor providing IT services to the U.S. government, and Glisson’s supervisor, Lawrence A. Eady, a former senior government employee, have also been charged for their respective roles in the scheme.

According to court documents, through multiple misrepresentations, Madison and his co-conspirators conspired to steal money from Madison’s employer and government agencies, illegally siphoning over $9 million in stolen proceeds to Madison’s shell company, Trident Technology Solutions, and another shell company. They used the money to purchase luxury items and to pay approximately $630,000 in bribes to Eady in exchange for Eady’s ensuring the purchase of additional products sold by Madison.

Madison used his ill-gotten gains to buy a Vanquish VQ58 yacht, 2020 Lamborghini Huracan and multiple other vehicles, all of which the United States seeks to forfeit in the indictment.

If convicted, Madison faces maximum penalties of five years in prison for the conspiracy count, 15 years in prison for each bribery count, 20 years in prison for each mail fraud count and 10 years for each money laundering count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The DCIS, the FBI Baltimore Field Office, CIA Office of Inspector General and NSA Office of Inspector General investigated the case.

Acting Assistant Chief Michael Sawers and Trial Attorneys Zachary Trotter and Elizabeth French of the Antitrust Division’s Washington Criminal Section and Assistant U.S. Attorneys Aaron S.J. Zelinsky, Sean M. Delaney and Darren Gardner for the District of Maryland are prosecuting the case.

Anyone with information about this investigation or other procurement fraud schemes should notify the PCSF at www.justice.gov/atr/webform/pcsf-citizen-complaint. The Justice Department created the PCSF in November 2019. It is a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government — federal, state and local. For more information, visit www.justice.gov/procurement-collusion-strike-force.

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

View the Eady information.

View Reefe information.

View the Glisson information.

View the Madison indictment.

View the Marquez indictment.

MIL-OSI: Medallion Financial Corp. Reports 2024 Third Quarter Results

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 29, 2024 (GLOBE NEWSWIRE) — Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the “Company”), a specialty finance company that originates and services loans in various consumer and commercial industries, as well as offers loan products and services through fintech strategic partners, announced today its results for the quarter ended September 30, 2024.

2024 Third Quarter Highlights

Net income was $8.6 million, or $0.37 per share, compared to $11.2 million, or $0.48 per share, in the prior year quarter.
Net interest income grew 8% to $52.7 million from $48.8 million in the prior year quarter.
Net interest margin on gross loans was 8.11%, compared to 8.35% in the prior year quarter, and on net loans it was 8.42%, compared to 8.64% in the prior year quarter.
Loan originations were $275.6 million, compared to $217.4 million in the prior year quarter.
Loans grew 13% to $2.5 billion as of September 30, 2024, compared to $2.2 billion a year ago.
The credit loss provision increased to $20.2 million from $14.5 million in the prior year quarter.
The Company repurchased 122,344 shares of common stock at an average cost of $7.89 per share.
Subsequent to September 30, 2024, the Board of Directors increased the quarterly cash dividend 10% to $0.11 per share.

Executive Commentary – Andrew Murstein, President of Medallion

“We continue to be pleased with our quarterly performance. The earnings were strong despite lower taxi medallion related recoveries and the absence of equity gains, both of which we experienced in the prior year quarter. At $0.37 per share, our earnings included approximately $0.07 per share of additional allowance tied to the growth of our consumer lending segments, which saw recreation and home improvement loans grow 4% and 5% from the previous quarter to a combined $2.4 billion, with over $235 million in originations this quarter. We continue to be comfortable with the overall credit performance of these two consumer segments, which carry weighted average coupons of 14.92% for recreation loans and 9.76% for home improvement loans. During the quarter we originated recreation loans at an average rate of 16.33% and home improvement loans at an average rate of 10.75%.

Our net interest income reached $52.7 million during the quarter, up 6% from just a quarter ago. We remain cautiously optimistic that the solid performance of our loan portfolio will continue. Our net interest margin during the quarter was 8.11%, decreasing only 1 basis point from the prior quarter, as we continue to increase our yield to offset the rise in our average cost of borrowings.

Our total interest income of $76.4 million, net interest income of $52.7 million, and total assets of $2.9 billion were all record highs. Our fintech strategic partnership program at Medallion Bank had its highest volume quarter ever with $40 million of new loans, up from $24 million in the second quarter of this year. As a result, we are optimistic about the quarters ahead and are hopeful to continue delivering meaningful growth in origination volumes in our newest business line.

Lastly, we are pleased to announce that our board of directors has authorized an increase of our quarterly dividend to $0.11 per share beginning with the upcoming payment next month, reflecting our strong financial performance and ongoing commitment to delivering value to our shareholders. This increase underscores our confidence in the Company’s future growth and stability, as well as our focus on returning capital to investors.”

Business Segment Highlights

Recreation Lending Segment

Originations were $139.1 million during the quarter, compared to $92.6 million a year ago.
Recreation loans grew 15% to $1.6 billion as of September 30, 2024, compared to $1.3 billion a year ago.
Recreation loans were 63% of total loans as of September 30, 2024, compared to 61% a year ago.
Net interest income grew 9% to $38.9 million for the quarter, from $35.6 million in the prior year quarter.
The average interest rate was 14.92% at quarter-end, compared to 14.73% a year ago.
Recreation loans 90 days or more past due were $7.5 million, or 0.50% of gross recreation loans, as of September 30, 2024, compared to $5.9 million, or 0.45%, a year ago.
Allowance for credit loss rate was 4.53% as of September 30, 2024, compared to 4.24% a year ago.

Home Improvement Lending Segment

Originations were $96.5 million during the quarter, compared to $79.3 million a year ago.
Home improvement loans grew 8% to $814.1 million as of September 30, 2024, compared to $750.5 million a year ago.
Home improvement loans were 33% of total loans as of September 30, 2024, compared to 34% a year ago.
Net interest income grew 5% to $12.0 million for the quarter, from $11.4 million in the prior year quarter.
The average interest rate was 9.76% at quarter-end, compared to 9.38% a year ago.
Home improvement loans 90 days or more past due were $1.6 million, or 0.19% of gross home improvement loans, as of September 30, 2024, compared to $1.0 million, or 0.13%, a year ago.
Allowance for credit loss rate was 2.42% as of September 30, 2024, compared to 2.31% a year ago.

Commercial Lending Segment

Commercial loans were $110.1 million at September 30, 2024, compared to $100.3 million a year ago.
The average interest rate on the portfolio was 12.90%, compared to 12.91% a year ago.

Taxi Medallion Lending Segment

The Company collected $4.1 million of cash on taxi medallion-related assets during the quarter.
Total net taxi medallion assets declined to $8.8 million (comprised of $1.9 million of loans net of allowance for credit losses and $6.9 million of loan collateral in process of foreclosure), a 46% reduction from a year ago, and represented less than half a percent of the Company’s total assets as of September 30, 2024.

Capital Allocation

Quarterly Dividend

The Board of Directors declared a quarterly dividend of $0.11 per share, payable on November 27, 2024 to shareholders of record at the close of business on November 15, 2024.

Stock Repurchase Plan

During the third quarter, the Company repurchased 122,344 shares of its common stock at an average cost of $7.89 per share, for a total of $1.0 million.
As of September 30, 2024, the Company had $15.4 million remaining under its $40 million share repurchase program.

Conference Call Information

The Company will host a conference call to discuss its third quarter financial results tomorrow, Wednesday, October 30, 2024 at 9:00 a.m. Eastern time.

In connection with its earnings release, the Company has updated its quarterly supplement presentation, which is now available at www.medallion.com.

How to Participate

Date: Wednesday, October 30, 2024
Time: 9:00 a.m. Eastern time
U.S. dial-in number: (833) 816-1412
International dial-in number: (412) 317-0504
Live webcast: Link to Webcast of 3Q24 Earnings Call

A link to the live audio webcast of the conference call will also be available at the Company’s IR website.

Replay Information

The webcast replay will be available at the Company’s IR website until the next quarter’s results are announced.

The conference call replay will be available following the end of the call through Wednesday, November 6.

U.S. dial-in number: (844) 512-2921
International dial-in number: (412) 317-6671
Access ID: 1019 3247

About Medallion Financial Corp.

Medallion Financial Corp. (NASDAQ:MFIN) and its subsidiaries originate and service a growing portfolio of consumer loans and mezzanine loans in various industries. Key industries served include recreation (towable RVs and marine) and home improvement (replacement roofs, swimming pools, and windows). Medallion Financial Corp. is headquartered in New York City, NY, and its largest subsidiary, Medallion Bank, is headquartered in Salt Lake City, Utah. For more information, please visit www.medallion.com.

Forward-Looking Statements
Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, net interest income and expenses, other expenses, earnings, growth, and our growth strategy. These statements are often, but not always, made using words or phrases such as “will” and “continue” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These statements relate to future public announcements of our earnings, the impact of the pending SEC litigation, expectations regarding our loan portfolio, including collections on our medallion loans, the potential for future asset growth, and market share opportunities. Medallion’s actual results may differ significantly from the results discussed in such forward-looking statements. For example, statements about the effects of the current economy, whether inflation or the risk of recession, operations, financial performance and prospects constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond Medallion’s control. In addition to risks relating to the current economy, a description of certain risks to which Medallion is or may be subject, including risks related to the pending SEC litigation, please refer to the factors discussed under the heading “Risk Factors” in Medallion’s 2023 Annual Report on Form 10-K.

Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com

MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Dollars in thousands, except share and per share data)	September 30, 2024			December 31, 2023			September 30, 2023
Assets
Cash, cash equivalents, and federal funds sold	$	187,929		$	149,845		$	127,642
Investment and equity securities		66,651			65,712			63,717
Loans		2,485,279			2,215,886			2,203,038
Allowance for credit losses		(96,518	)		(84,235	)		(79,133	)
Net loans receivable		2,388,761			2,131,651			2,123,905
Goodwill and intangible assets, net		170,311			171,394			171,755
Property, equipment, and right-of-use lease asset, net		14,172			14,076			13,278
Accrued interest receivable		14,108			13,538			13,593
Loan collateral in process of foreclosure		8,818			11,772			15,923
Other assets		29,302			29,839			28,814
Total assets	$	2,880,052		$	2,587,827		$	2,558,627
Liabilities
Deposits	$	2,108,132		$	1,866,657		$	1,855,096
Long-term debt		232,037			235,544			218,137
Short-term borrowings		49,000			8,000			18,489
Deferred tax liabilities, net		20,598			21,207			23,131
Operating lease liabilities		5,534			7,019			7,075
Accrued interest payable		6,888			6,822			4,624
Accounts payable and accrued expenses		26,687			30,804			34,813
Total liabilities		2,448,876			2,176,053			2,161,365
Total stockholders’ equity		362,388			342,986			328,474
Non-controlling interest in consolidated subsidiaries		68,788			68,788			68,788
Total equity		431,176			411,774			397,262
Total liabilities and equity	$	2,880,052		$	2,587,827		$	2,558,627
Number of shares outstanding		23,084,277			23,449,646			23,363,731
Book value per share	$	15.70		$	14.63		$	14.06

MEDALLION FINANCIAL CORP.‌
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)‌

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2024			2023			2024			2023
Total interest income	$	76,409		$	65,886		$	214,183		$	183,455
Total interest expense		23,672			17,102			63,661			44,379
Net interest income		52,737			48,784			150,522			139,076
Provision for credit losses		20,151			14,532			55,929			27,045
Net interest income after provision for credit losses		32,586			34,252			94,593			112,031
Other income (loss)
(Loss) gain on equity investments		(519	)		2,180			3,136			2,189
Gain on sale of loans and taxi medallions		340			1,417			1,170			4,578
Write-down of loan collateral in process of foreclosure		(19	)		(30	)		(19	)		(303	)
Other income		785			739			2,802			1,868
Total other income, net		587			4,306			7,089			8,332
Other expenses
Salaries and employee benefits		9,456			9,630			28,347			27,805
Loan servicing fees		2,790			2,501			7,951			7,084
Collection costs		1,673			1,583			4,799			4,729
Regulatory fees		961			1,021			2,826			2,484
Professional fees		818			1,148			3,434			4,223
Rent expense		664			629			2,019			1,855
Amortization of intangible assets		361			361			1,084			1,084
Other expenses		2,272			2,216			6,755			7,220
Total other expenses		18,995			19,089			57,215			56,484
Income before income taxes		14,178			19,469			44,467			63,879
Income tax provision		4,055			6,727			14,196			18,582
Net income after taxes		10,123			12,742			30,271			45,297
Less: income attributable to the non-controlling interest		1,512			1,512			4,535			4,536
Total net income attributable to Medallion Financial Corp.	$	8,611		$	11,230		$	25,736		$	40,761
Basic net income per share	$	0.38		$	0.50		$	1.14		$	1.81
Diluted net income per share	$	0.37		$	0.48		$	1.09		$	1.77
Weighted average common shares outstanding
Basic		22,490,792			22,596,982			22,576,446			22,469,968
Diluted		23,447,929			23,392,901			23,555,065			23,067,944
Dividends declared per common share	$	0.10		$	0.08		$	0.30		$	0.24

MIL-OSI: Heartland Financial USA, Inc. (“HTLF”) Reports Quarterly Results as of September 30, 2024

Source: GlobeNewswire (MIL-OSI)

Third Quarter Highlights

Quarterly net income available to common stockholders of $62.1 million or $1.44 per common share
Adjusted earnings available to common stockholders of $50.6 million or $1.17 adjusted diluted earnings per common share (non-GAAP), which excludes:
- Gain on sale, net, of $29.7 million due to the sale of Rocky Mountain Bank branches in Montana.
- Loss on security sales of $9.5 million.
- Loss on fixed assets of $2.9 million due to branch closures and write-downs on properties listed for sale.
Common equity to total assets increased to 11.11%; while the tangible common equity ratio (non-GAAP) improved 86 basis points to 8.14%.
Net interest margin, full tax-equivalent (non-GAAP) increased to 3.78% for the quarter ended September 30, 2024 up from 3.73% for the quarter ended June 30, 2024.
Nonperforming loans were $69.9 million or 0.61% of total loans, a decrease of $33.8 million or 33% from the quarter ended June 30, 2024.
- Charge-offs of $32.1 million, of which the majority have been reserved for in prior periods, were recorded for the third quarter.

	For the Quarter Ended									For the Nine Months Ended September 30,
	9/30/2024			6/30/2024			9/30/2023			2024			2023
Earnings Summary:
Net income/(loss) available to common stockholders (in millions)	$	62.1		$	37.7		$	46.1		$	149.6		$	144.2
Diluted earnings/(loss) per common share		1.44			0.88			1.08			3.47			3.37
Annualized return on average assets		1.38	%		0.84	%		0.94	%		1.10	%		1.00	%
Annualized return on average common equity		12.60			8.14			10.47			10.59			11.28
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾		18.32			12.28			16.32			15.77			17.82
Net interest margin		3.73			3.68			3.14			3.65			3.23
Net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾		3.78			3.73			3.18			3.69			3.27
Efficiency ratio		48.58			65.69			63.77			58.94			61.86
Adjusted efficiency ratio, fully-tax equivalent (non-GAAP)⁽¹⁾		57.98			57.73			59.95			58.16			58.98

Adjusted Earnings Summary (1):
Adjusted earnings available to common stockholders (in millions)	$	50.6		$	49.6		$	48.1		$	152.7		$	148.3
Adjusted diluted earnings per common share		1.17			1.15			1.12			3.54			3.47
Adjusted annualized return on average assets		1.14	%		1.09	%		0.98	%		1.12	%		1.02	%
Adjusted annualized return on average common equity		10.27			10.71			10.92			10.81			11.60
Adjusted annualized return on average tangible common equity		14.98			16.05			17.02			16.09			18.31

(1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.

“HTLF delivered a solid third quarter. Net interest margin increased as we continue to pay down high cost wholesale deposits. Our tangible common equity ratio improved to 8.14%. In July we completed the strategic sale of Rocky Mountain Bank in Montana, resulting in a net gain of $29.7 million. We continue to work closely with our partners at UMB on integration planning for our two companies and we’re excited about closing the transaction, expected in Q1 2025.”

Bruce K. Lee, President and Chief Executive Officer, HTLF

DENVER, Oct. 29, 2024 (GLOBE NEWSWIRE) — Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023:

Net income available to common stockholders of $62.1 million compared to $46.1 million, an increase of $16.1 million or 35%.
Earnings per diluted common share of $1.44 compared to $1.08, an increase of $0.36 or 33%.
Adjusted earnings available to common stockholders⁽¹⁾ of $50.6 million or $1.17 per diluted common share compared to $48.1 million or $1.12 per diluted common share, which excludes:
- Gain on sale, net, of $29.7 million due to the sale of Rocky Mountain Bank branches in Montana.
- Loss on security sales of $9.5 million.
- Loss on fixed assets of $2.9 million due to branch closures and write-downs on properties listed for sale.
Net interest income of $157.9 million compared to $145.8 million, an increase of $12.1 million or 8%.
Annualized return on average assets of 1.38% compared to 0.94%. Adjusted annualized return on average assets⁽¹⁾ of 1.14% compared to 0.98%.
Annualized return on average common equity of 12.60% compared to 10.47%. Adjusted annualized return on average common equity⁽¹⁾ of 10.27% compared to 10.92%.
Annualized return on average tangible common equity⁽¹⁾ of 18.32% compared to 16.32%. Adjusted annualized return on average tangible common equity⁽¹⁾ of 14.98% compared to 17.02%.

Rocky Mountain Bank Sale

HTLF Bank closed on the sale of the Rocky Mountain Bank branches in Montana in mid-July to two purchasers, which included loans of $343.8 million, deposits of $531.9 million and fixed assets of $13.8 million. The gain on sale, net, of $29.7 million was realized in the third quarter of 2024.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.73% (3.78% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2024 compared to 3.68% (3.73% on a fully tax-equivalent basis, non-GAAP) for the second quarter of 2024, and 3.14% (3.18% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2023.

Total interest income and average earning asset changes for the third quarter of 2024 compared to the third quarter of 2023 were:

Total interest income was $253.8 million compared to $245.4 million, an increase of $8.4 million or 3%, primarily attributable to an increase in yields on average earning assets. During the third quarter of 2024, HTLF recorded $5.3 million in additional interest income for a security that paid off.
Total interest income on a tax-equivalent basis (non-GAAP) was $255.8 million, an increase of $8.2 million or 3%, from $247.6 million. Subsequent to September 30, 2024, the fair value hedges were terminated in favorable market conditions in early October. HTLF recorded $10.3 million of interest income associated with the fair value hedges in the third quarter of 2024 in comparison to $5.6 million in the third quarter of 2023. As a result of the fair value hedge terminations, no additional interest income will be recorded.
Average earning assets decreased $1.60 billion or 9% to $16.84 billion compared to $18.44 billion, primarily due to the sale of $865.4 million of securities during the fourth quarter of 2023, $108.4 million of securities sold during the second quarter of 2024, and $40.3 million of securities sold during the third quarter of 2024. The proceeds were utilized to pay down high-cost wholesale deposits and borrowings.
The average rate on earning assets increased 71 basis points to 6.04% from 5.33%, primarily due to recent interest rate increases on earning assets.

Total interest expense and average interest-bearing liability changes for the third quarter of 2024 compared to the third quarter of 2023 were:

Total interest expense was $95.9 million, a decrease of $3.8 million from $99.7 million, primarily due to a decrease in average interest-bearing liabilities.
The average interest rate paid on interest-bearing liabilities increased 17 basis points to 3.18% from 3.01%.
Average interest-bearing deposits decreased $1.65 billion or 13% to $11.03 billion from $12.68 billion.
The average interest rate paid on interest-bearing deposits decreased 4 basis points to 2.86% from 2.90%.
Average borrowings and term debt increased $478.2 million to $953.9 million from $475.7 million, and the average interest rate paid on borrowings decreased 40 basis points to 5.39% from 5.78%.

Net interest income changes for the third quarter of 2024 compared to the third quarter of 2023 were:

Net interest income totaled $157.9 million compared to $145.8 million, an increase of $12.1 million or 8%.
Net interest income on a tax-equivalent basis (non-GAAP) totaled $159.9 million compared to $147.9 million, an increase of $12.0 million or 8%.

Noninterest Income and Noninterest Expense

Total noninterest income was $19.0 million during the third quarter of 2024 compared to $28.4 million during the third quarter of 2023, a decrease of $9.4 million or 33%. Significant changes within the noninterest income category for the third quarter of 2024 compared to the third quarter of 2023 were:

Service charges and fees decreased $1.5 million or 8% to $17.1 million from $18.6 million, primarily attributable to a decrease in consumer NSF and overdraft fees. In the fourth quarter of 2023, HTLF instituted a new fee policy across our single charter customer base in response to industry changes related to consumer overdraft fees.
Net security losses increased $9.4 million to $9.5 million compared to net security losses of $114,000.
Net gains on sales of loans held for sale decreased to $0 from $905,000, due to HTLF ceasing originations of residential mortgage loans to be sold to the secondary market.
Other noninterest income increased $957,000 to $1.6 million from $619,000, primarily due to an increase in deferred compensation income of $1.0 million to $1.5 million from $433,000.

Total noninterest expense was $85.9 million during the third quarter of 2024 compared to $111.1 million during the third quarter of 2023, a decrease of $25.1 million or 23%. Significant changes within the noninterest expense category for the third quarter of 2024 compared to the third quarter of 2023 were:

Salaries and employee benefits totaled $62.7 million compared to $62.3 million, an increase of $480,000 or 1%. The increase was attributable to higher benefit costs including incentive compensation and benefit expenses partially offset by a reduction of full-time equivalent employees. Full-time equivalent employees totaled 1,725 compared to 1,965, a decrease of 240 or 12%.
Professional fees totaled $17.4 million compared to $13.6 million, an increase of $3.8 million or 28%, primarily due to an increase legal expenses, including those associated with special asset loans.
Gain on sale of assets, net, totaled $26.4 million compared to a loss on sale of assets of $108,000. As discussed earlier, Rocky Mountain Bank, a division of HTLF Bank, was sold during the third quarter of 2024 which generated a gain on sale, net, of $29.7 million.

The effective tax rate was 24.25% for the third quarter of 2024 compared to 21.89% for third quarter of 2023. The following items impacted the third quarter 2024 and 2023 tax calculations:

Various tax credits of $629,000 compared to $1.6 million.
Tax-exempt interest income as a percentage of pre-tax income of 8.92% compared to 13.14%.
Tax benefit of $140,000 compared to a tax expense of $41,000 resulting from the vesting of restricted stock units.
Tax expense of $1.1 million compared to $1.6 million resulting from the disallowed interest expense related to tax-exempt loans and securities.

Total Assets, Total Loans and Total Deposits

Total assets were $18.27 billion at September 30, 2024, compared to $18.81 billion at June 30, 2024, and $19.41 billion at December 31, 2023. Total assets decreased $540.1 million or 3% during the third quarter of 2024 and $1.14 billion or 6% since year-end 2023. Securities represented 27% and 29% of total assets at September 30, 2024, and December 31, 2023, respectively.

Total loans held to maturity were $11.44 billion at September 30, 2024, compared to $11.61 billion at June 30, 2024, and $12.07 billion at December 31, 2023. Loans decreased $167.4 million or 1% during the third quarter of 2024 and $627.7 million or 5% since year-end 2023. Excluding the impact of Rocky Mountain Bank, loans held to maturity decreased $172.4 million or 1% during the third quarter of 2024 and decreased $284.0 million or 2% since year-end 2023.

Significant changes by loan category at September 30, 2024 compared to June 30, 2024 included:

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, decreased $262.7 million or 4% to $5.99 billion compared to $6.26 billion. Excluding the impact of Rocky Mountain Bank, commercial and business lending decreased $119.4 million or 2%.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, decreased $3.3 million, or less than 1%, to $3.58 billion compared to $3.58 billion. Excluding the impact of Rocky Mountain Bank, commercial real estate lending increased $67.0 million or 2%.
Agricultural and agricultural real estate loans decreased $167.2 million or 19% to $701.2 million compared to $868.4 million. Excluding the impact of Rocky Mountain Bank, agricultural and agricultural real estate loans decreased $99.9 million or 12%.
Residential mortgage loans decreased $56.7 million or 7% to $708.0 million compared to $764.7 million. Excluding the impact of Rocky Mountain Bank, residential mortgage loans decreased $25.7 million or 3%.

