Intelligence – Page 274

MIL-OSI: First Merchants Corporation Announces Third Quarter 2024 Earnings per Share

Source: GlobeNewswire (MIL-OSI)

MUNCIE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) — First Merchants Corporation (NASDAQ – FRME)

Third Quarter 2024 Highlights:

Net income available to common stockholders was $48.7 million and diluted earnings per common share totaled $0.84, compared to $55.9 million and $0.94 in the third quarter of 2023, and $39.5 million and $0.68 in the second quarter of 2024. Excluding the loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million or $0.95 per share for the third quarter of 2024.
Strong capital position with Common Equity Tier 1 Capital Ratio of 11.25% and Tangible Common Equity to Tangible Assets Ratio of 8.76%.
Net interest margin was 3.23% compared to 3.16% on a linked quarter basis.
Total loans grew $15.5 million, or 0.5% annualized, on a linked quarter basis, and $385.1 million, or 3.1% during the last twelve months.
Total deposits grew by $83.7 million, or 2.3% annualized, on a linked quarter basis after normalizing for $287.7 million of deposits reclassified to held for sale.
Nonperforming assets to total assets were 35 basis points compared to 36 basis points on a linked quarter basis.
The efficiency ratio totaled 53.76% for the quarter.
Announced sale of five Illinois branches and certain loans and deposits to Old Second National Bank on August 27, 2024.

“We are pleased with our third quarter results and the focused momentum that we are building,” said Mark Hardwick, Chief Executive Officer. “The pending sale of five non-core Illinois branches, restructure of the securities portfolio, and successful completion of four major technology initiatives provides us with the opportunity to reprioritize our core markets and introduce innovative customer acquisition strategies.”

Third Quarter Financial Results:

First Merchants Corporation (the “Corporation”) has reported third quarter 2024 net income available to common stockholders of $48.7 million compared to $55.9 million during the same period in 2023. Diluted earnings per common share for the period totaled $0.84 compared to the third quarter of 2023 result of $0.94. Excluding the $9.1 million pre-tax loss from repositioning of the available for sale securities portfolio, adjusted net income was $55.6 million, or $0.95 diluted earnings per common share for the third quarter of 2024.

During the quarter, the Corporation signed a definitive agreement to sell five Illinois branches along with certain loans and deposits, representing an exit from suburban Chicago markets. Loans of $9.2 million, deposits of $287.7 million and fixed assets of $3.4 million have been moved to held for sale categories as of September 30, 2024. The transaction is expected to close in the fourth quarter of this year.

Total assets equaled $18.3 billion as of quarter-end and loans totaled $12.7 billion. During the past twelve months, total loans grew by $385.1 million, or 3.1%. On a linked quarter basis, loans grew $15.5 million, or 0.5%, with growth primarily in commercial & industrial loans.

Investments totaling $3.7 billion decreased $51.6 million, or 1.4%, during the last twelve months and decreased $90.9 million, or 9.7% annualized, on a linked quarter basis. The decline during the quarter was due to $158.9 million in sales of available for sale securities with a weighted average tax-equivalent yield of 2.85%, partially offset by an increase in the securities portfolio valuation.

Total deposits were $14.4 billion as of quarter-end and decreased by $281.5 million, or 1.9%, over the past twelve months. The decline was primarily due to $287.7 million of deposits being reclassified to held for sale. Excluding this impact, deposits increased by $6.2 million. On a linked quarter basis, deposits grew organically by $83.7 million or 2.3%. The loan to deposit ratio increased to 88.0% at period end from 86.8% in the prior quarter, primarily due to the reclassification of deposits to held for sale as previously described.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $187.8 million as of quarter-end, or 1.48% of total loans, a decrease of $1.7 million from prior quarter. Loan charge-offs, net of recoveries totaled $6.7 million and provision for loans of $5.0 million was recorded during the quarter. Reserves for unfunded commitments totaled $19.5 million and remained unchanged from the prior quarter. Non-performing assets to total assets were 35 basis points for the third quarter of 2024, a decrease of one basis point compared to 36 basis points in the prior quarter.

Net interest income totaled $131.1 million for the quarter, an increase of $2.5 million, or 2.0%, compared to prior quarter and a decrease of $2.3 million, or 1.7%, compared to the third quarter of 2023. Fully-tax equivalent net interest margin was 3.23%, an increase of 7 basis points compared to the second quarter of 2024, and a decrease of 6 basis points compared to the third quarter of 2023. The increase in net interest margin compared to the second quarter was due to higher earning asset yields.

Non-interest income totaled $24.9 million for the quarter, a decrease of $6.5 million, or 20.6%, compared to the second quarter of 2024 and a decrease of $3.0 million, or 6.7% from the third quarter of 2023. The decrease from second quarter of 2024 was driven by realized losses on sales of available for sale securities associated with the repositioning of the bond portfolio, partially offset by increases in gains on sales of mortgage loans and earnings on cash surrender value of life insurance.

Non-interest expense totaled $94.6 million for the quarter, an increase of $3.2 million from the second quarter of 2024 and an increase of $0.8 million from the third quarter of 2023. The increase from the linked quarter was from higher salaries and employee benefits primarily driven by higher incentives.

The Corporation’s total risk-based capital ratio equaled 13.18%, common equity tier 1 capital ratio equaled 11.25%, and the tangible common equity ratio totaled 8.76%. These ratios continue to reflect the Corporation’s strong liquidity and capital positions.

CONFERENCE CALL

First Merchants Corporation will conduct a third quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, October 24, 2024.

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register.vevent.com/register/BI34430e309ed545808c7c8195f36e86b6)

To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/6grv3upw) during the time of the call. A replay of the webcast will be available until October 24, 2025.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank).

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements about First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity (including the ability to grow and maintain core deposits and retain large, uninsured deposits), credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,
		2024			2023
ASSETS
Cash and due from banks	$	84,719		$	125,173
Interest-bearing deposits		359,126			348,639
Investment securities, net of allowance for credit losses of $245,000 and $245,000		3,662,145			3,713,724
Loans held for sale		40,652			30,972
Loans		12,646,808			12,271,422
Less: Allowance for credit losses – loans		(187,828	)		(205,782	)
Net loans		12,458,980			12,065,640
Premises and equipment		129,582			132,441
Federal Home Loan Bank stock		41,716			41,797
Interest receivable		92,055			90,011
Goodwill and other intangibles		733,601			741,283
Cash surrender value of life insurance		304,613			306,106
Other real estate owned		5,247			6,480
Tax asset, deferred and receivable		86,732			135,521
Other assets		348,384			340,476
TOTAL ASSETS	$	18,347,552		$	18,078,263
LIABILITIES
Deposits:
Noninterest-bearing	$	2,334,197		$	2,554,984
Interest-bearing		12,030,903			12,091,592
Total Deposits		14,365,100			14,646,576
Borrowings:
Federal funds purchased		30,000			—
Securities sold under repurchase agreements		124,894			152,537
Federal Home Loan Bank advances		832,629			713,384
Subordinated debentures and other borrowings		93,562			158,665
Total Borrowings		1,081,085			1,024,586
Deposits and other liabilities held for sale		288,476			—
Interest payable		18,089			16,473
Other liabilities		292,429			297,984
Total Liabilities		16,045,179			15,985,619
STOCKHOLDERS’ EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 cumulative shares
Issued and outstanding – 125 cumulative shares		125			125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized — 10,000 non-cumulative perpetual shares
Issued and outstanding – 10,000 non-cumulative perpetual shares		25,000			25,000
Common Stock, $.125 stated value:
Authorized — 100,000,000 shares
Issued and outstanding – 58,117,115 and 59,398,022 shares		7,265			7,425
Additional paid-in capital		1,192,683			1,234,402
Retained earnings		1,229,125			1,132,962
Accumulated other comprehensive loss		(151,825	)		(307,270	)
Total Stockholders’ Equity		2,302,373			2,092,644
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,347,552		$	18,078,263


CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended						Nine Months Ended
(Dollars In Thousands, Except Per Share Amounts)	September 30,						September 30,
		2024			2023			2024			2023
INTEREST INCOME
Loans receivable:
Taxable	$	206,680		$	191,705		$	606,116		$	550,314
Tax-exempt		8,622			8,288			25,242			23,757
Investment securities:
Taxable		9,263			8,590			27,062			26,563
Tax-exempt		13,509			13,947			40,733			44,296
Deposits with financial institutions		2,154			5,884			11,642			9,685
Federal Home Loan Bank stock		855			719			2,569			2,281
Total Interest Income		241,083			229,133			713,364			656,896
INTEREST EXPENSE
Deposits		98,856			85,551			296,292			209,437
Federal funds purchased		329			—			455			1,420
Securities sold under repurchase agreements		700			797			2,377			2,624
Federal Home Loan Bank advances		8,544			6,896			21,715			20,775
Subordinated debentures and other borrowings		1,544			2,506			5,781			7,303
Total Interest Expense		109,973			95,750			326,620			241,559
NET INTEREST INCOME		131,110			133,383			386,744			415,337
Provision for credit losses		5,000			2,000			31,500			2,000
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		126,110			131,383			355,244			413,337
NONINTEREST INCOME
Service charges on deposit accounts		8,361			7,975			24,482			23,147
Fiduciary and wealth management fees		8,525			7,394			25,550			22,653
Card payment fees		5,121			4,716			14,360			14,425
Net gains and fees on sales of loans		6,764			5,517			15,159			11,548
Derivative hedge fees		736			516			1,488			2,336
Other customer fees		344			384			1,231			1,643
Earnings on cash surrender value of life insurance		2,755			1,761			6,276			5,145
Net realized losses on sales of available for sale securities		(9,114	)		(1,650	)		(9,165	)		(4,613	)
Other income		1,374			1,229			3,457			2,874
Total Noninterest Income		24,866			27,842			82,838			79,158
NONINTEREST EXPENSES
Salaries and employee benefits		55,223			55,566			165,730			167,778
Net occupancy		6,994			6,837			21,052			20,770
Equipment		6,949			5,698			19,774			18,005
Marketing		1,836			2,369			4,807			4,780
Outside data processing fees		7,150			6,573			21,111			19,290
Printing and office supplies		378			333			1,085			1,150
Intangible asset amortization		1,772			2,182			5,500			6,561
FDIC assessments		3,720			2,981			11,285			7,117
Other real estate owned and foreclosure expenses		942			677			1,849			1,575
Professional and other outside services		3,035			3,833			10,809			12,191
Other expenses		6,630			6,805			19,975			20,950
Total Noninterest Expenses		94,629			93,854			282,977			280,167
INCOME BEFORE INCOME TAX		56,347			65,371			155,105			212,328
Income tax expense		7,160			9,005			18,052			31,021
NET INCOME		49,187			56,366			137,053			181,307
Preferred stock dividends		468			468			1,406			1,406
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	48,719		$	55,898		$	135,647		$	179,901
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.84		$	0.95		$	2.32		$	3.04
Diluted Net Income Available to Common Stockholders	$	0.84		$	0.94		$	2.31		$	3.03
Cash Dividends Paid to Common Stockholders	$	0.35		$	0.34		$	1.04		$	1.00
Average Diluted Common Shares Outstanding (in thousands)		58,289			59,503			58,629			59,465


FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2024			2023			2024			2023
NET CHARGE-OFFS	$	6,709		$	20,365		$	48,606		$	22,495

AVERAGE BALANCES:
Total Assets	$	18,360,580		$	18,152,239		$	18,374,370		$	18,115,504
Total Loans		12,680,166			12,287,632			12,592,907			12,264,787
Total Earning Assets		16,990,358			16,947,669			17,042,540			16,913,965
Total Deposits		14,702,454			14,735,592			14,826,056			14,627,448
Total Stockholders’ Equity		2,251,547			2,154,232			2,232,419			2,126,005

FINANCIAL RATIOS:
Return on Average Assets		1.07	%		1.24	%		0.99	%		1.33	%
Return on Average Stockholders’ Equity		8.66			10.38			8.10			11.28
Return on Tangible Common Stockholders’ Equity		13.39			16.54			12.64			18.10
Average Earning Assets to Average Assets		92.54			93.36			92.75			93.37
Allowance for Credit Losses – Loans as % of Total Loans		1.48			1.67			1.48			1.67
Net Charge-offs as % of Average Loans (Annualized)		0.21			0.66			0.51			0.24
Average Stockholders’ Equity to Average Assets		12.26			11.87			12.15			11.74
Tax Equivalent Yield on Average Earning Assets		5.82			5.55			5.72			5.32
Interest Expense/Average Earning Assets		2.59			2.26			2.56			1.90
Net Interest Margin (FTE) on Average Earning Assets		3.23			3.29			3.16			3.42
Efficiency Ratio		53.76			53.91			55.54			52.60
Tangible Common Book Value Per Share	$	26.64		$	22.43		$	26.64		$	22.43


NONPERFORMING ASSETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023
Nonaccrual Loans	$	59,088		$	61,906		$	62,478		$	53,580		$	53,102
Other Real Estate Owned and Repossessions		5,247			4,824			4,886			4,831			6,480
Nonperforming Assets (NPA)		64,335			66,730			67,364			58,411			59,582
90+ Days Delinquent		14,105			1,686			2,838			172			89
NPAs & 90 Day Delinquent	$	78,440		$	68,416		$	70,202		$	58,583		$	59,671

Allowance for Credit Losses – Loans	$	187,828		$	189,537		$	204,681		$	204,934		$	205,782
Quarterly Net Charge-offs		6,709			39,644			2,253			3,148			20,365
NPAs / Actual Assets %		0.35	%		0.36	%		0.37	%		0.32	%		0.33	%
NPAs & 90 Day / Actual Assets %		0.43	%		0.37	%		0.38	%		0.32	%		0.33	%
NPAs / Actual Loans and OREO %		0.51	%		0.53	%		0.54	%		0.47	%		0.48	%
Allowance for Credit Losses – Loans / Actual Loans (%)		1.48	%		1.50	%		1.64	%		1.64	%		1.67	%
Net Charge-offs as % of Average Loans (Annualized)		0.21	%		1.26	%		0.07	%		0.10	%		0.66	%


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023
ASSETS
Cash and due from banks	$	84,719		$	105,372		$	100,514		$	112,649		$	125,173
Interest-bearing deposits		359,126			168,528			410,497			436,080			348,639
Investment securities, net of allowance for credit losses		3,662,145			3,753,088			3,783,574			3,811,364			3,713,724
Loans held for sale		40,652			32,292			15,118			18,934			30,972
Loans		12,646,808			12,639,650			12,465,582			12,486,027			12,271,422
Less: Allowance for credit losses – loans		(187,828	)		(189,537	)		(204,681	)		(204,934	)		(205,782	)
Net loans		12,458,980			12,450,113			12,260,901			12,281,093			12,065,640
Premises and equipment		129,582			133,245			132,706			133,896			132,441
Federal Home Loan Bank stock		41,716			41,738			41,758			41,769			41,797
Interest receivable		92,055			97,546			92,550			97,664			90,011
Goodwill and other intangibles		733,601			735,373			737,144			739,101			741,283
Cash surrender value of life insurance		304,613			306,379			306,028			306,301			306,106
Other real estate owned		5,247			4,824			4,886			4,831			6,480
Tax asset, deferred and receivable		86,732			107,080			101,121			99,883			135,521
Other assets		348,384			367,845			331,006			322,322			340,476
TOTAL ASSETS	$	18,347,552		$	18,303,423		$	18,317,803		$	18,405,887		$	18,078,263
LIABILITIES
Deposits:
Noninterest-bearing	$	2,334,197		$	2,303,313		$	2,338,364		$	2,500,062		$	2,554,984
Interest-bearing		12,030,903			12,265,757			12,546,220			12,321,391			12,091,592
Total Deposits		14,365,100			14,569,070			14,884,584			14,821,453			14,646,576
Borrowings:
Federal funds purchased		30,000			147,229			—			—			—
Securities sold under repurchase agreements		124,894			100,451			130,264			157,280			152,537
Federal Home Loan Bank advances		832,629			832,703			612,778			712,852			713,384
Subordinated debentures and other borrowings		93,562			93,589			118,612			158,644			158,665
Total Borrowings		1,081,085			1,173,972			861,654			1,028,776			1,024,586
Deposits and other liabilities held for sale		288,476			—			—			—			—
Interest payable		18,089			18,554			19,262			18,912			16,473
Other liabilities		292,429			329,302			327,500			289,033			297,984
Total Liabilities		16,045,179			16,090,898			16,093,000			16,158,174			15,985,619
STOCKHOLDERS’ EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 cumulative shares
Issued and outstanding – 125 cumulative shares		125			125			125			125			125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized — 10,000 non-cumulative perpetual shares
Issued and outstanding – 10,000 non-cumulative perpetual shares		25,000			25,000			25,000			25,000			25,000
Common Stock, $.125 stated value:
Authorized — 100,000,000 shares
Issued and outstanding		7,265			7,256			7,321			7,428			7,425
Additional paid-in capital		1,192,683			1,191,193			1,208,447			1,236,506			1,234,402
Retained earnings		1,229,125			1,200,930			1,181,939			1,154,624			1,132,962
Accumulated other comprehensive loss		(151,825	)		(211,979	)		(198,029	)		(175,970	)		(307,270	)
Total Stockholders’ Equity		2,302,373			2,212,525			2,224,803			2,247,713			2,092,644
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,347,552		$	18,303,423		$	18,317,803		$	18,405,887		$	18,078,263


CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023
INTEREST INCOME
Loans receivable:
Taxable	$	206,680		$	201,413		$	198,023		$	197,523		$	191,705
Tax-exempt		8,622			8,430			8,190			8,197			8,288
Investment securities:
Taxable		9,263			9,051			8,748			8,644			8,590
Tax-exempt		13,509			13,613			13,611			13,821			13,947
Deposits with financial institutions		2,154			2,995			6,493			8,034			5,884
Federal Home Loan Bank stock		855			879			835			771			719
Total Interest Income		241,083			236,381			235,900			236,990			229,133
INTEREST EXPENSE
Deposits		98,856			99,151			98,285			96,655			85,551
Federal funds purchased		329			126			—			1			—
Securities sold under repurchase agreements		700			645			1,032			827			797
Federal Home Loan Bank advances		8,544			6,398			6,773			6,431			6,896
Subordinated debentures and other borrowings		1,544			1,490			2,747			3,013			2,506
Total Interest Expense		109,973			107,810			108,837			106,927			95,750
NET INTEREST INCOME		131,110			128,571			127,063			130,063			133,383
Provision for credit losses		5,000			24,500			2,000			1,500			2,000
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		126,110			104,071			125,063			128,563			131,383
NONINTEREST INCOME
Service charges on deposit accounts		8,361			8,214			7,907			7,690			7,975
Fiduciary and wealth management fees		8,525			8,825			8,200			8,187			7,394
Card payment fees		5,121			4,739			4,500			4,437			4,716
Net gains and fees on sales of loans		6,764			5,141			3,254			4,111			5,517
Derivative hedge fees		736			489			263			1,049			516
Other customer fees		344			460			427			237			384
Earnings on cash surrender value of life insurance		2,755			1,929			1,592			3,202			1,761
Net realized losses on sales of available for sale securities		(9,114	)		(49	)		(2	)		(2,317	)		(1,650	)
Other income (loss)		1,374			1,586			497			(152	)		1,229
Total Noninterest Income		24,866			31,334			26,638			26,444			27,842
NONINTEREST EXPENSES
Salaries and employee benefits		55,223			52,214			58,293			60,967			55,566
Net occupancy		6,994			6,746			7,312			9,089			6,837
Equipment		6,949			6,599			6,226			6,108			5,698
Marketing		1,836			1,773			1,198			2,647			2,369
Outside data processing fees		7,150			7,072			6,889			5,875			6,573
Printing and office supplies		378			354			353			402			333
Intangible asset amortization		1,772			1,771			1,957			2,182			2,182
FDIC assessments		3,720			3,278			4,287			7,557			2,981
Other real estate owned and foreclosure expenses		942			373			534			1,743			677
Professional and other outside services		3,035			3,822			3,952			3,981			3,833
Other expenses		6,630			7,411			5,934			7,552			6,805
Total Noninterest Expenses		94,629			91,413			96,935			108,103			93,854
INCOME BEFORE INCOME TAX		56,347			43,992			54,766			46,904			65,371
Income tax expense		7,160			4,067			6,825			4,425			9,005
NET INCOME		49,187			39,925			47,941			42,479			56,366
Preferred stock dividends		468			469			469			469			468
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	48,719		$	39,456		$	47,472		$	42,010		$	55,898
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.84		$	0.68		$	0.80		$	0.71		$	0.95
Diluted Net Income Available to Common Stockholders	$	0.84		$	0.68		$	0.80		$	0.71		$	0.94
Cash Dividends Paid to Common Stockholders	$	0.35		$	0.35		$	0.34		$	0.34		$	0.34
Average Diluted Common Shares Outstanding (in thousands)		58,289			58,328			59,273			59,556			59,503
FINANCIAL RATIOS:
Return on Average Assets		1.07	%		0.87	%		1.04	%		0.92	%		1.24	%
Return on Average Stockholders’ Equity		8.66			7.16			8.47			7.89			10.38
Return on Tangible Common Stockholders’ Equity		13.39			11.29			13.21			12.75			16.54
Average Earning Assets to Average Assets		92.54			92.81			92.91			93.62			93.36
Allowance for Credit Losses – Loans as % of Total Loans		1.48			1.50			1.64			1.64			1.67
Net Charge-offs as % of Average Loans (Annualized)		0.21			1.26			0.07			0.10			0.66
Average Stockholders’ Equity to Average Assets		12.26			12.02			12.17			11.58			11.87
Tax Equivalent Yield on Average Earning Assets		5.82			5.69			5.65			5.64			5.55
Interest Expense/Average Earning Assets		2.59			2.53			2.55			2.48			2.26
Net Interest Margin (FTE) on Average Earning Assets		3.23			3.16			3.10			3.16			3.29
Efficiency Ratio		53.76			53.84			59.21			63.26			53.91
Tangible Common Book Value Per Share	$	26.64		$	25.10		$	25.07		$	25.06		$	22.43


LOANS
(Dollars In Thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023
Commercial and industrial loans	$	4,041,217		$	3,949,817		$	3,722,365		$	3,670,948		$	3,490,953
Agricultural land, production and other loans to farmers		238,743			239,926			234,431			263,414			233,838
Real estate loans:
Construction		814,704			823,267			941,726			957,545			1,022,261
Commercial real estate, non-owner occupied		2,251,351			2,323,533			2,368,360			2,400,839			2,360,596
Commercial real estate, owner occupied		1,152,751			1,174,195			1,137,894			1,162,083			1,153,707
Residential		2,366,943			2,370,905			2,316,490			2,288,921			2,257,385
Home equity		641,188			631,104			618,258			617,571			609,352
Individuals’ loans for household and other personal expenditures		158,480			162,089			161,459			168,388			176,523
Public finance and other commercial loans		981,431			964,814			964,599			956,318			966,807
Loans		12,646,808			12,639,650			12,465,582			12,486,027			12,271,422
Allowance for credit losses – loans		(187,828	)		(189,537	)		(204,681	)		(204,934	)		(205,782	)
NET LOANS	$	12,458,980		$	12,450,113		$	12,260,901		$	12,281,093		$	12,065,640


DEPOSITS
(Dollars In Thousands)	September 30,		June 30,		March 31,		December 31,		September 30,
		2024		2024		2024		2023		2023
Demand deposits	$	7,678,510	$	7,757,679	$	7,771,976	$	7,965,862	$	7,952,040
Savings deposits		4,302,236		4,339,161		4,679,593		4,516,433		4,572,162
Certificates and other time deposits of $100,000 or more		1,277,833		1,415,131		1,451,443		1,408,985		1,280,607
Other certificates and time deposits		802,949		889,949		901,280		849,906		761,196
Brokered certificates of deposits¹		303,572		167,150		80,292		80,267		80,571
TOTAL DEPOSITS²	$	14,365,100	$	14,569,070	$	14,884,584	$	14,821,453	$	14,646,576

^{1 –} Total brokered deposits of $838.3 million, which includes brokered CD’s of $303.6 million at September 30, 2024.
² – Total deposits at September 30, 2024 excludes $287.7 million of deposits reclassified to Deposits and other liabilities held for sale related to the pending Illinois branch sale.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	September 30, 2024						September 30, 2023
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
ASSETS
Interest-bearing deposits	$	252,113	$	2,154	3.42	%	$	502,967	$	5,884	4.68	%
Federal Home Loan Bank stock		41,730		855	8.20			41,826		719	6.88
Investment Securities: ⁽¹⁾
Taxable		1,789,526		9,263	2.07			1,817,219		8,590	1.89
Tax-exempt ⁽²⁾		2,226,823		17,100	3.07			2,298,025		17,655	3.07
Total Investment Securities		4,016,349		26,363	2.63			4,115,244		26,245	2.55
Loans held for sale		31,991		483	6.04			24,227		386	6.37
Loans: ⁽³⁾
Commercial		8,699,733		164,922	7.58			8,456,527		153,993	7.28
Real estate mortgage		2,183,095		24,333	4.46			2,079,067		21,618	4.16
Installment		832,222		16,942	8.14			827,318		15,708	7.59
Tax-exempt ⁽²⁾		933,125		10,914	4.68			900,493		10,491	4.66
Total Loans		12,680,166		217,594	6.86			12,287,632		202,196	6.58
Total Earning Assets		16,990,358		246,966	5.82	%		16,947,669		235,044	5.55	%
Total Non-Earning Assets		1,370,222						1,204,570
TOTAL ASSETS	$	18,360,580					$	18,152,239
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,455,298	$	40,450	2.97	%	$	5,425,829	$	37,780	2.79	%
Money market deposits		2,974,188		25,950	3.49			2,923,798		23,607	3.23
Savings deposits		1,425,047		4,208	1.18			1,641,338		3,844	0.94
Certificates and other time deposits		2,499,655		28,248	4.52			2,106,910		20,320	3.86
Total Interest-Bearing Deposits		12,354,188		98,856	3.20			12,097,875		85,551	2.83
Borrowings		1,071,440		11,117	4.15			1,032,180		10,199	3.95
Total Interest-Bearing Liabilities		13,425,628		109,973	3.28			13,130,055		95,750	2.92
Noninterest-bearing deposits		2,348,266						2,637,717
Other liabilities		335,139						230,235
Total Liabilities		16,109,033						15,998,007
STOCKHOLDERS’ EQUITY		2,251,547						2,154,232
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,360,580		109,973			$	18,152,239		95,750
Net Interest Income (FTE)			$	136,993					$	139,294
Net Interest Spread (FTE) ⁽⁴⁾					2.54	%					2.63	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.82	%					5.55	%
Interest Expense / Average Earning Assets					2.59	%					2.26	%
Net Interest Margin (FTE) ⁽⁵⁾					3.23	%					3.29	%

⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $5,883 and $5,911 for the three months ended September 30, 2024 and 2023, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.
⁽⁴⁾ Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾ Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Nine Months Ended
	September 30, 2024						September 30, 2023
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
ASSETS
Interest-bearing deposits	$	383,007	$	11,642	4.05	%	$	340,887	$	9,685	3.79	%
Federal Home Loan Bank stock		41,748		2,569	8.20			41,160		2,281	7.39
Investment Securities: ⁽¹⁾
Taxable		1,787,119		27,062	2.02			1,872,267		26,563	1.89
Tax-exempt ⁽²⁾		2,237,759		51,561	3.07			2,394,864		56,071	3.12
Total Investment Securities		4,024,878		78,623	2.60			4,267,131		82,634	2.58
Loans held for sale		27,735		1,242	5.97			22,398		1,046	6.23
Loans: ⁽³⁾
Commercial		8,659,088		484,979	7.47			8,515,148		444,422	6.96
Real estate mortgage		2,159,738		70,489	4.35			2,008,852		60,354	4.01
Installment		825,060		49,406	7.98			833,133		44,492	7.12
Tax-exempt ⁽²⁾		921,286		31,952	4.62			885,256		30,072	4.53
Total Loans		12,592,907		638,068	6.76			12,264,787		580,386	6.31
Total Earning Assets		17,042,540		730,902	5.72	%		16,913,965		674,986	5.32	%
Total Non-Earning Assets		1,331,830						1,201,539
TOTAL ASSETS	$	18,374,370					$	18,115,504
LIABILITIES
Interest-Bearing deposits:
Interest-bearing deposits	$	5,487,106	$	120,935	2.94	%	$	5,412,482	$	97,016	2.39	%
Money market deposits		3,018,526		80,563	3.56			2,812,891		55,868	2.65
Savings deposits		1,497,620		11,485	1.02			1,730,110		10,693	0.82
Certificates and other time deposits		2,447,684		83,309	4.54			1,821,408		45,860	3.36
Total Interest-Bearing Deposits		12,450,936		296,292	3.17			11,776,891		209,437	2.37
Borrowings		990,022		30,328	4.08			1,144,368		32,122	3.74
Total Interest-Bearing Liabilities		13,440,958		326,620	3.24			12,921,259		241,559	2.49
Noninterest-bearing deposits		2,375,120						2,850,557
Other liabilities		325,873						217,683
Total Liabilities		16,141,951						15,989,499
STOCKHOLDERS’ EQUITY		2,232,419						2,126,005
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,374,370		326,620			$	18,115,504		241,559
Net Interest Income (FTE)			$	404,282					$	433,427
Net Interest Spread (FTE) ⁽⁴⁾					2.48	%					2.83	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.72	%					5.32	%
Interest Expense / Average Earning Assets					2.56	%					1.90	%
Net Interest Margin (FTE) ⁽⁵⁾					3.16	%					3.42	%

⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $17,538 and $18,090 for the nine months ended September 30, 2024 and 2023, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.
⁽⁴⁾ Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾ Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE – NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
		2024			2024			2024			2023			2023			2024			2023
Net Income Available to Common Stockholders – GAAP	$	48,719		$	39,456		$	47,472		$	42,010		$	55,898		$	135,647		$	179,901
Adjustments:
PPP loan income		—			—			—			(7	)		(8	)		—			(42	)
Net realized losses on sales of available for sale securities		9,114			49			2			2,317			1,650			9,165			4,613
Non-core expenses^1,2		—			—			3,481			12,682			—			3,481			—
Tax on adjustments		(2,220	)		(12	)		(848	)		(3,652	)		(403	)		(3,081	)		(1,121	)
Adjusted Net Income Available to Common Stockholders – Non-GAAP	$	55,613		$	39,493		$	50,107		$	53,350		$	57,137		$	145,212		$	183,351

Average Diluted Common Shares Outstanding (in thousands)		58,289			58,328			59,273			59,556			59,503			58,629			59,465

Diluted Earnings Per Common Share – GAAP	$	0.84		$	0.68		$	0.80		$	0.71		$	0.94		$	2.31		$	3.03
Adjustments:
PPP loan income		—			—			—			—			—			—			—
Net realized losses on sales of available for sale securities		0.15			—			—			0.04			0.03			0.16			0.07
Non-core expenses^1,2		—			—			0.06			0.21			—			0.06			—
Tax on adjustments		(0.04	)		—			(0.01	)		(0.06	)		(0.01	)		(0.05	)		(0.02	)
Adjusted Diluted Earnings Per Common Share – Non-GAAP	$	0.95		$	0.68		$	0.85		$	0.90		$	0.96		$	2.48		$	3.08

¹ – Non-core expenses in 4Q23 included $6.3 million from early retirement and severance costs, $4.3 million from the FDIC special assessment, and $2.1 million from a lease termination.
² – Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.


NET INTEREST MARGIN (“NIM”), ADJUSTED
(Dollars in Thousands, Except Per Share Amounts)
	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
		2024			2024			2024			2023			2023			2024			2023
Net Interest Income (GAAP)	$	131,110		$	128,571		$	127,063		$	130,063		$	133,383		$	386,744		$	415,337
Fully Taxable Equivalent (“FTE”) Adjustment		5,883			5,859			5,795			5,853			5,911			17,538			18,090
Net Interest Income (FTE) (non-GAAP)	$	136,993		$	134,430		$	132,858		$	135,916		$	139,294		$	404,282		$	433,427

Average Earning Assets (GAAP)	$	16,990,358		$	17,013,984		$	17,123,851		$	17,222,714		$	16,947,669		$	17,042,540		$	16,913,965
Net Interest Margin (GAAP)		3.09	%		3.02	%		2.97	%		3.02	%		3.15	%		3.03	%		3.27	%
Net Interest Margin (FTE) (non-GAAP)		3.23	%		3.16	%		3.10	%		3.16	%		3.29	%		3.16	%		3.42	%


RETURN ON TANGIBLE COMMON EQUITY – NON-GAAP
(Dollars In Thousands)	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
		2024			2024			2024			2023			2023			2024			2023
Total Average Stockholders’ Equity (GAAP)	$	2,251,547		$	2,203,361		$	2,242,139		$	2,130,993		$	2,154,232		$	2,232,419		$	2,126,005
Less: Average Preferred Stock		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)
Less: Average Intangible Assets, Net of Tax		(729,581	)		(730,980	)		(732,432	)		(734,007	)		(735,787	)		(730,993	)		(737,476	)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,496,841		$	1,447,256		$	1,484,582		$	1,371,861		$	1,393,320		$	1,476,301		$	1,363,404

Net Income Available to Common Stockholders (GAAP)	$	48,719		$	39,456		$	47,472		$	42,010		$	55,898		$	135,647		$	179,901
Plus: Intangible Asset Amortization, Net of Tax		1,399			1,399			1,546			1,724			1,724			4,345			5,182
Tangible Net Income (Non-GAAP)	$	50,118		$	40,855		$	49,018		$	43,734		$	57,622		$	139,992		$	185,083

Return on Tangible Common Equity (Non-GAAP)		13.39	%		11.29	%		13.21	%		12.75	%		16.54	%		12.64	%		18.10	%

For more information, contact:
Nicole M. Weaver, Vice President and Director of Corporate Administration
765-521-7619
http://www.firstmerchants.com

SOURCE: First Merchants Corporation, Muncie, Indiana

The MIL Network –

January 25, 2025

MIL-OSI: Jackery Introduces Solar Generator 5000 Plus – “Most Trusted Whole-Home Backup Power”

Source: GlobeNewswire (MIL-OSI)

FREMONT, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) — Jackery, a global leader of innovative solar generators and green off-grid energy solutions, has launched its newest and most advanced product yet – the Jackery Solar Generator 5000 Plus. Powerful, portable and compact, the 5000 Plus is the lightest generator in its class and ensures people will stay connected, powered and secure, even in the most difficult and unexpected circumstances.

“Safety, sustainability and convenience are at the forefront of every solar generator we produce, and the 5000 Plus delivers at every turn,” said Jack Sun, CEO of Jackery. “Whether you need to power your entire home during an outage or emergency, need additional power while embracing outdoor living or reliable everyday power, the 5000 Plus provides the performance, safety and convenience that people need.”

With LFP battery cells, the 5000 Plus offers 4,000 life cycles, ensuring long-term reliability. It operates quietly and requires no maintenance, making it a better option for indoor use compared to traditional gas generators, especially during extreme weather conditions. The UPS feature allows for instantaneous switching to backup power during an outage, ensuring sensitive equipment like computers and other essential devices keep running without interruption and with zero downtime.

When paired with Jackery’s Smart Transfer Switch (STS), a single 5000 Plus delivers up to 7200W of power. And, when connected to a second unit, users can get up to 14400W, making it more than sufficient to power a home in the most unpredictable situation. When equipped with all modular extensions and add-ons available, the full 5000 Plus ecosystem capability reaches an impressive 60kWh – enough power to sustain the average American household necessities for up to several days (based on an average daily usage of 30kWh/day).

The modular design of the 5000 Plus ensures users can extend power capacity to fit their individual needs. This flexibility also offers users complete control over the power usage, capacity, spending, and savings, making it a truly personalized backup power solution. The Jackery 5000 Plus not only meets 120V load demands, but can also power 240V appliances, such as dryers, water pumps, ovens, and high-power electric tools. It is also capable of recharging RVs and electric vehicles.

The 5000 Plus is also equipped with dual-voltage solar charging, meaning that the system can recharge through a high voltage rooftop solar system and with Jackery’s portable solar panels. The 5000 Plus is compatible with most solar panels that use an MC4 connector, supporting up to 4000W of charging power for fast and efficient recharging. Compatible with up to six Jackery SolarSaga 200W portable solar panels or two new Jackery SolarSaga 500W portable solar panels, it is an eco-friendly, cost-saving solution for long-term use.

For added convenience, users can utilize smart app control to activate UPS mode, schedule charging, and more. This convenient app control also provides quick access to the 5000 Plus’s status with easy-to-set charge/discharge parameters and modes.

Further, the 5000 Plus is built to last, with fireproof, shockproof and IPX4 water-resistant certifications. Combined with Jackery’s 5+2 year warranty, the 5000 Plus is an investment in safety, sustainability, and convenience, ensuring long-term peace of mind.

Jackery is dedicated to developing reliable technology and offers the industry’s exclusive ChargeShield 2.0 and Class B standard, providing up to 62 layers of protection for charging, discharging, and battery management systems (BMS). The Company’s AI-driven variable speed charging technology ensures dependable power usage every time.

Whether for emergencies, off-grid living, or reliable everyday power, the 5000 Plus delivers the performance, safety, and ease that people need and have come to rely on from Jackery’s solar generators.

Finally, while designed with whole-home backup in mind, the 5000 Plus is also perfect for off-grid living and grid arbitrage, offering features like peak shaving and valley lifting to balance energy consumption, reduce energy bills, and alleviate pressure on the grid. Whether you need power for an off-grid cabin, RV, job site, or even film production, the 5000 Plus is the perfect green-energy solution.

For more information on Jackery, the 5000 Plus and other products, please visit www.jackery.com. Be sure to follow Jackery on social media at @JackeryUSA for the latest updates in real time.

ABOUT JACKERY
Founded in California in 2012, Jackery is the world’s leading provider of innovative solar generators and off-grid green energy solutions. As a global top-selling solar generator brand, Jackery is driven by its mission to “Bring Green Energy to All.” By integrating with Geneverse in 2024, Jackery has expanded its product offerings and is able to deliver a comprehensive range of energy solutions, from portable solar generators for outdoor use to whole-home backup systems, furthering its commitment to making green energy accessible for all. Jackery has consistently fulfilled its social responsibility on a global scale, maintaining long-term partnerships with global public welfare organizations such as WWF, NFF, and IRC. Through these collaborations, Jackery continues to contribute to global sustainable development and other public welfare initiatives, reinforcing its dedication to creating a greener, more sustainable future.

MEDIA CONTACTS
ICR
jackery@icrinc.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/910a7380-9682-4ba7-acd6-8c69fba4e929

The MIL Network –

January 25, 2025

MIL-OSI: West Bancorporation, Inc. Announces Third Quarter 2024 Financial Results and Declares Quarterly Dividend

Source: GlobeNewswire (MIL-OSI)

WEST DES MOINES, Iowa, Oct. 24, 2024 (GLOBE NEWSWIRE) — West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported third quarter 2024 net income of $6.0 million, or $0.35 per diluted common share, compared to second quarter 2024 net income of $5.2 million, or $0.31 per diluted common share, and third quarter 2023 net income of $5.9 million, or $0.35 per diluted common share. On October 23, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 20, 2024, to stockholders of record on November 6, 2024.

David Nelson, President and Chief Executive Officer of the Company, commented, “Our third quarter results include moderate growth in loans and core deposits along with an increase in quarterly net interest income and net interest margin. Our credit quality remains pristine as a result of our disciplined loan growth and credit risk management practices. The ratio of nonperforming assets to total assets remains negligible at 0.01%.”

David Nelson added, “West Bank is focused on initiatives that will drive sustained core profitability. Those initiatives are centered around our culture of building strong relationships and providing exceptional personal service to drive growth in both commercial and consumer banking services.”

Third Quarter 2024 Financial Highlights

	Quarter Ended September 30, 2024		Nine Months Ended September 30, 2024
Net income (in thousands)	$5,952		$16,953
Return on average equity		10.41%		10.18%
Return on average assets		0.60%		0.59%
Efficiency ratio (a non-GAAP measure)		63.28%		64.16%
Nonperforming assets to total assets		0.01%		0.01%

Third Quarter 2024 Compared to Second Quarter 2024 Overview

Loans increased $22.4 million in the third quarter of 2024, or 3.0 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
A provision for credit losses on loans of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. A negative provision for credit losses on unfunded commitments of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. The provision for loans in the third quarter of 2024 was primarily due to changes in the forecasted loss rates due to increases in forecasted unemployment rates. The negative provision for unfunded commitments was primarily due to the decline in unfunded commitments resulting primarily from the funding of construction loans.
The allowance for credit losses to total loans was 0.97 percent and 0.95 percent at September 30, 2024 and June 30, 2024, respectively. Nonaccrual loans at September 30, 2024 consisted of two loans with a total balance of $233 thousand, compared to three loans with a balance of $521 thousand at June 30, 2024.
Deposits increased $97.6 million, or 3.1 percent, in the third quarter of 2024. Brokered deposits totaled $425.9 million at September 30, 2024, compared to $370.3 million at June 30, 2024, an increase of $55.6 million. Excluding brokered deposits, deposits increased $42.0 million during the third quarter of 2024. As of September 30, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi^® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 27.8 percent of total deposits.
Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $525.5 million at June 30, 2024. The decrease was primarily due to the balance of federal funds purchased and other short-term borrowings decreasing to $0 as of September 30, 2024, from $85.5 million as of June 30, 2024 as a result of growth in deposits.
The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 67.14 percent for the second quarter of 2024. The improvement in the efficiency ratio was primarily due to the increase in net interest income. In the third quarter of 2024, the increase in interest income on loans outpaced the increase in interest expense on deposits and borrowed funds.
Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2024, compared to 1.86 percent for the second quarter of 2024. Net interest income for the third quarter of 2024 was $18.0 million, compared to $17.2 million for the second quarter of 2024.
The tangible common equity ratio was 5.90 percent as of September 30, 2024, compared to 5.65 percent as of June 30, 2024. The increase in the tangible common equity ratio was driven by retained net income and the decrease in accumulated other comprehensive loss, which was primarily the result of the increase in the market value of our available for sale investment portfolio.

Third Quarter 2024 Compared to Third Quarter 2023 Overview

Loans increased $171.4 million at September 30, 2024, or 6.0 percent, compared to September 30, 2023. The increase is primarily due to increases in commercial real estate loans and the funding of previously committed construction loans.
Deposits increased to $3.3 billion at September 30, 2024, compared to $2.8 billion at September 30, 2023. Included in deposits were brokered deposits totaling $425.9 million at September 30, 2024, compared to $237.0 million at September 30, 2023. Brokered deposits were used to reduce short-term borrowed funds and to fund loan growth. Excluding brokered deposits, deposits increased $334.2 million, or 13.3 percent, as of September 30, 2024, compared to September 30, 2023. Deposit growth included a mix of public funds and commercial and consumer deposits.
Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $705.1 million at September 30, 2023. The decrease was primarily attributable to a decrease of $261.5 million in federal funds purchased and other short-term borrowings as a result of growth in deposits.
The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 60.83 percent for the third quarter of 2023. The increase in the efficiency ratio in the third quarter of 2024 compared to the third quarter of 2023 was primarily due to the increase in noninterest expense, partially offset by an increase in net interest income. Occupancy and equipment expense increased primarily due to the occupancy costs associated with the Company’s newly constructed headquarters.
Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for both the third quarter of 2024 and the third quarter of 2023. Net interest income for the third quarter of 2024 was $18.0 million, compared to $16.6 million for the third quarter of 2023.

The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-Q is available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.

The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, October 24, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 7846129. A recording of the call will be available until November 7, 2024, by dialing 800-770-2030. The conference ID for the replay call is 7846129, followed by the # key.