Significant changes by loan category at September 30, 2024 compared to December 31, 2023 included:

Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, decreased $298.6 million or 5% to $5.99 billion compared to $6.29 billion. Excluding the Rocky Mountain Bank loans sold of $143.3 million, commercial and business lending decreased $155.3 million or 2%.
Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $9.9 million or less than 1% to $3.58 billion compared to $3.57 billion. Excluding the Rocky Mountain Bank loans sold of $70.3 million, commercial real estate lending increased $80.2 million or 2%.
Agricultural and agricultural real estate loans decreased $218.0 million or 24% to $701.2 million compared to $919.2 million. Excluding the Rocky Mountain Bank loans sold of $67.3 million, agricultural and agricultural real estate loans decreased $150.7 million or 16%.
Residential mortgage loans decreased $89.8 million or 11% to $708.0 million compared to $797.8 million. Excluding the Rocky Mountain Bank loans sold of $31.0 million, residential mortgage loans decreased $58.9 million or 7%.

Total deposits were $14.95 billion as of September 30, 2024, compared to $14.96 billion as of June 30, 2024, a decrease of $3.4 million or less than 1%. Total deposits were $14.95 billion as of September 30, 2024, compared to $16.20 billion at December 31, 2023, which was a decrease of $1.25 billion or 8%. Excluding the impact of Rocky Mountain Bank, deposits decreased $9.8 million or less than 1% during the third quarter of 2024 and decreased $716.6 million or 4% since year-end 2023.

Total customer deposits were $14.35 billion as of September 30, 2024, compared to $14.13 billion at June 30, 2024, an increase of $217.6 million or 2%. Excluding the impact of Rocky Mountain Bank, customer deposits increased $211.2 million or 1%. Significant customer deposit changes by category at September 30, 2024, compared to June 30, 2024, included:

Customer demand deposits decreased $367.6 million or 8% to $4.01 billion compared to $4.38 billion. Excluding the impact of Rocky Mountain Bank, customer demand deposits decreased $235.9 million or 6%.
Customer savings deposits increased $270.0 million or 3% to $8.71 billion compared to $8.44 billion. Excluding the impact of Rocky Mountain Bank, customer savings deposits increased $554.4 million or 7%.
Customer time deposits decreased $223.1 million or 12% to $1.63 billion compared to $1.85 billion. Excluding the impact of Rocky Mountain Bank, customer time deposits decreased $107.3 million or 6%.

Total customer deposits were $14.35 billion as of September 30, 2024, compared to $14.86 billion at December 31, 2023, a decrease of $505.1 million or 3%. Excluding the Rocky Mountain Bank customer deposits sold of $531.9 million, customer deposits increased $26.7 million. Significant customer deposit changes by category at September 30, 2024, compared to December 31, 2023, included:

Customer demand deposits decreased $491.1 million or 11% to $4.01 billion compared to $4.50 billion. Excluding the Rocky Mountain Bank customer demand deposits sold of $131.7 million, customer demand deposits decreased $359.3 million or 8%.
Customer savings deposits increased $302.0 million or 4% to $8.71 billion compared to $8.41 billion. Excluding the Rocky Mountain Bank customer savings deposits sold of $284.3 million, customer savings deposits increased $586.3 million or 7%.
Customer time deposits decreased $316.0 million or 16% to $1.63 billion compared to $1.94 billion. Excluding the Rocky Mountain Bank customer time deposits sold of $115.8 million, customer time deposits decreased $200.2 million or 10%.

Total wholesale and institutional deposits were $601.9 million as of September 30, 2024, a decrease of $221.0 million or 27% from $822.9 million at June 30, 2024. Significant wholesale and institutional deposit changes by category at September 30, 2024 compared to June 30, 2024 included:

Wholesale and institutional savings deposits decreased $105.7 million or 33% to $213.0 million compared to $318.6 million.
Wholesale time deposits decreased $115.3 million or 23% to $389.0 million compared to $504.3 million.

Total wholesale and institutional deposits were $601.9 million as of September 30, 2024, which was a decrease of $743.4 million or 55% from $1.35 billion at December 31, 2023. Significant wholesale and institutional deposit changes by category at September 30, 2024 compared to December 31, 2023 included:

Wholesale and institutional savings deposits decreased $181.4 million or 46% to $213.0 million compared to $394.4 million.
Wholesale time deposits decreased $562.0 million or 59% to $389.0 million compared to $950.9 million.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the third quarter of 2024 was $8.9 million, an increase of $6.2 million from $2.7 million recorded in the third quarter of 2023.

The allowance for credit losses for loans totaled $106.8 million at September 30, 2024 and $122.6 million at December 31, 2023. The following items impacted the allowance for credit losses for loans at September 30, 2024:

Provision expense for the nine months ended September 30, 2024, totaled $22.3 million. Provision expense was primarily impacted in the third quarter of 2024 by a nonperforming food manufacturing syndication loan currently in bankruptcy proceedings. HTLF recorded a charge-off of $19.2 million for this credit during the third quarter of 2024, of which $10.0 million was reserved for in a prior period.
Net charge-offs of $38.0 million, of which the majority have been reserved for in prior periods, were recorded for the first nine months of 2024.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments decreased $6.0 million or 36% to $10.5 million at September 30, 2024, from $16.5 million at December 31, 2023. The following impacted HTLF’s allowance for credit losses for unfunded commitments during 2024:

Provision benefit for the nine months ended September 30, 2024, totaled $6.0 million.
Reduction of $82.9 million in unfunded commitments for construction loans, which carry the highest loss rate.
Total unfunded commitments decreased $684.5 million or 15% to $3.94 billion at September 30, 2024 compared to $4.63 billion at December 31, 2023.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $6.3 million for the third quarter of 2024 compared to $1.5 million for the third quarter of 2023. The total allowance for lending related credit losses was $117.3 million or 1.02% of total loans at September 30, 2024, compared to $139.0 million or 1.15% of total loans as of December 31, 2023.

Nonperforming Assets

Nonperforming assets were $76.8 million or 0.42% of total assets at September 30, 2024, compared to $110.5 million or 0.57% of total assets at December 31, 2023. Nonperforming assets were reduced by charge-offs of $32.1 million and the return to performing status of a $10.4 million owner occupied commercial real estate loan relationship. The reduction was partially offset by the addition of a $10.1 million non-owner commercial real estate loan relationship. Nonperforming loans were $69.9 million or 0.61% of total loans at September 30, 2024, compared to $97.9 million or 0.81% of total loans at December 31, 2023. At September 30, 2024, loans delinquent 30-89 days were 0.26% of total loans compared to 0.09% of total loans at December 31, 2023. The increase in the 30-89 day delinquencies was due to a single $12.8 million real estate construction loan. Other real estate owned, net, decreased $5.7 million or 46% to $6.8 million at September 30, 2024 from $12.5 million at December 31, 2023.

Non-GAAP Financial Measures

This earnings release contains references to financial measures which are not defined by generally accepted accounting principles (“GAAP”). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate the company’s financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this earnings release with other companies’ non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this earnings release.

Below are the non-GAAP measures included in this earnings release, management’s reason for including each measure and the method of calculating each measure:

Adjusted earnings available to common stockholders and adjusted diluted earnings per common share, adjust net income for the gain/loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes these measures enhance the comparability net income available to common stockholders as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
Adjusted annualized return on average assets, adjusts net income for the gain/loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
Adjusted efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. Net interest margin, fully tax equivalent, is net interest income adjusted for the tax-favored status of certain loans and securities divided by average earning assets.
Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
Adjusted annualized return on average common equity, adjusts net income for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
Adjusted annualized return on average tangible common equity, adjusts net income available to common stockholders for the loss from sale of securities, and other non-operating expenses as well as the tax effect of those transactions. Management believes this measure enhances the comparability of annualized return on average assets as it reflects adjustments commonly made by management, investors and analysts to evaluate the ongoing operations and enhance comparability with the results of prior periods.
Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.

About HTLF

Heartland Financial USA, Inc., is a Denver, Colorado-based bank holding company operating under the brand name HTLF, with assets of $18.27 billion as of September 30, 2024. HTLF’s banks serve customers in the West, Southwest and Midwest regions. HTLF is committed to serving the banking needs of privately owned businesses, their owners, executives and employees. Our core commercial business is supported by a strong retail banking operation, in addition to a diversified line of financial services including treasury management, wealth management and investments. Additional information is available at www.htlf.com.

Safe Harbor Statement

This release (including any information incorporated herein by reference), and future oral and written statements of the company and its management, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.

Any statements about the company’s expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of the company’s operations or performance. These forward-looking statements are generally identified by the use of the words such as “believe”, “expect”, “intent”, “anticipate”, “plan”, “intend”, “estimate”, “project”, “may”, “will”, “would”, “could”, “should”, “may”, “view”, “opportunity”, “potential”, or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of the company and its management. Although the company may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of the company to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which the company currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF’s reports filed with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section under Item 1A of Part I of the company’s Annual Report on Form 10-K for the year ended December 31, 2023 and updates in HTLF’s Forms 10-Q filed thereafter, and include, among others:

Economic and Market Conditions Risks, including risks related to the deterioration of the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, pandemics and governmental measures addressing them, climate change and climate-related regulations, persistent inflation, higher interest rates, supply chain issues, labor shortages, terrorist threats or acts of war;
Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF’s borrowers, changes in asset and collateral values due to climate and other borrower industry risks, which may impact the provision for credit losses and net charge-offs;
Liquidity and Interest Rate Risks, including the impact of capital market conditions, rising interest rates and changes in monetary policy on our borrowings and net interest income;
Risks related to the planned merger with UMB Financial Corporation (the “Merger”), the fluctuation of the market value of the merger consideration, risks related to combining our businesses, including expenses related to the Merger and integration of the combined entity, risks that the Merger may not occur, and the risk of litigation related to the Merger;
Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
Strategic and External Risks, including economic, political, and competitive forces impacting our business;
Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect HTLF’s business, financial condition and results of operations. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to or correct or update any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF’s financial results, is included in HTLF’s filings with the SEC.

-FINANCIAL TABLES FOLLOW-

CONTACT:

Kevin L. Thompson

Executive Vice President

Chief Financial Officer

(563) 589-1994

kthompson@htlf.com

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
		2024			2023			2024			2023
Interest Income
Interest and fees on loans	$	192,506		$	182,394		$	587,328		$	505,136
Interest on securities:
Taxable		51,116			54,800			145,511			168,948
Nontaxable		5,979			6,584			18,062			18,990
Interest on federal funds sold		—			3			—			3
Interest on deposits with other banks and short-term investments		4,193			1,651			10,244			4,833
Total Interest Income		253,794			245,432			761,145			697,910
Interest Expense
Interest on deposits		82,976			92,744			247,609			231,617
Interest on borrowings		7,378			1,167			25,727			4,437
Interest on term debt		5,543			5,765			16,956			16,756
Total Interest Expense		95,897			99,676			290,292			252,810
Net Interest Income		157,897			145,756			470,853			445,100
Provision for credit losses		6,276			1,516			16,270			9,969
Net Interest Income After Provision for Credit Losses		151,621			144,240			454,583			435,131
Noninterest Income
Service charges and fees		17,100			18,553			51,127			55,316
Loan servicing income		111			278			349			1,403
Trust fees		5,272			4,734			15,847			15,810
Brokerage and insurance commissions		853			692			2,501			2,065
Capital markets fees		2,116			1,845			5,003			8,331
Securities gains (losses), net		(9,520	)		(114	)		(19,573	)		(1,532	)
Unrealized gain on equity securities, net		377			13			605			165
Net gains on sale of loans held for sale		—			905			104			3,786
Income on bank owned life insurance		1,107			858			3,610			3,042
Other noninterest income		1,576			619			5,289			2,489
Total Noninterest Income		18,992			28,383			64,862			90,875
Noninterest Expense
Salaries and employee benefits		62,742			62,262			191,817			186,510
Occupancy		6,318			6,438			19,843			20,338
Furniture and equipment		2,062			2,720			6,554			8,698
Professional fees		17,448			13,616			48,351			41,607
FDIC insurance assessments		3,035			3,313			11,344			9,627
Advertising		1,937			1,633			4,663			6,670
Core deposit intangibles amortization		1,345			1,625			4,258			5,128
Other real estate and loan collection expenses, net		395			481			1,422			984
(Gain) loss on sales/valuations of assets, net		(26,419	)		108			(26,012	)		(2,149	)
Acquisition, integration and restructuring costs		2,026			2,429			9,374			5,994
Partnership investment in tax credit projects		222			1,136			938			1,828
Other noninterest expense		14,816			15,292			43,214			46,307
Total Noninterest Expense		85,927			111,053			315,766			331,542
Income Before Income Taxes		84,686			61,570			203,679			194,464
Income taxes		20,533			13,479			48,077			44,181
Net Income/(Loss)		64,153			48,091			155,602			150,283
Preferred dividends		(2,013	)		(2,013	)		(6,038	)		(6,038	)
Net Income/(Loss) Available to Common Stockholders	$	62,140		$	46,078		$	149,564		$	144,245
Earnings/(loss) per common share-diluted	$	1.44		$	1.08		$	3.47		$	3.37
Weighted average shares outstanding-diluted		43,195,257			42,812,563			43,080,422			42,769,872

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Interest Income
Interest and fees on loans	$	192,506		$	199,161		$	195,661		$	192,861		$	182,394
Interest on securities:
Taxable		51,116			47,381			47,014			54,573			54,800
Nontaxable		5,979			6,042			6,041			6,278			6,584
Interest on federal funds sold		—			—			—			—			3
Interest on deposits with other banks and short-term investments		4,193			3,045			3,006			2,174			1,651
Total Interest Income		253,794			255,629			251,722			255,886			245,432
Interest Expense
Interest on deposits		82,976			80,499			84,134			88,071			92,744
Interest on borrowings		7,378			10,825			7,524			5,874			1,167
Interest on term debt		5,543			5,564			5,849			5,804			5,765
Total Interest Expense		95,897			96,888			97,507			99,749			99,676
Net Interest Income		157,897			158,741			154,215			156,137			145,756
Provision for credit losses		6,276			9,008			986			11,738			1,516
Net Interest Income After Provision for Credit Losses		151,621			149,733			153,229			144,399			144,240
Noninterest Income
Service charges and fees		17,100			16,964			17,063			18,708			18,553
Loan servicing income		111			107			131			158			278
Trust fees		5,272			5,532			5,043			4,905			4,734
Brokerage and insurance commissions		853			894			754			729			692
Capital markets fees		2,116			1,996			891			1,676			1,845
Securities gains (losses), net		(9,520	)		(10,111	)		58			(140,007	)		(114	)
Unrealized gain on equity securities, net		377			133			95			75			13
Net gains on sale of loans held for sale		—			—			104			94			905
Income on bank owned life insurance		1,107			1,326			1,177			729			858
Other noninterest income		1,576			1,366			2,347			1,132			619
Total Noninterest Income		18,992			18,207			27,663			(111,801	)		28,383
Noninterest Expense
Salaries and employee benefits		62,742			65,120			63,955			64,766			62,262
Occupancy		6,318			6,262			7,263			6,509			6,438
Furniture and equipment		2,062			2,155			2,337			2,901			2,720
Professional fees		17,448			15,372			15,531			17,060			13,616
FDIC insurance assessments		3,035			3,340			4,969			10,313			3,313
Advertising		1,937			1,368			1,358			1,677			1,633
Core deposit intangibles amortization		1,345			1,421			1,492			1,611			1,625
Other real estate and loan collection expenses, net		395			515			512			505			481
(Gain) loss on sales/valuations of assets, net		(26,419	)		193			214			2,072			108
Acquisition, integration and restructuring costs		2,026			5,973			1,375			4,365			2,429
Partnership investment in tax credit projects		222			222			494			3,573			1,136
Other noninterest expense		14,816			14,303			14,095			14,933			15,292
Total Noninterest Expense		85,927			116,244			113,595			130,285			111,053
Income Before Income Taxes		84,686			51,696			67,297			(97,687	)		61,570
Income taxes		20,533			11,954			15,590			(27,324	)		13,479
Net Income/(Loss)		64,153			39,742			51,707			(70,363	)		48,091
Preferred dividends		(2,013	)		(2,012	)		(2,013	)		(2,012	)		(2,013	)
Net Income/(Loss) Available to Common Stockholders	$	62,140		$	37,730		$	49,694		$	(72,375	)	$	46,078
Earnings/(loss) per common share-diluted	$	1.44		$	0.88		$	1.16		$	(1.69	)	$	1.08
Weighted average shares outstanding-diluted		43,195,257			43,060,354			42,915,768			42,838,405			42,812,563

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Assets
Cash and due from banks	$	228,719		$	226,735		$	208,176		$	275,554		$	248,756
Interest-bearing deposits with other banks and short-term investments		359,675			147,211			236,190			47,459			99,239
Cash and cash equivalents		588,394			373,946			444,366			323,013			347,995
Time deposits in other financial institutions		1,050			1,340			1,240			1,240			1,490
Securities:
Carried at fair value		4,057,335			4,185,054			4,418,222			4,646,891			5,482,687
Held to maturity, at cost		839,623			842,980			841,055			838,241			835,468
Other investments, at cost		69,511			70,684			68,524			91,277			90,001
Loans held for sale		—			348,761			352,744			5,071			6,262
Loans:
Held to maturity		11,440,917			11,608,309			11,644,641			12,068,645			11,872,436
Allowance for credit losses		(106,797	)		(126,861	)		(123,934	)		(122,566	)		(110,208	)
Loans, net		11,334,120			11,481,448			11,520,707			11,946,079			11,762,228
Premises, furniture and equipment, net		155,140			175,953			176,582			181,070			187,436
Goodwill		576,005			576,005			576,005			576,005			576,005
Core deposit intangibles, net		14,157			15,501			16,923			18,415			20,026
Cash surrender value on life insurance		199,998			199,036			197,671			197,085			196,694
Other real estate, net		6,805			7,533			2,590			12,548			14,362
Other assets		430,155			534,429			516,198			574,772			609,139
Total Assets	$	18,272,293		$	18,812,670		$	19,132,827		$	19,411,707		$	20,129,793
Liabilities and Equity
Liabilities
Deposits:
Demand	$	4,009,218		$	4,244,169		$	4,264,390		$	4,500,304		$	4,792,813
Savings		8,926,192			8,470,416			8,669,221			8,805,597			8,754,911
Time		2,017,806			2,242,005			2,368,555			2,895,813			3,553,269
Total deposits		14,953,216			14,956,590			15,302,166			16,201,714			17,100,993
Deposits held for sale		—			538,308			596,328			—			—
Borrowings		546,219			694,909			650,033			622,255			392,634
Term debt		373,324			372,988			372,652			372,396			372,059
Accrued expenses and other liabilities		259,161			222,025			232,815			282,225			438,577
Total Liabilities		16,131,920			16,784,820			17,153,994			17,478,590			18,304,263
Stockholders’ Equity
Preferred equity		110,705			110,705			110,705			110,705			110,705
Common stock		42,884			42,852			42,784			42,688			42,656
Capital surplus		1,098,837			1,096,619			1,093,207			1,090,740			1,088,267
Retained earnings		1,252,247			1,203,092			1,178,330			1,141,501			1,226,740
Accumulated other comprehensive income/(loss)		(364,300	)		(425,418	)		(446,193	)		(452,517	)		(642,838	)
Total Equity		2,140,373			2,027,850			1,978,833			1,933,117			1,825,530
Total Liabilities and Equity	$	18,272,293		$	18,812,670		$	19,132,827		$	19,411,707		$	20,129,793

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Average Balances
Assets	$	18,439,910		$	19,043,362		$	19,296,638		$	19,667,825		$	20,207,920
Loans, net of unearned		11,584,999			12,010,289			12,021,930			11,938,272			11,800,064
Total deposits		15,148,944			15,562,920			16,042,402			16,709,394			17,507,813
Customer deposits		14,347,965			14,768,407			14,816,652			14,969,948			14,699,235
Earning assets		16,838,131			17,331,435			17,597,068			17,853,957			18,439,010
Interest-bearing liabilities		11,986,220			12,461,957			12,607,745			12,721,680			13,158,631
Common equity		1,962,334			1,863,236			1,832,959			1,729,086			1,746,818
Total stockholders’ equity		2,073,039			1,973,941			1,943,664			1,839,791			1,857,523
Tangible common equity (non-GAAP)⁽¹⁾		1,371,515			1,271,046			1,239,313			1,133,888			1,149,992

Key Performance Ratios
Annualized return on average assets		1.38	%		0.84	%		1.08	%	(1.42		)%		0.94	%
Adjusted annualized return on average assets (non-GAAP)⁽¹⁾		1.14			1.09			1.13			0.96			0.98
Annualized return on average common equity (GAAP)		12.60			8.14			10.90			(16.61	)		10.47
Adjusted annualized return on average common equity (non-GAAP)⁽¹⁾		10.27			10.71			11.50			10.46			10.92
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾		18.32			12.28			16.49			(24.89	)		16.32
Adjusted annualized return on average tangible common equity (non-GAAP)⁽¹⁾		14.98			16.05			17.38			16.38			17.02
Annualized ratio of net charge-offs/(recoveries) to average loans		0.99			0.23			0.08			0.01			0.12
Annualized net interest margin (GAAP)		3.73			3.68			3.52			3.47			3.14
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾		3.78			3.73			3.57			3.52			3.18
Annualized cost of deposits		2.18			2.08			2.11			2.09			2.10
Efficiency ratio (GAAP)		48.58			65.69			62.46			293.86			63.77
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾		57.98			57.73			58.77			59.31			59.95
Annualized ratio of total noninterest expenses to average assets (GAAP)		1.85			2.46			2.37			2.63			2.18
Annualized ratio of core expenses to average assets (non-GAAP)⁽¹⁾		2.35			2.30			2.25			2.23			2.08

	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
		2024			2023			2024			2023
Average Balances
Assets	$	18,439,910		$	20,207,920		$	18,924,862		$	20,182,808
Loans, net of unearned		11,584,999			11,800,064			11,871,358			11,602,741
Total deposits		15,148,944			17,507,813			15,583,165			17,567,614
Customer deposits		14,347,965			14,699,235			14,642,347			14,778,030
Earning assets		16,838,131			18,439,010			17,254,023			18,451,907
Interest-bearing liabilities		11,986,220			13,158,631			12,350,640			12,985,665
Common equity		1,962,334			1,746,818			1,886,454			1,710,230
Total stockholders’ equity		2,073,039			1,857,523			1,997,159			1,820,935
Tangible common equity (non-GAAP)(1)		1,371,515			1,149,992			1,294,241			1,111,724

Key Performance Ratios
Annualized return on average assets		1.38	%		0.94	%		1.10	%		1.00	%
Adjusted annualized return on average assets (non-GAAP)⁽¹⁾		1.14			0.98			1.12			1.02
Annualized return on average common equity (GAAP)		12.60			10.47			10.59			11.28
Adjusted annualized return on average common equity (non-GAAP)⁽¹⁾		10.27			10.92			10.81			11.60
Annualized return on average tangible common equity (non-GAAP)⁽¹⁾		18.32			16.32			15.77			17.82
Adjusted annualized return on average tangible common equity (non-GAAP)⁽¹⁾		14.98			17.02			16.09			18.31
Annualized ratio of net charge-offs/(recoveries) to average loans		0.99			0.12			0.43			0.14
Annualized net interest margin (GAAP)		3.73			3.14			3.65			3.23
Annualized net interest margin, fully tax-equivalent (non-GAAP)⁽¹⁾		3.78			3.18			3.69			3.27
Annualized cost of deposits		2.18			2.10			2.12			1.76
Efficiency ratio (GAAP)		48.58			63.77			58.94			61.86
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)⁽¹⁾		57.98			59.95			58.16			58.98
Annualized ratio of total noninterest expenses to average assets (GAAP)		1.85			2.18			2.23			2.20
Annualized ratio of core expenses to average assets (non-GAAP)⁽¹⁾		2.35			2.08			2.30			2.12

(1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
	As of and for the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Common Share Data
Book value per common share	$	47.33		$	44.74		$	43.66		$	42.69		$	40.20
Tangible book value per common share (non-GAAP)⁽¹⁾		33.57			30.94			29.81			28.77			26.23
ASC 320 effect on book value per common share		(8.78	)		(10.82	)		(11.18	)		(11.00	)		(16.27	)

Common shares outstanding, net of treasury stock		42,883,865			42,852,180			42,783,670			42,688,008			42,656,303

Capital Ratios
Common equity to total assets		11.11	%		10.19	%		9.76	%		9.39	%		8.52	%
Tangible common equity ratio (non-GAAP)⁽¹⁾		8.14			7.28			6.88			6.53			5.73
Tier 1 leverage ratio		10.77			10.13			9.84			9.44			9.59
Common equity tier 1 ratio⁽²⁾		12.66			11.68			11.40			10.97			11.37
Total risk based capital ratio⁽²⁾		16.34			15.32			14.99			14.53			14.90