About West Bancorporation, Inc. (Nasdaq: WTBA)

West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners’ information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766


WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
	As of
CONDENSED BALANCE SHEETS	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Assets
Cash and due from banks	$	34,157		$	27,994		$	27,071		$	33,245		$	18,819
Interest-bearing deposits		123,646			121,825			120,946			32,112			1,802
Securities available for sale, at fair value		597,745			588,452			605,735			623,919			609,365
Federal Home Loan Bank stock, at cost		17,195			21,065			26,181			22,957			26,691
Loans		3,021,221			2,998,774			2,980,133			2,927,535			2,849,777
Allowance for credit losses		(29,419	)		(28,422	)		(28,373	)		(28,342	)		(28,147	)
Loans, net		2,991,802			2,970,352			2,951,760			2,899,193			2,821,630
Premises and equipment, net		106,771			101,965			95,880			86,399			75,675
Bank-owned life insurance		44,703			44,416			44,138			43,864			43,589
Other assets		72,547			89,046			90,981			84,069			104,329
Total assets	$	3,988,566		$	3,965,115		$	3,962,692		$	3,825,758		$	3,701,900

Liabilities and Stockholders’ Equity
Deposits	$	3,278,553		$	3,180,922		$	3,065,030		$	2,973,779		$	2,755,529
Federal funds purchased and other short-term borrowings		—			85,500			198,500			150,270			261,510
Other borrowings		438,814			439,998			441,183			442,367			443,552
Other liabilities		35,846			34,812			34,223			34,299			37,376
Stockholders’ equity		235,353			223,883			223,756			225,043			203,933
Total liabilities and stockholders’ equity	$	3,988,566		$	3,965,115		$	3,962,692		$	3,825,758		$	3,701,900

	For the Quarter Ended
AVERAGE BALANCES	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Assets	$	3,973,824		$	3,964,109		$	3,812,199		$	3,706,497		$	3,679,541
Loans		2,991,272			2,994,492			2,949,672			2,857,594			2,813,213
Deposits		3,258,669			3,123,282			2,956,635			2,878,676			2,764,184
Stockholders’ equity		227,513			219,771			219,835			201,920			215,230


WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
	As of
LOANS	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Commercial	$	512,884		$	526,589		$	544,293		$	531,594		$	529,293
Real estate:
Construction, land and land development		520,516			496,864			465,247			413,477			399,253
1-4 family residential first mortgages		89,749			92,230			108,065			106,688			89,713
Home equity		17,140			15,264			14,020			14,618			12,429
Commercial		1,870,132			1,856,301			1,839,580			1,854,510			1,812,816
Consumer and other		14,261			15,234			12,844			10,930			10,123
		3,024,682			3,002,482			2,984,049			2,931,817			2,853,627
Net unamortized fees and costs		(3,461	)		(3,708	)		(3,916	)		(4,282	)		(3,850	)
Total loans	$	3,021,221		$	2,998,774		$	2,980,133		$	2,927,535		$	2,849,777
Less: allowance for credit losses		(29,419	)		(28,422	)		(28,373	)		(28,342	)		(28,147	)
Net loans	$	2,991,802		$	2,970,352		$	2,951,760		$	2,899,193		$	2,821,630

CREDIT QUALITY
Pass	$	3,016,493		$	2,994,310		$	2,983,618		$	2,931,377		$	2,853,100
Watch		7,956			7,651			142			144			184
Substandard		233			521			289			296			343
Doubtful		—			—			—			—			—
Total loans	$	3,024,682		$	3,002,482		$	2,984,049		$	2,931,817		$	2,853,627

DEPOSITS
Noninterest-bearing demand	$	525,332		$	530,441		$	521,377		$	548,726		$	551,688
Interest-bearing demand		438,402			443,658			449,946			481,207			417,802
Savings and money market – non-brokered		1,481,840			1,483,264			1,315,698			1,315,741			1,249,309
Money market – brokered		123,780			97,259			119,840			124,335			99,282
Total nonmaturity deposits		2,569,354			2,554,622			2,406,861			2,470,009			2,318,081
Time – non-brokered		407,109			353,269			381,646			322,694			299,683
Time – brokered		302,090			273,031			276,523			181,076			137,765
Total time deposits		709,199			626,300			658,169			503,770			437,448
Total deposits	$	3,278,553		$	3,180,922		$	3,065,030		$	2,973,779		$	2,755,529

BORROWINGS
Federal funds purchased and other short-term borrowings	$	—		$	85,500		$	198,500		$	150,270		$	261,510
Subordinated notes, net		79,828			79,762			79,697			79,631			79,566
Federal Home Loan Bank advances		315,000			315,000			315,000			315,000			315,000
Long-term debt		43,986			45,236			46,486			47,736			48,986
Total borrowings	$	438,814		$	525,498		$	639,683		$	592,637		$	705,062

STOCKHOLDERS’ EQUITY
Preferred stock	$	—		$	—		$	—		$	—		$	—
Common stock		3,000			3,000			3,000			3,000			3,000
Additional paid-in capital		34,960			34,322			33,685			34,197			33,487
Retained earnings		275,724			273,981			272,997			271,369			271,025
Accumulated other comprehensive loss		(78,331	)		(87,420	)		(85,926	)		(83,523	)		(103,579	)
Total stockholders’ equity	$	235,353		$	223,883		$	223,756		$	225,043		$	203,933


WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
	For the Quarter Ended
CONSOLIDATED STATEMENTS OF INCOME	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023			September 30, 2023
Interest income:
Loans, including fees	$	42,504	$	41,700	$	40,196	$	38,208		$	36,756
Securities:
Taxable		3,261		3,394		3,416		3,521			3,427
Tax-exempt		806		808		810		869			880
Interest-bearing deposits		2,041		1,666		148		85			29
Total interest income		48,612		47,568		44,570		42,683			41,092
Interest expense:
Deposits		26,076		23,943		21,559		20,024			17,156
Federal funds purchased and other short-term borrowings		115		1,950		2,183		2,024			3,165
Subordinated notes		1,112		1,105		1,108		1,114			1,113
Federal Home Loan Bank advances		2,748		2,718		2,325		2,482			2,329
Long-term debt		601		622		645		678			695
Total interest expense		30,652		30,338		27,820		26,322			24,458
Net interest income		17,960		17,230		16,750		16,361			16,634
Credit loss expense		—		—		—		500			200
Net interest income after credit loss expense		17,960		17,230		16,750		15,861			16,434
Noninterest income:
Service charges on deposit accounts		459		462		460		476			463
Debit card usage fees		500		490		458		488			495
Trust services		828		794		776		782			831
Increase in cash value of bank-owned life insurance		287		278		274		275			262
Loan swap fees		—		—		—		—			431
Realized securities losses, net		—		—		—		(431	)		—
Other income		285		322		331		308			340
Total noninterest income		2,359		2,346		2,299		1,898			2,822
Noninterest expense:
Salaries and employee benefits		6,823		7,169		6,489		6,468			6,696
Occupancy and equipment		1,926		1,852		1,447		1,499			1,359
Data processing		771		754		714		723			703
Technology and software		722		731		700		676			573
FDIC insurance		711		631		519		475			439
Professional fees		239		244		257		235			254
Director fees		223		236		199		240			196
Other expenses		1,477		1,577		1,543		1,845			1,685
Total noninterest expense		12,892		13,194		11,868		12,161			11,905
Income before income taxes		7,427		6,382		7,181		5,598			7,351
Income taxes		1,475		1,190		1,372		1,073			1,445
Net income	$	5,952	$	5,192	$	5,809	$	4,525		$	5,906

Basic earnings per common share	$	0.35	$	0.31	$	0.35	$	0.27		$	0.35
Diluted earnings per common share	$	0.35	$	0.31	$	0.35	$	0.27		$	0.35


WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
	For the Nine Months Ended
CONSOLIDATED STATEMENTS OF INCOME	September 30, 2024		September 30, 2023
Interest income:
Loans, including fees	$	124,400	$	104,715
Securities:
Taxable		10,071		10,175
Tax-exempt		2,424		2,648
Interest-bearing deposits		3,855		84
Total interest income		140,750		117,622
Interest expense:
Deposits		71,578		46,772
Federal funds purchased and other short-term borrowings		4,248		7,508
Subordinated notes		3,325		3,328
Federal Home Loan Bank advances		7,791		5,212
Long-term debt		1,868		2,132
Total interest expense		88,810		64,952
Net interest income		51,940		52,670
Credit loss expense		—		200
Net interest income after credit loss expense		51,940		52,470
Noninterest income:
Service charges on deposit accounts		1,381		1,383
Debit card usage fees		1,448		1,492
Trust services		2,398		2,286
Increase in cash value of bank-owned life insurance		839		769
Loan swap fees		—		431
Gain from bank-owned life insurance		—		691
Other income		938		1,116
Total noninterest income		7,004		8,168
Noninterest expense:
Salaries and employee benefits		20,481		20,592
Occupancy and equipment		5,225		4,008
Data processing		2,239		2,067
Technology and software		2,153		1,665
FDIC insurance		1,861		1,275
Professional fees		740		791
Director fees		658		652
Other expenses		4,597		5,400
Total noninterest expense		37,954		36,450
Income before income taxes		20,990		24,188
Income taxes		4,037		4,576
Net income	$	16,953	$	19,612

Basic earnings per common share	$	1.01	$	1.17
Diluted earnings per common share	$	1.00	$	1.17


WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)

	As of and for the Quarter Ended															For the Nine Months Ended
COMMON SHARE DATA	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			September 30, 2024			September 30, 2023
Earnings per common share (basic)	$	0.35		$	0.31		$	0.35		$	0.27		$	0.35		$	1.01		$	1.17
Earnings per common share (diluted)		0.35			0.31			0.35			0.27			0.35			1.00			1.17
Dividends per common share		0.25			0.25			0.25			0.25			0.25			0.75			0.75
Book value per common share⁽¹⁾		13.98			13.30			13.31			13.46			12.19
Closing stock price		19.01			17.90			17.83			21.20			16.31
Market price/book value⁽²⁾		135.98	%		134.59	%		133.96	%		157.50	%		133.80	%
Price earnings ratio⁽³⁾		13.65			14.36			12.77			19.79			11.75
Annualized dividend yield⁽⁴⁾		5.26	%		5.59	%		5.61	%		4.72	%		6.13	%

REGULATORY CAPITAL RATIOS
Consolidated:
Total risk-based capital ratio		11.95	%		11.85	%		11.78	%		11.88	%		11.96	%
Tier 1 risk-based capital ratio		9.39			9.30			9.23			9.30			9.37
Tier 1 leverage capital ratio		8.15			8.08			8.36			8.50			8.58
Common equity tier 1 ratio		8.83			8.74			8.67			8.74			8.80
West Bank:
Total risk-based capital ratio		12.73	%		12.66	%		12.63	%		12.76	%		12.89	%
Tier 1 risk-based capital ratio		11.86			11.79			11.76			11.89			12.01
Tier 1 leverage capital ratio		10.29			10.25			10.65			10.86			11.00
Common equity tier 1 ratio		11.86			11.79			11.76			11.89			12.01

KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets⁽⁵⁾		0.60	%		0.53	%		0.61	%		0.48	%		0.64	%		0.59	%		0.72	%
Return on average equity⁽⁶⁾		10.41			9.50			10.63			8.89			10.89			10.18			12.22
Net interest margin^(7)(13)		1.91			1.86			1.88			1.87			1.91			1.88			2.05
Yield on interest-earning assets^(8)(13)		5.16			5.13			4.99			4.87			4.70			5.10			4.56
Cost of interest-bearing liabilities		3.84			3.83			3.70			3.60			3.38			3.79			3.09
Efficiency ratio^(9)(13)		63.28			67.14			62.04			64.66			60.83			64.16			59.52
Nonperforming assets to total assets⁽¹⁰⁾		0.01			0.01			0.01			0.01			0.01
ACL ratio⁽¹¹⁾		0.97			0.95			0.95			0.97			0.99
Loans/total assets		75.75			75.63			75.20			76.52			76.98
Loans/total deposits		92.15			94.27			97.23			98.44			103.42
Tangible common equity ratio⁽¹²⁾		5.90			5.65			5.65			5.88			5.51

(1)	Includes accumulated other comprehensive loss.
(2)	Closing stock price divided by book value per common share.
(3)	Closing stock price divided by annualized earnings per common share (basic).
(4)	Annualized dividend divided by period end closing stock price.
(5)	Annualized net income divided by average assets.
(6)	Annualized net income divided by average stockholders’ equity.
(7)	Annualized tax-equivalent net interest income divided by average interest-earning assets.
(8)	Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
(9)	Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
(10)	Total nonperforming assets divided by total assets.
(11)	Allowance for credit losses on loans divided by total loans.
(12)	Common equity less intangible assets (none held) divided by tangible assets.
(13)	A non-GAAP measure.

NON-GAAP FINANCIAL MEASURES

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.


(in thousands)	For the Quarter Ended															For the Nine Months Ended
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			September 30, 2024			September 30, 2023
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)	$	17,960		$	17,230		$	16,750		$	16,361		$	16,634		$	51,940		$	52,670
Tax-equivalent adjustment ⁽¹⁾		29			55			82			95			113			166			396
Net interest income on a FTE basis (non-GAAP)		17,989			17,285			16,832			16,456			16,747			52,106			53,066
Average interest-earning assets		3,749,688			3,731,674			3,595,954			3,487,799			3,478,053			3,692,647			3,458,606
Net interest margin on a FTE basis (non-GAAP)		1.91	%		1.86	%		1.88	%		1.87	%		1.91	%		1.88	%		2.05	%

Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)	$	17,989		$	17,285		$	16,832		$	16,456		$	16,747		$	52,106		$	53,066
Noninterest income		2,359			2,346			2,299			1,898			2,822			7,004			8,168
Adjustment for realized securities losses, net		—			—			—			431			—			—			—
Adjustment for losses on disposal of premises and equipment, net		26			21			—			24			3			47			5
Adjusted income		20,374			19,652			19,131			18,809			19,572			59,157			61,239
Noninterest expense		12,892			13,194			11,868			12,161			11,905			37,954			36,450
Efficiency ratio on an adjusted and FTE basis (non-GAAP) ⁽²⁾		63.28	%		67.14	%		62.04	%		64.66	%		60.83	%		64.16	%		59.52	%

(1)

Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. 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 arising from taxable and nontaxable sources.

(2)

The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company’s financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.

The MIL Network –

January 25, 2025

MIL-OSI Security: Former Eagle Pass Police Officer Sentenced to 10 Years in Federal Prison for Operating Human Smuggling Stash Houses

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

DEL RIO, Texas – An Eagle Pass woman, who had served as a police detective, was sentenced in a federal court in Del Rio to 120 months in prison for her role in a conspiracy to harbor undocumented noncitizens for a human smuggling organization (HSO).

According to court documents, Hazel Eileen Diaz, 54, rented out multiple properties she owned in Eagle Pass to assist in harboring undocumented noncitizens between September 2020 and August 2021. Diaz would often travel to the properties where the migrants were being held to collect rent payments. An investigation revealed that, in total, nearly 200 migrants were smuggled by the HSO Diaz worked for, and that she had received approximately $36,916 in cash and money service business transfers, much of which were proceeds from human smuggling. At the time of her arrest, she was in possession of $23,522 in cash from the smuggling operation.

Co-defendant Tomas Alejandro Mendez pleaded guilty on July 11, 2022 to one count of conspiracy to harbor illegal aliens. He is scheduled to be sentenced Jan. 13, 2025. Co-defendant Paola Nikole Cazares was sentenced Oct. 11, 2023 to 63 months in prison for the same offense with credit for time served since Aug. 26, 2021. Mendez and Cazares worked with Diaz to operate her properties as stash houses.

In addition to imprisonment, Diaz will serve three years of supervised release, pay a $10,000 fine and money judgement of $237,600, and she will forfeit three properties, a truck, and $23,522.

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

The FBI, Homeland Security Investigations, the U.S. Border Patrol, and the Texas Department of Public Safety investigated the case.

Assistant U.S. Attorney Holly Pavlinski prosecuted the case.

###

MIL Security OSI –

January 25, 2025

MIL-OSI: The Victory Bancorp, Inc., Announces 2024 Third Quarter Earnings

Source: GlobeNewswire (MIL-OSI)

LIMERICK, Pa., Oct. 24, 2024 (GLOBE NEWSWIRE) — The Victory Bancorp, Inc. (OTCQX: VTYB), the holding company for The Victory Bank, announced unaudited results for the quarter ended September 30, 2024.

Joseph W. Major, Bank Leader and Chief Executive Officer, stated, “Our third quarter results reflect consistent growth and improved earnings. Our commitment to providing top-notch banking services is central to our strategy which we implement by hiring skilled and dedicated bankers who offer trusted advice and exceptional personal service to our clients. Our focus is on maintaining disciplined pricing and credit underwriting practices as we expand the Bank. This diligence not only strengthens our institution but also benefits the communities we serve.”

As of September 30, 2024, deposits rose to $398.2 million, up from $358.2 million a year earlier—a 10.8% increase. Net loans increased by 12.7%, reaching $395.2 million, compared to $351.9 million on the same date last year. Total assets grew by $49.1 million to $467.9 million, marking an 11.9% increase over the past year. Overall credit quality remained strong, with very low levels of non-performing and non-accrual loans. Because of these excellent credit metrics, third quarter provision for loan losses decreased to $71 thousand, down from $75 thousand in the 3^rd quarter of 2023. Notably, non-performing assets fell significantly from $2.2 million at the end of 2023 to $209 thousand as of September 30, 2024.

Third Quarter 2024 Highlights compared to Third Quarter 2023

Net Loans increased 12.7% to $395.2 million from $351.9 million at September 30, 2023
$2.9 million increase in stockholders’ equity
$0.065 per share cash dividend paid to shareholders
Net interest margin at the Bank was 3.58% for the quarter
Net income of $586 thousand, totaling approximately $0.29 per common share fully diluted
Book value per share as of September 30, 2024 was $14.89
Total assets increased by $49.1 million from September 30, 2023 to $467.9 million as of September 30, 2024
Credit quality is outstanding

Capital Insights and Credit Quality:

Nonaccrual loans decreased in the third quarter of 2024, from $2.2 million at year end 2023 to $206 thousand in the current quarter.
Non-performing assets to total assets rose slightly from 0.01% in the linked quarter to 0.04% in the current quarter.
Delinquencies greater than 30 days were 0.05% of total loans as of September 30, 2024, down from 0.68% as of December 31, 2023.
The bank’s ACL ratio was 0.91% as of September 30, 2024, down slightly from 0.94% at year-end 2023. The September 30, 2024 ACL covered non-performing loans 17.5 times, an increase from 1.6 times at year-end 2023.
The bank remains well capitalized.

Victory Bancorp, Inc. is traded on the OTCQX market under the symbol VTYB (https://www.otcmarkets.com) and is the parent company of The Victory Bank, a Pennsylvania state-chartered commercial bank headquartered in Limerick, Pennsylvania, which is located just outside the Philadelphia market in Montgomery County. The Victory Bank was established in 2008 as a specialized business lender that provides high-quality banking services to small and mid-sized businesses and professionals through its three offices located in Montgomery and Berks Counties, Pennsylvania. Additional information about Victory Bancorp is available on its website, VictoryBank.com.

This presentation may contain forward-looking statements (within the meaning of Private Securities Litigation Reform Act of 1995). Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic; competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products, and services.

Contact:

Joseph W. Major,
Chairman and Chief Executive Officer

Robert H. Schultz,
Chief Financial Officer, Chief Operating Officer

The Victory Bancorp, Inc.
548 N. Lewis Rd.
Limerick, PA 19468

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(dollars in thousands, except per share data)
		September 30,		December 31,		September 30,
Selected Financial Data		2024		2023		2023
Investment securities	$	46,110	$	47,931	$	47,335
Loans, net of allowance for loan losses		395,213		364,383		351,926
Total assets		467,939		442,163		418,843
Deposits		398,169		364,032		358,207
Borrowings		24,692		36,200		19,750
Subordinated debt		12,851		12,830		12,824
Stockholders’ equity	$	29,437	$	27,948	$	26,548
Book value per common share	$	14.89	$	14.17	$	13.47
Allowance/loans		0.91%		0.94%		0.94%
Nonperforming assets/total assets		0.04%		0.49%		0.01%

		3 Months Ended
		September 30,		December 31,		September 30,
Selected Operations Data		2024		2023		2023
Interest income	$	7,526	$	6,680	$	6,298
Interest expense		4,064		3,337		2,955
Net interest income		3,462		3,343		3,343
Provision for loan losses		71		170		75
Other income		239		210		143
Other expense		2,895		2,748		2,826
Income before income taxes		735		635		585
Income taxes		(149)		(160)		(39)
Net income	$	586	$	475	$	546
Earnings per common share (basic)	$	0.30	$	0.24	$	0.28
Earnings per common share (diluted)	$	0.29	$	0.23	$	0.26
Return on average assets (annualized)		0.50%		0.45%		0.53%
Return on average equity (annualized)		8.14%		6.97%		8.05%
Net charge-offs(recoveries)/average loans		0.01%		0.00%		0.00%

The MIL Network –

January 25, 2025

MIL-OSI USA News: Background Press Call on the U.S. Approach to Harnessing the Power of AI for U.S. National Security

Source: The White House

Via Teleconference

MODERATOR: Good afternoon, everyone. Thanks so much for joining today’s call to discuss the U.S. approach to harnessing the power of AI for U.S. national security, ahead of tomorrow’s release of the National Security Memorandum.

As a reminder of the ground rules of this call, this call is on background, attributable to senior administration officials, and it is embargoed until 6:00 a.m. Eastern on Thursday, October 24.

For your awareness, not for your reporting, on the call today we have [senior administration official] and [senior administration official].

Following the call, we’ll provide you all with some materials under the same embargo, so be on the lookout for those.

Our speakers are going to have a few words at the top, and then we’ll turn it over to some of your questions.

With that, [senior administration official], I’ll turn it over to you.

SENIOR ADMINISTRATION OFFICIAL: Thanks, Eduardo. And thanks to all of you for joining us this evening.

So, we’re really pleased to report that tomorrow we’ll be releasing a National Security Memorandum on Artificial Intelligence signed by the President.

And we want to start off just by sharing a little bit of context for this, which really begins with the fact that the United States has a very strong hand in AI today. We design the most advanced hardware. We host the leading AI companies that are building the most advanced AI systems, and really have a dominant market share in artificial intelligence globally. And thanks to the President’s CHIPS Act, we are building more resilience in our chip supply chains as well.

But as many of you know, the innovation that’s happened, particularly in this current wave of frontier artificial intelligence, has really been driven by the private sector. And it’s critical that we continue to both foster that leadership but ensure that the government, and particularly with this National Security Memorandum, ensure that our national security agencies are adopting these technologies in ways that align with our values.

And a failure to do this, a failure to take advantage of this leadership and adopt this technology we worry could put us at risk of a strategic surprise by our rivals, such as China.

And as you all know, there are very clear national security applications of artificial intelligence, including in areas like cybersecurity and counter-intelligence, not to mention the broad array of logistics and other activities that support military operations.

Because countries like China recognize similar opportunities to modernize and revolutionize their own military and intelligence capabilities using artificial intelligence, it’s particularly imperative that we accelerate our national security community’s adoption and use of cutting-edge AI capabilities to maintain our competitive edge.

So, President Biden’s first-ever executive order, signed last October, on artificial intelligence was a key step forward to ensure that America leads the way in seizing the promise and managing the risks of AI.

In that executive order, the President specifically directed the development of this National Security Memorandum to ensure that we maintain our edge over rivals seeking to leverage AI to the detriment of our national security, while also building effective safeguards to ensure that our use of AI upholds our values and preserves public trust.

So, consistent with the President’s direction, we’ve been engaged in a policy process over the last year or so to advance those aims and complete this National Security Memorandum.

And tomorrow, the National Security Advisor, Jake Sullivan, will deliver remarks to rising military and intelligence professionals at the National Defense University so he can speak directly to the very national security professionals and leaders who are going to be implementing the core of this strategy.

During his remarks, Jake will talk about what led us to this moment in artificial intelligence, both in terms of its development and our views on why it is so critical for national intelligence and why, therefore, the President has issued this National Security Memorandum on AI.

Jake will also outline how the United States must strengthen our own advantages in artificial intelligence, how to harness that advantage in a responsible manner for national security, and also how the United States can do this work in lockstep with our partners around the world in ways that will protect our national security while also leveraging our advantages in AI for the benefit of countries around the world.

So, we hope you’ll join us for those remarks as well.

With that, I’ll turn it over to my colleague to provide more detail about the NSM itself.

SENIOR ADMINISTRATION OFFICIAL: Great. Thanks. And thanks, everybody, for joining.

As many of you know, the administration’s approach to AI is rooted in the premise that capabilities generated by the transformer and large language model revolution in AI, often called frontier AI, are poised to shape geopolitical, military, and intelligence competition.

Now, most of the NSM is unclassified and will be released publicly. It also contains a classified annex that primarily addresses adversary threats.

Now, the principles guiding our work in the NSM are simple. They are that the U.S. should first lead the world’s development of safe, secure, and trustworthy AI, and establishing a stable and responsible framework to advance international AI governance. And as a result, the NSM serves as a formal charter for the AI Safety Institute in the Department of Commerce, which we have created to be the primary port of call for U.S. AI developers. They have already issued guidance on safe, secure, and trustworthy AI development and have secured voluntary agreements with companies to test new AI systems before they are released to the public.

Second, another principle is that the U.S. should harness the most advanced AI systems with appropriate safeguards to achieve national security objectives. And we are directing that the agencies gain access to the most powerful AI systems and put them to use, which often involves substantial efforts on procurement.

And finally, all of this must be done in accordance with our values.

So, alongside the National Security Memorandum itself, we are publishing a companion document called the Framework for AI Governance and Risk Management for National Security that provides guidance on how agencies can and cannot use AI.

So, we also believe that we must out-compete our adversaries and mitigate the threats posed by adversary use of AI.

So, in summary, what I’ve outlined are essentially three core principles that you’ll see throughout the documents: securing the U.S.’s lead on AI; two, harnessing AI for national security; and, crucially, building in the governance framework to ensure that we are actually accelerating adoption in a smart way, in a responsible way, by having clear rules of the road.

With that, I’ll turn it over to Eduardo.

MODERATOR: Thank you both. We’ll now turn to our Q&A portion. If you’d like to ask a question, please use the “raise your hand” feature on Zoom.

First up, we’ll go to the line of Katrina Manson. You should be able to unmute yourself.

Q Hi there. Thanks so much. I would love to ask how you see the U.N. intention to have countries sign up to a ban on lethal autonomous weapons by 2026 and if any of your work foresees the U.S. signing up to that.

Many of the harms that you try to prevent on the civil use of AI, obviously in terms of bodily harms, are very much implied with the use of AI for the military. And in the case of Maven, AI targeting is already being used to support battlefield firing in the Middle East by the U.S. Can you address the very serious safety concerns around the use of AI targeting and whether you will consider a ban on lethal autonomous weapons, which can use AI?

SENIOR ADMINISTRATION OFFICIAL: Thanks for that question. I’m happy to start with that.

So, first point is, as I think [senior administration official] noted, we’ll be releasing tomorrow, alongside the National Security Memorandum, a framework on responsible use of artificial intelligence in a national security context. And so, you’ll see there really a lot of detail on kind of all the steps that we’re taking to ensure these systems are used responsibly.

Now, and the other thing I would point out is: While it’s not necessarily part of this NSM, although there’s a nod to kind of our diplomatic efforts and kind of direction to double down on those, some of you may be aware of the Political Declaration on Responsible Military Use of Artificial Intelligence and Autonomy. And that’s a declaration where the Vice President, in fact, has kind of taken a leadership role. And we have around 60 countries that have signed up to this declaration, which is really focused squarely on how AI and autonomy should be used. And most recently, there was a summit held on this by South Korea.

So that’s another area where that combines both the substance that you’ll see in the framework on responsible use, but also, really, diplomatic efforts that we’ve been leading over the last few years.

SENIOR ADMINISTRATION OFFICIAL: And, sorry, if I can add to what was just mentioned. The framework itself you’ll see actually references the political declaration that was just mentioned, and it also outlines the requirement for adherence to the Department of Defense’s Directive 3000.09 and successor related policies that address autonomous or semiautonomous weapons systems.

But in addition to that, as was just mentioned, there are a number of outlined prohibited use cases, as well as high-impact use cases that are relevant. And one theme you’ll see in both the NSM and the framework document is the fact that we need to ensure that AI is used in a manner consistent with the President’s authority as Commander-in-Chief to decide when to order military operations in the nation’s defense, for instance.

MODERATOR: Thank you. Next up, we’ll go to the line of Garrett (inaudible). You should be able to mute yourself.

Q Hello. Can you all hear me?

MODERATOR: We can, yes.

Q Great. You mentioned that some of the commitments from companies are voluntary. And, you know, just covering the big fight around legislation here in California, companies seem, from my perspective at least, to very much want to keep those commitments to safety and that kind of thing voluntary, rather than sort of required or legislated.

And I’m just wondering if, you know, the administration has a view, or if it’s published as part of this, about trying to sort of codify those voluntary commitments and make them more, you know, ironclad and not sort of up to the whims of these CEOs.

SENIOR ADMINISTRATION OFFICIAL: Thanks, Garrett. So, I think on that point, I would just say we continue to work with colleagues on the Hill. There are a number of proposals relating to, you know, regulations on artificial intelligence. And so, that’s really — that’s, really, ongoing.

I think, really, the emphasis in the National Security Memorandum is really kind of making commitments ourselves as a government about how we will adopt and use artificial intelligence. You know, as you point out, we have played a leadership role in getting some of those commitments from the companies. We have taken those commitments and kind of — to the international stage, through the G7 and the Hiroshima process as well.

But, really, what we’re focused on tomorrow is what commitments can the government itself make on responsible use, which we think is important, by the way, not just for its own sake, but we also think that’s important to enable us to both accelerate both the development and also accelerate the adoption of use as well. And that’s a point that I think you’ll hear the National Security Advisor focus on as well tomorrow.

MODERATOR: Thank you. And next up, we’ll go to the line of Patrick Tucker. You should be able to unmute yourself.

Q Hi. Thanks. Pat Tucker from Defense One.

There’s a new paper out, actually this week, from Meredith Whittaker and a couple other folks at the AI Now Institute, actually pointing out some of the potential dangers of some of these commercially facing AI products in national security contexts.

And they point out that some of these generative AI tools have very large — unacceptably large false positive rates. They hallucinate, often, a lot. And sometimes to train them, they rely on publicly available data, including data that might come from data brokers and other sources that poses a potential privacy risk, particularly to Americans, because Americans produce a lot more purchasable data than do citizens in China or Russia.

So can you talk a little bit about how this memorandum does or does not address data vulnerability of Americans and some of the potential risks in the national security setting of adopting commercial and consumer-facing AI tools that have high hallucination rates or false positive rates? Thank you.

SENIOR ADMINISTRATION OFFICIAL: Do you want to start with that? You can join as well.

So, thanks for the question. Look, I think some of these, you know, concerns I think are ones that I think colleagues in the national security community are acutely aware of. You know, there are a few points here.

One is, you know, we have to go through a process of accrediting systems. And that’s not just for AI systems, but you know, national security systems generally. And so, that’s point one, to kind of ensure that they are fit for the purpose or particular mission.

I think the second point is: We are, you know, very — I think very aware that what we’re doing at this stage is really trying to ensure that we have pilots and some important experimentation happening, because there are going to be challenges associated with adopting any new technology.

Third is, the framework that [senior administration official] mentioned is one that’s going to have to be continuously updated. And we have tried to set it up in a way so that that can happen in real time as there are challenges that are inevitably encountered.

And parallel to the policy process here, we have a lawyers group that is kind of working very intensively to ensure that, obviously, all existing law is complied with, but also to ensure that novel legal issues as we encounter them are addressed in a timely way as well.

I do want to just address the point on data that you mentioned specifically, which is, you know, we have been very concerned about the ways in which Americans’ sensitive data can be sold, really through the front door — through first collected in bulk, then sold through data brokers, and then end up in the hands of our adversaries. And so, that’s something that the President issued an executive order on to try to restrict adversary access to some of that data. And, in fact, just this week, we took one more step in the regulatory process through a notice of proposed rulemaking to try to get that final later this year.

SENIOR ADMINISTRATION OFFICIAL: And if I can just add on that.

So, in addition to the work that the AI Safety Institute is going to do, and as [senior administration official] mentioned some of the other work, you’ll see that in the NSM itself there are very specific requirements for specific agencies and our intelligence community, and, for instance, the Department of Energy to do classified testing of different systems for different purposes for this very reason.

And in addition to that, as [senior administration official] mentioned, there’s a strong focus on experimentation here for this very reason. We want to see rapid adoption, but we also want to see experimentation that will tease out kind of what missions are best suited for various systems and also tease out the challenges of them. And that’s going to require leaning forward and experimenting, adopting, and then doing all of the work that was just mentioned as well, in terms of both policy and legal review.

MODERATOR: Thank you. We have time for one more question, and we’ll go to the line of Maria Curry. You should be able to unmute yourself.

Q Hey. Thanks for taking my question. I’m wondering if export controls are part of this at all. And if so, can you elaborate how those might be helpful?

And then, if you could just elaborate, too, on the third point. Could you dig in a little bit deeper into how agencies can or can’t use the technology? Could you provide an example or two of that? Thank you.

SENIOR ADMINISTRATION OFFICIAL: I can speak to the export control piece, and, [senior administration official], maybe you can speak to some of the prohibited use cases.

So, really, the NSM does kind of address, kind of as a matter of policy, the importance of protecting advanced AI technologies so that they’re not used against us by adversary militaries or intelligence services. And so, at a high level, it does kind of try to emphasize the importance of maintaining those policies and making sure that we are continuously adapting to efforts to circumvent those measures.

And as you know, those export controls cover not only GPUs, the advanced AI chips, but also the semiconductor manufacturing equipment that’s necessary to manufacture those as well. So, that full aspect of the supply chain.

[Senior administration official] do you want to say anything about prohibited uses?

SENIOR ADMINISTRATION OFFICIAL: Sure. So, you’ll see in the accompanying framework document that I mentioned, it identifies both prohibited, as well as what we call high-impact AI use cases, based on the risk that they pose to national security, international norms, democratic values, human rights, civil rights, civil liberties, privacy, and safety.

And on the prohibited end of the spectrum, these will be — not surprising, but there are clear prohibitions on use of AI with intent or purpose, for instance, to unlawfully suppress or burden the right to free speech or the right to legal counsel.

There’s also prohibited use cases around, for instance, removing a human in the loop for actions critical to informing and executing decisions by the President to initiate or terminate nuclear weapons employment, for example. That runs the spectrum of kind of military-related activities, but also protecting civil liberties and tracking international norms.

But in doing that, we actually view these restrictions — so these prohibitions, for example, as well as the high-impact cases — as being important in clarifying what the agencies can and cannot do. That will actually accelerate experimentation and adoption. Because one of the paradoxical outcomes we’ve seen is: With a lack of policy clarity and a lack of legal clarity about what can and cannot be done, we are likely to see less experimentation and less adoption than with a clear path for use, which is what the NSM and the framework tries to provide.

MODERATOR: Thank you. That’s all the time we have for today. Big thanks to our speakers, and thanks to you all for joining.

As a reminder, this call is on background, attributable to senior administration officials. And this call and its contents are embargoed until 6:00 a.m. Eastern tomorrow.

Thanks, all, for joining. And be sure to tune in tomorrow to National Security Advisor Jake Sullivan’s remarks on this topic. Thanks again.

MIL OSI USA News –

January 25, 2025

MIL-OSI Australia: eInvoicing-enabled entities

Source: Australian Department of Revenue

These Australian Government entities are registered on the Peppol network. They appear on the Peppol Directory along with hundreds of state, territory and local government organisations, and thousands of other Australian businesses who can receive eInvoices.

If you supply to any of the entities listed below and can send eInvoices you may be paid faster. For more information visit Getting PaidExternal Link on the Department of Finance’s website or talk to your contract manager in the Government entity about any specific requirements.

Australian Government entities able to receive eInvoices
ABN	Entity name
73 147 176 148	Administrative Review Tribunal
80 246 994 451	Aged Care Quality and Safety Commission
50 802 255 175	Asbestos and Silica Safety and Eradication Agency
92 661 124 436	Attorney-General’s Department
26 331 428 522	Australian Bureau of Statistics
34 864 955 427	Australian Centre for International Agriculture Research
54 488 464 865	Australian Charities and Not-for-profits Commission
97 250 687 371	Australian Commission on Safety and Quality In Health Care
55 386 169 386	Australian Communications and Media Authority
94 410 483 623	Australian Competition & Consumer Commission
11 259 448 410	Australian Crime Commission
84 425 496 912	Australian Digital Health Agency
21 133 285 851	Australian Electoral Commission
17 864 931 143	Australian Federal Police
19 892 732 021	Australian Film Television & Radio School
63 384 330 717	Australian Financial Security Authority
81 098 497 517	Australian Fisheries Management Authority
69 405 937 639	Australian Government Solicitor
47 996 232 602	Australian Human Rights Commission
31 162 998 046	Australian Industrial Chemicals Introduction Scheme
63 257 175 248	Australian Institute of Criminology
64 001 053 079	Australian Institute of Family Studies
65 377 938 320	Australian Maritime Safety Authority
33 020 645 631	Australian National Audit Office
13 059 525 039	Australian Office of Financial Management
56 253 405 315	Australian Organ & Tissue Donation and Transplantation Authority
79 635 582 658	Australian Prudential Regulation Authority
99 470 863 260	Australian Public Service Commission
61 321 195 155	Australian Radiation Protection and Nuclear Safety Agency (ARPANSA)
35 931 927 899	Australian Renewable Energy Agency
35 201 451 156	Australian Research Council
86 768 265 615	Australian Securities & Investments Commission
37 467 566 201	Australian Security Intelligence Organisation
22 323 254 583	Australian Signals Directorate
72 581 678 650	Australian Skills Quality Authority
67 374 695 240	Australian Sports Commission
67 250 046 148	Australian Submarine Agency
51 824 753 556	Australian Taxation Office
11 764 698 227	Australian Trade and Investment Commission
32 770 513 371	Australian Transaction Reports & Analysis Centre (AUSTRAC)
65 061 156 887	Australian Transport Safety Bureau
64 909 221 257	Australian War Memorial
92 637 533 532	Bureau of Meteorology
21 075 951 918	Cancer Australia
44 808 014 470	Civil Aviation Safety Authority
43 669 904 352	Clean Energy Finance Corporation
72 321 984 210	Clean Energy Regulator
60 585 018 782	Climate Change Authority
41 640 788 304	Comcare Australia
64 703 642 210	Commonwealth Grants Commission
34 190 894 983	Department of Agriculture, Fisheries and Forestry
68 706 814 312	Department of Defence
69 289 134 420	Department of Defence Army & Air Force Canteen Service
12 862 898 150	Department of Education
96 584 957 427	Department of Employment and Workplace Relations
61 970 632 495	Department of Finance
47 065 634 525	Department of Foreign Affairs & Trade
83 605 426 759	Department of Health and Aged Care
33 380 054 835	Department of Home Affairs
74 599 608 295	Department of Industry, Science and Resources
86 267 354 017	Department of Infrastructure, Transport, Regional Development, Communications and the Arts
52 997 141 147	Department of Parliamentary Services
36 342 015 855	Department of Social Services
18 526 287 740	Department of the House of Representatives
49 775 240 532	Department of the Parliamentary Budget Office
23 991 641 527	Department of the Senate
92 802 414 793	Department of the Treasury
23 964 290 824	Department of Veterans’ Affairs & the Repatriation Commission and the Military Rehabilitation and Compensation Commission
96 257 979 159	Digital Transformation Agency
13 051 694 963	Director of National Parks
99 696 833 561	Domestic, Family and Sexual Violence Commission
12 212 931 598	eSafety Commissioner
93 614 579 199	Fair Work Commission
49 110 847 399	Federal Court of Australia
20 537 066 246	Food Standards Australia New Zealand
40 465 597 854	Future Fund Board of Guardians
53 156 699 293	Future Fund Management Agency
80 091 799 039	Geoscience Australia
12 949 356 885	Great Barrier Reef Marine Park Authority
27 598 959 960	Independent Health and Aged Care Pricing Authority
26 424 781 530	Independent Parliamentary Expenses Authority
59 912 679 254	Indigenous Land and Sea Corporation
51 248 702 319	Inspector-General of Taxation
38 113 072 755	IP Australia
13 679 821 382	Murray-Darling Basin Authority
47 446 409 542	National Anti-Corruption Commission
36 889 228 992	National Archives of Australia
87 361 602 478	National Blood Authority
75 149 374 427	National Capital Authority
56 552 760 098	National Competition Council
25 617 475 104	National Disability Insurance Agency
40 816 261 802	National Emergency Management Agency
27 855 975 449	National Gallery of Australia
88 601 010 284	National Health and Medical Research Council
15 337 761 242	National Health Funding Body
30 429 895 164	National Indigenous Australians Agency
22 385 178 289	National Offshore Petroleum Safety and Environmental Management Authority
67 890 861 578	National Transport Commission
72 581 678 650	National Vocational Education and Training Regulator
40 293 545 182	NDIS Quality and Safeguards Commission
61 900 398 761	North Queensland Water Infrastructure Authority
87 904 367 991	Office of National Intelligence
41 425 630 817	Office of Parliamentary Counsel
80 959 780 601	Office of the Auditing and Assurance Standards Board
92 702 019 575	Office of the Australian Accounting Standards Board
85 249 230 937	Office of the Australian Information Commissioner
53 003 678 148	Office of the Commonwealth Ombudsman
41 036 606 436	Office of the Director of Public Prosecutions
43 884 188 232	Office of the Fair Work Ombudsman
15 862 053 538	Office of the Gene Technology Regulator
27 478 662 745	Office Of the Inspector-General of Aged Care
67 332 668 643	Office of the Inspector-General of Intelligence & Security
67 582 329 284	Office of the Official Secretary to the Governor-General
87 767 208 148	Office of the Special Investigator
30 620 774 963	Old Parliament House
78 094 372 050	Productivity Commission
45 307 308 260	Professional Services Review
99 528 049 038	Regional Investment Corporation
45 852 104 259	Royal Australian Mint
25 203 754 319	Rural Industries Research & Development Corporation
81 840 374 163	Safe Work Australia
46 741 353 180	Screen Australia
32 745 854 352	Seafarers Safety Rehabilitation and Compensation Authority
90 794 605 008	Services Australia
17 090 574 431	Snowy Hydro Limited
91 314 398 574	Special Broadcasting Service Corporation
70 588 505 483	Sport Integrity Australia
50 658 250 012	Tertiary Education Quality and Standards Agency
18 108 001 191	The Department of the Prime Minister and Cabinet
40 939 406 804	Therapeutic Goods Administration
57 155 285 807	Torres Strait Regional Authority
47 641 643 874	Workplace Gender Equality Agency

MIL OSI News –

January 25, 2025

MIL-OSI Security: Repeat Domestic Abuser Sentenced to Federal Prison for Violently Attacking His Girlfriend

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

pokane, Washington – On October 23, 2024, United States District Judge Thomas O. Rice sentenced James Edward Kensler, age 45, of Spokane, Washington, to 60 months in prison for violently assaulting his girlfriend. Judge Rice also imposed 3 years of supervised release. At the time of the offense, Kensler was on federal supervised release. As a penalty for the supervised release violation, Judge Rice imposed a penalty of 18 months which will be served consecutively to the 60-month sentence imposed in this case.

According to court documents and information presented during proceedings in the case, Kensler was with his girlfriend at the Northern Quest Resort & Casino in May 2024. Kensler, who is an enrolled member of the Confederated Tribes of the Colville Reservation, grabbed his victim by the back of the head and threw her on the ground with such force that the impact of her head hitting the couch moved two couches and a table forward.

Kensler then chased his victim through the resort. When Kensler caught his victim, he again threw her to the ground, attempted to stomp on her face, punched her in the face, slapped her, and hit her with his knee. When Kensler’s victim attempted to escape a second time, he again pursued her and threw her into a closed elevator door.

In the resort parking lot, Kalispel Tribal Police Officers apprehended Kensler and provided aid to his victim. Officers noted the victim’s face was swollen and that she had multiple scrapes.

“Mr. Kensler violently and repeatedly assaulted his victim, causing her severe injuries. Furthermore, Mr. Kenlser had a history of domestic violence offenses and was on federal supervised release at the time of this latest assault,” stated U.S. Attorney Vanessa Waldref. “Focusing our prosecutions on repeat offenders and those with prior domestic violence convictions is one of our strategies to support community safety and address the root causes underlying the MMIP crisis. My office is committed to working with our partners in Tribal and Federal law enforcement to secure justice for all victims and to build safer and stronger communities on Tribal lands and throughout Eastern Washington.”

“When Mr. Kensler was taken into custody, he was treated respectfully.” said Kelly M. Smith, Assistant Special Agent in Charge of the FBI’s Seattle field office. “The same cannot be said of how he treated his girlfriend. This case demonstrates successful partnerships, as in this case with the Kalispel Tribal Police, we can help reduce violent crime on our state’s reservations.”

“We are committed to the safety and security of our guests,” said Police Chief Rodney Schurger of the Kalispel Tribal Police Department. “Our officers responded swiftly to this violent incident and worked closely with the FBI to ensure that justice was served.”

“The safety of our guests, Tribal Members, and team members is our top priority,” said Kalispel Tribal Council Vice Chair Curt Holmes. “Domestic violence and other violent crimes are growing concerns across the nation and in the Spokane region. We are thankful for the prompt actions of our Tribal Police Department and the FBI’s involvement in this case. We also appreciate the U.S. Attorney’s Office for their dedication to prosecuting violent offenders like Mr. Kensler and helping to keep our communities safe.”

This case was investigated by the FBI and the Kalispel Tribal Police. This case was prosecuted by Assistant United States Attorney Michael J. Ellis.