Other Selected Trend Information
Effective tax rate		24.25	%		23.12	%		23.17	%		27.97	%		21.89	%
Full time equivalent employees		1,725			1,843			1,888			1,970			1,965

Loans Held to Maturity
Commercial and industrial	$	3,503,093		$	3,541,239		$	3,545,051		$	3,652,047		$	3,591,809
Paycheck Protection Program (“PPP”)		1,582			1,864			2,172			2,777			3,750
Owner occupied commercial real estate		2,489,697			2,555,964			2,545,033			2,638,175			2,429,659
Commercial and business lending		5,994,372			6,099,067			6,092,256			6,292,999			6,025,218
Non-owner occupied commercial real estate		2,455,396			2,434,258			2,495,068			2,553,711			2,656,358
Real estate construction		1,119,922			1,082,726			1,041,583			1,011,716			1,029,554
Commercial real estate lending		3,575,318			3,516,984			3,536,651			3,565,427			3,685,912
Total commercial lending		9,569,690			9,616,051			9,628,907			9,858,426			9,711,130
Agricultural and agricultural real estate		701,211			802,958			809,876			919,184			842,116
Residential mortgage		707,984			733,401			756,021			797,829			813,803
Consumer		462,032			455,899			449,837			493,206			505,387
Total loans held to maturity	$	11,440,917		$	11,608,309		$	11,644,641		$	12,068,645		$	11,872,436

Total unfunded loan commitments	$	3,941,268		$	4,381,565		$	4,537,718		$	4,625,768		$	4,813,798

Deposits
Demand-customer	$	4,009,218		$	4,244,169		$	4,264,390		$	4,500,304		$	4,792,813
Savings-customer		8,713,228			8,151,794			8,269,956			8,411,240			8,190,430
Savings-wholesale and institutional		212,964			318,622			399,265			394,357			564,481
Total savings		8,926,192			8,470,416			8,669,221			8,805,597			8,754,911
Time-customer		1,628,856			1,737,723			1,734,971			1,944,884			1,814,335
Time-wholesale		388,950			504,282			633,584			950,929			1,738,934
Total time		2,017,806			2,242,005			2,368,555			2,895,813			3,553,269
Total deposits	$	14,953,216		$	14,956,590		$	15,302,166		$	16,201,714		$	17,100,993

Total customer deposits	$	14,351,302		$	14,133,686		$	14,269,317		$	14,856,428		$	14,797,578
Total wholesale and institutional deposits		601,914			822,904			1,032,849			1,345,286			2,303,415
Total deposits	$	14,953,216		$	14,956,590		$	15,302,166		$	16,201,714		$	17,100,993

(1) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.
(2) September 30, 2024 calculation is preliminary.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	As of and for the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Allowance for Credit Losses-Loans
Balance, beginning of period	$	126,861		$	123,934		$	122,566		$	110,208		$	111,198
Provision for credit losses		8,871			9,737			3,668			12,750			2,672
Charge-offs		(32,137	)		(7,388	)		(4,093	)		(3,886	)		(3,964	)
Recoveries		3,202			578			1,793			3,494			302
Balance, end of period	$	106,797		$	126,861		$	123,934		$	122,566		$	110,208

Allowance for Unfunded Commitments
Balance, beginning of period	$	13,057		$	13,786		$	16,468		$	17,480		$	18,636
Provision for credit losses		(2,595	)		(729	)		(2,682	)		(1,012	)		(1,156	)
Balance, end of period	$	10,462		$	13,057		$	13,786		$	16,468		$	17,480

Allowance for lending related credit losses	$	117,259		$	139,918		$	137,720		$	139,034		$	127,688

Provision for Credit Losses
Provision for credit losses-loans	$	8,871		$	9,737		$	3,668		$	12,750		$	2,672
Provision for credit losses-unfunded commitments		(2,595	)		(729	)		(2,682	)		(1,012	)		(1,156	)
Total provision (benefit) for credit losses	$	6,276		$	9,008		$	986		$	11,738		$	1,516

Asset Quality
Nonaccrual loans	$	69,115		$	103,123		$	94,800		$	95,426		$	51,304
Loans past due ninety days or more		832			663			611			2,507			511
Other real estate owned		6,805			7,533			2,590			12,548			14,362
Other repossessed assets		—			—			—			—			1
Total nonperforming assets	$	76,752		$	111,319		$	98,001		$	110,481		$	66,178

Nonperforming Assets Activity
Balance, beginning of period	$	111,319		$	98,001		$	110,481		$	66,178		$	66,097
Net loan (charge-offs) recoveries		(28,935	)		(6,810	)		(2,300	)		(392	)		(3,662	)
New nonperforming loans		25,441			48,346			5,470			61,193			19,295
Reduction of nonperforming loans⁽¹⁾		(30,240	)		(28,050	)		(5,692	)		(14,278	)		(14,691	)
OREO/Repossessed assets sales proceeds		(833	)		(168	)		(9,958	)		(2,220	)		(861	)
Balance, end of period	$	76,752		$	111,319		$	98,001		$	110,481		$	66,178

Asset Quality Ratios
Ratio of nonperforming loans to total loans		0.61	%		0.89	%		0.82	%		0.81	%		0.44	%
Ratio of nonperforming assets to total assets		0.42			0.59			0.51			0.57			0.33
Annualized ratio of net loan charge-offs (recoveries) to average loans		0.99			0.23			0.08			0.01			0.12
Allowance for loan credit losses as a percent of loans		0.93			1.09			1.06			1.02			0.93
Allowance for lending related credit losses as a percent of loans		1.02			1.21			1.18			1.15			1.08
Allowance for loan credit losses as a percent of nonperforming loans		152.68			122.23			129.89			125.15			212.70
Loans delinquent 30-89 days as a percent of total loans		0.26			0.25			0.31			0.09			0.12

(1) Includes principal reductions, transfers to performing status and transfers to OREO.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Quarter Ended
	September 30, 2024							June 30, 2024							September 30, 2023
	Average Balance			Interest		Rate		Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	4,254,529		$	51,116	4.78	%	$	4,490,407		$	47,381	4.24	%	$	5,726,057		$	54,800	3.80	%
Nontaxable⁽¹⁾		768,483			7,313	3.79			759,234			7,383	3.91			881,162			8,085	3.64
Total securities		5,023,012			58,429	4.63			5,249,641			54,764	4.20			6,607,219			62,885	3.78
Interest on deposits with other banks and short-term investments		355,394			4,193	4.69			194,824			3,045	6.29			142,301			1,651	4.60
Federal funds sold		—			—	—			—			—	—			152			3	7.83
Loans:⁽²⁾
Commercial and industrial⁽¹⁾		3,531,206			65,972	7.43			3,638,004			69,469	7.68			3,610,677			63,001	6.92
PPP loans		1,759			5	1.13			2,242			7	1.26			3,948			11	1.11
Owner occupied commercial real estate		2,527,006			35,189	5.54			2,615,504			37,028	5.69			2,412,501			30,127	4.95
Non-owner occupied commercial real estate		2,474,036			39,536	6.36			2,519,346			39,272	6.27			2,586,011			38,779	5.95
Real estate construction		1,106,387			22,878	8.23			1,093,399			21,770	8.01			1,027,544			19,448	7.51
Agricultural and agricultural real estate		757,745			11,536	6.06			879,707			13,390	6.12			822,957			12,582	6.07
Residential real estate		725,901			9,110	4.99			776,821			9,454	4.89			827,402			9,482	4.55
Consumer		460,959			8,956	7.73			485,266			9,421	7.81			509,024			9,615	7.49
Less: allowance for credit losses		(125,274	)		—	—			(123,319	)		—	—			(110,726	)		—	—
Net loans		11,459,725			193,182	6.71			11,886,970			199,811	6.76			11,689,338			183,045	6.21
Total earning assets		16,838,131			255,804	6.04	%		17,331,435			257,620	5.98	%		18,439,010			247,584	5.33	%
Nonearning Assets		1,601,779							1,711,927							1,768,910
Total Assets	$	18,439,910						$	19,043,362						$	20,207,920
Interest-bearing Liabilities
Savings	$	8,842,494		$	59,307	2.67	%	$	8,834,746		$	55,440	2.52	%	$	8,737,581		$	49,195	2.23	%
Time deposits		2,189,861			23,669	4.30			2,372,653			25,059	4.25			3,945,371			43,549	4.38
Borrowings		580,707			7,378	5.05			881,738			10,825	4.94			103,567			1,167	4.47
Term debt		373,158			5,543	5.91			372,820			5,564	6.00			372,112			5,765	6.15
Total interest-bearing liabilities		11,986,220			95,897	3.18	%		12,461,957			96,888	3.13	%		13,158,631			99,676	3.01	%
Noninterest-bearing Liabilities
Noninterest-bearing deposits		4,116,589							4,355,521							4,824,861
Accrued interest and other liabilities		264,062							251,943							366,905
Total noninterest-bearing liabilities		4,380,651							4,607,464							5,191,766
Stockholders’ Equity		2,073,039							1,973,941							1,857,523
Total Liabilities and Stockholders’ Equity	$	18,439,910						$	19,043,362						$	20,207,920
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾				$	159,907						$	160,732						$	147,908
Net interest spread⁽¹⁾						2.86	%						2.85	%						2.32	%
Net interest income, fully tax-equivalent (non-GAAP^)(1)(3)to total earning assets						3.78	%						3.73	%						3.18	%
Interest-bearing liabilities to earning assets		71.18	%						71.90	%						71.36	%

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
	For the Nine Months Ended
	September 30, 2024							September 30, 2023
	Average Balance			Interest		Rate		Average Balance			Interest		Rate
Earning Assets
Securities:
Taxable	$	4,469,258		$	145,511	4.35	%	$	5,927,026		$	168,948	3.81	%
Nontaxable⁽¹⁾		768,782			22,079	3.84			899,613			23,611	3.51
Total securities		5,238,040			167,590	4.27			6,826,639			192,559	3.77
Interest on deposits with other banks and other short-term investments		268,122			10,244	5.10			133,910			4,833	4.83
Federal funds sold		—			—	—			51			3	7.86
Loans:⁽²⁾
Commercial and industrial⁽¹⁾		3,603,668			202,426	7.50			3,547,256			169,552	6.39
PPP loans		2,195			19	1.16			6,718			61	1.21
Owner occupied commercial real estate		2,583,886			107,734	5.57			2,355,545			84,927	4.82
Non-owner occupied commercial real estate		2,514,452			118,657	6.30			2,459,965			105,111	5.71
Real estate construction		1,087,280			65,497	8.05			1,051,298			56,107	7.14
Agricultural and agricultural real estate		838,395			38,682	6.16			835,673			36,191	5.79
Residential mortgage		764,515			28,699	5.01			840,143			28,138	4.48
Consumer		476,967			27,578	7.72			506,143			26,925	7.11
Less: allowance for credit losses-loans		(123,497	)		—	—			(111,434	)		—	—
Net loans		11,747,861			589,292	6.70			11,491,307			507,012	5.90
Total earning assets		17,254,023			767,126	5.94	%		18,451,907			704,407	5.10	%
Nonearning Assets		1,670,839							1,730,901
Total Assets	$	18,924,862						$	20,182,808
Interest-bearing Liabilities
Savings	$	8,828,973		$	169,414	2.56	%	$	9,130,980		$	128,372	1.88	%
Time deposits		2,447,293			78,195	4.27			3,344,434			103,245	4.13
Borrowings		701,548			25,727	4.90			138,157			4,437	4.29
Term debt		372,826			16,956	6.08			372,094			16,756	6.02
Total interest-bearing liabilities		12,350,640			290,292	3.14	%		12,985,665			252,810	2.60	%
Noninterest-bearing Liabilities
Noninterest-bearing deposits		4,306,899							5,092,200
Accrued interest and other liabilities		270,164							284,008
Total noninterest-bearing liabilities		4,577,063							5,376,208
Stockholders’ Equity		1,997,159							1,820,935
Total Liabilities and Stockholders’ Equity	$	18,924,862						$	20,182,808
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾				$	476,834						$	451,597
Net interest spread⁽¹⁾						2.80	%						2.50	%
Net interest income, fully tax-equivalent (non-GAAP)⁽¹⁾⁽³⁾to total earning assets						3.69	%						3.27	%
Interest-bearing liabilities to earning assets		71.58	%						70.38	%

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to “Non-GAAP Measures” in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
	For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
*Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)*
Earnings available to common stockholders (GAAP)	$	62,140		$	37,730		$	49,694		$	(72,375	)	$	46,078
Plus core deposit intangibles amortization, net of tax⁽²⁾		1,022			1,081			1,131			1,229			1,240
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	63,162		$	38,811		$	50,825		$	(71,146	)	$	47,318

Average common equity (GAAP)	$	1,962,334		$	1,863,236		$	1,832,959		$	1,729,086		$	1,746,818
Less average goodwill		576,005			576,005			576,005			576,005			576,005
Less average core deposit intangibles, net		14,814			16,185			17,641			19,193			20,821
Average tangible common equity (non-GAAP)	$	1,371,515		$	1,271,046		$	1,239,313		$	1,133,888		$	1,149,992
Annualized return on average common equity (GAAP)		12.60	%		8.14	%		10.90	%	(16.61		)%		10.47	%
Annualized return on average tangible common equity (non-GAAP)		18.32	%		12.28	%		16.49	%	(24.89		)%		16.32	%

*Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)*
Net Interest Income (GAAP)	$	157,897		$	158,741		$	154,215		$	156,137		$	145,756
Plus tax-equivalent adjustment⁽¹⁾		2,010			1,991			1,981			2,058			2,152
Net interest income, fully tax-equivalent (non-GAAP)	$	159,907		$	160,732		$	156,196		$	158,195		$	147,908

Average earning assets	$	16,838,131		$	17,331,435		$	17,597,068		$	17,853,957		$	18,439,010

Annualized net interest margin (GAAP)		3.73	%		3.68	%		3.52	%		3.47	%		3.14	%
Annualized net interest margin, fully tax-equivalent (non-GAAP)		3.78			3.73			3.57			3.52			3.18
Net purchase accounting discount amortization on loans included in annualized net interest margin		0.02			0.01			0.02			0.02			0.01

*Reconciliation of Tangible Book Value Per Common Share (non-GAAP)*
Common equity (GAAP)	$	2,029,668		$	1,917,145		$	1,868,128		$	1,822,412		$	1,714,825
Less goodwill		576,005			576,005			576,005			576,005			576,005
Less core deposit intangibles, net		14,157			15,501			16,923			18,415			20,026
Tangible common equity (non-GAAP)	$	1,439,506		$	1,325,639		$	1,275,200		$	1,227,992		$	1,118,794

Common shares outstanding, net of treasury stock		42,883,865			42,852,180			42,783,670			42,688,008			42,656,303
Common equity (book value) per share (GAAP)	$	47.33		$	44.74		$	43.66		$	42.69		$	40.20
Tangible book value per common share (non-GAAP)	$	33.57		$	30.94		$	29.81		$	28.77		$	26.23

*Reconciliation of Tangible Common Equity Ratio (non-GAAP)*
Tangible common equity (non-GAAP)	$	1,439,506		$	1,325,639		$	1,275,200		$	1,227,992		$	1,118,794

Total assets (GAAP)	$	18,272,293		$	18,812,670		$	19,132,827		$	19,411,707		$	20,129,793
Less goodwill		576,005			576,005			576,005			576,005			576,005
Less core deposit intangibles, net		14,157			15,501			16,923			18,415			20,026
Total tangible assets (non-GAAP)	$	17,682,131		$	18,221,164		$	18,539,899		$	18,817,287		$	19,533,762
Tangible common equity ratio (non-GAAP)		8.14	%		7.28	%		6.88	%		6.53	%		5.73	%

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
*Reconciliation of Adjusted Efficiency Ratio, fully tax-equivalent (non-GAAP)*
Net interest income (GAAP)	$	157,897		$	158,741		$	154,215		$	156,137		$	145,756
Tax-equivalent adjustment⁽¹⁾		2,010			1,991			1,981			2,058			2,152
Fully tax-equivalent net interest income		159,907			160,732			156,196			158,195			147,908
Noninterest income		18,992			18,207			27,663			(111,801	)		28,383
Securities (gains)/losses, net		9,520			10,111			(58	)		140,007			114
Unrealized gain on equity securities, net		(377	)		(133	)		(95	)		(75	)		(13	)
Adjusted revenue (non-GAAP)	$	188,042		$	188,917		$	183,706		$	186,326		$	176,392

Total noninterest expenses (GAAP)	$	85,927		$	116,244		$	113,595		$	130,285		$	111,053
Less:
Core deposit intangibles amortization		1,345			1,421			1,492			1,611			1,625
Partnership investment in tax credit projects		222			222			494			3,573			1,136
(Gain) loss on sales/valuation of assets, net		(26,419	)		193			214			2,072			108
Acquisition, integration and restructuring costs		2,026			5,973			1,375			4,365			2,429
FDIC special assessment		(267	)		(631	)		2,049			8,145			—
Core expenses (non-GAAP)	$	109,020		$	109,066		$	107,971		$	110,519		$	105,755

Efficiency ratio (GAAP)		48.58	%		65.69	%		62.46	%		293.86	%		63.77	%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)		57.98	%		57.73	%		58.77	%		59.31	%		59.95	%

*Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)*
Total noninterest expenses (GAAP)	$	85,927		$	116,244		$	113,595		$	130,285		$	111,053
Core expenses (non-GAAP)		109,020			109,066			107,971			110,519			105,755

Average assets	$	18,439,910		$	19,043,362		$	19,296,638		$	19,667,825		$	20,207,920
Total noninterest expenses to average assets (GAAP)		1.85	%		2.46	%		2.37	%		2.63	%		2.18	%
Core expenses to average assets (non-GAAP)		2.35	%		2.30	%		2.25	%		2.23	%		2.08	%

Acquisition, integration and restructuring costs
Salaries and employee benefits	$	58		$	462		$	168		$	1,425		$	94
Occupancy		—			—			—			1,092			—
Furniture and equipment		52			53			—			19			—
Professional fees		1,674			5,385			931			793			1,617
Advertising		—			—			—			28			178
Other noninterest expenses		242			73			276			1,008			540
Total acquisition, integration and restructuring costs	$	2,026		$	5,973		$	1,375		$	4,365		$	2,429

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
*Reconciliation of Adjusted Earnings*
Net income/(loss)	$	64,153		$	39,742		$	51,707		$	(70,363	)	$	48,091
(Gain)/loss from sale of securities		9,520			10,111			(58	)		140,007			114
(Gain)/loss on sales/valuation of assets, net		(26,419	)		193			214			2,072			108
Acquisition, integration and restructuring costs		2,026			5,973			1,375			4,365			2,429
FDIC special assessment		(267	)		(631	)		2,049			8,145			—
Total adjustments		(15,140	)		15,646			3,580			154,589			2,651
Tax effect of adjustments⁽²⁾		3,634			(3,739	)		(866	)		(36,638	)		(628	)
Adjusted earnings	$	52,647		$	51,649		$	54,421		$	47,588		$	50,114

Preferred dividends		(2,013	)		(2,012	)		(2,013	)		(2,012	)		(2,013	)
Adjusted earnings available to common stockholders	$	50,634		$	49,637		$	52,408		$	45,576		$	48,101

Plus core deposit intangibles amortization, net of tax⁽²⁾		1,022			1,081			1,131			1,229			1,240
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	51,656		$	50,718		$	53,539		$	46,805		$	49,341

*Reconciliation of Adjusted Annualized Return on Average Assets*
Average assets	$	18,439,910		$	19,043,362		$	19,296,638		$	19,667,825		$	20,207,920
Adjusted annualized return on average assets (non-GAAP)		1.14	%		1.09	%		1.13	%		0.96	%		0.98	%

*Reconciliation of Adjusted Annualized Return on Average Common Equity*
Average common stockholders’ equity (GAAP)	$	1,962,334		$	1,863,236		$	1,832,959		$	1,729,086		$	1,746,818
Adjusted annualized average common equity (non-GAAP)		10.27	%		10.71	%		11.50	%		10.46	%		10.92	%

*Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity*
Average tangible common equity (non-GAAP)	$	1,371,515		$	1,271,046		$	1,239,313		$	1,133,888		$	1,149,992
Adjusted annualized average tangible common equity (non-GAAP)		14.98	%		16.05	%		17.38	%		16.38	%		17.02	%

*Reconciliation of Adjusted Diluted Earnings Per Common Share*
Weighted average shares outstanding-diluted		43,195,257			43,060,354			42,915,768			42,838,405			42,812,563
Adjusted diluted earnings per common share	$	1.17		$	1.15		$	1.22		$	1.06		$	1.12

(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
		2024			2023			2024			2023
*Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)*
Earnings available to common stockholders (GAAP)	$	62,140		$	46,078		$	149,564		$	144,245
Plus core deposit intangibles amortization, net of tax⁽²⁾		1,022			1,240			3,236			3,908
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	63,162		$	47,318		$	152,800		$	148,153

Average common equity (GAAP)	$	1,962,334		$	1,746,818		$	1,886,454		$	1,710,230
Less average goodwill		576,005			576,005			576,005			576,005
Less average core deposit intangibles, net		14,814			20,821			16,208			22,501
Average tangible common equity (non-GAAP)	$	1,371,515		$	1,149,992		$	1,294,241		$	1,111,724
Annualized return on average common equity (GAAP)		12.60	%		10.47	%		10.59	%		11.28	%
Annualized return on average tangible common equity (non-GAAP)		18.32	%		16.32	%		15.77	%		17.82	%

*Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)*
Net Interest Income (GAAP)	$	157,897		$	145,756		$	470,853		$	445,100
Plus tax-equivalent adjustment⁽¹⁾		2,010			2,152			5,981			6,497
Net interest income, fully tax-equivalent (non-GAAP)	$	159,907		$	147,908		$	476,834		$	451,597

Average earning assets	$	16,838,131		$	18,439,010		$	17,254,023		$	18,451,907

Annualized net interest margin (GAAP)		3.73	%		3.14	%		3.65	%		3.23	%
Annualized net interest margin, fully tax-equivalent (non-GAAP)		3.78			3.18			3.69			3.27
Net purchase accounting discount amortization on loans included in annualized net interest margin		0.02			0.01			0.02			0.02

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.
(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
		2024			2023			2024			2023
*Reconciliation of Adjusted Efficiency Ratio, Fully Tax-Equivalent (non-GAAP)*
Net interest income (GAAP)	$	157,897		$	145,756		$	470,853		$	445,100
Tax-equivalent adjustment⁽¹⁾		2,010			2,152			5,981			6,497
Fully tax-equivalent net interest income		159,907			147,908			476,834			451,597
Noninterest income (GAAP)		18,992			28,383			64,862			90,875
Securities (gains)/losses, net		9,520			114			19,573			1,532
Unrealized gain on equity securities, net		(377	)		(13	)		(605	)		(165	)
Adjusted revenue (non-GAAP)	$	188,042		$	176,392		$	560,664		$	543,839

Total noninterest expenses (GAAP)	$	85,927		$	111,053		$	315,766		$	331,542
Less:
Core deposit intangibles amortization		1,345			1,625			4,258			5,128
Partnership investment in tax credit projects		222			1,136			938			1,828
(Gain)/loss on sales/valuation of assets, net		(26,419	)		108			(26,012	)		(2,149	)
Acquisition, integration and restructuring costs		2,026			2,429			9,374			5,994
FDIC special assessment		(267	)		—			1,151			—
Core expenses (non-GAAP)	$	109,020		$	105,755		$	326,057		$	320,741

Efficiency ratio (GAAP)		48.58	%		63.77	%		58.94	%		61.86	%
Adjusted efficiency ratio, fully tax-equivalent (non-GAAP)		57.98	%		59.95	%		58.16	%		58.98	%

*Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)*
Total noninterest expenses (GAAP)	$	85,927		$	111,053		$	315,766		$	331,542
Core expenses (non-GAAP)		109,020			105,755			326,057			320,741

Average assets	$	18,439,910		$	20,207,920		$	18,924,862		$	20,182,808
Total noninterest expenses to average assets (GAAP)		1.85	%		2.18	%		2.23	%		2.20	%
Core expenses to average assets (non-GAAP)		2.35	%		2.08	%		2.30	%		2.12	%

Acquisition, integration and restructuring costs
Salaries and employee benefits	$	58		$	94		$	689		$	261
Occupancy		—			—			—			—
Furniture and equipment		52			—			105			—
Professional fees		1,674			1,617			7,990			3,619
Advertising		—			178			—			522
Other noninterest expenses		242			540			590			1,592
Total acquisition, integration and restructuring costs	$	2,026		$	2,429		$	9,374		$	5,994

(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
		2024			2023			2024			2023
*Reconciliation of Adjusted Earnings (non-GAAP)*
Net income/(loss)	$	64,153		$	48,091		$	155,602		$	150,283
(Gain)/loss from sale of securities		9,520			114			19,573			1,532
(Gain)/loss on sales/valuation of assets, net		(26,419	)		108			(26,012	)		(2,149	)
Acquisition, integration and restructuring costs		2,026			2,429			9,374			5,994
FDIC special assessment		(267	)		—			1,151			—
Total adjustments		(15,140	)		2,651			4,086			5,377
Tax effect of adjustments⁽²⁾		3,634			(628	)		(981	)		(1,280	)
Adjusted earnings	$	52,647		$	50,114		$	158,707		$	154,380

Preferred dividends		(2,013	)		(2,013	)		(6,038	)		(6,038	)
Adjusted earnings available to common stockholders	$	50,634		$	48,101		$	152,669		$	148,342

Plus core deposit intangibles amortization, net of tax⁽²⁾		1,022			1,240			3,236			3,908
Earnings available to common stockholders excluding intangible amortization (non-GAAP)	$	51,656		$	49,341		$	155,905		$	152,250

*Reconciliation of Adjusted Annualized Return on Average Assets*
Average assets	$	18,439,910		$	20,207,920		$	18,924,862		$	20,182,808
Adjusted annualized return on average assets (non-GAAP)		1.14	%		0.98	%		1.12	%		1.02	%

*Reconciliation of Adjusted Annualized Return on Average Common Equity*
Average common stockholders’ equity (GAAP)	$	1,962,334		$	1,746,818		$	1,886,454		$	1,710,230
Adjusted annualized return on average common equity (non-GAAP)		10.27	%		10.92	%		10.81	%		11.60	%

*Reconciliation of Adjusted Annualized Return on Average Tangible Common Equity*
Average tangible common equity (non-GAAP)	$	1,371,515		$	1,149,992		$	1,294,241		$	1,111,724
Adjusted annualized return on average tangible common equity (non-GAAP)		14.98	%		17.02	%		16.09	%		18.31	%

*Reconciliation of Adjusted Diluted Earnings Per Common Share*
Weighted average shares outstanding-diluted		43,195,257			42,812,563			43,080,422			42,769,872
Adjusted diluted earnings per common share	$	1.17		$	1.12		$	3.54		$	3.47

(2) Tax effect is calculated based on the respective periods’ year-to-date effective tax rate excluding the impact of discrete items.