2:24-cr-00074-TOR

MIL Security OSI –

January 25, 2025

MIL-OSI USA: Memorandum on Advancing the United States’ Leadership in Artificial Intelligence; Harnessing Artificial Intelligence to Fulfill National Security Objectives; and Fostering the Safety, Security, and Trustworthiness of Artificial Intelligence

US Senate News:

Source: The White House
MEMORANDUM FOR THE VICE PRESIDENT
               THE SECRETARY OF STATE
               THE SECRETARY OF THE TREASURY
               THE SECRETARY OF DEFENSE
               THE ATTORNEY GENERAL
               THE SECRETARY OF COMMERCE
               THE SECRETARY OF ENERGY
               THE SECRETARY OF HEALTH AND HUMAN SERVICES
               THE SECRETARY OF HOMELAND SECURITY
               THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
               THE DIRECTOR OF NATIONAL INTELLIGENCE
               THE REPRESENTATIVE OF THE UNITED STATES OF AMERICA TO THE UNITED NATIONS
               THE DIRECTOR OF THE CENTRAL INTELLIGENCE AGENCY
               THE ASSISTANT TO THE PRESIDENT AND CHIEF OF STAFF
               THE ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS
               THE ASSISTANT TO THE PRESIDENT FOR ECONOMIC
                  POLICY AND DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL
               THE CHAIR OF THE COUNCIL OF ECONOMIC ADVISERS
               THE DIRECTOR OF THE OFFICE OF SCIENCE AND TECHNOLOGY POLICY
               THE ADMINISTRATOR OF THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT
               THE DIRECTOR OF THE NATIONAL SCIENCE FOUNDATION
               THE DIRECTOR OF THE FEDERAL BUREAU OF INVESTIGATION
               THE NATIONAL CYBER DIRECTOR
               THE DIRECTOR OF THE OFFICE OF PANDEMIC PREPAREDNESS AND RESPONSE POLICY
               THE DIRECTOR OF THE NATIONAL SECURITY AGENCY
               THE DIRECTOR OF THE NATIONAL GEOSPATIAL-INTELLIGENCE AGENCY
               THE DIRECTOR OF THE DEFENSE INTELLIGENCE AGENCY
SUBJECT:      Advancing the United States’ Leadership in
               Artificial Intelligence; Harnessing Artificial
               Intelligence to Fulfill National Security
               Objectives; and Fostering the Safety, Security,
               and Trustworthiness of Artificial Intelligence
     Section 1. Policy. (a) This memorandum fulfills the directive set forth in subsection 4.8 of Executive Order 14110 of October 30, 2023 (Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence). This memorandum provides further direction on appropriately harnessing artificial intelligence (AI) models and AI-enabled technologies in the United States Government, especially in the context of national security systems (NSS), while protecting human rights, civil rights, civil liberties, privacy, and safety in AI-enabled national security activities. A classified annex to this memorandum addresses additional sensitive national security issues, including countering adversary use of AI that poses risks to United States national security.
     (b) United States national security institutions have historically triumphed during eras of technological transition. To meet changing times, they developed new capabilities, from submarines and aircraft to space systems and cyber tools. To gain a decisive edge and protect national security, they pioneered technologies such as radar, the Global Positioning System, and nuclear propulsion, and unleashed these hard-won breakthroughs on the battlefield. With each paradigm shift, they also developed new systems for tracking and countering adversaries’ attempts to wield cutting-edge technology for their own advantage.
     (c) AI has emerged as an era-defining technology and has demonstrated significant and growing relevance to national security. The United States must lead the world in the responsible application of AI to appropriate national security functions. AI, if used appropriately and for its intended purpose, can offer great benefits. If misused, AI could threaten United States national security, bolster authoritarianism worldwide, undermine democratic institutions and processes, facilitate human rights abuses, and weaken the rules-based international order. Harmful outcomes could occur even without malicious intent if AI systems and processes lack sufficient protections.
     (d) Recent innovations have spurred not only an increase in AI use throughout society, but also a paradigm shift within the AI field — one that has occurred mostly outside of Government. This era of AI development and deployment rests atop unprecedented aggregations of specialized computational power, as well as deep scientific and engineering expertise, much of which is concentrated in the private sector. This trend is most evident with the rise of large language models, but it extends to a broader class of increasingly general-purpose and computationally intensive systems. The United States Government must urgently consider how this current AI paradigm specifically could transform the national security mission.
     (e) Predicting technological change with certainty is impossible, but the foundational drivers that have underpinned recent AI progress show little sign of abating. These factors include compounding algorithmic improvements, increasingly efficient computational hardware, a growing willingness in industry to invest substantially in research and development, and the expansion of training data sets. AI under the current paradigm may continue to become more powerful and general-purpose. Developing and effectively using these systems requires an evolving array of resources, infrastructure, competencies, and workflows that in many cases differ from what was required to harness prior technologies, including previous paradigms of AI.
     (f) If the United States Government does not act with responsible speed and in partnership with industry, civil society, and academia to make use of AI capabilities in service of the national security mission — and to ensure the safety, security, and trustworthiness of American AI innovation writ large — it risks losing ground to strategic competitors. Ceding the United States’ technological edge would not only greatly harm American national security, but it would also undermine United States foreign policy objectives and erode safety, human rights, and democratic norms worldwide.
     (g) Establishing national security leadership in AI will require making deliberate and meaningful changes to aspects of the United States Government’s strategies, capabilities, infrastructure, governance, and organization. AI is likely to affect almost all domains with national security significance, and its use cannot be relegated to a single institutional silo. The increasing generality of AI means that many functions that to date have been served by individual bespoke tools may, going forward, be better fulfilled by systems that, at least in part, rely on a shared, multi-purpose AI capability. Such integration will only succeed if paired with appropriately redesigned United States Government organizational and informational infrastructure.
     (h) In this effort, the United States Government must also protect human rights, civil rights, civil liberties, privacy, and safety, and lay the groundwork for a stable and responsible international AI governance landscape. Throughout its history, the United States has been a global leader in shaping the design, development, and use of new technologies not only to advance national security, but also to protect and promote democratic values. The United States Government must develop safeguards for its use of AI tools, and take an active role in steering global AI norms and institutions. The AI frontier is moving quickly, and the United States Government must stay attuned to ongoing technical developments without losing focus on its guiding principles.
     (i) This memorandum aims to catalyze needed change in how the United States Government approaches AI national security policy. In line with Executive Order 14110, it directs actions to strengthen and protect the United States AI ecosystem; improve the safety, security, and trustworthiness of AI systems developed and used in the United States; enhance the United States Government’s appropriate, responsible, and effective adoption of AI in service of the national security mission; and minimize the misuse of AI worldwide.
Sec. 2. Objectives. It is the policy of the United States Government that the following three objectives will guide its activities with respect to AI and national security.
     (a) First, the United States must lead the world’s development of safe, secure, and trustworthy AI. To that end, the United States Government must — in partnership with industry, civil society, and academia — promote and secure the foundational capabilities across the United States that power AI development. The United States Government cannot take the unmatched vibrancy and innovativeness of the United States AI ecosystem for granted; it must proactively strengthen it, ensuring that the United States remains the most attractive destination for global talent and home to the world’s most sophisticated computational facilities. The United States Government must also provide appropriate safety and security guidance to AI developers and users, and rigorously assess and help mitigate the risks that AI systems could pose.
     (b) Second, the United States Government must harness powerful AI, with appropriate safeguards, to achieve national security objectives. Emerging AI capabilities, including increasingly general-purpose models, offer profound opportunities for enhancing national security, but employing these systems effectively will require significant technical, organizational, and policy changes. The United States must understand AI’s limitations as it harnesses the technology’s benefits, and any use of AI must respect democratic values with regard to transparency, human rights, civil rights, civil liberties, privacy, and safety.
     (c) Third, the United States Government must continue cultivating a stable and responsible framework to advance international AI governance that fosters safe, secure, and trustworthy AI development and use; manages AI risks; realizes democratic values; respects human rights, civil rights, civil liberties, and privacy; and promotes worldwide benefits from AI. It must do so in collaboration with a wide range of allies and partners. Success for the United States in the age of AI will be measured not only by the preeminence of United States technology and innovation, but also by the United States’ leadership in developing effective global norms and engaging in institutions rooted in international law, human rights, civil rights, and democratic values.
Sec. 3. Promoting and Securing the United States’ Foundational AI Capabilities. (a) To preserve and expand United States advantages in AI, it is the policy of the United States Government to promote progress, innovation, and competition in domestic AI development; protect the United States AI ecosystem against foreign intelligence threats; and manage risks to AI safety, security, and trustworthiness. Leadership in responsible AI development benefits United States national security by enabling applications directly relevant to the national security mission, unlocking economic growth, and avoiding strategic surprise. United States technological leadership also confers global benefits by enabling like-minded entities to collectively mitigate the risks of AI misuse and accidents, prevent the unchecked spread of digital authoritarianism, and prioritize vital research.
     3.1. Promoting Progress, Innovation, and Competition in United States AI Development. (a) The United States’ competitive edge in AI development will be at risk absent concerted United States Government efforts to promote and secure domestic AI progress, innovation, and competition. Although the United States has benefited from a head start in AI, competitors are working hard to catch up, have identified AI as a top strategic priority, and may soon devote resources to research and development that United States AI developers cannot match without appropriately supportive Government policies and action. It is therefore the policy of the United States Government to enhance innovation and competition by bolstering key drivers of AI progress, such as technical talent and computational power.
     (b) It is the policy of the United States Government that advancing the lawful ability of noncitizens highly skilled in AI and related fields to enter and work in the United States constitutes a national security priority. Today, the unparalleled United States AI industry rests in substantial part on the insights of brilliant scientists, engineers, and entrepreneurs who moved to the United States in pursuit of academic, social, and economic opportunity. Preserving and expanding United States talent advantages requires developing talent at home and continuing to attract and retain top international minds.
     (c) Consistent with these goals:
(i)    On an ongoing basis, the Department of State, the Department of Defense (DOD), and the Department of Homeland Security (DHS) shall each use all available legal authorities to assist in attracting and rapidly bringing to the United States individuals with relevant technical expertise who would improve United States competitiveness in AI and related fields, such as semiconductor design and production. These activities shall include all appropriate vetting of these individuals and shall be consistent with all appropriate risk mitigation measures. This tasking is consistent with and additive to the taskings on attracting AI talent in section 5 of Executive Order 14110.
(ii)   Within 180 days of the date of this memorandum, the Chair of the Council of Economic Advisers shall prepare an analysis of the AI talent market in the United States and overseas, to the extent that reliable data is available.
(iii) Within 180 days of the date of this memorandum, the Assistant to the President for Economic Policy and Director of the National Economic Council shall coordinate an economic assessment of the relative competitive advantage of the United States private sector AI ecosystem, the key sources of the United States private sector’s competitive advantage, and possible risks to that position, and shall recommend policies to mitigate them. The assessment could include areas including (1) the design, manufacture, and packaging of chips critical in AI-related activities; (2) the availability of capital; (3) the availability of workers highly skilled in AI-related fields; (4) computational resources and the associated electricity requirements; and (5) technological platforms or institutions with the requisite scale of capital and data resources for frontier AI model development, as well as possible other factors.
(iv)   Within 90 days of the date of this memorandum, the Assistant to the President for National Security Affairs (APNSA) shall convene appropriate executive departments and agencies (agencies) to explore actions for prioritizing and streamlining administrative processing operations for all visa applicants working with sensitive technologies. Doing so shall assist with streamlined processing of highly skilled applicants in AI and other critical and emerging technologies. This effort shall explore options for ensuring the adequate resourcing of such operations and narrowing the criteria that trigger secure advisory opinion requests for such applicants, as consistent with national security objectives.
     (d) The current paradigm of AI development depends heavily on computational resources. To retain its lead in AI, the United States must continue developing the world’s most sophisticated AI semiconductors and constructing its most advanced AI-dedicated computational infrastructure.
     (e) Consistent with these goals:
(i)    DOD, the Department of Energy (DOE) (including national laboratories), and the Intelligence Community (IC) shall, when planning for and constructing or renovating computational facilities, consider the applicability of large-scale AI to their mission. Where appropriate, agencies shall design and build facilities capable of harnessing frontier AI for relevant scientific research domains and intelligence analysis. Those investments shall be consistent with the Federal Mission Resilience Strategy adopted in Executive Order 13961 of December 7, 2020 (Governance and Integration of Federal Mission Resilience).
(ii)   On an ongoing basis, the National Science Foundation (NSF) shall, consistent with its authorities, use the National AI Research Resource (NAIRR) pilot project and any future NAIRR efforts to distribute computational resources, data, and other critical assets for AI development to a diverse array of actors that otherwise would lack access to such capabilities — such as universities, nonprofits, and independent researchers (including trusted international collaborators) — to ensure that AI research in the United States remains competitive and innovative. This tasking is consistent with the NAIRR pilot assigned in section 5 of Executive Order 14110.
(iii) Within 180 days of the date of this memorandum, DOE shall launch a pilot project to evaluate the performance and efficiency of federated AI and data sources for frontier AI-scale training, fine-tuning, and inference.
(iv)   The Office of the White House Chief of Staff, in coordination with DOE and other relevant agencies, shall coordinate efforts to streamline permitting, approvals, and incentives for the construction of AI-enabling infrastructure, as well as surrounding assets supporting the resilient operation of this infrastructure, such as clean energy generation, power transmission lines, and high-capacity fiber data links. These efforts shall include coordination, collaboration, consultation, and partnership with State, local, Tribal, and territorial governments, as appropriate, and shall be consistent with the United States’ goals for managing climate risks.
(v)    The Department of State, DOD, DOE, the IC, and the Department of Commerce (Commerce) shall, as appropriate and consistent with applicable law, use existing authorities to make public investments and encourage private investments in strategic domestic and foreign AI technologies and adjacent fields. These agencies shall assess the need for new authorities for the purposes of facilitating public and private investment in AI and adjacent capabilities.
     3.2. Protecting United States AI from Foreign Intelligence Threats. (a) In addition to pursuing industrial strategies that support their respective AI industries, foreign states almost certainly aim to obtain and repurpose the fruits of AI innovation in the United States to serve their national security goals. Historically, such competitors have employed techniques including research collaborations, investment schemes, insider threats, and advanced cyber espionage to collect and exploit United States scientific insights. It is the policy of the United States Government to protect United States industry, civil society, and academic AI intellectual property and related infrastructure from foreign intelligence threats to maintain a lead in foundational capabilities and, as necessary, to provide appropriate Government assistance to relevant non-government entities.
     (b) Consistent with these goals:
(i)   Within 90 days of the date of this memorandum, the National Security Council (NSC) staff and the Office of the Director of National Intelligence (ODNI) shall review the President’s Intelligence Priorities and the National Intelligence Priorities Framework consistent with National Security Memorandum 12 of July 12, 2022 (The President’s Intelligence Priorities), and make recommendations to ensure that such priorities improve identification and assessment of foreign intelligence threats to the United States AI ecosystem and closely related enabling sectors, such as those involved in semiconductor design and production.
(ii) Within 180 days of the date of this memorandum, and on an ongoing basis thereafter, ODNI, in coordination with DOD, the Department of Justice (DOJ), Commerce, DOE, DHS, and other IC elements as appropriate, shall identify critical nodes in the AI supply chain, and develop a list of the most plausible avenues through which these nodes could be disrupted or compromised by foreign actors. On an ongoing basis, these agencies shall take all steps, as appropriate and consistent with applicable law, to reduce such risks.
     (c) Foreign actors may also seek to obtain United States intellectual property through gray-zone methods, such as technology transfer and data localization requirements. AI-related intellectual property often includes critical technical artifacts (CTAs) that would substantially lower the costs of recreating, attaining, or using powerful AI capabilities. The United States Government must guard against these risks.
     (d) Consistent with these goals:
(i) In furtherance of Executive Order 14083 of September 15, 2022 (Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States), the Committee on Foreign Investment in the United States shall, as appropriate, consider whether a covered transaction involves foreign actor access to proprietary information on AI training techniques, algorithmic improvements, hardware advances, CTAs, or other proprietary insights that shed light on how to create and effectively use powerful AI systems.
     3.3. Managing Risks to AI Safety, Security, and Trustworthiness. (a) Current and near-future AI systems could pose significant safety, security, and trustworthiness risks, including those stemming from deliberate misuse and accidents. Across many technological domains, the United States has historically led the world not only in advancing capabilities, but also in developing the tests, standards, and norms that underpin reliable and beneficial global adoption. The United States approach to AI should be no different, and proactively constructing testing infrastructure to assess and mitigate AI risks will be essential to realizing AI’s positive potential and to preserving United States AI leadership.
     (b) It is the policy of the United States Government to pursue new technical and policy tools that address the potential challenges posed by AI. These tools include processes for reliably testing AI models’ applicability to harmful tasks and deeper partnerships with institutions in industry, academia, and civil society capable of advancing research related to AI safety, security, and trustworthiness.
     (c) Commerce, acting through the AI Safety Institute (AISI) within the National Institute of Standards and Technology (NIST), shall serve as the primary United States Government point of contact with private sector AI developers to facilitate voluntary pre- and post-public deployment testing for safety, security, and trustworthiness of frontier AI models. In coordination with relevant agencies as appropriate, Commerce shall establish an enduring capability to lead voluntary unclassified pre-deployment safety testing of frontier AI models on behalf of the United States Government, including assessments of risks relating to cybersecurity, biosecurity, chemical weapons, system autonomy, and other risks as appropriate (not including nuclear risk, the assessment of which shall be led by DOE). Voluntary unclassified safety testing shall also, as appropriate, address risks to human rights, civil rights, and civil liberties, such as those related to privacy, discrimination and bias, freedom of expression, and the safety of individuals and groups. Other agencies, as identified in subsection 3.3(f) of this section, shall establish enduring capabilities to perform complementary voluntary classified testing in appropriate areas of expertise. The directives set forth in this subsection are consistent with broader taskings on AI safety in section 4 of Executive Order 14110, and provide additional clarity on agencies’ respective roles and responsibilities.
     (d) Nothing in this subsection shall inhibit agencies from performing their own evaluations of AI systems, including tests performed before those systems are released to the public, for the purposes of evaluating suitability for that agency’s acquisition and procurement. AISI’s responsibilities do not extend to the evaluation of AI systems for the potential use by the United States Government for national security purposes; those responsibilities lie with agencies considering such use, as outlined in subsection 4.2(e) of this memorandum and the associated framework described in that subsection.
     (e) Consistent with these goals, Commerce, acting through AISI within NIST, shall take the following actions to aid in the evaluation of current and near-future AI systems:
(i)    Within 180 days of the date of this memorandum and subject to private sector cooperation, AISI shall pursue voluntary preliminary testing of at least two frontier AI models prior to their public deployment or release to evaluate capabilities that might pose a threat to national security. This testing shall assess models’ capabilities to aid offensive cyber operations, accelerate development of biological and/or chemical weapons, autonomously carry out malicious behavior, automate development and deployment of other models with such capabilities, and give rise to other risks identified by AISI. AISI shall share feedback with the APNSA, interagency counterparts as appropriate, and the respective model developers regarding the results of risks identified during such testing and any appropriate mitigations prior to deployment.
(ii)   Within 180 days of the date of this memorandum, AISI shall issue guidance for AI developers on how to test, evaluate, and manage risks to safety, security, and trustworthiness arising from dual-use foundation models, building on guidelines issued pursuant to subsection 4.1(a) of Executive Order 14110. AISI shall issue guidance on topics including:
(A) How to measure capabilities that are relevant to the risk that AI models could enable the development of biological and chemical weapons or the automation of offensive cyber operations;
(B) How to address societal risks, such as the misuse of models to harass or impersonate individuals;
(C) How to develop mitigation measures to prevent malicious or improper use of models;
(D) How to test the efficacy of safety and security mitigations; and
(E) How to apply risk management practices throughout the development and deployment lifecycle (pre-development, development, and deployment/release).
(iii) Within 180 days of the date of this memorandum, AISI, in consultation with other agencies as appropriate, shall develop or recommend benchmarks or other methods for assessing AI systems’ capabilities and limitations in science, mathematics, code generation, and general reasoning, as well as other categories of activity that AISI deems relevant to assessing general-purpose capabilities likely to have a bearing on national security and public safety.
(iv)   In the event that AISI or another agency determines that a dual-use foundation model’s capabilities could be used to harm public safety significantly, AISI shall serve as the primary point of contact through which the United States Government communicates such findings and any associated recommendations regarding risk mitigation to the developer of the model.
(v)    Within 270 days of the date of this memorandum, and at least annually thereafter, AISI shall submit to the President, through the APNSA, and provide to other interagency counterparts as appropriate, at minimum one report that shall include the following:
(A) A summary of findings from AI safety assessments of frontier AI models that have been conducted by or shared with AISI;
(B) A summary of whether AISI deemed risk mitigation necessary to resolve any issues identified in the assessments, along with conclusions regarding any mitigations’ efficacy; and
(C) A summary of the adequacy of the science-based tools and methods used to inform such assessments.
     (f) Consistent with these goals, other agencies specified below shall take the following actions, in coordination with Commerce, acting through AISI within NIST, to provide classified sector-specific evaluations of current and near-future AI systems for cyber, nuclear, and radiological risks:
(i)    All agencies that conduct or fund safety testing and evaluations of AI systems shall share the results of such evaluations with AISI within 30 days of their completion, consistent with applicable protections for classified and controlled information.
(ii)   Within 120 days of the date of this memorandum, the National Security Agency (NSA), acting through its AI Security Center (AISC) and in coordination with AISI, shall develop the capability to perform rapid systematic classified testing of AI models’ capacity to detect, generate, and/or exacerbate offensive cyber threats. Such tests shall assess the degree to which AI systems, if misused, could accelerate offensive cyber operations.
(iii) Within 120 days of the date of this memorandum, DOE, acting primarily through the National Nuclear Security Administration (NNSA) and in close coordination with AISI and NSA, shall seek to develop the capability to perform rapid systematic testing of AI models’ capacity to generate or exacerbate nuclear and radiological risks. This initiative shall involve the development and maintenance of infrastructure capable of running classified and unclassified tests, including using restricted data and relevant classified threat information. This initiative shall also feature the creation and regular updating of automated evaluations, the development of an interface for enabling human-led red-teaming, and the establishment of technical and legal tooling necessary for facilitating the rapid and secure transfer of United States Government, open-weight, and proprietary models to these facilities. As part of this initiative:
(A) Within 180 days of the date of this memorandum, DOE shall use the capability described in subsection 3.3(f)(iii) of this section to complete initial evaluations of the radiological and nuclear knowledge, capabilities, and implications of a frontier AI model no more than 30 days after the model has been made available to NNSA at an appropriate classification level. These evaluations shall involve tests of AI systems both without significant modifications and, as appropriate, with fine-tuning or other modifications that could enhance performance.
(B) Within 270 days of the date of this memorandum, and at least annually thereafter, DOE shall submit to the President, through the APNSA, at minimum one assessment that shall include the following:
(1) A concise summary of the findings of each AI model evaluation for radiological and nuclear risk, described in subsection 3.3(f)(iii)(A) of this section, that DOE has performed in the preceding 12 months;
(2) A recommendation as to whether corrective action is necessary to resolve any issues identified in the evaluations, including but not limited to actions necessary for attaining and sustaining compliance conditions appropriate to safeguard and prevent unauthorized disclosure of restricted data or other classified information, pursuant to the Atomic Energy Act of 1954; and
(3) A concise statement regarding the adequacy of the science-based tools and methods used to inform the evaluations.
(iv)   On an ongoing basis, DHS, acting through the Cybersecurity and Infrastructure Security Agency (CISA), shall continue to fulfill its responsibilities with respect to the application of AISI guidance, as identified in National Security Memorandum 22 of April 30, 2024 (Critical Infrastructure Security and Resilience), and section 4 of Executive Order 14110.
     (g) Consistent with these goals, and to reduce the chemical and biological risks that could emerge from AI:
(i)    The United States Government shall advance classified evaluations of advanced AI models’ capacity to generate or exacerbate deliberate chemical and biological threats. As part of this initiative:
(A) Within 210 days of the date of this memorandum, DOE, DHS, and AISI, in consultation with DOD and other relevant agencies, shall coordinate to develop a roadmap for future classified evaluations of advanced AI models’ capacity to generate or exacerbate deliberate chemical and biological threats, to be shared with the APNSA. This roadmap shall consider the scope, scale, and priority of classified evaluations; proper safeguards to ensure that evaluations and simulations are not misconstrued as offensive capability development; proper safeguards for testing sensitive and/or classified information; and sustainable implementation of evaluation methodologies.
(B) On an ongoing basis, DHS shall provide expertise, threat and risk information, and other technical support to assess the feasibility of proposed biological and chemical classified evaluations; interpret and contextualize evaluation results; and advise relevant agencies on potential risk mitigations.
(C) Within 270 days of the date of this memorandum, DOE shall establish a pilot project to provide expertise, infrastructure, and facilities capable of conducting classified tests in this area.
(ii)   Within 240 days of the date of this memorandum, DOD, the Department of Health and Human Services (HHS), DOE (including national laboratories), DHS, NSF, and other agencies pursuing the development of AI systems substantially trained on biological and chemical data shall, as appropriate, support efforts to utilize high-performance computing resources and AI systems to enhance biosafety and biosecurity. These efforts shall include:
(A) The development of tools for screening in silico chemical and biological research and technology;
(B) The creation of algorithms for nucleic acid synthesis screening;
(C) The construction of high-assurance software foundations for novel biotechnologies;
(D) The screening of complete orders or data streams from cloud labs and biofoundries; and
(E) The development of risk mitigation strategies such as medical countermeasures.
(iii) After the publication of biological and chemical safety guidance by AISI outlined in subsection 3.3(e) of this section, all agencies that directly develop relevant dual-use foundation AI models that are made available to the public and are substantially trained on biological or chemical data shall incorporate this guidance into their agency’s practices, as appropriate and feasible.
(iv)   Within 180 days of the date of this memorandum, NSF, in coordination with DOD, Commerce (acting through AISI within NIST), HHS, DOE, the Office of Science and Technology Policy (OSTP), and other relevant agencies, shall seek to convene academic research institutions and scientific publishers to develop voluntary best practices and standards for publishing computational biological and chemical models, data sets, and approaches, including those that use AI and that could contribute to the production of knowledge, information, technologies, and products that could be misused to cause harm. This is in furtherance of the activities described in subsections 4.4 and 4.7 of Executive Order 14110.
(v)    Within 540 days of the date of this memorandum, and informed by the United States Government Policy for Oversight of Dual Use Research of Concern and Pathogens with Enhanced Pandemic Potential, OSTP, NSC staff, and the Office of Pandemic Preparedness and Response Policy, in consultation with relevant agencies and external stakeholders as appropriate, shall develop guidance promoting the benefits of and mitigating the risks associated with in silico biological and chemical research.