MIL-OSI: AMD Reports Third Quarter 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

SANTA CLARA, Calif., Oct. 29, 2024 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announced revenue for the third quarter of 2024 of $6.8 billion, gross margin of 50%, operating income of $724 million, net income of $771 million and diluted earnings per share of $0.47. On a non-GAAP^(*) basis, gross margin was 54%, operating income was $1.7 billion, net income was $1.5 billion and diluted earnings per share was $0.92.

“We delivered strong third quarter financial results with record revenue led by higher sales of EPYC and Instinct data center products and robust demand for our Ryzen PC processors,” said AMD Chair and CEO Dr. Lisa Su. “Looking forward, we see significant growth opportunities across our data center, client and embedded businesses driven by the insatiable demand for more compute.”

“We are pleased with our execution in the third quarter, delivering strong year-over-year expansion in gross margin and earnings per share,” said AMD EVP, CFO and Treasurer Jean Hu. “We are on-track to deliver record annual revenue for 2024 based on significant growth in our Data Center and Client segments.”

GAAP Quarterly Financial Results

	Q3 2024	Q3 2023	Y/Y	Q2 2024	Q/Q
Revenue ($M)	$6,819	$5,800	Up 18%	$5,835	Up 17%
Gross profit ($M)	$3,419	$2,747	Up 24%	$2,864	Up 19%
Gross margin	50%	47%	Up 3 ppts	49%	Up 1 ppt
Operating expenses ($M)	$2,709	$2,533	Up 7%	$2,605	Up 4%
Operating income ($M)	$724	$224	Up 223%	$269	Up 169%
Operating margin	11%	4%	Up 7 ppts	5%	Up 6 ppts
Net income ($M)	$771	$299	Up 158%	$265	Up 191%
Diluted earnings per share	$0.47	$0.18	Up 161%	$0.16	Up 194%

*Non-GAAP() Quarterly Financial Results**

	Q3 2024	Q3 2023	Y/Y	Q2 2024	Q/Q
Revenue ($M)	$6,819	$5,800	Up 18%	$5,835	Up 17%
Gross profit ($M)	$3,657	$2,963	Up 23%	$3,101	Up 18%
Gross margin	54%	51%	Up 3 ppts	53%	Up 1 ppt
Operating expenses ($M)	$1,956	$1,697	Up 15%	$1,847	Up 6%
Operating income ($M)	$1,715	$1,276	Up 34%	$1,264	Up 36%
Operating margin	25%	22%	Up 3 ppts	22%	Up 3 ppts
Net income ($M)	$1,504	$1,135	Up 33%	$1,126	Up 34%
Diluted earnings per share	$0.92	$0.70	Up 31%	$0.69	Up 33%

Segment Summary

Record Data Center segment revenue of $3.5 billion was up 122% year-over-year and 25% sequentially primarily driven by the strong ramp of AMD Instinct™ GPU shipments and growth in AMD EPYC™ CPU sales.
Client segment revenue was $1.9 billion, up 29% year-over-year and 26% sequentially primarily driven by strong demand for “Zen 5” AMD Ryzen™ processors.
Gaming segment revenue was $462 million, down 69% year-over-year and 29% sequentially primarily due to a decrease in semi-custom revenue.
Embedded segment revenue was $927 million, down 25% year-over-year as customers normalized their inventory levels. On a sequential basis, revenue increased 8% as demand improved in several end markets.

Recent PR Highlights

At the Advancing AI 2024 event this month, AMD and strategic partners including Dell, Google Cloud, HPE, Lenovo, Meta, Microsoft, Oracle Cloud Infrastructure, Supermicro and AI leaders Databricks, Essential AI, Fireworks AI, Luma AI and Reka AI unveiled a broad portfolio of solutions delivering enterprise AI at scale based on the latest AMD Instinct accelerators, EPYC CPUs, AMD networking solutions and Ryzen PRO CPUs:
- New AMD EPYC 9005 Series processors, with record-breaking performance and energy efficiency for diverse data center needs, available in a wide range of platforms from leading OEMs and ODMs.
- AMD Instinct MI325X accelerators, delivering leadership performance and memory capabilities for the most demanding AI workloads. AMD also shared new details on next-gen AMD Instinct accelerators planned to launch in 2025 and 2026.
- An expanded high performance networking portfolio to maximize performance, scalability and efficiency for AI systems, with the new AMD Pensando™ Salina DPU and AMD Pensando Pollara 400 NIC.
- New Ryzen AI PRO 300 Series mobile processors, powering next-gen AI PCs for the enterprise with 50+ AI TOPS and leadership performance, battery life, security and manageability features.
AMD continues to extend leadership AI performance, optimizations and customer adoption for AMD Instinct accelerators and AMD ROCm™ open software:
- Oracle Cloud Infrastructure selected AMD Instinct MI300X accelerators with AMD ROCm open software to power its latest OCI Compute Supercluster designed for demanding AI workloads.
- AMD unveiled its first results on leading AI benchmark MLPerf, revealing excellent performance for AMD Instinct MI300X accelerators advanced by the AMD ROCm software platform, on-par with NVIDIA H100.
- AMD highlighted support for the latest Llama 3.2 release from Meta, enabling developers to build new agentic applications and personalized AI experiences on AMD accelerators and processors from cloud to edge and AI PCs.
AMD and ecosystem partners are enabling new AI PC platforms and capabilities:
- In partnership with Microsoft, AMD announced that Copilot+ will be enabled on AMD CPU-powered AI PCs via a free upgrade planned to be available starting in November 2024.
- OEM partners including Acer, HP, Lenovo and Asus announced new systems powered by AMD Ryzen AI 300 Series mobile processors, leveraging the leadership gaming, content creation and everyday performance of the new “Zen 5” architecture.
AMD expanded its embedded portfolio for a range of applications, including:
AMD announced an agreement to acquire ZT Systems, a leading provider of AI and general purpose compute infrastructure for the world’s largest hyperscale providers, to expand the company’s data center AI systems capabilities and accelerate deployment of AMD AI rack scale systems with cloud and enterprise customers. The acquisition is subject to regulatory clearance and other customary closing conditions and is expected to close in the first half of 2025.
AMD completed the acquisition of Silo AI to accelerate development and deployment of AI models on AMD hardware.
AMD and Intel announced the creation of an x86 ecosystem advisory group with Broadcom, Dell, Google, HPE, HP, Lenovo, Meta, Microsoft, Oracle, Red Hat and industry luminaries Linus Torvalds and Tim Sweeney to collaborate on architectural interoperability and simplify software development.

Current Outlook

AMD’s outlook statements are based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

For the fourth quarter of 2024, AMD expects revenue to be approximately $7.5 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 22% and sequential growth of approximately 10%. Non-GAAP gross margin is expected to be approximately 54%.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its third quarter 2024 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.

Media Contact:
Drew Prairie
AMD Communications
512-602-4425
drew.prairie@amd.com

Investor Contact:
Mitch Haws
AMD Investor Relations
408-749-3124
mitch.haws@amd.com

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share data) (Unaudited)

	Three Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023
GAAP gross profit	$	3,419		$	2,864		$	2,747
*GAAP gross margin*		50	%		49	%		47	%
Stock-based compensation		5			5			6
Amortization of acquisition-related intangibles		233			231			210
Acquisition-related and other costs⁽¹⁾		—			1			—
Non-GAAP gross profit	$	3,657		$	3,101		$	2,963
Non-GAAP gross margin		54	%		53	%		51	%

GAAP operating expenses	$	2,709		$	2,605		$	2,533
*GAAP operating expenses/revenue %*		40	%		45	%		44	%
Stock-based compensation		346			341			347
Amortization of acquisition-related intangibles		352			372			450
Acquisition-related and other costs⁽¹⁾		55			45			39
Non-GAAP operating expenses	$	1,956		$	1,847		$	1,697
Non-GAAP operating expenses/revenue %		29	%		32	%		29	%

GAAP operating income	$	724		$	269		$	224
*GAAP operating margin*		11	%		5	%		4	%
Stock-based compensation		351			346			353
Amortization of acquisition-related intangibles		585			603			660
Acquisition-related and other costs⁽¹⁾		55			46			39
Non-GAAP operating income	$	1,715		$	1,264		$	1,276
*Non-GAAP operating margin*		25	%		22	%		22	%

	Three Months Ended
	September 28, 2024						June 29, 2024						September 30, 2023
GAAP net income / earnings per share	$	771		$	0.47		$	265		$	0.16		$	299		$	0.18
(Gains) losses on equity investments, net		(1	)		—			—			—			(4	)		—
Stock-based compensation		351			0.21			346			0.21			353			0.22
Equity income in investee		(7	)		—			(7	)		—			(3	)		—
Amortization of acquisition-related intangibles		585			0.36			603			0.37			660			0.41
Acquisition-related and other costs⁽¹⁾		56			0.03			46			0.03			39			0.02
Income tax provision		(251	)		(0.15	)		(127	)		(0.08	)		(209	)		(0.13	)
Non-GAAP net income / earnings per share	$	1,504		$	0.92		$	1,126		$	0.69		$	1,135		$	0.70

(1)

Acquisition-related and other costs primarily comprised of transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.

About AMD

For more than 50 years AMD has driven innovation in high-performance computing, graphics and visualization technologies. AMD employees are focused on building leadership high-performance and adaptive products that push the boundaries of what is possible. Billions of people, leading Fortune 500 businesses and cutting-edge scientific research institutions around the world rely on AMD technology daily to improve how they live, work and play. For more information about how AMD is enabling today and inspiring tomorrow, visit the AMD (NASDAQ: AMD) website, blog, LinkedIn and X pages.

Cautionary Statement

This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as AMD’s expectations for future growth in data center, client and embedded businesses; AMD being on track to deliver record annual revenue growth for 2024 based on significant growth in AMD’s Data Center and Client segments; AMD’s expectations about the demand for more compute; the features, functionality, performance, availability, timing and expected benefits of future AMD products; AMD’s anticipated acquisition of ZT Systems and the expected timing of the transaction; and AMD’s expected fourth quarter 2024 financial outlook, including revenue and non-GAAP gross margin, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this press release are based on current beliefs, assumptions and expectations, speak only as of the date of this press release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD’s control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation’s dominance of the microprocessor market and its aggressive business practices; Nvidia’s dominance in the graphics processing unit market and its aggressive business practices; the cyclical nature of the semiconductor industry; market conditions of the industries in which AMD products are sold; loss of a significant customer; competitive markets in which AMD’s products are sold; economic and market uncertainty; quarterly and seasonal sales patterns; AMD’s ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD’s products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD’s ability to introduce products on a timely basis with expected features and performance levels; AMD’s ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyberattacks; uncertainties involving the ordering and shipment of AMD’s products; AMD’s reliance on third-party intellectual property to design and introduce new products; AMD’s reliance on third-party companies for design, manufacture and supply of motherboards, software, memory and other computer platform components; AMD’s reliance on Microsoft and other software vendors’ support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board partners; impact of modification or interruption of AMD’s internal business processes and information systems; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; efficiency of AMD’s supply chain; AMD’s ability to rely on third party supply-chain logistics functions; AMD’s ability to effectively control sales of its products on the gray market; long-term impact of climate change on AMD’s business; impact of government actions and regulations such as export regulations, tariffs and trade protection measures; AMD’s ability to realize its deferred tax assets; potential tax liabilities; current and future claims and litigation; impact of environmental laws, conflict minerals related provisions and other laws or regulations; evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters; issues related to the responsible use of AI; restrictions imposed by agreements governing AMD’s notes, the guarantees of Xilinx’s notes and the revolving credit agreement; the ability to obtain applicable regulatory approvals for the acquisition of ZT Systems in a timely manner or otherwise and to satisfy other closing conditions to the transaction; impact of acquisitions, joint ventures and/or investments on AMD’s business and AMD’s ability to integrate acquired businesses;  impact of any impairment of the combined company’s assets; political, legal and economic risks and natural disasters; future impairments of technology license purchases; AMD’s ability to attract and retain qualified personnel; and AMD’s stock price volatility. Investors are urged to review in detail the risks and uncertainties in AMD’s Securities and Exchange Commission filings, including but not limited to AMD’s most recent reports on Forms 10-K and 10-Q.

(*)		In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating expenses/revenue%, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share. AMD uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2024, AMD uses a projected non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments, reflecting currently available information. AMD also provided adjusted EBITDA, free cash flow and free cash flow margin as supplemental non-GAAP measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. The non-GAAP financial measures disclosed in this earnings press release should be viewed in addition to and not as a substitute for or superior to AMD’s reported results prepared in accordance with GAAP and should be read only in conjunction with AMD’s Consolidated Financial Statements prepared in accordance with GAAP. These non-GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in the data tables in this earnings press release. This earnings press release also contains forward-looking non-GAAP gross margin concerning AMD’s financial outlook, which is based on current expectations as of October 29, 2024 and assumptions and beliefs that involve numerous risks and uncertainties. Adjustments to arrive at the GAAP gross margin outlook typically include stock-based compensation, amortization of acquired intangible assets and acquisition-related and other costs. The timing and impact of such adjustments are dependent on future events that are typically uncertain or outside of AMD’s control, therefore, a reconciliation to equivalent GAAP measures is not practicable at this time. AMD undertakes no intent or obligation to publicly update or revise its outlook statements as a result of new information, future events or otherwise, except as may be required by law.

©2024 Advanced Micro Devices, Inc. All rights reserved. AMD, the AMD Arrow logo, 3D V-Cache, Alveo, EPYC, FidelityFX, Instinct, Kria, Radeon, Ryzen, Threadripper, Ultrascale+, Versal, Zynq, and combinations thereof, are trademarks of Advanced Micro Devices, Inc.

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages) (Unaudited)

	Three Months Ended									Nine Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Net revenue	$	6,819		$	5,835		$	5,800		$	18,127		$	16,512
Cost of sales		3,167			2,740			2,843			8,590			8,236
Amortization of acquisition-related intangibles		233			231			210			694			727
Total cost of sales		3,400			2,971			3,053			9,284			8,963
Gross profit		3,419			2,864			2,747			8,843			7,549
Gross margin		50	%		49	%		47	%		49	%		46	%
Research and development		1,636			1,583			1,507			4,744			4,361
Marketing, general and administrative		721			650			576			1,991			1,708
Amortization of acquisition-related intangibles		352			372			450			1,116			1,449
Licensing gain		(14	)		(10	)		(10	)		(37	)		(28	)
Operating income		724			269			224			1,029			59
Interest expense		(23	)		(25	)		(26	)		(73	)		(79	)
Other income (expense), net		36			55			59			144			148
Income before income taxes and equity income		737			299			257			1,100			128
Income tax provision (benefit)		(27	)		41			(39	)		(38	)		(49	)
Equity income in investee		7			7			3			21			10
Net income	$	771		$	265		$	299		$	1,159		$	187
Earnings per share
Basic	$	0.48		$	0.16		$	0.18		$	0.72		$	0.12
Diluted	$	0.47		$	0.16		$	0.18		$	0.71		$	0.11
Shares used in per share calculation
Basic		1,620			1,618			1,616			1,619			1,613
Diluted		1,636			1,637			1,629			1,638			1,625

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)

	September 28, 2024			December 30, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,897		$	3,933
Short-term investments		647			1,840
Accounts receivable, net		7,241			5,376
Inventories		5,374			4,351
Receivables from related parties		29			9
Prepaid expenses and other current assets		1,547			1,259
Total current assets		18,735			16,768
Property and equipment, net		1,669			1,589
Operating lease right-of-use assets		647			633
Goodwill		24,839			24,262
Acquisition-related intangibles, net		19,572			21,363
Investment: equity method		137			99
Deferred tax assets		1,183			366
Other non-current assets		2,854			2,805
Total Assets	$	69,636		$	67,885

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,530		$	2,055
Payables to related parties		461			363
Accrued liabilities		4,120			3,082
Current portion of long-term debt, net		—			751
Other current liabilities		389			438
Total current liabilities		7,500			6,689
Long-term debt, net of current portion		1,720			1,717
Long-term operating lease liabilities		518			535
Deferred tax liabilities		1,162			1,202
Other long-term liabilities		1,751			1,850

Stockholders’ equity:
Capital stock:
Common stock, par value		17			17
Additional paid-in capital		60,896			59,676
Treasury stock, at cost		(5,812	)		(4,514	)
Retained earnings		1,882			723
Accumulated other comprehensive income (loss)		2			(10	)
Total stockholders’ equity	$	56,985		$	55,892
Total Liabilities and Stockholders’ Equity	$	69,636		$	67,885

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions) (Unaudited)

	Three Months Ended						Nine Months Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Cash flows from operating activities:
Net income	$	771		$	299		$	1,159		$	187
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		756			823			2,309			2,654
Stock-based compensation		351			353			1,068			1,010
Amortization of operating lease right-of-use assets		30			25			82			73
Deferred income taxes		(607	)		(218	)		(863	)		(800	)
Inventory loss at contract manufacturer		—			—			65			—
Other		(13	)		(23	)		(50	)		(31	)
Changes in operating assets and liabilities
Accounts receivable, net		(1,489	)		(743	)		(1,862	)		(929	)
Inventories		(386	)		122			(1,096	)		(674	)
Prepaid expenses and other assets		(16	)		(143	)		(250	)		(380	)
Receivables from and payables to related parties, net		36			14			78			(136	)
Accounts payable		832			(547	)		476			(238	)
Accrued and other liabilities		363			459			626			550
Net cash provided by operating activities		628			421			1,742			1,286
Cash flows from investing activities:
Purchases of property and equipment		(132	)		(124	)		(428	)		(407	)
Purchases of short-term investments		(142	)		(496	)		(707	)		(3,312	)
Proceeds from maturity of short-term investments		149			746			1,351			1,917
Proceeds from sale of short-term investments		589			—			591			248
Acquisitions, net of cash acquired		(548	)		(14	)		(548	)		(14	)
Related party equity method investment		(17	)		—			(17	)		—
Other		(37	)		(10	)		(129	)		(5	)
Net cash provided by (used in) investing activities		(138	)		102			113			(1,573	)
Cash flows from financing activities:
Repayment of debt		—			—			(750	)		—
Proceeds from sales of common stock through employee equity plans		4			4			152			148
Repurchases of common stock		(250	)		(511	)		(606	)		(752	)
Common stock repurchases for tax withholding on employee equity plans		(460	)		(295	)		(686	)		(382	)
Other		—			(1	)		(1	)		1
Net cash used in financing activities		(706	)		(803	)		(1,891	)		(987	)
Net decrease in cash and cash equivalents	$	(216	)	$	(280	)	$	(36	)	$	(1,274	)
Cash and cash equivalents at beginning of period		4,113			3,841			3,933			4,835
Cash and cash equivalents at end of period	$	3,897		$	3,561		$	3,897		$	3,561

ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions) (Unaudited)

	Three Months Ended									Nine Months Ended
	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Segment and Category Information⁽¹⁾
Data Center
Net revenue	$	3,549		$	2,834		$	1,598		$	8,720		$	4,214
Operating income	$	1,041		$	743		$	306		$	2,325		$	601
Client
Net revenue	$	1,881		$	1,492		$	1,453		$	4,741		$	3,190
Operating income (loss)	$	276		$	89		$	140		$	451		$	(101	)
Gaming
Net revenue	$	462		$	648		$	1,506		$	2,032		$	4,844
Operating income	$	12		$	77		$	208		$	240		$	747
Embedded
Net revenue	$	927		$	861		$	1,243		$	2,634		$	4,264
Operating income	$	372		$	345		$	612		$	1,059		$	2,167
All Other
Net revenue	$	—		$	—		$	—		$	—		$	—
Operating loss	$	(977	)	$	(985	)	$	(1,042	)	$	(3,046	)	$	(3,355	)
Total
Net revenue	$	6,819		$	5,835		$	5,800		$	18,127		$	16,512
Operating income	$	724		$	269		$	224		$	1,029		$	59

Other Data
Capital expenditures	$	132		$	154		$	124		$	428		$	407
Adjusted EBITDA⁽²⁾	$	1,887		$	1,430		$	1,439		$	4,612		$	3,920
Cash, cash equivalents and short-term investments	$	4,544		$	5,340		$	5,785		$	4,544		$	5,785
Free cash flow⁽³⁾	$	496		$	439		$	297		$	1,314		$	879
Total assets	$	69,636		$	67,886		$	67,626		$	69,636		$	67,626
Total debt	$	1,720		$	1,719		$	2,467		$	1,720		$	2,467

(1)		The Data Center segment primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers.
		The Client segment primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers.
		The Gaming segment primarily includes discrete GPUs, and semi-custom SoC products and development services.
		The Embedded segment primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
		From time to time, the Company may also sell or license portions of its IP portfolio.
		All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments, such as amortization of acquisition-related intangible asset, employee stock-based compensation expense, acquisition-related and other costs, inventory loss at contract manufacturer, and licensing gain.

(2)

Reconciliation of GAAP Net Income to Adjusted EBITDA

	Three Months Ended									Nine Months Ended
(Millions) (Unaudited)	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
GAAP net income	$	771		$	265		$	299		$	1,159		$	187
Interest expense		23			25			26			73			79
Other (income) expense, net		(36	)		(55	)		(59	)		(144	)		(148	)
Income tax provision (benefit)		(27	)		41			(39	)		(38	)		(49	)
Equity income in investee		(7	)		(7	)		(3	)		(21	)		(10	)
Stock-based compensation		351			346			353			1,068			1,006
Depreciation and amortization		171			166			163			499			478
Amortization of acquisition-related intangibles		585			603			660			1,810			2,176
Inventory loss at contract manufacturer		—			—			—			65			—
Acquisition-related and other costs		56			46			39			141			201
Adjusted EBITDA	$	1,887		$	1,430		$	1,439		$	4,612		$	3,920

The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other (income) expense, net, income tax provision (benefit), equity income in investee, stock-based compensation, depreciation and amortization expense, amortization of acquisition-related intangibles, inventory loss at contract manufacturer, and acquisition-related and other costs. The Company calculates and presents Adjusted EBITDA because management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of income or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities that can affect cash flows.

(3)

Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow

	Three Months Ended									Nine Months Ended
(Millions except percentages) (Unaudited)	September 28, 2024			June 29, 2024			September 30, 2023			September 28, 2024			September 30, 2023
GAAP net cash provided by operating activities	$	628		$	593		$	421		$	1,742		$	1,286
Operating cash flow margin %		9	%		10	%		7	%		10	%		8	%
Purchases of property and equipment		(132	)		(154	)		(124	)		(428	)		(407	)
Free cash flow	$	496		$	439		$	297		$	1,314		$	879
Free cash flow margin %		7	%		8	%		5	%		7	%		5	%

The Company also presents free cash flow as a supplemental Non-GAAP measure of its performance. Free cash flow is determined by adjusting GAAP net cash provided by operating activities for capital expenditures, and free cash flow margin % is free cash flow expressed as a percentage of the Company’s net revenue. The Company calculates and communicates free cash flow in the financial earnings press release because management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities.

MIL-OSI: Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three Months Ended September 30, 2024

Source: GlobeNewswire (MIL-OSI)

Shreveport, Oct. 29, 2024 (GLOBE NEWSWIRE) — Home Federal Bancorp, Inc. of Louisiana (the “Company”) (Nasdaq: HFBL), the holding company of Home Federal Bank, reported net income for the three months ended September 30, 2024, of $941,000 compared to net income of $1.2 million reported for the three months ended September 30, 2023. The Company’s basic and diluted earnings per share were $0.31 for the three months ended September 30, 2024, compared to basic and diluted earnings per share of $0.40 and $0.39, respectively, for the three months ended September 30, 2023.

The decrease in net income for the three months ended September 30, 2024, compared to the same period in 2023, resulted from a decrease in net interest income of $857,000, or 16.2%, and a decrease in non-interest income of $134,000, or 30.9%, partially offset by a decrease in non-interest expense of $177,000, or 4.2%, a decrease in provision for income taxes of $312,000, or 100.6%, a decrease in the provision of credit losses of $223,000. The decrease in net interest income for the three months ended September 30, 2024, compared to the same period in 2023, resulted from an increase in total interest expense of $524,000, or 18.8%, and a decrease in total interest income of $333,000, or 4.1%. The Company’s average interest rate spread was 2.23% for the three months ended September 30, 2024, compared to 2.68% for the three months ended September 30, 2023. The Company’s net interest margin was 2.98% for the three months ended September 30, 2024, compared to 3.37% for the three months ended September 30, 2023.

The following table sets forth the Company’s average balances and average yields earned and rates paid on its interest-earning assets and interest-bearing liabilities for the periods indicated.

	For the Three Months Ended September 30,
	2024					2023
	Average Balance		Average Yield/Rate			Average Balance		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	466,170		5.87	%	$	498,242		5.79	%
Investment securities		96,749		2.09			113,584		2.18
Interest-earning deposits		25,617		5.20			10,066		6.98
Total interest-earning assets	$	588,536		5.22	%	$	621,892		5.15	%

Interest-bearing liabilities:
Savings accounts	$	82,556		1.61	%	$	78,572		0.38	%
NOW accounts		72,787		1.10			55,900		0.48
Money market accounts		75,216		2.29			108,891		2.26
Certificates of deposit		204,019		4.30			194,785		3.73
Total interest-bearing deposits		434,578		2.92			438,148		2.47
Other bank borrowings		5,989		7.75			8,654		8.39
FHLB advances		—		—			1,138		5.23
Total interest-bearing liabilities	$	440,567		2.98	%	$	447,940		2.47	%

The $134,000 decrease in non-interest income for the three months ended September 30, 2024, compared to the same period in 2023, resulted from an increase in loss on sale of real estate of $220,000, partially offset by an increase in gain on sale of loans of $58,000, an increase in other non-interest income of $26,000, and an increase in income on bank owned life insurance of $2,000.

The $177,000 decrease in non-interest expense for the three months ended September 30, 2024, compared to the same period in 2023, resulted from decreases in advertising expense of $86,000, compensation and benefits expense of $54,000, professional fees of $43,000, loan and collection expense of $32,000, data processing expense of $26,000, amortization of core deposit intangible expense of $20,000, and deposit insurance premium expense of $1,000, partially offset by increases in audit and examination fees of $30,000, other non-interest expense of $28,000, occupancy and equipment expense of $15,000, and franchise and bank shares tax expense of $12,000.

Total assets decreased $9.1 million, or 1.4%, from $637.5 million at June 30, 2024 to $628.4 million at September 30, 2024. The decrease in assets was comprised of decreases in net loans receivable of $16.9 million, or 3.6%, from $470.9 million at June 30, 2024 to $454.0 million at September 30, 2024, real estate owned of $296,000, or 70.8% from $418,000 at June 30, 2024 to $122,000 at September 30, 2024, premises and equipment of $238,000, or 1.3%, from $18.3 million at June 30, 2024 to $18.1 million at September 30, 2024, core deposit intangible of $74,000, or 6.2%, from $1.2 million at June 30, 2024 to $1.1 million at September 30, 2024, and accrued interest receivable of $14,000, or 0.8%, from $1.78 million at June 30, 2024 to $1.76 million at September 30, 2024, partially offset by increases in cash and cash equivalents of $6.1 million, or 17.4%, from $34.9 million at June 30, 2024 to $41.0 million at September 30, 2024, investment securities of $1.4 million, or 1.5%, from $96.0 million at June 30, 2024 to $97.4 million at September 30, 2024, loans-held-for-sale of $535,000, or 30.9%, from $1.7 million at June 30, 2024 to $2.3 million at September 30, 2024, other assets of $224,000, or 16.6%, from $1.3 million at June 30, 2024 to $1.6 million at September 30, 2024, deferred tax asset of $29,000, or 2.5%, from $1.18 million at June 30, 2024 to $1.21 million at September 30, 2024, and bank owned life insurance of $29,000, or 0.4%, from $6.81 million at June 30, 2024 to $6.84 million at September 30, 2024. The increase in investment securities was primarily due to $4.0 million in security purchases and a $1.3 million reduction in unrealized losses on available for sale securities, partially offset by $3.5 million in principal payments. The increase in cash and cash equivalents from $34.9 million at June 30, 2024 to $41.0 million at September 30, 2024 was mainly due to decreases in loans receivable.

Total liabilities decreased $10.6 million, or 1.8%, from $584.7 million at June 30, 2024 to $574.1 million at September 30, 2024. The decrease in liabilities was comprised of decreases in total deposits of $9.4 million, or 1.6%, from $574.0 million at June 30, 2024 to $564.6 million at September 30, 2024, and other borrowings of $1.5 million, or 21.4%, from $7.0 million at June 30, 2024 to $5.5 million at September 30, 2024, partially offset by increases in other accrued expenses and liabilities of $252,000, or 7.9%, from $3.2 million at June 30, 2024 to $3.4 million at September 30, 2024, and advances from borrowers for taxes and insurance of $123,000, or 23.6%, from $521,000 at June 30, 2024 to $644,000 at September 30, 2024,. The decrease in deposits resulted from decreases in certificates of deposit of $17.5 million, or 8.2%, from $214.9 million at June 30, 2024 to $197.3 million at September 30, 2024, and money market deposits of $5.9 million, or 6.9%, from $85.5 million at June 30, 2024 to $79.6 million at September 30, 2024, partially offset by increases in savings deposits of $9.2 million, or 12.0%, from $76.6 million at June 30, 2024 to $85.8 million at September 30, 2024, non-interest deposits of $3.0 million, or 2.3%, from $130.3 million at June 30, 2024 to $133.3 million at September 30, 2024, and NOW accounts of $1.9 million, or 2.8%, from $66.6 million at June 30, 2024 to $68.5 million at September 30, 2024. The Company had no balances in brokered deposits at September 30, 2024 or June 30, 2024.

At September 30, 2024, the Company had $1.9 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $2.0 million on non-performing assets at June 30, 2024, consisting of two commercial non-real estate loans, five single-family residential loans, four home equity line-of-credit loans, and one single-family residence in other real estate owned at September 30, 2024, compared to five single-family residential loans, three commercial non-real estate loans, four home equity line-of-credit loans and three single-family residences in other real estate owned at June 30, 2024. At September 30, 2024 the Company had five commercial non-real-estate loans, one commercial real-estate loan, six single family residential loans, four home-equity line-of-credit loans, and one auto loan classified as substandard, compared to six single family residential loans, five commercial non-real-estate loans, four home equity line-of-credit loans and one auto loan classified as substandard at June 30, 2024. There were no loans classified as doubtful at September 30, 2024 or June 30, 2024.

Shareholders’ equity increased $1.5 million, or 2.8%, from $52.8 million at June 30, 2024 to $54.3 million at September 30, 2024. The increase in shareholders’ equity was comprised of net income for the three month period of $941,000, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $94,000, proceeds from the issuance of common stock from the exercise of stock options of $19,000, and a decrease in the Company’s accumulated other comprehensive loss of $1.0 million, partially offset by dividends paid totaling $409,000, and stock repurchases of $182,000.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its ten full-service banking offices and home office in northwest Louisiana.

Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe”, “expect”, “anticipate”, “estimate”, and “intend”, or future or conditional verbs such as “will”, “would”, “should”, “could”, or “may”. We undertake no obligation to update any forward-looking statements.

In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, competition, changes in the quality or composition of the Company’s loans, investment and mortgage-backed securities portfolios; geographic concentration of the Company’s business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees.

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share and per share data)

	September 30, 2024			June 30, 2024
	(Unaudited)
ASSETS

Cash and Cash Equivalents (Includes Interest-Bearing Deposits with Other Banks of $32,743 and $25,505 at September 30, 2024 and June 30, 2024, Respectively)	$	41,044		$	34,948
Securities Available-for-Sale (amortized cost September 30, 2024: $31,977; June 30, 2024: $30,348, Respectively)		29,934			27,037
Securities Held-to-Maturity (fair value September 30, 2024: $56,584; June 30, 2024: $54,450, Respectively)		65,800			67,302
Other Securities		1,633			1,614
Loans Held-for-Sale		2,268			1,733
Loans Receivable, Net of Allowance for Credit Losses (September 30, 2024: $4,703; June 30, 2024: $4,574, Respectively)		454,039			470,852
Accrued Interest Receivable		1,761			1,775
Premises and Equipment, Net		18,065			18,303
Bank Owned Life Insurance		6,839			6,810
Goodwill		2,990			2,990
Core Deposit Intangible		1,125			1,199
Deferred Tax Asset		1,210			1,181
Real Estate Owned		122			418
Other Assets		1,574			1,350

Total Assets	$	628,404		$	637,512

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

Deposits:
Non-interest bearing	$	133,293		$	130,334
Interest-bearing		431,267			443,673
Total Deposits		564,560			574,007
Advances from Borrowers for Taxes and Insurance		644			521
Other Borrowings		5,500			7,000
Other Accrued Expenses and Liabilities		3,433			3,181

Total Liabilities		574,137			584,709

SHAREHOLDERS’ EQUITY

Preferred Stock – $0.01 Par Value; 10,000,000 Shares Authorized: None Issued and Outstanding		–			–
Common Stock – $0.01 Par Value; 40,000,000 Shares Authorized: 3,129,668 and 3,144,168 Shares Issued and Outstanding at September 30, 2024 and June 30, 2024, Respectively		32			32
Additional Paid-in Capital		41,822			41,739
Unearned ESOP Stock		(379	)		(408	)
Retained Earnings		14,406			14,055
Accumulated Other Comprehensive Loss		(1,614	)		(2,615	)

Total Shareholders’ Equity		54,267			52,803

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	628,404		$	637,512

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (In thousands except share and per share data)

	Three Months Ended
	September 30,
	2024			2023
INTEREST INCOME
Loans, including fees	$	6,895		$	7,274
Investment securities		67			150
Mortgage-backed securities		443			473
Other interest-earning assets		336			177
Total interest income		7,741			8,074

INTEREST EXPENSE
Deposits		3,197			2,592
Federal Home Loan Bank borrowings		—			15
Other bank borrowings		117			183
Total interest expense		3,314			2,790
Net interest income		4,427			5,284

RECOVERY OF CREDIT LOSSES		(223	)		—
Net interest income after recovery of credit losses		4,650			5,284

NON-INTEREST INCOME
Gain on sale of loans		96			38
Loss on sale of real estate		(254	)		(34	)
Income on bank owned life insurance		28			26
Service charges on deposit accounts		391			391
Other income		39			13

Total non-interest income		300			434

NON-INTEREST EXPENSE
Compensation and benefits		2,302			2,356
Occupancy and equipment		564			549
Data processing		219			245
Audit and examination fees		132			102
Franchise and bank shares tax		168			156
Advertising		57			143
Professional fees		117			160
Loan and collection		28			60
Amortization core deposit intangible		74			94
Deposit insurance premium		90			91
Other expenses		260			232
Total non-interest expense		4,011			4,188

Income before income taxes		939			1,530
PROVISION FOR INCOME TAX EXPENSE		(2	)		310

NET INCOME	$	941		$	1,220

EARNINGS PER SHARE
Basic	$	0.31		$	0.40
Diluted	$	0.31		$	0.39

	Three Months Ended September 30,
	2024			2023

Selected Operating Ratios⁽¹⁾:
Average interest rate spread		2.23	%		2.68	%
Net interest margin		2.98	%		3.37	%
Return on average assets		0.59	%		0.73	%
Return on average equity		7.23	%		9.46	%

Asset Quality Ratios⁽²⁾:
Non-performing assets as a percent of total assets		0.31	%		0.28	%
Allowance for credit losses as a percent of non-performing loans		258.46	%		403.96	%
Allowance for credit losses as a percent of total loans receivable		1.03	%		1.00	%

Per Share Data:
Shares outstanding at period end		3,129,668			3,133,351
Weighted average shares outstanding:
Basic		3,058,286			3,028,597
Diluted		3,071,716			3,107,834

(1) Ratios for the three-month period are annualized.
(2) Asset quality ratios are end of period ratios.

MIL-OSI Security: Alabama Man Sentenced for Threatening Fulton County Sheriff and District Attorney

Source: Office of United States Attorneys

ATLANTA – Arthur Ray Hanson, II has been sentenced to federal prison for transmitting interstate threats to injure Fulton County Sheriff Patrick Labat and Fulton County District Attorney Fani Willis because of their connections to the Fulton County, Georgia investigation and prosecution of former President Donald Trump.

“Public servants have a responsibility to enforce our criminal laws, and anyone who threatens to harm or intimidate them will face the consequences of their actions,” said U.S. Attorney Ryan K. Buchanan. “We are grateful to our law enforcement partners who diligently worked to ensure public officials are free to perform their essential work without the threat of physical attack.”

“Threats against public servants are not only illegal, but also a threat against our democratic process,” said Sean Burke, Acting Special Agent in Charge of FBI Atlanta. “The FBI’s mission is to protect the American people and uphold the Constitution. We take this responsibility very seriously and seek to punish those who engage in this type of criminal behavior, and to send the message that such conduct will not be tolerated.”

According to U.S. Attorney Buchanan, the charges, and other information presented in court: On August 6, 2023, Hanson called the Fulton County Government customer service line twice and left two voicemails—the first for Sheriff Labat and the second for District Attorney Willis. During both calls, Hanson threatened violence against these officials.

In his message for Sheriff Labat, Hanson made statements that included the following:

“If you think you gonna take a mugshot of my President Trump and it’s gonna be okay, you gonna find out that after you take that mugshot, some bad [expletive]’s gonna happen to you;”
“If you take a mugshot of the President and you’re the reason it happened, some bad [expletive]’s gonna happen to you;”
“I’m warning you right now before you [expletive] up your life and get hurt real bad;” and
“Whether you got a [expletive] badge or not ain’t gonna help you none;” and “you gonna get [expletive]ed up you keep [expletive]ing with my President.”

In Hanson’s message for District Attorney Willis, he made statements that included the following:

“Watch it when you’re going to the car at night, when you’re going into your house, watch everywhere that you’re going;”
“I would be very afraid if I were you because you can’t be around people all the time that are going to protect you;”
“There’s gonna be moments when you’re gonna be vulnerable;”
“When you charge Trump on that fourth indictment, anytime you’re alone, be looking over your shoulder;” and
“What you put out there, [expletive], comes back at you ten times harder, and don’t ever forget it.”

Arthur Ray Hanson, II, 59, of Huntsville, Alabama, was sentenced by U.S. District Judge U.S. District Judge J. P. Boulee to one year, nine months in prison to be followed by three years of supervised release. He was also ordered to pay a $7,500 fine. Hanson was convicted on these charges on July 3, 2024, after he pleaded guilty to one count of transmitting interstate threats.

This case was investigated by the Federal Bureau of Investigation.

Assistant U.S. Attorneys Bret R. Hobson and Brent Alan Gray prosecuted the case.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.

MIL-OSI: Northeast Bank Reports First Quarter Results and Declares Dividend

Source: GlobeNewswire (MIL-OSI)

PORTLAND, Maine, Oct. 29, 2024 (GLOBE NEWSWIRE) — Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $17.1 million, or $2.11 per diluted common share, for the quarter ended September 30, 2024, compared to net income of $15.2 million, or $2.01 per diluted common share, for the quarter ended September 30, 2023.

The Board of Directors declared a cash dividend of $0.01 per share, payable on November 26, 2024, to shareholders of record as of November 12, 2024.

“With $859.8 million of loan generation from our National Lending Division, we had our second largest quarterly loan volume in the Bank’s history, consisting of $732.9 million of purchases and $126.9 million of originations,” said Rick Wayne, Chief Executive Officer. “Our National Lending Division portfolio grew by $742.2 million, or 27.6%, over June 30, 2024. Our small balance SBA 7(a) program with Newity LLC as our loan service provider has gained real traction. For the quarter, we originated $82.4 million, compared to $40.2 million for the quarter ended June 30, 2024 and $9.7 million for the quarter ended September 30, 2023. During the current quarter we sold $63.1 million of the guaranteed portion of our SBA loans, compared with $26.8 million for the quarter ended June 30, 2024 and $5.3 million for the quarter ended September 30, 2023. We are reporting earnings of $2.11 per diluted common share, a return on average equity of 17.5%, and a return on average assets of 2.1%.”

As of September 30, 2024, total assets were $3.94 billion, an increase of $807.7 million, or 25.8%, from total assets of $3.13 billion as of June 30, 2024.

1. The following table highlights the changes in the loan portfolio, including loans held for sale, for the three months ended September 30, 2024:

	Loan Portfolio Changes
	September 30, 2024 Balance		June 30, 2024 Balance		Change ($)			Change (%)
	(Dollars in thousands)
National Lending Purchased	$	2,420,883	$	1,708,551	$	712,332		41.69	%
National Lending Originated		1,011,374		981,497		29,877		3.04	%
SBA National		66,919		48,405		18,514		38.25	%
Community Banking		21,426		22,704		(1,278	)	(5.63	%)
Total	$	3,520,602	$	2,761,157	$	759,445		27.50	%

Loans generated by the Bank’s National Lending Division for the quarter ended September 30, 2024 totaled $859.8 million, which consisted of $732.9 million of purchased loans at an average price of 90.7% of unpaid principal balance, and $126.9 million of originated loans.

An overview of the Bank’s National Lending Division portfolio follows:

	National Lending Portfolio
	Three Months Ended September 30,
	2024									2023
	Purchased			Originated			Total			Purchased			Originated			Total
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$	807,733		$	126,893		$	934,626		$	63,695		$	68,042		$	131,737
Initial net investment basis (1)		732,893			126,893			859,786			52,346			68,042			120,388

Loan returns during the period:
Yield		8.83	%		9.31	%		9.00	%		8.99	%		10.03	%		9.40	%
Total Return on Purchased Loans (2)		8.84	%		N/A			8.84	%		9.04	%		N/A			9.04	%

Total loans as of period end:
Unpaid principal balance	$	2,644,390		$	1,011,374		$	3,655,764		$	1,693,627		$	958,232		$	2,651,859
Net investment basis		2,420,883			1,011,374			3,432,257			1,516,379			958,232			2,474,611

^{(1) Initial net investment basis on purchased loans is the initial amortized cost basis net of initial allowance for credit losses (credit mark).}
^{(2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains (losses) on real estate owned, release of allowance for credit losses on purchased loans, and other noninterest income recorded during the period divided by the average invested balance on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”}

2. Deposits increased by $785.5 million, or 33.6%, from June 30, 2024. The increase was primarily attributable to increases in time deposits of $785.4 million, or 60.1%. The significant drivers in the change in time deposits were the increase in brokered time deposits, which increased by $712.6 million, and Community Banking Division time deposits, which increased by $52.9 million compared to June 30, 2024.

3. Federal Home Loan Bank (“FHLB”) advances decreased by $6.1 million, or 1.8%, from June 30, 2024. The decrease was attributable to net paydowns on amortizing advances.

4. Shareholders’ equity increased by $15.9 million, or 4.2%, from June 30, 2024, primarily due to net income of $17.1 million and stock-based compensation of $1.8 million, partially offset by the cancelation of restricted stock to cover tax obligations on restricted stock vests, which had a $3.2 million impact on shareholders’ equity.

Net income increased by $1.9 million to $17.1 million for the quarter ended September 30, 2024, compared to net income of $15.2 million for the quarter ended September 30, 2023.

1. Net interest and dividend income before provision for credit losses increased by $1.9 million to $39.0 million for the quarter ended September 30, 2024, compared to $37.1 million for the quarter ended September 30, 2023. The increase was primarily due to the following:

An increase in interest income earned on loans of $6.2 million, primarily due to higher average balances in the National Lending Division purchased and Small Business Administration (“SBA”) portfolios and higher rates earned on the SBA portfolio;
An increase in interest income earned on short-term investments of $821 thousand, due to higher average balances and higher rates earned; and
A decrease in FHLB borrowings interest expense of $2.1 million, primarily due to lower average balances; partially offset by,
An increase in deposit interest expense of $7.3 million, primarily due to higher average balances as well as higher rates in interest-bearing deposits.

The following table summarizes interest income and related yields recognized on the loan portfolios:

	Interest Income and Yield on Loans
	Three Months Ended September 30,
	2024						2023
	Average		Interest				Average		Interest
	Balance (1)		Income		Yield		Balance (1)		Income		Yield
	(Dollars in thousands)
Community Banking	$	22,409	$	370	6.55	%	$	27,149	$	438	6.42	%
SBA National		59,745		2,419	16.06	%		26,257		786	11.91	%
National Lending:
Originated		997,397		23,408	9.31	%		960,629		24,219	10.03	%
Purchased		1,758,801		39,141	8.83	%		1,489,394		33,671	8.99	%
Total National Lending		2,756,198		62,549	9.00	%		2,450,023		57,890	9.40	%
Total	$	2,838,352	$	65,338	9.13	%	$	2,503,429		59,114	9.39	%

^{(1) Includes loans held for sale.}

The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the quarter ended September 30, 2023, transactional income decreased by $776 thousand for the quarter ended September 30, 2024, and regularly scheduled interest and accretion increased by $6.1 million primarily due to the increase in average balances. The total return on purchased loans for the quarter ended September 30, 2024 was 8.8%, a decrease from 9.0% for the quarter ended September 30, 2023. The following table details the total return on purchased loans:

	Total Return on Purchased Loans
	Three Months Ended September 30,
	2024				2023
	Income		Return (1)		Income		Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	37,160	8.38	%	$	31,030	8.29	%
Transactional income:
Release of allowance for credit losses on purchased loans		64	0.01	%		180	0.05	%
Accelerated accretion and loan fees		1,981	0.45	%		2,641	0.70	%
Total transactional income		2,045	0.46	%		2,821	0.75	%
Total	$	39,205	8.84	%	$	33,851	9.04	%

^{(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, and gains (losses) on real estate owned, and release of allowance for credit losses on purchased loans recorded during the period divided by the average invested balance on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.}

2. Provision for credit losses increased by $232 thousand to $422 thousand for the quarter ended September 30, 2024, compared to $190 thousand in the quarter ended September 30, 2023. The increase was primarily related to the increase in originated loans during the quarter ended September 30, 2024.

3. Noninterest income increased by $3.3 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023, primarily due to an increase in gain on sale of SBA loans of $3.1 million, due to the sale of $63.1 million in SBA loans during the quarter ended September 30, 2024 as compared to the sale of $5.3 million during the quarter ended September 30, 2023.