     (h) Agencies shall take the following actions to improve foundational understanding of AI safety, security, and trustworthiness:
(i)   DOD, Commerce, DOE, DHS, ODNI, NSF, NSA, and the National Geospatial-Intelligence Agency (NGA) shall, as appropriate and consistent with applicable law, prioritize research on AI safety and trustworthiness. As appropriate and consistent with existing authorities, they shall pursue partnerships as appropriate with leading public sector, industry, civil society, academic, and other institutions with expertise in these domains, with the objective of accelerating technical and socio-technical progress in AI safety and trustworthiness. This work may include research on interpretability, formal methods, privacy enhancing technologies, techniques to address risks to civil liberties and human rights, human-AI interaction, and/or the socio-technical effects of detecting and labeling synthetic and authentic content (for example, to address the malicious use of AI to generate misleading videos or images, including those of a strategically damaging or non-consensual intimate nature, of political or public figures).
(ii) DOD, Commerce, DOE, DHS, ODNI, NSF, NSA, and NGA shall, as appropriate and consistent with applicable law, prioritize research to improve the security, robustness, and reliability of AI systems and controls. These entities shall, as appropriate and consistent with applicable law, partner with other agencies, industry, civil society, and academia. Where appropriate, DOD, DHS (acting through CISA), the Federal Bureau of Investigation, and NSA (acting through AISC) shall publish unclassified guidance concerning known AI cybersecurity vulnerabilities and threats; best practices for avoiding, detecting, and mitigating such issues during model training and deployment; and the integration of AI into other software systems. This work shall include an examination of the role of and vulnerabilities potentially caused by AI systems used in critical infrastructure.
     (i) Agencies shall take actions to protect classified and controlled information, given the potential risks posed by AI:
(i) In the course of regular updates to policies and procedures, DOD, DOE, and the IC shall consider how analysis enabled by AI tools may affect decisions related to declassification of material, standards for sufficient anonymization, and similar activities, as well as the robustness of existing operational security and equity controls to protect classified or controlled information, given that AI systems have demonstrated the capacity to extract previously inaccessible insight from redacted and anonymized data.
Sec. 4. Responsibly Harnessing AI to Achieve National Security Objectives. (a) It is the policy of the United States Government to act decisively to enable the effective and responsible use of AI in furtherance of its national security mission. Achieving global leadership in national security applications of AI will require effective partnership with organizations outside Government, as well as significant internal transformation, including strengthening effective oversight and governance functions.
     4.1. Enabling Effective and Responsible Use of AI. (a) It is the policy of the United States Government to adapt its partnerships, policies, and infrastructure to use AI capabilities appropriately, effectively, and responsibly. These modifications must balance each agency’s unique oversight, data, and application needs with the substantial benefits associated with sharing powerful AI and computational resources across the United States Government. Modifications must also be grounded in a clear understanding of the United States Government’s comparative advantages relative to industry, civil society, and academia, and must leverage offerings from external collaborators and contractors as appropriate. The United States Government must make the most of the rich United States AI ecosystem by incentivizing innovation in safe, secure, and trustworthy AI and promoting industry competition when selecting contractors, grant recipients, and research collaborators. Finally, the United States Government must address important technical and policy considerations in ways that ensure the integrity and interoperability needed to pursue its objectives while protecting human rights, civil rights, civil liberties, privacy, and safety.
     (b) The United States Government needs an updated set of Government-wide procedures for attracting, hiring, developing, and retaining AI and AI-enabling talent for national security purposes.
     (c) Consistent with these goals:
(i)   In the course of regular legal, policy, and compliance framework reviews, the Department of State, DOD, DOJ, DOE, DHS, and IC elements shall revise, as appropriate, their hiring and retention policies and strategies to accelerate responsible AI adoption. Agencies shall account for technical talent needs required to adopt AI and integrate it into their missions and other roles necessary to use AI effectively, such as AI-related governance, ethics, and policy positions. These policies and strategies shall identify financial, organizational, and security hurdles, as well as potential mitigations consistent with applicable law. Such measures shall also include consideration of programs to attract experts with relevant technical expertise from industry, academia, and civil society — including scholarship for service programs — and similar initiatives that would expose Government employees to relevant non-government entities in ways that build technical, organizational, and cultural familiarity with the AI industry. These policies and strategies shall use all available authorities, including expedited security clearance procedures as appropriate, in order to address the shortfall of AI-relevant talent within Government.
(ii) Within 120 days of the date of this memorandum, the Department of State, DOD, DOJ, DOE, DHS, and IC elements shall each, in consultation with the Office of Management and Budget (OMB), identify education and training opportunities to increase the AI competencies of their respective workforces, via initiatives which may include training and skills-based hiring.
     (d) To accelerate the use of AI in service of its national security mission, the United States Government needs coordinated and effective acquisition and procurement systems. This will require an enhanced capacity to assess, define, and articulate AI-related requirements for national security purposes, as well as improved accessibility for AI companies that lack significant prior experience working with the United States Government.
     (e) Consistent with these goals:
(i)    Within 30 days of the date of this memorandum, DOD and ODNI, in coordination with OMB and other agencies as appropriate, shall establish a working group to address issues involving procurement of AI by DOD and IC elements and for use on NSS. As appropriate, the working group shall consult the Director of the NSA, as the National Manager for NSS, in developing recommendations for acquiring and procuring AI for use on NSS.
(ii)   Within 210 days of the date of this memorandum, the working group described in subsection 4.1(e)(i) of this section shall provide written recommendations to the Federal Acquisition Regulatory Council (FARC) regarding changes to existing regulations and guidance, as appropriate and consistent with applicable law, to promote the following objectives for AI procured by DOD and IC elements and for use on NSS:
(A) Ensuring objective metrics to measure and promote the safety, security, and trustworthiness of AI systems;
(B) Accelerating the acquisition and procurement process for AI, consistent with the Federal Acquisition Regulation, while maintaining appropriate checks to mitigate safety risks;
(C) Simplifying processes such that companies without experienced contracting teams may meaningfully compete for relevant contracts, to ensure that the United States Government has access to a wide range of AI systems and that the AI marketplace is competitive;
(D) Structuring competitions to encourage robust participation and achieve best value to the Government, such as by including requirements that promote interoperability and prioritizing the technical capability of vendors when evaluating offers;
(E) Accommodating shared use of AI to the greatest degree possible and as appropriate across relevant agencies; and
(F) Ensuring that agencies with specific authorities and missions may implement other policies, where appropriate and necessary.
(iii) The FARC shall, as appropriate and consistent with applicable law, consider proposing amendments to the Federal Acquisition Regulation to codify recommendations provided by the working group pursuant to subsection 4.1(e)(ii) of this section that may have Government-wide application.
(iv)   DOD and ODNI shall seek to engage on an ongoing basis with diverse United States private sector stakeholders — including AI technology and defense companies and members of the United States investor community — to identify and better understand emerging capabilities that would benefit or otherwise affect the United States national security mission.
     (f) The United States Government needs clear, modernized, and robust policies and procedures that enable the rapid development and national security use of AI, consistent with human rights, civil rights, civil liberties, privacy, safety, and other democratic values.
     (g) Consistent with these goals:
(i)    DOD and the IC shall, in consultation with DOJ as appropriate, review their respective legal, policy, civil liberties, privacy, and compliance frameworks, including international legal obligations, and, as appropriate and consistent with applicable law, seek to develop or revise policies and procedures to enable the effective and responsible use of AI, accounting for the following:
(A) Issues raised by the acquisition, use, retention, dissemination, and disposal of models trained on datasets that include personal information traceable to specific United States persons, publicly available information, commercially available information, and intellectual property, consistent with section 9 of Executive Order 14110;
(B) Guidance that shall be developed by DOJ, in consultation with DOD and ODNI, regarding constitutional considerations raised by the IC’s acquisition and use of AI;
(C) Challenges associated with classification and compartmentalization;
(D) Algorithmic bias, inconsistent performance, inaccurate outputs, and other known AI failure modes;
(E) Threats to analytic integrity when employing AI tools;
(F) Risks posed by a lack of safeguards that protect human rights, civil rights, civil liberties, privacy, and other democratic values, as addressed in further detail in subsection 4.2 of this section;
(G) Barriers to sharing AI models and related insights with allies and partners; and
(H) Potential inconsistencies between AI use and the implementation of international legal obligations and commitments.
(ii)   As appropriate, the policies described in subsection 4.1(g) of this section shall be consistent with direction issued by the Committee on NSS and DOD governing the security of AI used on NSS, policies issued by the Director of National Intelligence governing adoption of AI by the IC, and direction issued by OMB governing the security of AI used on non-NSS.
(iii) On an ongoing basis, each agency that uses AI on NSS shall, in consultation with ODNI and DOD, take all steps appropriate and consistent with applicable law to accelerate responsible approval of AI systems for use on NSS and accreditation of NSS that use AI systems.
     (h) The United States’ network of allies and partners confers significant advantages over competitors. Consistent with the 2022 National Security Strategy or any successor strategies, the United States Government must invest in and proactively enable the co-development and co-deployment of AI capabilities with select allies and partners.
     (i) Consistent with these goals:
(i) Within 150 days of the date of this memorandum, DOD, in coordination with the Department of State and ODNI, shall evaluate the feasibility of advancing, increasing, and promoting co-development and shared use of AI and AI-enabled assets with select allies and partners. This evaluation shall include:
(A) A potential list of foreign states with which such co-development or co-deployment may be feasible;
(B) A list of bilateral and multilateral fora for potential outreach;
(C) Potential co-development and co-deployment concepts;
(D) Proposed classification-appropriate testing vehicles for co-developed AI capabilities; and
(E) Considerations for existing programs, agreements, or arrangements to use as foundations for future co-development and co-deployment of AI capabilities.
     (j) The United States Government needs improved internal coordination with respect to its use of and approach to AI on NSS in order to ensure interoperability and resource sharing consistent with applicable law, and to reap the generality and economies of scale offered by frontier AI models.
     (k) Consistent with these goals:
(i) On an ongoing basis, DOD and ODNI shall issue or revise relevant guidance to improve consolidation and interoperability across AI functions on NSS. This guidance shall seek to ensure that the United States Government can coordinate and share AI-related resources effectively, as appropriate and consistent with applicable law. Such work shall include:
(A) Recommending agency organizational practices to improve AI research and deployment activities that span multiple national security institutions. In order to encourage AI adoption for the purpose of national security, these measures shall aim to create consistency to the greatest extent possible across the revised practices.
(B) Steps that enable consolidated research, development, and procurement for general-purpose AI systems and supporting infrastructure, such that multiple agencies can share access to these tools to the extent consistent with applicable law, while still allowing for appropriate controls on sensitive data.
(C) Aligning AI-related national security policies and procedures across agencies, as practicable and appropriate, and consistent with applicable law.
(D) Developing policies and procedures, as appropriate and consistent with applicable law, to share information across DOD and the IC when an AI system developed, deployed, or used by a contractor demonstrates risks related to safety, security, and trustworthiness, including to human rights, civil rights, civil liberties, or privacy.
     4.2. Strengthening AI Governance and Risk Management. (a) As the United States Government moves swiftly to adopt AI in support of its national security mission, it must continue taking active steps to uphold human rights, civil rights, civil liberties, privacy, and safety; ensure that AI is used in a manner consistent with the President’s authority as Commander in Chief to decide when to order military operations in the Nation’s defense; and ensure that military use of AI capabilities is accountable, including through such use during military operations within a responsible human chain of command and control. Accordingly, the United States Government must develop and implement robust AI governance and risk management practices to ensure that its AI innovation aligns with democratic values, updating policy guidance where necessary. In light of the diverse authorities and missions across covered agencies with a national security mission and the rapid rate of ongoing technological change, such AI governance and risk management frameworks shall be:
(i)    Structured, to the extent permitted by law, such that they can adapt to future opportunities and risks posed by new technical developments;
(ii)   As consistent across agencies as is practicable and appropriate in order to enable interoperability, while respecting unique authorities and missions;
(iii) Designed to enable innovation that advances United States national security objectives;
(iv)   As transparent to the public as practicable and appropriate, while protecting classified or controlled information;
(v)    Developed and applied in a manner and with means to integrate protections, controls, and safeguards for human rights, civil rights, civil liberties, privacy, and safety where relevant; and
(vi)   Designed to reflect United States leadership in establishing broad international support for rules and norms that reinforce the United States’ approach to AI governance and risk management.
     (b) Covered agencies shall develop and use AI responsibly, consistent with United States law and policies, democratic values, and international law and treaty obligations, including international humanitarian and human rights law. All agency officials retain their existing authorities and responsibilities established in other laws and policies.
     (c) Consistent with these goals:
(i) Heads of covered agencies shall, consistent with their authorities, monitor, assess, and mitigate risks directly tied to their agency’s development and use of AI. Such risks may result from reliance on AI outputs to inform, influence, decide, or execute agency decisions or actions, when used in a defense, intelligence, or law enforcement context, and may impact human rights, civil rights, civil liberties, privacy, safety, national security, and democratic values. These risks from the use of AI include the following:
(A) Risks to physical safety: AI use may pose unintended risks to human life or property.
(B) Privacy harms: AI design, development, and operation may result in harm, embarrassment, unfairness, and prejudice to individuals.
(C) Discrimination and bias: AI use may lead to unlawful discrimination and harmful bias, resulting in, for instance, inappropriate surveillance and profiling, among other harms.
(D) Inappropriate use: operators using AI systems may not fully understand the capabilities and limitations of these technologies, including systems used in conflicts. Such unfamiliarity could impact operators’ ability to exercise appropriate levels of human judgment.
(E) Lack of transparency: agencies may have gaps in documentation of AI development and use, and the public may lack access to information about how AI is used in national security contexts because of the necessity to protect classified or controlled information.
(F) Lack of accountability: training programs and guidance for agency personnel on the proper use of AI systems may not be sufficient, including to mitigate the risk of overreliance on AI systems (such as “automation bias”), and accountability mechanisms may not adequately address possible intentional or negligent misuse of AI-enabled technologies.
(G) Data spillage: AI systems may reveal aspects of their training data — either inadvertently or through deliberate manipulation by malicious actors — and data spillage may result from AI systems trained on classified or controlled information when used on networks where such information is not permitted.
(H) Poor performance: AI systems that are inappropriately or insufficiently trained, used for purposes outside the scope of their training set, or improperly integrated into human workflows may exhibit poor performance, including in ways that result in inconsistent outcomes or unlawful discrimination and harmful bias, or that undermine the integrity of decision-making processes.
(I) Deliberate manipulation and misuse: foreign state competitors and malicious actors may deliberately undermine the accuracy and efficacy of AI systems, or seek to extract sensitive information from such systems.
     (d) The United States Government’s AI governance and risk management policies must keep pace with evolving technology.
     (e) Consistent with these goals:
(i)   An AI framework, entitled “Framework to Advance AI Governance and Risk Management in National Security” (AI Framework), shall further implement this subsection. The AI Framework shall be approved by the NSC Deputies Committee through the process described in National Security Memorandum 2 of February 4, 2021 (Renewing the National Security Council System), or any successor process, and shall be reviewed periodically through that process. This process shall determine whether adjustments are needed to address risks identified in subsection 4.2(c) of this section and other topics covered in the AI Framework. The AI Framework shall serve as a national security-focused counterpart to OMB’s Memorandum M-24-10 of March 28, 2024 (Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence), and any successor OMB policies. To the extent feasible, appropriate, and consistent with applicable law, the AI Framework shall be as consistent as possible with these OMB policies and shall be made public.
(ii) The AI Framework described in subsection 4.2(e)(i) of this section and any successor document shall, at a minimum, and to the extent consistent with applicable law, specify the following:
(A) Each covered agency shall have a Chief AI Officer who holds primary responsibility within that agency, in coordination with other responsible officials, for managing the agency’s use of AI, promoting AI innovation within the agency, and managing risks from the agency’s use of AI consistent with subsection 3(b) of OMB Memorandum M-24-10, as practicable.
(B) Covered agencies shall have AI Governance Boards to coordinate and govern AI issues through relevant senior leaders from the agency.
(C) Guidance on AI activities that pose unacceptable levels of risk and that shall be prohibited.
(D) Guidance on AI activities that are “high impact” and require minimum risk management practices, including for high-impact AI use that affects United States Government personnel. Such high-impact activities shall include AI whose output serves as a principal basis for a decision or action that could exacerbate or create significant risks to national security, international norms, human rights, civil rights, civil liberties, privacy, safety, or other democratic values. The minimum risk management practices for high-impact AI shall include a mechanism for agencies to assess AI’s expected benefits and potential risks; a mechanism for assessing data quality; sufficient test and evaluation practices; mitigation of unlawful discrimination and harmful bias; human training, assessment, and oversight requirements; ongoing monitoring; and additional safeguards for military service members, the Federal civilian workforce, and individuals who receive an offer of employment from a covered agency.
(E) Covered agencies shall ensure privacy, civil liberties, and safety officials are integrated into AI governance and oversight structures. Such officials shall report findings to the heads of agencies and oversight officials, as appropriate, using existing reporting channels when feasible.
(F) Covered agencies shall ensure that there are sufficient training programs, guidance, and accountability processes to enable proper use of AI systems.
(G) Covered agencies shall maintain an annual inventory of their high-impact AI use and AI systems and provide updates on this inventory to agency heads and the APNSA.
(H) Covered agencies shall ensure that whistleblower protections are sufficient to account for issues that may arise in the development and use of AI and AI systems.
(I) Covered agencies shall develop and implement waiver processes for high-impact AI use that balance robust implementation of risk mitigation measures in this memorandum and the AI Framework with the need to utilize AI to preserve and advance critical agency missions and operations.
(J) Covered agencies shall implement cybersecurity guidance or direction associated with AI systems issued by the National Manager for NSS to mitigate the risks posed by malicious actors exploiting new technologies, and to enable interoperability of AI across agencies. Within 150 days of the date of this memorandum, and periodically thereafter, the National Manager for NSS shall issue minimum cybersecurity guidance and/or direction for AI used as a component of NSS, which shall be incorporated into AI governance guidance detailed in subsection 4.2(g)(i) of this section.
     (f) The United States Government needs guidance specifically regarding the use of AI on NSS.
     (g) Consistent with these goals:
(i) Within 180 days of the date of this memorandum, the heads of the Department of State, the Department of the Treasury, DOD, DOJ, Commerce, DOE, DHS, ODNI (acting on behalf of the 18 IC elements), and any other covered agency that uses AI as part of a NSS (Department Heads) shall issue or update guidance to their components/sub-agencies on AI governance and risk management for NSS, aligning with the policies in this subsection, the AI Framework, and other applicable policies. Department Heads shall review their respective guidance on an annual basis, and update such guidance as needed. This guidance, and any updates thereto, shall be provided to the APNSA prior to issuance. This guidance shall be unclassified and made available to the public to the extent feasible and appropriate, though it may have a classified annex. Department Heads shall seek to harmonize their guidance, and the APNSA shall convene an interagency meeting at least annually for the purpose of harmonizing Department Heads’ guidance on AI governance and risk management to the extent practicable and appropriate while respecting the agencies’ diverse authorities and missions. Harmonization shall be pursued in the following areas:
(A) Implementation of the risk management practices for high-impact AI;
(B) AI and AI system standards and activities, including as they relate to training, testing, accreditation, and security and cybersecurity; and
(C) Any other issues that affect interoperability for AI and AI systems.
Sec. 5. Fostering a Stable, Responsible, and Globally Beneficial International AI Governance Landscape. (a) Throughout its history, the United States has played an essential role in shaping the international order to enable the safe, secure, and trustworthy global adoption of new technologies while also protecting democratic values. These contributions have ranged from establishing nonproliferation regimes for biological, chemical, and nuclear weapons to setting the foundations for multi-stakeholder governance of the Internet. Like these precedents, AI will require new global norms and coordination mechanisms, which the United States Government must maintain an active role in crafting.
     (b) It is the policy of the United States Government that United States international engagement on AI shall support and facilitate improvements to the safety, security, and trustworthiness of AI systems worldwide; promote democratic values, including respect for human rights, civil rights, civil liberties, privacy, and safety; prevent the misuse of AI in national security contexts; and promote equitable access to AI’s benefits. The United States Government shall advance international agreements, collaborations, and other substantive and norm-setting initiatives in alignment with this policy.
     (c) Consistent with these goals:
(i) Within 120 days of the date of this memorandum, the Department of State, in coordination with DOD, Commerce, DHS, the United States Mission to the United Nations (USUN), and the United States Agency for International Development (USAID), shall produce a strategy for the advancement of international AI governance norms in line with safe, secure, and trustworthy AI, and democratic values, including human rights, civil rights, civil liberties, and privacy. This strategy shall cover bilateral and multilateral engagement and relations with allies and partners. It shall also include guidance on engaging with competitors, and it shall outline an approach to working in international institutions such as the United Nations and the Group of 7 (G7), as well as technical organizations. The strategy shall:
(A) Develop and promote internationally shared definitions, norms, expectations, and standards, consistent with United States policy and existing efforts, which will promote safe, secure, and trustworthy AI development and use around the world. These norms shall be as consistent as possible with United States domestic AI governance (including Executive Order 14110 and OMB Memorandum M-24-10), the International Code of Conduct for Organizations Developing Advanced AI Systems released by the G7 in October 2023, the Organization for Economic Cooperation and Development Principles on AI, United Nations General Assembly Resolution A/78/L.49, and other United States-supported relevant international frameworks (such as the Political Declaration on Responsible Military Use of AI and Autonomy) and instruments. By discouraging misuse and encouraging appropriate safeguards, these norms and standards shall aim to reduce the likelihood of AI causing harm or having adverse impacts on human rights, democracy, or the rule of law.
(B) Promote the responsible and ethical use of AI in national security contexts in accordance with democratic values and in compliance with applicable international law. The strategy shall advance the norms and practices established by this memorandum and measures endorsed in the Political Declaration on Responsible Military Use of AI and Autonomy.
Sec. 6. Ensuring Effective Coordination, Execution, and Reporting of AI Policy. (a) The United States Government must work in a closely coordinated manner to make progress on effective and responsible AI adoption. Given the speed with which AI technology evolves, the United States Government must learn quickly, adapt to emerging strategic developments, adopt new capabilities, and confront novel risks.
     (b) Consistent with these goals:
(i)    Within 270 days of the date of this memorandum, and annually thereafter for at least the next 5 years, the heads of the Department of State, DOD, Commerce, DOE, ODNI (acting on behalf of the IC), USUN, and USAID shall each submit a report to the President, through the APNSA, that offers a detailed accounting of their activities in response to their taskings in all sections of this memorandum, including this memorandum’s classified annex, and that provides a plan for further action. The Central Intelligence Agency (CIA), NSA, the Defense Intelligence Agency (DIA), and NGA shall submit reports on their activities to ODNI for inclusion in full as an appendix to ODNI’s report regarding IC activities. NGA, NSA, and DIA shall submit their reports as well to DOD for inclusion in full as an appendix to DOD’s report.
(ii)   Within 45 days of the date of this memorandum, the Chief AI Officers of the Department of State, DOD, DOJ, DOE, DHS, OMB, ODNI, CIA, DIA, NSA, and NGA, as well as appropriate technical staff, shall form an AI National Security Coordination Group (Coordination Group). Any Chief AI Officer of an agency that is a member of the Committee on National Security Systems may also join the Coordination Group as a full member. The Coordination Group shall be co-chaired by the Chief AI Officers of ODNI and DOD. The Coordination Group shall consider ways to harmonize policies relating to the development, accreditation, acquisition, use, and evaluation of AI on NSS. This work could include development of:
(A) Enhanced training and awareness to ensure that agencies prioritize the most effective AI systems, responsibly develop and use AI, and effectively evaluate AI systems;
(B) Best practices to identify and mitigate foreign intelligence risks and human rights considerations associated with AI procurement;
(C) Best practices to ensure interoperability between agency deployments of AI, to include data interoperability and data sharing agreements, as appropriate and consistent with applicable law;
(D) A process to maintain, update, and disseminate such trainings and best practices on an ongoing basis;
(E) AI-related policy initiatives to address regulatory gaps implicated by executive branch-wide policy development processes; and
(F) An agile process to increase the speed of acquisitions, validation, and delivery of AI capabilities, consistent with applicable law.
(iii) Within 90 days of the date of this memorandum, the Coordination Group described in subsection (b)(ii) of this section shall establish a National Security AI Executive Talent Committee (Talent Committee) composed of senior AI officials (or designees) from all agencies in the Coordination Group that wish to participate. The Talent Committee shall work to standardize, prioritize, and address AI talent needs and develop an updated set of Government-wide procedures for attracting, hiring, developing, and retaining AI and AI-enabling talent for national security purposes. The Talent Committee shall designate a representative to serve as a member of the AI and Technology Talent Task Force set forth in Executive Order 14110, helping to identify overlapping needs and address shared challenges in hiring.
(iv)   Within 365 days of the date of this memorandum, and annually thereafter for at least the next 5 years, the Coordination Group described in subsection (b)(ii) of this section shall issue a joint report to the APNSA on consolidation and interoperability of AI efforts and systems for the purposes of national security.
     Sec. 7. Definitions. (a) This memorandum uses definitions set forth in section 3 of Executive Order 14110. In addition, for the purposes of this memorandum:
(i)     The term “AI safety” means the mechanisms through which individuals and organizations minimize and mitigate the potential for harm to individuals and society that can result from the malicious use, misapplication, failures, accidents, and unintended behavior of AI models; the systems that integrate them; and the ways in which they are used.
(ii)    The term “AI security” means a set of practices to protect AI systems — including training data, models, abilities, and lifecycles — from cyber and physical attacks, thefts, and damage.
(iii)   The term “covered agencies” means agencies in the Intelligence Community, as well as all agencies as defined in 44 U.S.C. 3502(1) when they use AI as a component of a National Security System, other than the Executive Office of the President.
(iv)    The term “Critical Technical Artifacts” (CTAs) means information, usually specific to a single model or group of related models that, if possessed by someone other than the model developer, would substantially lower the costs of recreating, attaining, or using the model’s capabilities. Under the technical paradigm dominant in the AI industry today, the model weights of a trained AI system constitute CTAs, as do, in some cases, associated training data and code. Future paradigms may rely on different CTAs.
(v)     The term “frontier AI model” means a general-purpose AI system near the cutting-edge of performance, as measured by widely accepted publicly available benchmarks, or similar assessments of reasoning, science, and overall capabilities.
(vi)    The term “Intelligence Community” (IC) has the meaning provided in 50 U.S.C. 3003.
(vii)   The term “open-weight model” means a model that has weights that are widely available, typically through public release.
(viii) The term “United States Government” means all agencies as defined in 44 U.S.C. 3502(1).
     Sec. 8. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect:
(i)   the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
     (b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
     (c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
                              JOSEPH R. BIDEN JR.

MIL OSI USA News –

January 25, 2025

MIL-OSI: Sift Reinvents Account Takeover Prevention Across the Consumer Journey, Integrates with Leading CIAM Platforms

Source: GlobeNewswire (MIL-OSI)

SAN FRANCISCO, Oct. 24, 2024 (GLOBE NEWSWIRE) — Sift, the AI-powered fraud platform securing digital trust for leading global businesses, today announced its latest quarterly product update, featuring an enhanced solution to protect businesses from account takeover (ATO) fraud throughout the entire consumer journey. Sift’s detailed analysis of its customers shows that its ATO solution prevents an average of $1.9 million per week in fraud losses per customer. Its comprehensive approach ensures that organizations can safeguard their users from point of login to post-transaction, addressing the growing threat of ATO that resulted in nearly $13 billion in losses in 2023 alone.

Fueled by a digitally-driven economy, ATO attacks increased 24% in Q2 2024 compared to the same period last year, when attacks skyrocketed by 354% according to Sift research from 2023. Traditional solutions that seek to stop account theft only at the point of login often fall short, leaving businesses vulnerable to attacks that occur at different points of the consumer journey. Exacerbating the problem is that ATO often lives between the cracks within organizations, making it an “orphan” threat with no clear owner between Fraud and Security departments. Sift allows these departments to collaborate and take ownership of ATO by uniting data and workflows that are accessible to both.

Key Advancements with new Sift ATO solution:

Identity-Centric Accuracy: AI-powered insights, real-time behavioral analysis, and expanded device fingerprinting provide richer context around risk and user intent throughout the consumer journey.
Powerful Integrations: Unify and extend existing Customer Identity Access Management (CIAM) workflows through low-code integrations, including Ping Identity PingOne DaVinci and Okta Auth0, accelerating time to value and strengthening identity management investments across the security tech stack.
Fine-Tuned Controls: Robust MFA capabilities and continuous monitoring after login deliver precise friction at the session level. Pre-built, industry-specific automations generate immediate impact out of the box.

“Account takeover is a deeply connected problem that impacts multiple facets of a business, from cybersecurity to finance,” said Raviv Levi, Chief Product and Technology Officer at Sift. “Traditional approaches often result in fragmented data and incomplete insights, making it difficult to fully understand and mitigate the impact of ATO. Sift’s unique approach unites departments and data, providing a single source of truth for ATO prevention and removing barriers to revenue.”

Additional innovations from Sift this quarter include advanced behavior signals and VIP Fast Pass controls for high velocity transaction industries like iGaming and Fintech, as well as expanded RiskWatch functionality for faster, more insightful manual reviews.

For more information about Sift’s revamped ATO solution and other innovations, visit the Sift Blog here.

About Sift
Sift is the AI-powered fraud platform securing digital trust for leading global businesses. Our deep investments in machine learning and user identity, a data network scoring 1 trillion events per year, and a commitment to long-term customer success empower more than 700 customers to grow fearlessly. Brands including DoorDash, Yelp, and Poshmark rely on Sift to unlock growth and deliver seamless consumer experiences. Visit us at sift.com and follow us on LinkedIn.

Media Contact:
Victor White
VP, Corporate Communications, Sift
press@sift.com

The MIL Network –

January 25, 2025

MIL-OSI Security: Two Former Georgia Deputies Plead Guilty to Violating Civil Rights of Jail Detainee

Source: United States Attorneys General 11

Two former Richmond County, Georgia, Sheriff’s Office deputies pleaded guilty yesterday to federal civil rights charges involving an assault on a jail detainee.

Daniel D’Aversa, 52, and Melissa Morello, 28, pleaded guilty to an information charging both officers with one felony count of deprivation of civil rights under color of law.

According to court documents, Morello was assigned as a jailer at Richmond County’s Charles D. Webster Detention Center, and D’Aversa was a corporal with the Richmond County Sheriff’s Office. On May 7, 2022, Morello and D’Aversa were working with other Richmond County Sheriff’s Office deputies to secure inmates who had caused flooding in a section of the jail. Fellow deputies deliberately removed the handcuffs of a compliant inmate and then proceeded to punch and kick him. Both Morello and D’Aversa pleaded guilty to failing to intervene or stop the assault on the inmate, who was not posing a threat to anyone at the time of the assault.

U.S. District Court Judge J. Randal Hall will schedule sentencing for D’Aversa and Morello upon completion of pre-sentence investigations by U.S. Probation Services.

Sentencing hearings will be set at a later date. Both D’Aversa and Morello face a maximum penalty of 10 years in prison, along with substantial fines and restitution, followed by up to three years of supervised release upon completion of any prison term. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and any other statutory factors.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, U.S. Attorney Jill E. Steinberg for the Southern District of Georgia and Acting Special Agent in Charge Sean Burke of the FBI Atlanta Field Office made the announcement.

The FBI Atlanta Field Office is investigating the case.

Assistant U.S. Attorney George J.C. Jacobs III for the Southern District of Georgia and Trial Attorney Anita T. Channapati of the Justice Department’s Civil Rights Division are prosecuting the case.

MIL Security OSI –

January 25, 2025

MIL-OSI: First Bank Announces Third Quarter 2024 Net Income of $8.2 Million

Source: GlobeNewswire (MIL-OSI)

Results reflect strong loan and deposit growth, solid asset quality, and balance sheet optimization initiatives

HAMILTON, N.J., Oct. 23, 2024 (GLOBE NEWSWIRE) — First Bank (Nasdaq Global Market: FRBA) (the Bank) today announced results for the third quarter of 2024. Net income for the third quarter of 2024 was $8.2 million, or $0.32 per diluted share. Return on average assets, return on average equity and return on average tangible equity^[i] for the third quarter of 2024 were 0.88%, 8.15% and 9.42%, respectively. The Bank recorded a net loss of $1.3 million, or a loss of $0.05 per diluted share, and losses on average assets, equity, and tangible equityⁱ of 0.14%, 1.43%, and 1.66%, respectively, for the third quarter of 2023. Financial results for the third quarter of 2023 were negatively impacted by the Malvern Bancorp acquisition, completed in July 2023, primarily due to the merger-related expenses and the initial credit loss expense on acquired loans.

Third Quarter 2024 Performance Highlights:

Total loans of $3.09 billion at September 30, 2024 grew $89.5 million, or 11.9%, annualized, from the linked quarter ended June 30, 2024. Loan growth occurred late in the quarter, which is reflected in average loan balance increase of only $12.2 million during the quarter ended September 30, 2024. The growth was primarily driven by $56.9 million expansion within the Commercial and Industrial and Owner-occupied commercial real estate loan categories.
Total deposits of $3.05 billion at September 30, 2024 grew $82.4 million, or 11.1%, annualized, from the linked quarter. Growth occurred across all deposit categories, as non-interest bearing demand, interest bearing demand, money market and savings, and time deposits increased $19.3 million, $23.3 million, $36.3 million, and $3.6 million, respectively, from the second quarter of 2024.
Tangible book value per share^[ii] grew to $13.84 at September 30, 2024, increasing 11.2%, annualized, from $13.46 at June 30, 2024.
The Bank continued to prioritize balance sheet efficiency, selling approximately $11.7 million of investment securities during the quarter ended September 30, 2024 which resulted in a $555,000 net loss on the sale of investments during the quarter. The Bank also completed a restructuring of its bank-owned life insurance (BOLI) portfolio during the quarter which resulted in approximately $24 million in terminated policies and the acquisition of approximately $20 million in new policies. As a result of the restructure, the Bank recorded a $1.1 million enhancement to the cash surrender value and recognized additional income tax expense totaling $1.2 million.
Strong asset quality continued, with nonperforming assets decreasing by 9 basis points to 0.47% of total assets at September 30, 2024 from 0.56% at June 30, 2024.

Patrick L. Ryan, President and CEO of First Bank, reflected on the Bank’s performance, stating, “First Bank’s outstanding third quarter growth is an outcome of a well-executed long-term strategy. We have worked to build teams, products, and operating structures that promote quality growth over the long term, and the results are evident. Our teams added high-quality loans and deposits across all categories. We also continued to optimize the Bank’s efficiency as our efficiency ratio^[iii] remained below 60% for the 21st consecutive quarter. We continued to enact strategies to enhance future profitability and complement our organic growth efforts including ongoing balance sheet restructuring through the sale of certain lower-yielding investment securities, and we opportunistically restructured our BOLI policies during the quarter, an initiative that will be accretive to future earnings. The current quarter highlighted our efforts to build our core community banking customer base while we expand our specialty banking teams and continued investment in technology to improve the customer experience.”

Mr. Ryan added, “We are pleased with our ability to generate solid returns for our shareholders, including this quarter’s 11% annualized growth in tangible book value per share. We continue to explore a variety of opportunities to drive future earnings. Our recent receipt of regulatory approval to initiate stock repurchases also adds to our toolkit of options to support continued and growing returns for our shareholders.”

Income Statement

In the third quarter of 2024, the Bank’s net interest income increased to $30.1 million, growing $1.5 million, or 5.2%, compared to the same period in 2023. The increase was primarily due to net interest margin expansion in the third quarter of 2024 compared to the third quarter of 2023. Net interest income decreased $446,000, or 1.5%, from the linked second quarter of 2024. The modest decrease was primarily due to net interest margin compression and the timing of our loan growth, which occurred late in the third quarter, limiting interest income received during the quarter. During the third quarter, a $606,000 increase in interest income compared to the second quarter of 2024 was primarily related to higher earning asset balances, which was offset by a $1.1 million increase in interest expense, resulting from increased deposit costs and a higher level of average borrowings.

The Bank’s tax equivalent net interest margin of 3.49% for the third quarter of 2024 represented an increase of 13 basis points from the quarter ended September 30, 2023 and a decrease of 13 basis points from the linked quarter ended June 30, 2024. The Bank’s tax equivalent net interest margin includes the impact of amortization and accretion of premiums and discounts from fair value measurements of assets acquired and liabilities assumed in acquisitions. Amortization of premiums and accretion of discounts from fair value measurements of assets acquired and liabilities assumed in acquisitions totaled $3.4 million during the third quarter of 2024, compared to $2.7 million for the quarter ended September 30, 2023 and $3.6 million for the quarter ended June 30, 2024. The Bank’s net interest margin declined compared to the linked second quarter due to lower acquisition accounting accretion income, increased levels of average borrowings, lower average loan yields, and higher interest bearing deposit costs.

The Bank recorded a credit loss expense totaling $1.6 million during the third quarter of 2024, compared to $63,000 recorded during the second quarter of 2024 and $6.7 million recorded for the third quarter of 2023. The Bank’s credit loss expense for the third quarter of 2024 was commensurate with robust organic loan growth during the quarter and continued to reflect strong and stable asset quality. Credit loss expense for the third quarter of 2023 included a $5.5 million credit loss recorded to establish the allowance for credit losses on the acquired Malvern loan portfolio.

In the third quarter of 2024, the Bank recorded non-interest income of $2.5 million, compared to $193,000 during the same period in 2023 and $689,000 in the second quarter of 2024. The increase in non-interest income was primarily related to approximately $1.1 million in one-time enhancement to the cash surrender value of BOLI that resulted from the aforementioned BOLI restructuring transaction during the quarter, as well as higher yields earned on the new BOLI policies purchased during the quarter. Additionally, the Bank recorded $135,000 in net gains on the sale of loans during third quarter 2024, compared to net losses on the sale of loans totaling $900,000 and $704,000 in the linked and prior year quarters, respectively. This was partially offset by $555,000 in net losses on the sale of investment securities during third quarter 2024, while no investment securities sales were executed in the linked quarter, and $527,000 in net losses were recognized during the third quarter of 2023.

Non-interest expense for the third quarter of 2024 was $18.6 million, a decrease of $4.8 million, or 20.6%, compared to $23.4 million for the prior year quarter. Lower non-interest expense was largely due to $7.0 million in merger-related expenses recorded during the third quarter of 2023. Excluding merger-related expenses, non-interest expense grew $2.2 million, or 13.3%, including an increase of $849,000 in salaries and employee benefits due to merit increases and a larger employee base. Other real estate owned (OREO) expense totaled $662,000 during third quarter 2024, with no similar expense recorded in third quarter 2023. The increase reflects a $363,000 impairment of an OREO asset along with other legal and real estate tax expenses recorded during the quarter. Additionally, other professional fees increased $312,000 primarily related to increases in personnel placement costs, consulting fees, and tax services.

On a linked quarter basis, non-interest expense increased $691,000, or 3.8%, from $18.0 million for the second quarter of 2024. The largest impact on expenses compared to the linked quarter is the aforementioned $363,000 OREO impairment expense during third quarter 2024. Salaries and employee benefits expense increased by $207,000 primarily due to a larger employee base. These were partially offset by modest decreases in marketing and advertising costs, as well as travel and entertainment expenses.

Income tax expense for the three months ended September 30, 2024 was $4.2 million with an effective tax rate of 33.9%, compared to an income tax benefit of $78,000 for the third quarter of 2023 and an income tax expense of $2.1 million with an effective tax rate of 16.2% for the second quarter of 2024. The effective tax rate for the third quarter of 2024 included approximately $1.2 million of tax expense recorded related to the BOLI restructuring. Excluding this impact, the effective tax rate would have been approximately 24% for the third quarter of 2024. The effective tax rate for the second quarter of 2024 was lower compared to the first quarter due to the recently enacted New Jersey Corporate Transit Fee, which resulted in a change in tax rate and a revaluation of the Bank’s deferred tax assets. A tax benefit of $1.1 million was booked as a discrete item in the second quarter for this change in tax rate. With the expected negative ongoing impact of the New Jersey Corporate Transit Fee, we anticipate our future effective tax rate will range between 24% and 25%.

Balance Sheet

Total assets increased $148.3 million, or 4.1%, from December 31, 2023 to September 30, 2024. Total loans increased $66.0 million, or 2.2%, from December 31, 2023 to September 30, 2024. Growth totaling $116.3 million across the owner-occupied commercial real estate and commercial and industrial loan portfolios was partially offset by a decline of commercial investor real estate loans totaling $47.8 million, including multi-family and construction and development, during the first nine months of 2024. The Bank continues to prioritize relationship-based commercial and industrial lending while actively managing our exposure in investor real estate lending.

Total assets grew $141.9 million, or 15.6% annualized, during the quarter ended September 30, 2024. Growth included an increase of $71.5 million in cash and cash equivalents related to the opportunistic addition of FHLB advances when interest rates declined during the quarter. Total loans increased by $89.5 million, or 11.9%, annualized, during the quarter ended September 30, 2024. Growth across the owner-occupied commercial real estate and commercial and industrial loan portfolios totaled $56.9 million, while commercial investor real estate loans, including multi-family and construction and development, grew $27.5 million, and consumer and residential real estate loans grew $5.2 million.

Total deposits increased by $82.4 million, or 11.1% annualized, during the quarter ended September 30, 2024. Growth occurred across all categories, with non-interest bearing demand, interest bearing demand, money market and savings, and time deposits increasing $19.3 million, $23.3 million, $36.3 million, and $3.6 million, respectively, from the second quarter of 2024. Our team continued to focus on attracting new deposit relationships while maintaining existing core balances.

Nearly all of the Bank’s deposit growth for the first nine months of 2024 occurred during the quarter ended September 30, 2024. We also experienced a slight shift in the mix of customer balances over the nine-month period. The Bank grew non-interest bearing demand deposits by $17.3 million in a challenging interest rate environment, while total interest-bearing deposits experienced a shift toward higher-costing deposits. During the first nine months of 2024, increases in money market and savings deposits and time deposits totaled $64.2 million and $32.3 million, respectively, partially offset by a decline in interest bearing demand deposits totaling $31.3 million.

During the nine months ended September 30, 2024, stockholders’ equity increased by $31.2 million, primarily due to net income, partially offset by dividends.

As of September 30, 2024, the Bank continued to exceed all regulatory capital requirements to be considered well-capitalized, with a Tier 1 Leverage ratio of 9.53%, a Tier 1 Risk-Based capital ratio of 9.65%, a Common Equity Tier 1 Capital ratio of 9.65%, and a Total Risk-Based capital ratio of 11.55%. The tangible stockholders’ equity to tangible assets ratio^[IV] increased to 9.41% as of September 30, 2024 compared to 8.89% at December 31, 2023.

Asset Quality

First Bank’s asset quality metrics for the third quarter of 2024 remained favorable. Total nonperforming loans declined from $25.0 million at December 31, 2023 to $12.0 million at September 30, 2024, while total nonperforming assets declined from $25.0 million to $17.7 million during the same period.

The Bank recorded net charge-offs of $386,000 during the third quarter of 2024, compared to net charge-offs of $175,000 during the second quarter of 2024 and net charge-offs of $1.1 million in the third quarter of 2023. The allowance for credit losses on loans as a percentage of total loans measured 1.21% at September 30, 2024, compared to 1.21% at June 30, 2024 and 1.40% at December 31, 2023. The decline from December 31, 2023 to September 30, 2024 reflected the $5.5 million charge-off and elimination of the Bank’s reserves on a purchase credit deteriorated loan transferred to OREO during the first quarter of 2024.

Liquidity and Borrowings

The Bank increased its liquidity position in the third quarter of 2024. Total cash and cash equivalents increased by $71.5 million to $312.3 million at September 30, 2024. Borrowings increased by $49.9 million compared to June 30, 2024, as the Bank increased its FHLB borrowings.

Management believes the Bank’s current liquidity position, coupled with our various contingent funding sources, provides us with a strong liquidity base and a diverse source of funding options.

Cash Dividend Declared

On October 15, 2024, the Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on November 8, 2024, payable on November 22, 2024.

Share Repurchase Program

The Board of Directors has authorized and the Bank has received regulatory approvals for a new share repurchase program. The program provides for the repurchase of up to 1.0 million shares of First Bank common stock for an aggregate repurchase amount of up to $16.0 million. The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors. The stock repurchases may be made from time to time on the open market or in privately negotiated transactions. The stock repurchase program does not require First Bank to repurchase any specific number of shares, and First Bank may terminate the repurchase program at any time. The share repurchase program will expire on September 30, 2025.