4. Noninterest expense increased by $2.3 million for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, primarily due to the following:

An increase in salaries and employee benefits expense of $1.5 million, primarily due to increases in regular and stock compensation expense; and
An increase in loan expense of $643 thousand primarily related to increased expenses in connection with the origination of SBA 7(a) loans.

5. Income tax expense increased by $754 thousand to $7.9 million, or an effective tax rate of 31.6%, for the quarter ended September 30, 2024, compared to $7.2 million, or an effective tax rate of 32.0%, for the quarter ended September 30, 2023. The decrease in effective tax rate is primarily due a $243 thousand increase in tax benefit on the vest of restricted stock and exercise of stock options during the quarter ended September 30, 2024 as compared to the quarter ended September 30, 2023.

As of September 30, 2024, nonperforming assets totaled $37.2 million, or 0.94% of total assets, compared to $28.3 million, or 0.90% of total assets, as of June 30, 2024. The increase is primarily related to four National Lending loans placed on non-accrual, which are individually evaluated in the allowance for credit losses and are well-collateralized.

As of September 30, 2024, past due loans totaled $31.3 million, or 0.89% of total loans, compared to past due loans totaling $26.3 million, or 0.95% of total loans, as of June 30, 2024.

As of September 30, 2024, the Bank’s Tier 1 leverage capital ratio was 12.1%, compared to 12.3% at June 30, 2024, and the Total risk-based capital ratio was 12.7% at September 30, 2024, compared to 14.8% at June 30, 2024. The Total risk-based capital ratio decreased primarily due to the increase in risk-weighted assets from significant loan growth during the quarter ended September 30, 2024.

Investor Call Information
Rick Wayne, Chief Executive Officer, Richard Cohen, Chief Financial Officer, and Pat Dignan, Chief Operating Officer of Northeast Bank, will host a conference call to discuss first quarter earnings and business outlook at 10:00 a.m. Eastern Time on Wednesday, October 30^th. To access the conference call by phone, please go to this link (Phone Registration), and you will be provided with dial in details. The call will be available via live webcast, which can be viewed by accessing the Bank’s website at www.northeastbank.com and clicking on the About Us – Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.

About Northeast Bank
Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via seven branches. Our National Lending Division purchases and originates commercial loans on a nationwide basis. ableBanking, a division of Northeast Bank, offers online savings products to consumers nationwide. Information regarding Northeast Bank can be found at www.northeastbank.com.

Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including tangible common shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. The Bank’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Forward-Looking Statements
Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Federal Deposit Insurance Corporation (the “FDIC”), in our annual reports to our shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. Although the Bank believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Bank’s control. The Bank’s actual results could differ materially from those expressed or implied by such the forward-looking statements as a result of, among other factors, changes in employment levels, general business and economic conditions on a national basis and in the local markets in which the Bank operates; changes in customer behavior due to changing business and economic conditions (including inflation and concerns about liquidity) or legislative or regulatory initiatives; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; turbulence in the capital and debt markets; changes in interest rates and real estate values; competitive pressures from other financial institutions; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; operational risks including, but not limited to, cybersecurity, fraud, natural disasters, climate change and future pandemics; the risk that the Bank may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Bank’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Bank’s Annual Report on Form 10-K and updated by our Quarterly Reports on Form 10-Q and other filings submitted to the FDIC. These statements speak only as of the date of this release and the Bank does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

NBN-F


NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
	September 30, 2024		June 30, 2024

Assets
Cash and due from banks	$	768	$	2,711
Short-term investments		316,519		239,447
Total cash and cash equivalents		317,287		242,158


Available-for-sale debt securities, at fair value		36,836		48,978
Equity securities, at fair value		7,269		7,013
Total investment securities		44,105		55,991

SBA loans held for sale		17,639		14,506

Loans:
Commercial real estate		2,715,536		2,028,280
Commercial and industrial		681,118		618,846
Residential real estate		106,075		99,234
Consumer		234		291
Total loans		3,502,963		2,746,651
Less: Allowance for credit losses		43,640		26,709
Loans, net		3,459,323		2,719,942


Premises and equipment, net		26,452		27,144
Federal Home Loan Bank stock, at cost		15,499		15,751
Loan servicing rights, net		926		984
Bank-owned life insurance		18,954		18,830
Accrued interest receivable		17,294		15,163
Other assets		22,419		21,734
Total assets	$	3,939,898	$	3,132,203

Liabilities and Shareholders’ Equity
Deposits:
Demand	$	149,669	$	146,727
Savings and interest checking		752,806		732,029
Money market		130,878		154,504
Time		2,091,561		1,306,203
Total deposits		3,124,914		2,339,463

Federal Home Loan Bank and other advances		339,073		345,190
Lease liability		19,870		20,252
Other liabilities		63,484		50,664
Total liabilities		3,547,341		2,755,569

Commitments and contingencies		–		–


Shareholders’ equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares
issued and outstanding at September 30 and June 30, 2024		–		–
Voting common stock, $1.00 par value, 25,000,000 shares authorized;
8,212,026 and 8,127,690 shares issued and outstanding at
September 30 and June 30, 2024, respectively		8,212		8,128
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;
No shares issued and outstanding at September 30 and June 30, 2024		–		–
Additional paid-in capital		63,318		64,762
Retained earnings		320,955		303,927
Accumulated other comprehensive income (loss)		72		(183	)
Total shareholders’ equity		392,557		376,634
Total liabilities and shareholders’ equity	$	3,939,898	$	3,132,203


NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
	Three Months Ended September 30,
	2024		2023
Interest and dividend income:
Interest and fees on loans	$	65,338	$	59,114
Interest on available-for-sale securities		595		483
Other interest and dividend income		3,921		3,100
Total interest and dividend income		69,854		62,697

Interest expense:
Deposits		26,590		19,257
Federal Home Loan Bank and other advances		4,030		6,145
Obligation under capital lease agreements		234		171
Total interest expense		30,854		25,573
Net interest and dividend income before provision for credit losses		39,000		37,124
Provision for credit losses		422		190
Net interest and dividend income after provision for credit losses		38,578		36,934

Noninterest income:
Fees for other services to customers		443		407
Gain on sales of SBA loans		3,331		251
Net unrealized gain (loss) on equity securities		189		(157	)
Loss on real estate owned, other repossessed collateral and premises and equipment, net		–		–
Bank-owned life insurance income		124		115
Correspondent fee income		30		92
Other noninterest income		2		71
Total noninterest income		4,119		779

Noninterest expense:
Salaries and employee benefits		11,183		9,721
Occupancy and equipment expense		1,078		1,105
Professional fees		753		781
Data processing fees		1,487		1,100
Marketing expense		136		261
Loan acquisition and collection expense		1,293		650
FDIC insurance expense		331		357
Other noninterest expense		1,424		1,414
Total noninterest expense		17,685		15,389
Income before income tax expense		25,012		22,324
Income tax expense		7,906		7,152
Net income	$	17,106	$	15,172


Weighted-average shares outstanding:
Basic		7,886,148		7,479,837
Diluted		8,108,688		7,554,314

Earnings per common share:
Basic	$	2.17	$	2.03
Diluted		2.11		2.01

Cash dividends declared per common share	$	0.01	$	0.01


NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Three Months Ended September 30,
	2024						2023
			Interest		Average				Interest		Average
	Average		Income/		Yield/		Average		Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
Assets:
Interest-earning assets:
Investment securities	$	55,413	$	595	4.26	%	$	60,173	$	483	3.19	%
Loans (1) (2) (3)		2,838,352		65,338	9.13	%		2,503,429		59,114	9.39	%
Federal Home Loan Bank stock		16,465		330	7.95	%		22,357		413	7.35	%
Short-term investments (4)		245,542		3,591	5.80	%		201,803		2,687	5.30	%
Total interest-earning assets		3,155,772		69,854	8.78	%		2,787,762		62,697	8.95	%
Cash and due from banks		2,112						2,492
Other non-interest earning assets		94,071						56,263
Total assets	$	3,251,955					$	2,846,517

Liabilities & Shareholders’ Equity:
Interest-bearing liabilities:
NOW accounts	$	563,730	$	6,380	4.49	%	$	487,445	$	5,145	4.20	%
Money market accounts		148,687		1,267	3.38	%		258,296		2,133	3.29	%
Savings accounts		178,581		1,557	3.46	%		90,997		560	2.45	%
Time deposits		1,389,832		17,386	4.96	%		977,220		11,419	4.65	%
Total interest-bearing deposits		2,280,830		26,590	4.63	%		1,813,958		19,257	4.22	%
Federal Home Loan Bank advances		362,594		4,030	4.41	%		510,514		6,145	4.79	%
Lease liability		20,018		234	4.64	%		21,776		171	3.12	%
Total interest-bearing liabilities		2,663,442		30,854	4.60	%		2,346,248		25,573	4.34	%

Non-interest-bearing liabilities:
Demand deposits and escrow accounts		175,161						169,338
Other liabilities		26,175						25,065
Total liabilities		2,864,778						2,540,651
Shareholders’ equity		387,177						305,866
Total liabilities and shareholders’ equity	$	3,251,955					$	2,846,517

Net interest income			$	39,000					$	37,124

Interest rate spread					4.18	%					4.61	%
Net interest margin (5)					4.90	%					5.30	%

Cost of funds (6)					4.31	%					4.04	%

(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(2) Includes loans held for sale.
(3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4) Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
(5) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(6) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.


NORTHEAST BANK
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
	Three Months Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Net interest income	$	39,000		$	37,935		$	36,512		$	37,000		$	37,124
Provision for credit losses		422			547			596			436			190
Noninterest income		4,119			2,092			1,542			1,466			779
Noninterest expense		17,685			17,079			16,429			15,669			15,389
Net income		17,106			15,140			13,865			14,054			15,172

Weighted-average common shares outstanding:
Basic		7,886,148			7,765,868			7,509,320			7,505,109			7,479,837
Diluted		8,108,688			7,910,692			7,595,124			7,590,913			7,554,315
Earnings per common share:
Basic	$	2.17		$	1.95		$	1.85		$	1.87		$	2.03
Diluted		2.11			1.91			1.83			1.85			2.01

Dividends declared per common share	$	0.01		$	0.01		$	0.01		$	0.01		$	0.01

Return on average assets		2.09	%		1.99	%		1.87	%		1.93	%		2.12	%
Return on average equity		17.53	%		16.56	%		16.45	%		17.35	%		19.73	%
Net interest rate spread (1)		4.18	%		4.41	%		4.27	%		4.49	%		4.61	%
Net interest margin (2)		4.90	%		5.13	%		5.01	%		5.20	%		5.30	%
Efficiency ratio (non-GAAP) (3)		41.01	%		42.67	%		43.17	%		40.73	%		40.60	%
Noninterest expense to average total assets		2.16	%		2.24	%		2.21	%		2.15	%		2.15	%
Average interest-earning assets to average interest-bearing liabilities		118.48	%		118.78	%		119.28	%		118.52	%		118.82	%

	As of:
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Nonperforming loans:
Originated portfolio:
Residential real estate	$	3,976		$	2,502		$	2,573		$	2,582		$	289
Commercial real estate		4,682			1,407			2,075			2,075			1,973
Commercial and industrial		6,684			6,520			6,928			6,950			584
Consumer		–			–			–			–			–
Total originated portfolio		15,342			10,429			11,576			11,607			2,846
Total purchased portfolio		21,830			17,832			16,370			19,165			14,603
Total nonperforming loans		37,172			28,261			27,946			30,772			17,449
Real estate owned and other repossessed collateral, net		–			–			–			–			–
Total nonperforming assets	$	37,172		$	28,261		$	27,946		$	30,772		$	17,449

Past due loans to total loans		0.89	%		0.95	%		1.13	%		1.22	%		1.01	%
Nonperforming loans to total loans		1.06	%		1.02	%		1.05	%		1.18	%		0.69	%
Nonperforming assets to total assets		0.94	%		0.90	%		0.93	%		1.04	%		0.61	%
Allowance for credit losses to total loans		1.25	%		0.97	%		0.98	%		1.06	%		1.00	%
Allowance for credit losses to nonperforming loans		117.40	%		94.51	%		92.83	%		89.67	%		145.01	%
Net charge-offs (recoveries)	$	1,604		$	1,347		$	2,225		$	995		$	1,536
Commercial real estate loans to total capital (4)		604.38	%		482.13	%		509.08	%		544.34	%		546.91	%
Net loans to deposits		110.70	%		116.88	%		118.15	%		121.31	%		127.24	%
Purchased loans to total loans		69.11	%		61.88	%		60.99	%		63.07	%		59.98	%
Equity to total assets		9.96	%		12.02	%		11.73	%		11.03	%		10.83	%
Common equity tier 1 capital ratio		11.45	%		13.84	%		13.24	%		12.63	%		12.45	%
Total risk-based capital ratio		12.70	%		14.82	%		14.22	%		13.71	%		13.46	%
Tier 1 leverage capital ratio		12.06	%		12.30	%		11.79	%		11.28	%		10.95	%

Total shareholders’ equity	$	392,557		$	376,634		$	351,913		$	327,540		$	311,569
Less: Preferred stock		–			–			–			–			–
Common shareholders’ equity		392,557			376,634			351,913			327,540			311,569
Less: Intangible assets (5)		–			–			–			–			–
Tangible common shareholders’ equity (non-GAAP)	$	392,557		$	376,634		$	351,913		$	327,540		$	311,569

Common shares outstanding		8,212,026			8,127,690			7,977,690			7,804,052			7,796,691
Book value per common share	$	47.80		$	46.34		$	44.11		$	41.97		$	39.96
Tangible book value per share (non-GAAP) (6)		47.80			46.34			44.11			41.97			39.96

(1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
(2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the credit loss provision) plus noninterest income.
(4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.
(5) Includes the loan servicing rights asset.
(6) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.

For More Information:
Richard Cohen, Chief Financial Officer
Northeast Bank, 27 Pearl Street, Portland, Maine 04101
207.786.3245 ext. 3249
www.northeastbank.com

MIL-OSI: Provident Financial Services, Inc. Reports Third Quarter Earnings and Declares Quarterly Cash Dividend

Source: GlobeNewswire (MIL-OSI)

ISELIN, N.J., Oct. 29, 2024 (GLOBE NEWSWIRE) — Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $46.4 million, or $0.36 per basic and diluted share for the three months ended September 30, 2024, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024 and net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023.

The Company’s earnings for the three and nine months ended September 30, 2024 reflected the impact of the May 16, 2024 merger with Lakeland Bancorp, Inc. (“Lakeland”), which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments. The merger with Lakeland significantly impacted provisions for credit losses in the trailing quarter due to the initial CECL provisions recorded on acquired loans. The results of operations for the three and nine months ended September 30, 2024 also included other transaction costs related to the merger with Lakeland, totaling $15.6 million and $36.7 million, respectively, compared with transaction costs totaling $2.3 million and $5.3 million for the respective 2023 periods. Additionally, the Company realized a $2.8 million loss related to the sale of subordinated debt issued by Lakeland from the Provident investment portfolio, during the nine months ended September 30, 2024.

Anthony J. Labozzetta, President and Chief Executive Officer commented, “We achieved solid performance this quarter, and we are optimistic that our results will continue to improve as we further realize the synergies of the merger. Provident generated strong earnings and core metrics, aided by robust performance in our fee-based businesses. We continue to expand our operations prudently and believe we are well-positioned for even greater success as market conditions improve.”

Regarding the Company’s merger with Lakeland, Mr. Labozzetta added, “We are proud to announce that, with the conversion of our core system in early September, our merger is complete and we are a unified organization. Our cultures are combining well and we are already experiencing the benefits of cost savings and enhanced revenue opportunities. We are grateful to the many team members whose hard work allowed for a smooth conversion and the retention of almost all legacy Lakeland customers.”

Performance Highlights for the Third Quarter of 2024

Net interest income increased $42.2 million to $183.7 million for the three months ended September 30, 2024, from $141.5 million for the trailing quarter primarily due to the full quarter impact of net assets acquired from Lakeland, including the accretion of purchase accounting adjustments and four basis points of core margin expansion.
The net interest margin increased ten basis points to 3.31% for the quarter ended September 30, 2024, from 3.21% for the trailing quarter. The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 17 basis points to 5.84%, compared to the trailing quarter, while the weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2024 increased ten basis points to 3.19%, compared to the trailing quarter. The increases in the yields and costs on interest-earning assets and interest-bearing liabilities were primarily due to a full quarter of accretion of purchase accounting adjustments related to the Lakeland merger, which contributed approximately 53 basis points to the net interest margin in the current quarter.
Non-interest income increased $4.6 million to $26.9 million for the three months ended September 30, 2024, from $22.3 million for the trailing quarter, while non-interest expense increased $20.6 million to $136.0 million for the three months ended September 30, 2024, compared to $115.4 million for the trailing quarter. The increases in both non-interest income and non-interest expense were reflective of a full quarter of combined operations with Lakeland.
Wealth management and insurance agency income increased 9.0% and 12.6%, respectively, versus the same period in 2023. The increase in wealth management income was primarily due to an increase in the average market value of assets under management during the period, while the increase in insurance agency income was largely due to an increase in business activity.
Adjusting for transaction costs related to the merger with Lakeland, net of tax, the Company’s annualized adjusted returns on average assets, average equity and average tangible equity(1) were 0.95%, 8.62% and 14.53% for the quarter ended September 30, 2024, compared to 0.06%, 0.53% and 2.01% for the quarter ended June 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios are shown on page 13 of the earnings release.
The Company’s annualized adjusted pre-tax, pre-provision returns on average assets, average equity and average tangible equity⁽²⁾ were 1.48%, 13.48% and 19.77% for the quarter ended September 30, 2024, compared to 1.47%, 13.26% and 19.21% for the quarter ended June 30, 2024. A reconciliation between GAAP and the above non-GAAP ratios are shown on page 14 of the earnings release.
As of September 30, 2024, the Company’s loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.98 billion, with a weighted average interest rate of 7.18%, compared to $1.67 billion, with a weighted average interest rate of 7.53%, as of June 30, 2024.
The Company recorded a $9.6 million provision for credit losses on loans for the quarter ended September 30, 2024, compared to a $66.1 million provision for the trailing quarter. The provision for credit losses on loans in the quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration. The allowance for credit losses as a percentage of loans increased to 1.02% as of September 30, 2024, from 1.00% as of June 30, 2024.
As of September 30, 2024, CRE loans related to office properties totaled $921.1 million, compared to $953.5 million as of June 30, 2024. CRE loans secured by office properties constitutes only 4.9% of total loans and have an average loan size of $1.9 million, with just seven relationships greater than $10.0 million. There were four loans totaling $9.2 million on non-accrual as of September 30, 2024, however we do not expect to incur losses on any of these loans.
As of September 30, 2024, multi-family CRE loans secured by New York City properties totaled $226.6 million, compared to $227.7 million as of June 30, 2024. This portfolio constitutes only 1.2% of total loans and has an average loan size of $2.6 million. Loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.
Non-performing loans to total loans as of September 30, 2024 increased to 0.47%, compared to 0.36% as of June 30, 2024, while non-performing assets to total assets as of September 30, 2024 increased to 0.41%, compared to 0.33% as of June 30, 2024. The increase in non-performing loans, compared to the prior quarter was primarily attributable to one commercial real estate credit secured by an industrial property which has a loan-to-value ratio of approximately 39%. We anticipate a near-term resolution of this credit with no expected loss. For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans. Of this total, $6.4 million was attributable to one previously identified commercial relationship that had a $4.4 million specific reserve as of June 30, 2024. This credit is expected to be fully resolved in the fourth quarter of 2024.

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on November 29, 2024 to stockholders of record as of the close of business on November 15, 2024.

Results of Operations

Three months ended September 30, 2024 compared to the three months ended June 30, 2024

For the three months ended September 30, 2024, the Company reported net income of $46.4 million, or $0.36 per basic and diluted share, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024. The Company’s earnings for the prior quarter were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. The results of operations for the three months ended September 30, 2024 included transaction costs related to the merger with Lakeland totaling $15.6 million, compared with transaction costs totaling $18.9 million in the trailing quarter. Additionally, the Company realized a $2.8 million loss in the trailing quarter related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland.

Net Interest Income and Net Interest Margin

Net interest income increased $42.2 million to $183.7 million for the three months ended September 30, 2024, from $141.5 million for the trailing quarter. Net interest income for the three months ended September 30, 2024 was favorably impacted by a full quarter of combined operations with Lakeland and accretion of purchase accounting adjustments, compared to a 45 days impact in the prior quarter.

The Company’s net interest margin increased ten basis points to 3.31% for the quarter ended September 30, 2024, from 3.21% for the trailing quarter. Accretion of purchase accounting adjustments related to the Lakeland merger contributed 53 basis points to the net interest margin in the current quarter. The current net interest margin reflects a full quarter of the acquisition of Lakeland’s interest-bearing assets and liabilities, the prior quarter sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the prior quarter issuance of subordinated debt.

The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 17 basis points to 5.84%, compared to the trailing quarter. The weighted average cost of interest-bearing liabilities for the quarter ended September 30, 2024 increased ten basis points from the trailing quarter, to 3.19%. The average cost of interest-bearing deposits for the quarter ended September 30, 2024 increased 12 basis points to 2.96%, compared to 2.84% for the trailing quarter. The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared to 2.27% for the trailing quarter. The average cost of borrowed funds for the quarter ended September 30, 2024 was 3.73%, compared to 3.83% for the quarter ended June 30, 2024. All yields and costs reflect a full quarter of combined operations with Lakeland.

Provision for Credit Losses on Loans

For the quarter ended September 30, 2024, the Company recorded a $9.6 million provision for credit losses on loans, compared with a provision for credit losses on loans of $66.1 million for the quarter ended June 30, 2024. The provision for credit losses on loans in the quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration, while the provision for credit losses on loans in the prior quarter was primarily attributable to an initial CECL provision for credit losses of $60.1 million, recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans.

Non-Interest Income and Expense

For the three months ended September 30, 2024, non-interest income totaled $26.9 million, an increase of $4.6 million, compared to the trailing quarter. Net gain on securities transactions increased $3.0 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to a $2.8 million loss realized on the sale from the Provident investment portfolio of subordinated debt issued by Lakeland in the prior quarter. Fee income increased $1.1 million to $9.8 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to increases in deposit and debit card related fee income. The increases in fee income are primarily attributable to the addition of the Lakeland customer base. BOLI income increased $1.0 million for the three months ended September 30, 2024, compared to the trailing quarter, primarily due to an increase in benefit claims recognized. Partially offsetting these increases in non-interest income, insurance agency income decreased $857,000 to $3.6 million for the three months ended September 30, 2024, compared to the trailing quarter, due to a seasonal decrease in business activity in the current quarter, while wealth management income decreased $149,000 to $7.6 million for the three months ended September 30, 2024, compared to the trailing quarter, mainly due to a seasonal decrease in tax preparation fees, partially offset by an increase in the average market value of assets under management during the period.

Non-interest expense totaled $136.0 million for the three months ended September 30, 2024, an increase of $20.6 million, compared to $115.4 million for the trailing quarter. Compensation and benefits expense increased $8.6 million to $63.5 million for the three months ended September 30, 2024, compared to $54.9 million for the trailing quarter. The increase in compensation and benefits expense was primarily attributable to a full quarter of combined operations with Lakeland, compared to 45 days in the prior quarter. Amortization of intangibles increased $5.7 million to $12.2 million for the three months ended September 30, 2024, compared to $6.5 million for the trailing quarter, largely due to a full quarter of core deposit intangible amortization related to Lakeland. Other operating expenses increased $4.5 million to $15.8 million for the three months ended September 30, 2024, compared to $11.3 million for the trailing quarter, primarily due to increases in professional service expenses. Data processing expense increased $2.0 million to $10.5 million for the three months ended September 30, 2024, compared to $8.4 million for the trailing quarter, primarily due a full quarter of combined operations with Lakeland, while net occupancy expense increased $1.6 million to $12.8 million for the three months ended September 30, 2024, compared to $11.1 million for the trailing quarter, primarily due to increases in maintenance and depreciation expenses from the addition of Lakeland. Additionally, FDIC insurance increased $1.1 million to $4.2 million for the three months ended September 30, 2024, primarily resulting from the impact of the Lakeland merger. Partially offsetting these increases, merger-related expenses decreased $3.3 million to $15.6 million for the three months ended September 30, 2024, compared to the trailing quarter.

The Company’s annualized adjusted non-interest expense as a percentage of average assets⁽⁵⁾ declined to 1.98% for the quarter ended September 30, 2024, compared to 2.02% for the trailing quarter. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)⁽⁶⁾ improved to 57.20% for the three months ended September 30, 2024, compared to 57.86% for the trailing quarter.

Income Tax Expense/Benefit

For the three months ended September 30, 2024, the Company’s income tax expense was $18.9 million, compared to an income tax benefit of $9.8 million for the trailing quarter. The increase in tax expense for the three months ended September 30, 2024 compared with the trailing quarter was largely due to an increase in taxable income in the current quarter as a result of the Lakeland merger and a $5.3 million tax benefit realized in the trailing quarter related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024.

Three months ended September 30, 2024 compared to the three months ended September 30, 2023

For the three months ended September 30, 2024, the Company reported net income of $46.4 million, or $0.36 per basic and diluted share, compared to net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023. The Company’s earnings for the quarter ended September 30, 2024 reflected the impact of the May 16, 2024 merger with Lakeland. The results of operations included transaction costs related to the merger with Lakeland totaling $15.6 million and $2.3 million for the three months ended September 30, 2024 and 2023, respectively.

Net Interest Income and Net Interest Margin

Net interest income increased $87.5 million to $183.7 million for the three months ended September 30, 2024, from $96.2 million for same period in 2023. Net interest income for the three months ended September 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by unfavorable repricing of both deposits and borrowings.

The Company’s net interest margin increased 35 basis points to 3.31% for the quarter ended September 30, 2024, from 2.96% for the same period last year. Accretion of purchase accounting adjustments related to the Lakeland merger contributed 53 basis points to the net interest margin in the current quarter. The current quarter net interest margin reflects the acquisition of Lakeland’s interest bearing assets and liabilities, the prior quarter sale of $554.2 million of securities acquired from Lakeland and the repayment of overnight borrowings as well as the prior quarter issuance of subordinated debt.

The weighted average yield on interest-earning assets for the quarter ended September 30, 2024 increased 95 basis points to 5.84%, compared to 4.89% for the quarter ended September 30, 2023. The weighted average cost of interest-bearing liabilities increased 69 basis points for the quarter ended September 30, 2024 to 3.19%, compared to 2.50% for the third quarter of 2023. The average cost of interest-bearing deposits for the quarter ended September 30, 2024 was 2.96%, compared to 2.22% for the same period last year. Average non-interest-bearing demand deposits increased $1.51 billion to $3.74 billion for the quarter ended September 30, 2024, compared to $2.23 billion for the quarter ended September 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared with 1.74% for the quarter ended September 30, 2023. The average cost of borrowed funds for the quarter ended September 30, 2024 was 3.73%, compared to 3.74% for the same period last year.

Provision for Credit Losses on Loans

For the quarter ended September 30, 2024, the Company recorded a $9.6 million provision for credit losses on loans, compared with an $11.0 million provision for credit losses on loans for the quarter ended September 30, 2023. The provision for credit losses on loans in the current quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration. For the three months ended September 30, 2024, net charge-offs totaled $6.8 million, or an annualized 14 basis points of average loans.

Non-Interest Income and Expense

Non-interest income totaled $26.9 million for the quarter ended September 30, 2024, an increase of $7.5 million, compared to the same period in 2023. Fee income increased $3.7 million to $9.8 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and loan related fee income, resulting from the Lakeland merger. BOLI income increased $2.5 million to $4.3 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland’s BOLI. Wealth management fees increased $628,000 to $7.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, mainly due to an increase in the average market value of assets under management during the period, while insurance agency income increased $407,000 to $3.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, largely due to an increase in business activity. Additionally, other income increased $339,000 to $1.5 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, primarily due to increases in gains on the sale of SBA and mortgage loans.

For the three months ended September 30, 2024, non-interest expense totaled $136.0 million, an increase of $70.4 million, compared to the three months ended September 30, 2023. Compensation and benefits expense increased $27.8 million to $63.5 million for the three months ended September 30, 2024, compared to $35.7 million for the same period in 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Additionally, merger-related expenses increased $13.3 million to $15.6 million for the three months ended September 30, 2024, compared to the same period in 2023. Amortization of intangibles increased $11.5 million to $12.2 million for the three months ended September 30, 2024, compared to $720,000 for the same period in 2023, largely due to core deposit intangible amortization related to Lakeland in the current quarter. Data processing expenses increased $5.2 million to $10.5 million for three months ended September 30, 2024, compared to $5.3 million for the same period in 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland. Net occupancy expense increased $4.7 million to $12.8 million for three months ended September 30, 2024, compared to $8.1 million for the same period in 2023, primarily due to an increase in depreciation and maintenance expenses due to the addition of Lakeland. Other operating expenses increased $5.0 million to $15.8 million for the three months ended September 30, 2024, compared to $10.7 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $2.6 million to $4.2 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

The Company’s annualized adjusted non-interest expense as a percentage of average assets⁽⁵⁾ was 1.98% for the quarter ended September 30, 2024, compared to 1.80% for the same period in 2023. The efficiency ratio (adjusted non-interest expense divided by the sum of net interest income and non-interest income)⁽⁶⁾ was 57.20% for the three months ended September 30, 2024 compared to 54.81% for the same respective period in 2023.

Income Tax Expense

For the three months ended September 30, 2024, the Company’s income tax expense was $18.9 million with an effective tax rate of 28.9%, compared with an income tax expense of $8.8 million with an effective tax rate of 23.7% for the three months ended September 30, 2023. The increase in tax expense for the three months ended September 30, 2024, compared with the same period last year was largely due to an increase in taxable income in the quarter, as a result of the Lakeland merger and the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee in the prior quarter.

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

For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to net income of $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023. The Company’s earnings for the nine months ended September 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations. Transaction costs related to our merger with Lakeland totaled $36.7 million and $5.3 million for the nine months ended September 30, 2024 and 2023, respectively. Additionally, the Company realized a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland, during the nine months ended September 30, 2024.

Net Interest Income and Net Interest Margin

Net interest income increased $115.2 million to $418.9 million for the nine months ended September 30, 2024, from $303.7 million for same period in 2023. Net interest income for the nine months ended September 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings.

For the nine months ended September 30, 2024, our net interest margin decreased one basis point to 3.18%, compared to 3.19% for the nine months ended September 30, 2023. The weighted average yield on interest earning assets increased 85 basis points to 5.61% for the nine months ended September 30, 2024, compared to 4.76% for the nine months ended September 30, 2023, while the weighted average cost of interest-bearing liabilities increased 99 basis points to 3.06% for the nine months ended September 30, 2024, compared to 2.07% for the same period last year. The average cost of interest-bearing deposits increased 102 basis points to 2.84% for the nine months ended September 30, 2024, compared to 1.82% for the same period last year. Average non-interest-bearing demand deposits increased $514.3 million to $2.90 billion for the nine months ended September 30, 2024, compared with $2.38 billion for the nine months ended September 30, 2023. The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the nine months ended September 30, 2024, compared with 1.40% for the nine months ended September 30, 2023. The average cost of borrowings for the nine months ended September 30, 2024 was 3.73%, compared to 3.29% for the same period last year.

Provision for Credit Losses on Loans

For the nine months ended September 30, 2024, the Company recorded a $75.9 million provision for credit losses on loans, compared with a provision for credit losses on loans of $27.4 million for the nine months ended September 30, 2023. The increased provision for credit losses on loans for the nine months ended September 30, 2024 was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by an improved economic forecast for the current nine-month period within our CECL model, compared to the same period last year. For the nine months ended September 30, 2024, net charge-offs totaled $9.1 million or an annualized eight basis points of average loans.

Non-Interest Income and Expense

For the nine months ended September 30, 2024, non-interest income totaled $69.9 million, an increase of $9.1 million compared to the same period in 2023. Fee income increased $6.1 million to $24.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in deposit fee income, debit and credit card related fee income and loan related fee income resulting from the Lakeland merger. BOLI income increased $4.6 million to $9.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland’s BOLI, while wealth management income increased $2.1 million to $22.9 million for the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to an increase in the average market value of assets under management during the period. Additionally, insurance agency income increased $1.7 million to $12.9 million for the nine months ended September 30, 2024, compared to $11.2 million for the same period in 2023, largely due to increases in contingent commissions, retention revenue and new business activity. Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the nine months ended September 30, 2024, primarily due to a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland. Other income decreased $2.4 million to $3.2 million for the nine months ended September 30, 2024, compared to $5.7 million for the same period in 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans.

Non-interest expense totaled $323.2 million for the nine months ended September 30, 2024, an increase of $123.7 million, compared to $199.5 million for the nine months ended September 30, 2023. Compensation and benefits expense increased $48.7 million to $158.4 million for the nine months ended September 30, 2024, compared to $109.7 million for the nine months ended September 30, 2023. The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland. Merger-related expenses increased $31.3 million to $36.7 million for the nine months ended September 30, 2024, compared to $5.3 million for the nine months ended September 30, 2023. Amortization of intangibles increased $17.2 million to $19.4 million for the nine months ended September 30, 2024, compared to $2.2 million for the nine months ended September 30, 2023, largely due to core deposit intangible amortization related to Lakeland. Data processing expense increased $9.2 million to $25.7 million for the nine months ended September 30, 2024, compared to $16.5 million for the nine months ended September 30, 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland, while net occupancy expense increased $8.0 million to $32.5 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland. Other operating expenses increased $5.6 million to $37.4 million for the three months ended September 30, 2024, compared to $31.8 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $3.9 million to $9.6 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

Income Tax Expense
For the nine months ended September 30, 2024, the Company’s income tax expense was $19.9 million with an effective tax rate of 22.9%, compared with $34.9 million with an effective tax rate of 25.7% for the nine months ended September 30, 2023. The decrease in tax expense for the nine months ended September 30, 2024 compared with the same period last year was largely due to a $5.8 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of the initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

Asset Quality

The Company’s total non-performing loans as of September 30, 2024 were $89.9 million, or 0.47% of total loans, compared to $67.9 million, or 0.36% of total loans as of June 30, 2024 and $49.6 million, or 0.46% of total loans as of December 31, 2023. The $22.1 million increase in non-performing loans as of September 30, 2024, compared to the trailing quarter, consisted of a $10.4 million increase in non-performing commercial mortgage loans, an $8.9 million increase in non-performing commercial loans, a $1.5 million increase in non-performing construction loans, a $764,000 increase in non-performing residential mortgage loans, a $302,000 increase in non-performing multi-family loans and a $289,000 increase in non-performing consumer loans. As of September 30, 2024, impaired loans totaled $74.0 million with related specific reserves of $7.2 million, compared with impaired loans totaling $54.6 million with related specific reserves of $7.7 million as of June 30, 2024. As of December 31, 2023, impaired loans totaled $42.8 million with related specific reserves of $2.4 million.

As of September 30, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.02% of total loans, compared to 1.00% and 0.99% as of June 30, 2024 and December 31, 2023, respectively. The allowance for credit losses increased $84.0 million to $191.2 million as of September 30, 2024, from $107.2 million as of December 31, 2023. The increase in the allowance for credit losses on loans as of September 30, 2024 compared to December 31, 2023 was due to a $75.9 million provision for credit losses, which included an initial CECL provision of $60.1 million on loans acquired from Lakeland, and a $17.2 million allowance recorded through goodwill related to Purchased Credit Deteriorated loans acquired from Lakeland, partially offset by net charge-offs of $9.1 million.

The following table sets forth accruing past due loans and non-accrual loans on the dates indicated, as well as delinquency statistics and certain asset quality ratios.

	September 30, 2024				June 30, 2024				December 31, 2023
	Number of Loans	Principal Balance of Loans			Number of Loans	Principal Balance of Loans			Number of Loans	Principal Balance of Loans
	(Dollars in thousands)
Accruing past due loans:
30 to 59 days past due:
Commercial mortgage loans	2	$	430		3	$	1,707		1	$	825
Multi-family mortgage loans	—		—		—		—		1		3,815
Construction loans	—		—		—		—		—		—
Residential mortgage loans	23		5,020		9		1,714		13		3,429
Total mortgage loans	25		5,450		12		3,421		15		8,069
Commercial loans	14		1,952		20		3,444		6		998
Consumer loans	53		4,073		38		2,891		31		875
Total 30 to 59 days past due	92	$	11,475		70	$	9,756		52	$	9,942

60 to 89 days past due:
Commercial mortgage loans	1	$	641		3	$	1,231		—	$	—
Multi-family mortgage loans	—		—		—		—		1		1,635
Construction loans	—		—		—		—		—		—
Residential mortgage loans	11		1,991		10		2,193		8		1,208
Total mortgage loans	12		2,632		13		3,424		9		2,843
Commercial loans	9		1,240		6		1,146		3		198
Consumer loans	10		606		9		648		5		275
Total 60 to 89 days past due	31		4,478		28		5,218		17		3,316
Total accruing past due loans	123	$	15,953		98	$	14,974		69	$	13,258

Non-accrual:
Commercial mortgage loans	17	$	13,969		10	$	3,588		7	$	5,151
Multi-family mortgage loans	6		7,578		5		7,276		1		744
Construction loans	2		13,151		1		11,698		1		771
Residential mortgage loans	24		5,211		20		4,447		7		853
Total mortgage loans	49		39,909		36		27,009		16		7,519
Commercial loans	69		48,592		58		39,715		26		41,487
Consumer loans	32		1,433		24		1,144		10		633
Total non-accrual loans	150	$	89,934		118	$	67,868		52	$	49,639

Non-performing loans to total loans			0.47	%			0.36	%			0.46	%
Allowance for loan losses to total non-performing loans			217.09	%			277.50	%			215.96	%
Allowance for loan losses to total loans			1.02	%			1.00	%			0.99	%

As of September 30, 2024 and December 31, 2023, the Company held foreclosed assets of $9.8 million and $11.7 million, respectively. During the nine months ended September 30, 2024, there were three properties sold with an aggregate carrying value of $532,000 and one write-down of a foreclosed commercial property of $1.3 million. Foreclosed assets as of September 30, 2024 consisted primarily of commercial real estate. Total non-performing assets as of September 30, 2024 increased $36.6 million to $97.9 million, or 0.41% of total assets, from $61.3 million, or 0.43% of total assets as of December 31, 2023.

Balance Sheet Summary

Total assets as of September 30, 2024 were $24.04 billion, a $9.83 billion increase from December 31, 2023. The increase in total assets was primarily due to the addition of Lakeland.

The Company’s loans held for investment portfolio totaled $18.79 billion as of September 30, 2024 and $10.87 billion as of December 31, 2023. The loan portfolio consisted of the following:

	September 30, 2024			June 30, 2024			December 31, 2023
	(Dollars in thousands)
Mortgage loans:
Commercial	$	7,342,456		$	7,337,742		$	4,512,411
Multi-family		3,226,918			3,189,808			1,812,500
Construction		873,509			970,244			653,246
Residential		2,032,671			2,024,027			1,164,956
Total mortgage loans		13,475,554			13,521,821			8,143,113
Commercial loans		4,710,601			4,617,232			2,440,621
Consumer loans		623,709			626,016			299,164
Total gross loans		18,809,864			18,765,069			10,882,898
Premiums on purchased loans		1,362			1,410			1,474
Net deferred fees and unearned discounts		(16,617	)		(7,149	)		(12,456	)
Total loans	$	18,794,609		$	18,759,330		$	10,871,916

As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments. Compared to the prior quarter, during the three months ended September 30, 2024, the loan portfolio had net increases of $93.4 million of commercial loans, $37.1 million of multi-family loans, $8.6 million of residential mortgage loans, and $4.7 million of commercial mortgage loans, partially offset by net decreases of $96.7 million of construction loans and $2.3 million of consumer loans. Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio as of September 30, 2024, compared to 86.5% as of December 31, 2023.

For the nine months ended September 30, 2024, loan funding, including advances on lines of credit, totaled $2.78 billion, compared with $2.53 billion for the same period in 2023.

As of September 30, 2024, the Company’s unfunded loan commitments totaled $2.97 billion, including commitments of $1.84 billion in commercial loans, $231.0 million in construction loans and $225.7 million in commercial mortgage loans. Unfunded loan commitments as of December 31, 2023 and September 30, 2023 were $2.09 billion and $2.18 billion, respectively.

The loan pipeline, consisting of work-in-process and loans approved pending closing, totaled $1.98 billion as of September 30, 2024, compared to $1.09 billion and $1.70 billion as of December 31, 2023 and September 30, 2023, respectively.

Total investment securities were $3.17 billion as of September 30, 2024, a $1.04 billion increase from December 31, 2023. This increase was primarily due to the addition of Lakeland.

Total deposits increased $8.08 billion during the nine months ended September 30, 2024, to $18.38 billion, due primarily to the addition of Lakeland. Total savings and demand deposit accounts increased $6.02 billion to $15.22 billion as of September 30, 2024, while total time deposits increased $2.06 billion to $3.16 billion as of September 30, 2024. The increase in savings and demand deposits was largely attributable to a $2.92 billion increase in interest bearing demand deposits, a $1.58 billion increase in non-interest bearing demand deposits, a $1.03 billion increase in money market deposits and a $495.5 million increase in savings deposits. The increase in time deposits consisted of a $2.01 billion increase in retail time deposits and a $46.5 million increase in brokered time deposits.

Borrowed funds increased $244.5 million during the nine months ended September 30, 2024, to $2.21 billion. The increase in deposits and borrowings was largely due to the addition of Lakeland. Borrowed funds represented 9.2% of total assets as of September 30, 2024, a decrease from 13.9% as of December 31, 2023.

Stockholders’ equity increased $930.5 million during the nine months ended September 30, 2024, to $2.62 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and an improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders. For the three and nine months ended September 30, 2024, common stock repurchases totaled 1,969 shares at an average cost of $16.36 per share and 88,821 shares at an average cost of $14.87 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. As of September 30, 2024, approximately 1.0 million shares remained eligible for repurchase under the current stock repurchase authorization. Book value per share and tangible book value per share(1) as of September 30, 2024 were $20.09 and $13.66, respectively, compared with $22.38 and $16.32, respectively, as of December 31, 2023.

About the Company

Provident Financial Services, Inc. is the holding company for Provident Bank, a community-oriented bank offering “commitment you can count on” since 1839. Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Orange, Queens and Nassau Counties in New York. Provident Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company and insurance services through its wholly owned subsidiary, Provident Protection Plus, Inc.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors on Wednesday, October 30, 2024 at 10:00 a.m. Eastern Time to discuss the Company’s financial results for the quarter ended September 30, 2024. The call may be accessed by dialing 1-888-412-4131 (United States Toll Free) and 1-646-960-0134 (United States Local). Speakers will need to enter conference ID code (3610756) before being met by a live operator. Internet access to the call is also available (listen only) at provident.bank by going to Investor Relations and clicking on “Webcast.”

Forward Looking Statements

Certain statements contained herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “project,” “intend,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company’s Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and those related to the economic environment, particularly in the market areas in which the Company operates, inflation and unemployment, competitive products and pricing, real estate values, fiscal and monetary policies of the U.S. Government, the effects of any turmoil or negative news in the banking industry, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, any failure to realize the anticipated benefits of the merger transaction when expected or at all; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected conditions, factors or events, potential adverse reactions or changes to business, employee, customer and/or counterparty relationships, including those resulting from the completion of the merger and integration of the companies; and the impact of a potential shutdown of the federal government.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.

Footnotes

⁽¹⁾ Annualized adjusted return on average assets, average equity and average tangible equity, annualized adjusted pre-tax pre-provision return on average assets, average equity and average tangible equity, tangible book value per share, annualized adjusted non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes following the Consolidated Financial Highlights which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Financial Highlights
(Dollars in Thousands, except share data) (Unaudited)

	At or for the Three Months Ended									At or for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2024			2024			2023			2024			2023
Statement of Income
Net interest income	$	183,701		$	141,506		$	96,236		$	418,877		$	303,666
Provision for credit losses		9,299			69,705			12,541			78,684			29,031
Non-interest income		26,855			22,275			19,320			69,937			60,861
Non-interest expense		136,002			115,394			65,625			323,224			199,485
Income (loss) before income tax expense		65,255			(21,318	)		37,390			86,906			136,011
Net income (loss)		46,405			(11,485	)		28,547			67,001			101,086
Diluted earnings per share	$	0.36		$	(0.11	)	$	0.38		$	0.65		$	1.35
Interest rate spread		2.65	%		2.58	%		2.39	%		2.55	%		2.69	%
Net interest margin		3.31	%		3.21	%		2.96	%		3.18	%		3.19	%

Profitability
Annualized return on average assets		0.76	%	(0.24		)%		0.81	%		0.47	%		0.98	%
Annualized adjusted return on average assets ⁽¹⁾		0.95	%	0.06		%		0.86	%		0.66	%		1.02	%
Annualized return on average equity		6.94	%	(2.17		)%		6.84	%		4.14	%		8.22	%
Annualized adjusted return on average equity ⁽¹⁾		8.62	%	0.53		%		7.30	%		5.83	%		8.59	%
Annualized return on average tangible equity ⁽⁴⁾		12.06	%	(3.15		)%		9.47	%		7.13	%		11.40	%
Annualized adjusted return on average tangible equity ⁽¹⁾		14.53	%		2.01	%		10.24	%		9.56	%		12.07	%
Annualized adjusted non-interest expense to average assets ⁽⁴⁾		1.98	%		2.02	%		1.80	%		1.99	%		1.87	%
Efficiency ratio ⁽⁶⁾		57.20	%		57.86	%		54.81	%		58.27	%		53.26	%

Asset Quality
Non-accrual loans				$	67,868					$	89,934		$	39,529
90+ and still accruing					—						—			—
Non-performing loans					67,868						88,061			39,529
Foreclosed assets					11,119						9,801			16,487
Non-performing assets					78,987						97,862			56,016
Non-performing loans to total loans					0.36	%					0.47	%		0.37	%
Non-performing assets to total assets					0.33	%					0.41	%		0.40	%
Allowance for loan losses				$	188,331					$	191,175		$	107,563
Allowance for loan losses to total non-performing loans					277.50	%					217.09	%		272.11	%
Allowance for loan losses to total loans					1.00	%					1.02	%		1.01	%
Net loan charge-offs	$	6,756		$	1,340		$	5,510		$	9,067		$	7,266
Annualized net loan charge-offs to average total loans		0.14	%		0.04	%		0.21	%		0.08	%		0.09	%

Average Balance Sheet Data
Assets	$	24,248,038		$	19,197,041		$	13,976,610		$	19,198,113		$	13,848,351
Loans, net		18,531,939			14,649,413			10,470,843			14,631,071			10,269,022
Earning assets		21,809,226			17,385,819			12,735,938			17,305,446			12,574,437
Core deposits		15,394,715			12,257,244			9,212,202			12,271,839			9,408,156
Borrowings		2,125,149			2,158,193			1,780,655			2,074,958			1,556,619
Interest-bearing liabilities		17,304,569			13,856,039			9,826,064			13,757,895			9,554,204
Stockholders’ equity		2,660,470			2,127,469			1,654,920			2,163,856			1,645,093
Average yield on interest-earning assets		5.84	%		5.67	%		4.89	%		5.61	%		4.76	%
Average cost of interest-bearing liabilities		3.19	%		3.09	%		2.50	%		3.06	%		2.07	%

Notes and Reconciliation of GAAP and Non-GAAP Financial Measures
(Dollars in Thousands, except share data)

The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.


(1) Annualized Adjusted Return on Average Assets, Equity and Tangible Equity
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2024			2024			2023			2024			2023
Net Income	$	46,405		$	(11,485	)	$	28,547		$	67,001		$	101,086
Merger-related transaction costs		15,567			18,915			2,289			36,684			5,349
Less: income tax expense		(4,306	)		(4,625	)		(486	)		(9,274	)		(1,015	)
Annualized adjusted net income	$	57,666		$	2,805		$	30,350		$	94,411		$	105,420
Less: Amortization of Intangibles (net of tax)	$	8,551		$	4,532		$	503		$	13,577		$	1,560
Annualized adjusted net income for annualized adjusted return on average tangible equity	$	66,217		$	7,337		$	30,853		$	107,988		$	106,980

Annualized Adjusted Return on Average Assets		0.95	%		0.06	%		0.86	%		0.66	%		1.02	%
Annualized Adjusted Return on Average Equity		8.62	%		0.53	%		7.30	%		5.83	%		8.59	%
Annualized Adjusted Return on Average Tangible Equity		14.53	%		2.01	%		10.24	%		9.56	%		12.07	%

(2) Annualized adjusted pre-tax, pre-provision (“PTPP”) returns on average assets, average equity and average tangible equity
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2024			2024			2023			2024			2023
Net income (loss)	$	46,405		$	(11,485	)	$	28,547		$	67,001		$	101,086
Adjustments to net income (loss):
Provision for credit losses		9,299			69,705			12,541			78,684			29,031
Net loss on Lakeland bond sale		—			2,839			—			—			—
Merger-related transaction costs		15,567			18,915			2,289			36,684			5,349
Income tax expense (benefit)		18,850			(9,833	)		8,843			19,905			34,925
PTPP income	$	90,121		$	70,141		$	52,220		$	202,274		$	170,391

Annualized PTPP income	$	358,525		$	282,106		$	207,177		$	270,191		$	227,812
Average assets	$	24,248,038		$	19,197,041		$	13,976,610		$	19,198,113		$	13,848,351
Average equity	$	2,660,470		$	2,127,469		$	1,654,920		$	2,163,856		$	1,645,093
Average tangible equity	$	1,813,327		$	1,468,630		$	1,195,787		$	1,508,594		$	1,185,222

Annualized PTPP return on average assets		1.48	%		1.47	%		1.48	%		1.41	%		1.65	%
Annualized PTPP return on average equity		13.48	%		13.26	%		12.52	%		12.49	%		13.85	%
Annualized PTPP return on average tangible equity		19.77	%		19.21	%		17.33	%		17.91	%		19.22	%

(3) Book and Tangible Book Value per Share
							September 30,			June 30,			December 31,
								2024			2024			2023
Total stockholders’ equity							$	2,621,058		$	2,555,646		$	1,690,596
Less: total intangible assets								839,223			851,507			457,942
Total tangible stockholders’ equity							$	1,781,835		$	1,704,139		$	1,232,654

Shares outstanding								130,448,599			130,380,393			75,537,186

Book value per share (total stockholders’ equity/shares outstanding)							$	20.09		$	19.60		$	22.38
Tangible book value per share (total tangible stockholders’ equity/shares outstanding)							$	13.66		$	13.07		$	16.32

(4) Annualized Return on Average Tangible Equity
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2024			2024			2023			2024			2023
Total average stockholders’ equity	$	2,660,470		$	2,127,469		$	1,654,920		$	2,163,856		$	1,645,093
Less: total average intangible assets		847,143			658,839			459,133			655,262			459,871
Total average tangible stockholders’ equity	$	1,813,327		$	1,468,630		$	1,195,787		$	1,508,594		$	1,185,222

Net income (loss)	$	46,405		$	(11,485	)	$	28,547		$	67,001		$	101,086
Less: Amortization of Intangibles, net of tax		8,551			4,532			503			13,577			1,560
Total net income (loss)	$	54,956		$	(6,953	)	$	29,050		$	80,578		$	102,646

Annualized return on average tangible equity (net income/total average tangible stockholders’ equity)		12.06	%	(1.90) %				9.64	%		7.13	%		11.58	%

(5) Annualized Adjusted Non-Interest Expense to Average Assets
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2024			2024			2023			2024			2023
Reported non-interest expense	$	136,002		$	115,394		$	65,625		$	323,224		$	199,485
Adjustments to non-interest expense:
Merger-related transaction costs		15,567			18,915			2,289			36,684			5,349
Adjusted non-interest expense	$	120,435		$	96,479		$	63,336		$	286,540		$	194,136

Annualized adjusted non-interest expense	$	479,122		$	388,036		$	251,279		$	382,751		$	259,559

Average assets	$	24,248,038		$	19,197,041		$	13,976,610		$	19,198,113		$	13,848,351

Annualized adjusted non-interest expense/average assets		1.98	%		2.02	%		1.80	%		1.99	%		1.87	%

(6) Efficiency Ratio Calculation
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
		2024			2024			2023			2024			2023
Net interest income	$	183,701		$	141,506		$	96,236		$	418,877		$	303,666
Reported non-interest income		26,855			22,275			19,320			69,937			60,861
Adjustments to non-interest income:
Net (gain) loss on securities transactions		(2	)		2,973			13			2,972			(37	)
Adjusted non-interest income		26,853			25,248			19,333			72,909			60,824
Total income	$	210,554		$	166,754		$	115,569		$	491,786		$	364,490

Adjusted non-interest expense	$	120,435		$	96,479		$	63,336		$	286,540		$	194,136

Efficiency ratio (adjusted non-interest expense/income)		57.20	%		57.86	%		54.80	%		58.27	%		53.26	%

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
September 30, 2024 (Unaudited) and December 31, 2023
(Dollars in Thousands)

Assets	September 30, 2024			December 31, 2023
Cash and due from banks	$	244,064		$	180,241
Short-term investments		25			14
Total cash and cash equivalents		244,089			180,255
Available for sale debt securities, at fair value		2,725,110			1,690,112
Held to maturity debt securities, net of allowance (fair value of $322,427 as of September 30, 2024 (unaudited) and $352,601 as of December 31, 2023)		332,021			363,080
Equity securities, at fair value		20,044			1,270
Federal Home Loan Bank stock		96,219			79,217
Loans held for sale		5,757			1,785
Loans held for investment		18,794,609			10,871,916
Less allowance for credit losses		191,175			107,200
Net loans		18,609,191			10,766,501
Foreclosed assets, net		9,801			11,651
Banking premises and equipment, net		124,955			70,998
Accrued interest receivable		89,866			58,966
Intangible assets		839,223			457,942
Bank-owned life insurance		403,648			243,050
Other assets		548,348			287,768
Total assets	$	24,042,515		$	14,210,810

Liabilities and Stockholders’ Equity
Deposits:
Demand deposits	$	13,548,480		$	8,020,889
Savings deposits		1,671,209			1,175,683
Certificates of deposit of $250,000 or more		800,005			218,549
Other time deposits		2,356,491			877,393
Total deposits		18,376,185			10,292,514
Mortgage escrow deposits		48,007			36,838
Borrowed funds		2,214,512			1,970,033
Subordinated debentures		414,184			10,695
Other liabilities		368,569			210,134
Total liabilities		21,421,457			12,520,214

Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued		—			—
Common stock, $0.01 par value, 200,000,000 shares authorized, 137,565,966 shares issued and 130,448,599 shares outstanding as of September 30, 2024 and 75,537,186 outstanding as of December 31, 2023.		1,376			832
Additional paid-in capital		1,871,343			989,058
Retained earnings		972,997			974,542
Accumulated other comprehensive loss		(93,049	)		(141,115	)
Treasury stock		(129,148	)		(127,825	)
Unallocated common stock held by the Employee Stock Ownership Plan		(2,461	)		(4,896	)
Common Stock acquired by the Directors’ Deferred Fee Plan		(2,247	)		(2,694	)
Deferred Compensation – Directors’ Deferred Fee Plan		2,247			2,694
Total stockholders’ equity		2,621,058			1,690,596
Total liabilities and stockholders’ equity	$	24,042,515		$	14,210,810

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three months ended September 30, 2024, June 30, 2024 and September 30, 2023, and nine months ended September 30, 2024 and 2023 (Unaudited)
(Dollars in Thousands, except per share data)

	Three Months Ended							Nine Months Ended
	September 30,		June 30,			September 30,		September 30,			September 30,
		2024		2024			2023		2024			2023
Interest and dividend income:
Real estate secured loans	$	197,857	$	156,318		$	104,540	$	461,632		$	299,830
Commercial loans		81,183		58,532			33,806		175,815			93,915
Consumer loans		12,947		8,351			4,746		25,820			13,419
Available for sale debt securities, equity securities and Federal Home Loan Bank stock		25,974		20,394			11,886		58,698			34,748
Held to maturity debt securities		2,136		2,357			2,334		6,761			7,059
Deposits, federal funds sold and other short-term investments		2,425		1,859			885		5,466			2,678
Total interest income		322,522		247,811			158,197		734,192			451,649

Interest expense:
Deposits		110,009		81,058			44,923		243,602			108,880
Borrowed funds		19,923		20,566			16,765		57,871			38,329
Subordinated debt		8,889		4,681			273		13,842			774
Total interest expense		138,821		106,305			61,961		315,315			147,983
Net interest income		183,701		141,506			96,236		418,877			303,666
Provision charge for credit losses		9,299		69,705			12,541		78,684			29,031
Net interest income after provision for credit losses		174,402		71,801			83,695		340,193			274,635

Non-interest income:
Fees		9,816		8,699			6,132		24,426			18,294
Wealth management income		7,620		7,769			6,992		22,878			20,826
Insurance agency income		3,631		4,488			3,224		12,912			11,175
Bank-owned life insurance		4,308		3,323			1,820		9,448			4,838
Net gain (loss) on securities transactions		2		(2,973	)		13		(2,972	)		37
Other income		1,478		969			1,139		3,245			5,691
Total non-interest income		26,855		22,275			19,320		69,937			60,861

Non-interest expense:
Compensation and employee benefits		63,468		54,888			35,702		158,404			109,724
Net occupancy expense		12,790		11,142			8,113		32,452			24,474
Data processing expense		10,481		8,433			5,312		25,698			16,536
FDIC Insurance		4,180		3,100			1,628		9,553			5,688
Amortization of intangibles		12,231		6,483			720		19,420			2,231
Advertising and promotion expense		1,524		1,171			1,133		3,661			3,722
Merger-related expenses		15,567		18,915			2,289		36,684			5,349
Other operating expenses		15,761		11,262			10,728		37,352			31,761
Total non-interest expense		136,002		115,394			65,625		323,224			199,485
Income (loss) before income tax expense		65,255		(21,318	)		37,390		86,906			136,011
Income tax expense (benefit)		18,850		(9,833	)		8,843		19,905			34,925
Net income (loss)	$	46,405	$	(11,485	)	$	28,547	$	67,001		$	101,086

Basic earnings per share	$	0.36	$	(0.11	)	$	0.38	$	0.65		$	1.35
Average basic shares outstanding		129,941,845		102,957,521			74,909,083		102,819,042			74,793,530

Diluted earnings per share	$	0.36	$	(0.11	)	$	0.38	$	0.65		$	1.35
Average diluted shares outstanding		130,004,870		102,957,521			74,914,205		102,845,261			74,816,606

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Quarterly Average Balances
(Dollars in Thousands) (Unaudited)
	September 30, 2024						June 30, 2024						September 30, 2023
	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Interest-Earning Assets:
Deposits	$	179,313	$	2,425	5.38	%	$	40,228	$	1,859	5.38	%	$	74,183	$	884	4.73	%
Federal funds sold and other short-term investments		—		—	—	%		0		—	—	%		57		1	4.00	%
Available for sale debt securities		2,644,262		24,884	3.72	%		2,244,725		17,647	3.14	%		1,724,833		10,127	2.35	%
Held to maturity debt securities, net ⁽¹⁾		342,217		2,136	2.50	%		352,216		2,357	2.68	%		373,681		2,334	2.50	%
Equity securities, at fair value		19,654		—	—	%		10,373		—	—	%		1,068		—	—	%
Federal Home Loan Bank stock		91,841		1,090	4.75	%		88,864		2,747	12.36	%		91,273		1,759	7.71	%
Net loans: ⁽²⁾
Total mortgage loans		13,363,265		197,857	5.83	%		10,674,109		156,318	5.81	%		7,881,193		104,540	5.21	%
Total commercial loans		4,546,088		81,183	7.05	%		3,514,602		58,532	6.62	%		2,289,267		33,806	5.81	%
Total consumer loans		622,586		12,947	8.27	%		460,702		8,351	7.29	%		300,383		4,746	6.27	%
Total net loans		18,531,939		291,987	6.21	%		14,649,413		223,201	6.05	%		10,470,843		143,092	5.37	%
Total interest-earning assets	$	21,809,226	$	322,522	5.84	%	$	17,385,819	$	247,811	5.67	%	$	12,735,938	$	158,197	4.89	%

Non-Interest Earning Assets:
Cash and due from banks		341,505						37,621						82,522
Other assets		2,097,307						1,773,601						1,158,150
Total assets	$	24,248,038					$	19,197,041					$	13,976,610

Interest-Bearing Liabilities:
Demand deposits	$	9,942,053	$	74,864	3.00	%	$	7,935,543	$	58,179	2.95	%	$	5,741,052	$	35,290	2.44	%
Savings deposits		1,711,502		1,006	0.23	%		1,454,784		832	0.23	%		1,240,951		592	0.19	%
Time deposits		3,112,598		34,139	4.36	%		2,086,433		22,047	4.25	%		1,052,793		9,041	3.41	%
Total deposits		14,766,153		110,009	2.96	%		11,476,760		81,058	2.84	%		8,034,796		44,923	2.22	%

Borrowed funds		2,125,149		19,923	3.73	%		2,158,193		20,566	3.83	%		1,780,655		16,765	3.74	%
Subordinated debentures		413,267		8,889	8.56	%		221,086		4,681	8.52	%		10,613		273	10.24	%
Total interest-bearing liabilities		17,304,569		138,821	3.19	%		13,856,039		106,305	3.09	%		9,826,064		61,961	2.50	%

Non-Interest Bearing Liabilities:
Non-interest bearing deposits		3,741,160						2,866,917						2,230,199
Other non-interest bearing liabilities		541,839						346,616						265,427
Total non-interest bearing liabilities		4,282,999						3,213,533						2,495,626
Total liabilities		21,587,568						17,069,572						12,321,690
Stockholders’ equity		2,660,470						2,127,469						1,654,920
Total liabilities and stockholders’ equity	$	24,248,038					$	19,197,041					$	13,976,610

Net interest income			$	183,701					$	141,506					$	96,236

Net interest rate spread					2.65	%					2.58	%					2.39	%
Net interest-earning assets	$	4,504,657					$	3,529,780					$	2,909,874

Net interest margin ⁽³⁾					3.31	%					3.21	%					2.96	%

Ratio of interest-earning assets to total interest-bearing liabilities	1.26x						1.25x						1.30x


(1	)	Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2	)	Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3	)	Annualized net interest income divided by average interest-earning assets.

The following table summarizes the quarterly net interest margin for the previous five quarters.
	9/30/24		6/30/24		3/31/24		12/31/23		9/30/23
	3rd Qtr.		2nd Qtr.		1st Qtr.		4th Qtr.		3rd Qtr.
Interest-Earning Assets:
Securities	3.69	%	3.40	%	2.87	%	2.79	%	2.67	%
Net loans	6.21	%	6.05	%	5.51	%	5.50	%	5.37	%
Total interest-earning assets	5.84	%	5.67	%	5.06	%	5.04	%	4.89	%

Interest-Bearing Liabilities:
Total deposits	2.96	%	2.84	%	2.60	%	2.47	%	2.22	%
Total borrowings	3.73	%	3.83	%	3.60	%	3.71	%	3.74	%
Total interest-bearing liabilities	3.19	%	3.09	%	2.80	%	2.71	%	2.50	%

Interest rate spread	2.65	%	2.58	%	2.26	%	2.33	%	2.39	%
Net interest margin	3.31	%	3.21	%	2.87	%	2.92	%	2.96	%

Ratio of interest-earning assets to interest-bearing liabilities	1.26x		1.25x		1.28x		1.28x		1.30x

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Net Interest Margin Analysis
Average Year to Date Balances
(Dollars in Thousands) (Unaudited)

	September 30, 2024						September 30, 2023
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
Interest-Earning Assets:
Deposits	$	39,280	$	5,466	5.38	%	$	69,696	$	2,676	5.13	%
Federal funds sold and other short term investments		—		—	—	%		58		2	5.34	%
Available for sale debt securities		2,189,671		52,553	3.19	%		1,777,861		30,819	2.31	%
Held to maturity debt securities, net ⁽¹⁾		350,529		6,761	2.57	%		379,144		7,059	2.48	%
Equity securities, at fair value		10,050		—	—	%		1,022		—	—	%
Federal Home Loan Bank stock		84,845		6,145	9.66	%		77,634		3,929	6.75	%
Net loans: ⁽²⁾
Total mortgage loans		10,682,974		461,632	5.70	%		7,740,591		299,830	5.12	%
Total commercial loans		3,487,600		175,815	6.69	%		2,225,725		93,915	5.60	%
Total consumer loans		460,497		25,820	7.49	%		302,706		13,419	5.93	%
Total net loans		14,631,071		663,267	5.99	%		10,269,022		407,164	5.25	%
Total interest-earning assets	$	17,305,446	$	734,192	5.61	%	$	12,574,437	$	451,649	4.76	%

Non-Interest Earning Assets:
Cash and due from banks		229,336						121,801
Other assets		1,663,331						1,152,113
Total assets	$	19,198,113					$	13,848,351

Interest-Bearing Liabilities:
Demand deposits	$	7,931,251	$	174,609	2.94	%	$	5,710,855	$	85,822	2.01	%
Savings deposits		1,444,135		2,476	0.23	%		1,315,157		1,582	0.16	%
Time deposits		2,091,806		66,517	4.25	%		961,010		21,476	2.99	%
Total deposits		11,467,192		243,602	2.84	%		7,987,022		108,880	1.82	%
Borrowed funds		2,074,958		57,871	3.73	%		1,556,619		38,329	3.29	%
Subordinated debentures		215,745		13,842	8.57	%		10,563		774	9.80	%
Total interest-bearing liabilities	$	13,757,895	$	315,315	3.06	%	$	9,554,204	$	147,983	2.07	%

Non-Interest Bearing Liabilities:
Non-interest bearing deposits		2,896,453						2,382,144
Other non-interest bearing liabilities		379,909						266,910
Total non-interest bearing liabilities		3,276,362						2,649,054
Total liabilities		17,034,257						12,203,258
Stockholders’ equity		2,163,856						1,645,093
Total liabilities and stockholders’ equity	$	19,198,113					$	13,848,351

Net interest income			$	418,877					$	303,666

Net interest rate spread					2.55	%					2.69	%
Net interest-earning assets	$	3,547,551					$	3,020,233

Net interest margin ⁽³⁾					3.18	%					3.19	%

Ratio of interest-earning assets to total interest-bearing liabilities	1.26x						1.32x


(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans.
(3) Annualized net interest income divided by average interest-earning assets.

The following table summarizes the year-to-date net interest margin for the previous three years.

	Nine Months Ended
	September 30, 2024		September 30, 2023		September 23, 2022
Interest-Earning Assets:
Securities	3.33	%	2.57	%	1.72	%
Net loans	5.99	%	5.25	%	4.01	%
Total interest-earning assets	5.61	%	4.76	%	3.51	%

Interest-Bearing Liabilities:
Total deposits	2.84	%	1.82	%	0.33	%
Total borrowings	3.73	%	3.29	%	0.97	%
Total interest-bearing liabilities	3.06	%	2.07	%	0.38	%

Interest rate spread	2.55	%	2.69	%	3.13	%
Net interest margin	3.18	%	3.19	%	3.24	%

Ratio of interest-earning assets to interest-bearing liabilities	1.26x		1.32x		1.38x

SOURCE: Provident Financial Services, Inc.

CONTACT: Investor Relations, 1-732-590-9300 Web Site: http://www.Provident.Bank

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

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

Source: GlobeNewswire (MIL-OSI)

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

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

Financial Highlights

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

Operational Highlights

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

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

MANAGEMENT COMMENTARY

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

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

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

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

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

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

SELECT FINANCIAL AND OPERATING INFORMATION

Financial Highlights

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

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

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

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

Operating Highlights

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

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

Drilling Activity

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

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

Financial Position

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

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

Summary for the three months ended September 30, 2024:

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

Summary for the nine months ended September 30, 2024:

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

STRATEGY

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

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

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

OUTLOOK

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

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

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

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

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

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

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

Contracts

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

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

SEGMENTED FINANCIAL RESULTS

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

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

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

SEGMENT REVIEW OF CONTRACT DRILLING SERVICES

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

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

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

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

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

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

SEGMENT REVIEW OF COMPLETION AND PRODUCTION SERVICES

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

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

OTHER ITEMS

Share-based Incentive Compensation Plans

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

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

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

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

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

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

EVALUATION OF CONTROLS AND PROCEDURES

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

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

FINANCIAL MEASURES AND RATIOS

Non-GAAP Financial Measures

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

Adjusted EBITDA

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

The most directly comparable financial measure is net earnings.

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

Funds Provided by (Used in) Operations

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

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

Net Capital Spending

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

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

Net capital spending is calculated as follows:

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

Working Capital

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

Working capital is calculated as follows:

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

Total Long-term Financial Liabilities

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

Total long-term financial liabilities is calculated as follows:

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

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

CHANGE IN ACCOUNTING POLICY

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

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

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

JOINT PARTNERSHIP

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

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

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

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

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

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

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

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

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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

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

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

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

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

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

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

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


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

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

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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

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

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

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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

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

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

2024 THIRD QUARTER RESULTS CONFERENCE CALL AND WEBCAST

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

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

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

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

About Precision

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

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

Additional Information

For further information, please contact:

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

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

MIL-OSI USA: News 10/24/2024 Blackburn, Cornyn, Blumenthal, Colleagues Introduce Bill to Combat Child Exploitation

US Senate News:

Source: United States Senator Marsha Blackburn (R-Tenn)
NASHVILLE, Tenn. – U.S. Senators Marsha Blackburn (R-Tenn.), John Cornyn (R-Texas), Richard Blumenthal (D-Conn.), and three of their Senate colleagues introduced the PROTECT Our Children Act, which would reauthorize and modernize the Internet Crimes Against Children Task Force Program:
“For more than 15 years, the Internet Crimes Against Children Task Force Program has helped law enforcement agencies protect innocent children from sexual predators who wish to exploit them online,” said Senator Blackburn. “The PROTECT Our Children Act would reauthorize this critical program to combat technology-facilitated crimes against children.”
“For decades, the Internet Crimes Against Children Task Force Program has played an invaluable role in helping federal, state, and local law enforcement work together to fight child exploitation and put vicious predators behind bars,” said Senator Cornyn. “By extending and modernizing this program, our legislation would ensure these Task Forces can continue to protect our next generation in an increasingly digital world.”
“We must save children who are victims of the most ongoing vile, stomach-churning crimes because child sexual abuse goes unstopped,” said Senator Blumenthal. “Protecting such victims is urgent and imperative—and we have an obligation to provide tools and resources necessary to do it. The PROTECT Our Children Act reauthorizes and modernizes the Internet Crimes Against Children Task Force Programs, enabling law enforcement to combat the exploding, serious dangers of abhorrent abuse in an online society. This essential legislation will help safeguard our children and hold predators accountable.”

BACKGROUND:

The Internet Crimes Against Children (ICAC) Task Force Program helps state and local law enforcement agencies develop an effective response to technology-facilitated child sexual exploitation and Internet crimes against children. This encompasses forensic and investigative components, training and technical assistance, victim services, and community education. This national network of 61 coordinated task forces represents more than 5,400 federal, state, and local law enforcement and prosecutorial agencies engaged in both proactive and reactive investigations, forensic investigations, and criminal prosecutions.
Since 1998, ICAC Task Forces have trained more than 826,700 law enforcement officers, prosecutors, and other professionals on techniques to investigative and prosecute ICAC-related cases. They have also reviewed more than 1,452,040 reports of online child exploitation, resulting in the arrest of more than 123,790 suspects.

THE PROTECT OUR CHILDREN ACT:

The PROTECT Our Children Act would:
Update and modernize the requirements for the National Strategy for Child Exploitation Prevention and Interdiction, including requiring the U.S. Department of Justice to provide detailed, useful information on efforts to protect children nationwide;
Provide liability protection for ICAC Task Forces in the course of conducting criminal investigations of child sexual abuse material (CSAM) and child abuse material;
Make needed technical improvements and clarifications to the statutory text of the program to match it to current technology and needs;
Focus the ICAC program on both proactive and reactive investigations; and
Reauthorize the ICAC Program through 2027 with an escalator authorization.

ENDORSEMENTS:

The PROTECT Our Children Act is endorsed by the National Center on Sexual Exploitation (NCOSE), the Rape, Abuse, and Incest National Network (RAINN), National Children’s Alliance, National Center for Missing & Exploited Children (NCMEC), Rights 4 Girls, National District Attorneys Association (NDAA), Raven, Fraternal Order of Police, Association of State Criminal Investigative Agencies (ASCIA), and the National Criminal Justice Training Center (NCJTC).

CO-SPONSORS:

This legislation is also co-sponsored by Senators Josh Hawley (R-Mo.), Dick Durbin (D-Ill.), and Amy Klobuchar (D-Minn.). Companion legislation was introduced in the House by Representatives Nathaniel Moran (R-Texas) and Debbie Wasserman Schultz (D-Fla.).

MIL OSI USA News –