Conference Call and Earnings Release Supplement

Additional details on the quarterly results and the Bank are included in the attached earnings release supplement. http://ml.globenewswire.com/Resource/Download/8c344bfa-6975-4f79-872b-2307433b1520

First Bank will host its earnings call on Thursday, October 24, 2024 at 9:00 AM Eastern Time. The direct dial toll free number for the live call is 1-800-715-9871 and the access code is 1578641. For those unable to participate in the call, a replay will be available by dialing 1-800-770-2030 (access code 8550862) from one hour after the end of the conference call until January 22, 2025. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

About First Bank

First Bank is a New Jersey state-chartered bank with 26 full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington (2), Hamilton, Lawrence, Monroe, Morristown, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Coventry, Devon, Doylestown, Glenn Mills, Lionville, Malvern, Paoli, Trevose, Warminster and West Chester, Pennsylvania; and Palm Beach, Florida. With $3.76 billion in assets as of September 30, 2024, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank’s common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”

Forward Looking Statements

This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: changes in market interest rates on funding costs, yield on interest earning assets, credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank’s investment securities portfolio; whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions, integrate acquired entities and realize anticipated efficiencies, sustain its internal growth rate, and provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; the effects of the recent turmoil in the banking industry (including the failures of two financial institutions in early 2023); the impact of public health emergencies, such as COVID-19, on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank’s level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank’s operations, including changes in regulations affecting financial institutions and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank’s ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; and possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue.

_____________

ⁱ Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱ Tangible book value per share is a non-U.S. GAAP financial measure and is calculated by dividing common shares outstanding by tangible equity (equity minus goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱⁱ The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by adjusted total revenue (net interest income plus non-interest income). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

^iv Tangible stockholders’ equity to tangible assets ratio is a non-U.S. GAAP financial measure and is calculated by dividing tangible equity (equity minus goodwill and other intangible assets) by tangible assets (total assets minus goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

FIRST BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data, unaudited)

	September 30, 2024			December 31, 2023
Assets
Cash and due from banks	$	35,456		$	25,652
Restricted cash		9,200			13,770
Interest bearing deposits with banks		267,643			188,529
Cash and cash equivalents		312,299			227,951
Interest bearing time deposits with banks		743			996
Investment securities available for sale, at fair value		74,549			94,142
Investment securities held to maturity, net of allowance for credit losses of $206 at September 30, 2024 and $200 at December 31, 2023 (fair value of $39,049 and $38,486 at September 30, 2024 and December 31, 2023, respectively)		43,659			44,059
Equity securities, at fair value		1,860			1,888
Restricted investment in bank stocks		13,845			10,469
Other investments		11,141			9,841
Loans, net of deferred fees and costs		3,087,488			3,021,501
Less: Allowance for credit losses		(37,434	)		(42,397	)
Net loans		3,050,054			2,979,104
Premises and equipment, net		20,331			21,627
Other real estate owned, net		5,637			–
Accrued interest receivable		13,502			14,763
Bank-owned life insurance		84,727			86,435
Goodwill		44,166			44,166
Other intangible assets, net		9,318			10,812
Deferred income taxes, net		31,448			30,875
Other assets		40,374			32,199
Total assets	$	3,757,653		$	3,609,327

Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits	$	519,079		$	501,763
Interest bearing deposits		2,530,991			2,465,806
Total deposits		3,050,070			2,967,569
Borrowings		236,999			179,140
Subordinated debentures		29,926			55,261
Accrued interest payable		5,078			2,813
Other liabilities		33,510			33,644
Total liabilities		3,355,583			3,238,427
Stockholders’ Equity:
Preferred stock, par value $2 per share; 10,000,000 shares authorized; no shares issued and outstanding		–			–
Common stock, par value $5 per share; 40,000,000 shares authorized; 27,367,984 shares issued and 25,186,920 shares outstanding at September 30, 2024 and 27,149,186 shares issued and 24,968,122 shares outstanding at December 31, 2023		135,415			134,552
Additional paid-in capital		124,014			122,881
Retained earnings		167,792			140,563
Accumulated other comprehensive loss		(3,773	)		(5,718	)
Treasury stock, 2,181,064 shares at September 30, 2024 and December 31, 2023		(21,378	)		(21,378	)
Total stockholders’ equity		402,070			370,900
Total liabilities and stockholders’ equity	$	3,757,653		$	3,609,327

FIRST BANK
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except for share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Interest and Dividend Income
Investment securities—taxable	$	1,201		$	1,151		$	3,661		$	3,128
Investment securities—tax-exempt		35			86			109			158
Interest bearing deposits with banks, Federal funds sold and other		3,972			2,593			10,479			6,029
Loans, including fees		50,957			46,088			151,039			111,536
Total interest and dividend income		56,165			49,918			165,288			120,851

Interest Expense
Deposits		23,081			18,470			66,253			40,574
Borrowings		2,550			1,914			6,859			4,939
Subordinated debentures		440			940			1,224			1,821
Total interest expense		26,071			21,324			74,336			47,334
Net interest income		30,094			28,594			90,952			73,517
Credit loss expense		1,579			6,650			944			8,237
Net interest income after credit loss expense		28,515			21,944			90,008			65,280

Non-Interest Income
Service fees on deposit accounts		362			280			1,056			741
Loan fees		218			152			437			259
Income from bank-owned life insurance		1,819			544			3,213			1,291
Losses on sale of investment securities, net		(555	)		(527	)		(555	)		(734	)
Gains (losses) on sale of loans, net		135			(704	)		(536	)		(393	)
Gains on recovery of acquired loans		35			24			209			95
Other non-interest income		465			424			1,308			1,026
Total non-interest income		2,479			193			5,132			2,285

Non-Interest Expense
Salaries and employee benefits		10,175			9,326			30,181			25,320
Occupancy and equipment		2,080			1,915			6,188			5,107
Legal fees		245			270			801			671
Other professional fees		943			631			2,628			1,880
Regulatory fees		728			595			1,970			1,345
Directors’ fees		272			224			784			631
Data processing		800			907			2,355			2,206
Marketing and advertising		310			220			983			693
Travel and entertainment		233			140			762			519
Insurance		245			272			740			624
Other real estate owned expense, net		662			–			879			38
Merger-related expenses		–			7,028			–			7,710
Other expense		1,951			1,958			6,136			4,020
Total non-interest expense		18,644			23,486			54,407			50,764
Income Before Income Taxes		12,350			(1,349	)		40,733			16,801
Income tax expense		4,188			(78	)		8,986			4,284
Net Income (loss)	$	8,162		$	(1,271	)	$	31,747		$	12,517

Basic earnings (loss) per common share	$	0.32		$	(0.05	)	$	1.26		$	0.60
Diluted earnings (loss) per common share	$	0.32		$	(0.05	)	$	1.26		$	0.59

Basic weighted average common shares outstanding		25,172,927			23,902,478			25,114,685			20,928,847
Diluted weighted average common shares outstanding		25,342,462			23,902,478			25,265,250			21,057,655

FIRST BANK
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)

	Three Months Ended September 30,
	2024								2023
	Average						Average		Average						Average
	Balance			Interest			Rate⁽⁵⁾		Balance			Interest			Rate⁽⁵⁾
Interest earning assets
Investment securities ^{(1) (2)}	$	137,216		$	1,244		3.61	%	$	169,244		$	1,255			2.94	%
Loans ⁽³⁾		3,010,116			50,957		6.73	%		3,003,703			46,088			6.09	%
Interest bearing deposits with banks,
Federal funds sold and other		265,474			3,593		5.38	%		182,128			2,395			5.22	%
Restricted investment in bank stocks		12,768			257		8.01	%		10,284			196			7.56	%
Other investments		12,776			122		3.80	%		9,162			2			0.09	%
Total interest earning assets ⁽²⁾		3,438,350			56,173		6.50	%		3,374,521			49,936			5.87	%
Allowance for credit losses		(36,612	)							(41,216	)
Non-interest earning assets		271,105								232,045
Total assets	$	3,672,843							$	3,565,350

Interest bearing liabilities
Interest bearing demand deposits	$	587,045		$	3,974		2.69	%	$	674,417		$	4,038			2.38	%
Money market deposits		1,064,045			10,573		3.95	%		952,042			8,386			3.49	%
Savings deposits		149,057			563		1.50	%		174,412			490			1.11	%
Time deposits		690,723			7,902		4.55	%		655,288			5,556			3.36	%
Total interest bearing deposits		2,490,870			23,012		3.68	%		2,456,159			18,470			2.98	%
Borrowings		206,588			2,550		4.91	%		163,746			1,914			4.64	%
Subordinated debentures		29,908			440		5.88	%		51,101			940			7.36	%
Total interest bearing liabilities		2,727,366			26,002		3.79	%		2,671,006			21,324			3.17	%
Non-interest bearing deposits		506,084								507,866
Other liabilities		40,858								33,106
Stockholders’ equity		398,535								353,372
Total liabilities and stockholders’ equity	$	3,672,843							$	3,565,350
Net interest income/interest rate spread ⁽²⁾					30,171		2.71	%					28,612			2.70	%
Net interest margin ^{(2) (4)}							3.49	%								3.36	%
Tax equivalent adjustment ⁽²⁾					(8	)							(18	)
Net interest income				$	30,163							$	28,594

(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)

	Nine Months Ended September 30,
	2024								2023
	Average						Average		Average						Average
	Balance			Interest			Rate⁽⁵⁾		Balance			Interest			Rate⁽⁵⁾
Interest earning assets
Investment securities ^{(1) (2)}	$	143,528		$	3,793		3.53	%	$	155,128		$	3,319		2.86	%
Loans ⁽³⁾		2,995,895			151,039		6.73	%		2,590,409			111,536		5.76	%
Interest bearing deposits with banks,
Federal funds sold and other		231,171			9,404		5.43	%		143,922			5,403		5.02	%
Restricted investment in bank stocks		11,461			699		8.15	%		9,327			454		6.51	%
Other investments		12,262			376		4.10	%		8,902			172		2.58	%
Total interest earning assets ⁽²⁾		3,394,317			165,311		6.51	%		2,907,688			120,884		5.56	%
Allowance for credit losses		(37,000	)							(33,664	)
Non-interest earning assets		265,368								174,246
Total assets	$	3,622,685							$	3,048,270

Interest bearing liabilities
Interest bearing demand deposits	$	599,025		$	11,453		2.55	%	$	445,318		$	6,492		1.95	%
Money market deposits		1,046,911			30,921		3.95	%		840,688			20,177		3.21	%
Savings deposits		156,416			1,756		1.50	%		155,370			1,202		1.03	%
Time deposits		680,194			22,054		4.33	%		586,827			12,703		2.89	%
Total interest bearing deposits		2,482,546			66,184		3.56	%		2,028,203			40,574		2.67	%
Borrowings		181,844			6,859		5.04	%		149,042			4,939		4.43	%
Subordinated debentures		34,071			1,224		4.79	%		36,949			1,821		6.57	%
Total interest bearing liabilities		2,698,461			74,267		3.68	%		2,214,194			47,334		2.86	%
Non-interest bearing deposits		494,971								490,211
Other liabilities		41,971								29,939
Stockholders’ equity		387,282								313,926
Total liabilities and stockholders’ equity	$	3,622,685							$	3,048,270
Net interest income/interest rate spread ⁽²⁾					91,044		2.83	%					73,550		2.70	%
Net interest margin ^{(2) (4)}							3.58	%							3.38	%
Tax equivalent adjustment ⁽²⁾					(23	)							(33	)
Net interest income				$	91,021							$	73,517

(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)

	As of or For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
EARNINGS
Net interest income	$	30,094		$	30,540		$	30,318		$	30,999		$	28,594
Credit loss (benefit) expense		1,579			63			(698	)		(294	)		6,650
Non-interest income		2,479			689			1,964			(3,000	)		193
Non-interest expense		18,644			17,953			17,810			17,936			23,486
Income tax expense		4,188			2,140			2,658			1,977			(78	)
Net income		8,162			11,073			12,512			8,380			(1,271	)

PERFORMANCE RATIOS
Return on average assets ⁽¹⁾		0.88	%		1.23	%		1.41	%		0.93	%		(0.14	%)
Adjusted return on average assets ^{(1) (2)}		0.93	%		1.31	%		1.39	%		1.38	%		1.07	%
Return on average equity ⁽¹⁾		8.15	%		11.52	%		13.36	%		9.06	%		(1.43	%)
Adjusted return on average equity ^{(1) (2)}		8.56	%		12.26	%		13.17	%		13.38	%		10.75	%
Return on average tangible equity ^{(1) (2)}		9.42	%		13.40	%		15.64	%		10.67	%		(1.66	%)
Adjusted return on average tangible equity ^{(1) (2)}		9.89	%		14.26	%		15.41	%		15.75	%		12.50	%
Net interest margin ^{(1) (3)}		3.49	%		3.62	%		3.64	%		3.68	%		3.36	%
Yield on loans ⁽¹⁾		6.73	%		6.81	%		6.66	%		6.49	%		6.09	%
Total cost of deposits ⁽¹⁾		3.05	%		3.01	%		2.83	%		2.63	%		2.47	%
Efficiency ratio ⁽²⁾		58.49	%		55.88	%		55.56	%		53.79	%		54.83	%

SHARE DATA
Common shares outstanding		25,186,920			25,144,983			25,096,449			24,968,122			24,926,919
Basic earnings per share	$	0.32		$	0.44		$	0.50		$	0.34		$	(0.05	)
Diluted earnings per share		0.32			0.44			0.50			0.33			(0.05	)
Adjusted diluted earnings per share ⁽²⁾		0.34			0.47			0.49			0.49			0.40
Book value per share		15.96			15.61			15.23			14.85			14.48
Tangible book value per share ⁽²⁾		13.84			13.46			13.06			12.65			12.26

MARKET DATA
Market value per share	$	15.20		$	12.74		$	13.74		$	14.70		$	10.78
Market value / Tangible book value		109.83	%		94.65	%		105.20	%		116.18	%		87.96	%
Market capitalization	$	382,841		$	320,347		$	344,825		$	367,031		$	268,712

CAPITAL & LIQUIDITY
Stockholders’ equity / assets		10.70	%		10.86	%		10.64	%		10.28	%		10.15	%
Tangible stockholders’ equity / tangible assets ⁽²⁾		9.41	%		9.50	%		9.27	%		8.89	%		8.72	%
Loans / deposits		101.23	%		101.02	%		100.75	%		101.82	%		101.80	%

ASSET QUALITY
Net charge-offs	$	386		$	175		$	5,293		$	209		$	1,122
Net charge-offs (recoveries), excluding PCD loan charge-off ⁽⁴⁾		386			175			(201	)		209			1,122
Nonperforming loans		12,014			14,227			17,054			24,989			24,158
Nonperforming assets		17,651			20,226			23,053			24,989			24,158
Net charge offs / average loans ⁽¹⁾		0.05	%		0.02	%		0.72	%		0.03	%		0.15	%
Net charge offs (recoveries), excluding PCD loan charge-off / average loans ^{(1) (4)}		0.05	%		0.02	%		(0.03	%)		0.03	%		0.15	%
Nonperforming loans / total loans		0.39	%		0.47	%		0.57	%		0.83	%		0.80	%
Nonperforming assets / total assets		0.47	%		0.56	%		0.64	%		0.69	%		0.68	%
Allowance for credit losses on loans / total loans		1.21	%		1.21	%		1.22	%		1.40	%		1.42	%
Allowance for credit losses on loans / nonperforming loans		311.59	%		254.81	%		213.42	%		169.66	%		177.50	%

OTHER DATA
Total assets	$	3,757,653		$	3,615,731		$	3,591,398		$	3,609,327		$	3,558,426
Total loans		3,087,488			2,998,029			2,992,423			3,021,501			3,020,778
Total deposits		3,050,070			2,967,634			2,970,262			2,967,569			2,967,455
Total stockholders’ equity		402,070			392,489			382,254			370,900			361,037
Number of full-time equivalent employees		313			294			288			286			286

(1) Annualized.
(2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition. See accompanying table, “Non-U.S. GAAP Financial Measures,” for calculation and reconciliation.
(3) Tax equivalent using a federal income tax rate of 21%.
(4) Excludes $5.5 million in a PCD loan charge-off in first quarter of 2024, which was reserved for through purchase accounting marks at the time of the Malvern acquisition.

FIRST BANK
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)

	As of the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
LOAN COMPOSITION
Commercial and industrial	$	546,541		$	530,996		$	508,911		$	506,849		$	478,120
Commercial real estate:
Owner-occupied		688,988			647,625			625,643			612,352			607,888
Investor		1,170,508			1,143,954			1,172,311			1,221,702			1,269,134
Construction and development		193,460			190,108			184,816			186,829			168,192
Multi-family		267,861			270,238			279,668			271,058			275,825
Total commercial real estate		2,320,817			2,251,925			2,262,438			2,291,941			2,321,039
Residential real estate:
Residential mortgage and first lien home equity loans		143,953			144,978			154,704			156,024			158,487
Home equity–second lien loans and revolving lines of credit		49,891			46,882			45,869			44,698			46,239
Total residential real estate		193,844			191,860			200,573			200,722			204,726
Consumer and other		29,518			26,321			23,702			25,343			20,208
Total loans prior to deferred loan fees and costs		3,090,720			3,001,102			2,995,624			3,024,855			3,024,093
Net deferred loan fees and costs		(3,232	)		(3,073	)		(3,201	)		(3,354	)		(3,315	)
Total loans	$	3,087,488		$	2,998,029		$	2,992,423		$	3,021,501		$	3,020,778

LOAN MIX
Commercial and industrial		17.7	%		17.7	%		17.0	%		16.8	%		15.8	%
Commercial real estate:
Owner-occupied		22.3	%		21.6	%		20.9	%		20.3	%		20.1	%
Investor		37.9	%		38.2	%		39.2	%		40.4	%		42.0	%
Construction and development		6.3	%		6.3	%		6.2	%		6.2	%		5.6	%
Multi-family		8.7	%		9.0	%		9.3	%		9.0	%		9.1	%
Total commercial real estate		75.2	%		75.1	%		75.6	%		75.9	%		76.8	%
Residential real estate:
Residential mortgage and first lien home equity loans		4.7	%		4.8	%		5.2	%		5.1	%		5.3	%
Home equity–second lien loans and revolving lines of credit		1.6	%		1.6	%		1.5	%		1.5	%		1.5	%
Total residential real estate		6.3	%		6.4	%		6.7	%		6.6	%		6.8	%
Consumer and other		0.9	%		0.9	%		0.8	%		0.8	%		0.7	%
Net deferred loan fees and costs		(0.1	%)		(0.1	%)		(0.1	%)		(0.1	%)		(0.1	%)
Total loans		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

FIRST BANK
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)

	As of the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
DEPOSIT COMPOSITION
Non-interest bearing demand deposits	$	519,079		$	499,765		$	470,749		$	501,763		$	493,703
Interest bearing demand deposits		597,802			574,515			580,864			629,110			623,338
Money market and savings deposits		1,235,637			1,199,382			1,219,634			1,171,440			1,228,832
Time deposits		697,552			693,972			699,015			665,256			621,582
Total Deposits	$	3,050,070		$	2,967,634		$	2,970,262		$	2,967,569		$	2,967,455

DEPOSIT MIX
Non-interest bearing demand deposits		17.0	%		16.8	%		15.8	%		16.9	%		16.6	%
Interest bearing demand deposits		19.6	%		19.4	%		19.6	%		21.2	%		21.0	%
Money market and savings deposits		40.5	%		40.4	%		41.1	%		39.5	%		41.4	%
Time deposits		22.9	%		23.4	%		23.5	%		22.4	%		21.0	%
Total Deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

FIRST BANK
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)

	As of or For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Return on Average Tangible Equity
Net income (numerator)	$	8,162		$	11,073		$	12,512		$	8,380		$	(1,271	)

Average stockholders’ equity	$	398,535		$	386,644		$	376,542		$	366,950		$	353,372
Less: Average Goodwill and other intangible assets, net		53,823			54,347			54,790			55,324			49,491
Average Tangible stockholders’ equity (denominator)	$	344,712		$	332,297		$	321,752		$	311,626		$	303,881

Return on Average Tangible equity (1)		9.42	%		13.40	%		15.64	%		10.67	%		-1.66	%

Tangible Book Value Per Share
Stockholders’ equity	$	402,070		$	392,489		$	382,254		$	370,900		$	361,037
Less: Goodwill and other intangible assets, net		53,484			54,026			54,483			54,978			55,554
Tangible stockholders’ equity (numerator)	$	348,586		$	338,463		$	327,771		$	315,922		$	305,483

Common shares outstanding (denominator)		25,186,920			25,144,983			25,096,449			24,968,122			24,926,919

Tangible book value per share	$	13.84		$	13.46		$	13.06		$	12.65		$	12.26

Tangible Equity / Tangible Assets
Stockholders’ equity	$	402,070		$	392,489		$	382,254		$	370,900		$	361,037
Less: Goodwill and other intangible assets, net		53,484			54,026			54,483			54,978			55,554
Tangible stockholders’ equity (numerator)	$	348,586		$	338,463		$	327,771		$	315,922		$	305,483

Total assets	$	3,757,653		$	3,615,731		$	3,591,398		$	3,609,327		$	3,558,426
Less: Goodwill and other intangible assets, net		53,484			54,026			54,483			54,978			55,554
Tangible total assets (denominator)	$	3,704,169		$	3,561,705		$	3,536,915		$	3,554,349		$	3,502,872

Tangible stockholders’ equity / tangible assets		9.41	%		9.50	%		9.27	%		8.89	%		8.72	%

Efficiency Ratio
Non-interest expense	$	18,644		$	17,953		$	17,810		$	17,936		$	23,486
Less: Merger-related expenses		–			–			–			338			7,028
Adjusted non-interest expense (numerator)	$	18,644		$	17,953		$	17,810		$	17,598		$	16,458

Net interest income	$	30,094		$	30,540		$	30,318		$	30,999		$	28,594
Non-interest income		2,479			689			1,964			(3,000	)		193
Total revenue		32,573			31,229			32,282			27,999			28,787
Add: Losses on sale of investment securities, net		555			–			–			916			527
(Subtract) Add: (Gains) losses on sale of loans, net		(135	)		900			(229	)		3,799			704
Less: Bank Owned Life Insurance Enhancement		(1,116	)		–			–			–			–
Adjusted total revenue (denominator)	$	31,877		$	32,129		$	32,053		$	32,714		$	30,018

Efficiency ratio		58.49	%		55.88	%		55.56	%		53.79	%		54.83	%

(1) Annualized.

FIRST BANK
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)

	For the Quarter Ended
	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023

Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity

Net income	$	8,162		$	11,073		$	12,512		$	8,380		$	(1,271	)
Add: Merger-related expenses⁽¹⁾		–			–			–			267			5,552
Add: Credit loss expense on acquired loan portfolio⁽¹⁾		–			–			–			–			4,323
Add (subtract): Losses (gains) on sale of loans, net⁽¹⁾		(107	)		711			(181	)		3,001			556
Add: Losses on sale of investment securities, net⁽¹⁾		438			–			–			724			416
Add: Net Impact of Bank Owned Life Insurance Restructuring⁽²⁾		79			–			–			–			–
Adjusted net income	$	8,572		$	11,784		$	12,331		$	12,372		$	9,576

Diluted weighted average common shares outstanding		25,342,462			25,258,785			25,199,381			25,089,495			24,029,910
Average assets	$	3,672,843		$	3,618,912		$	3,575,748		$	3,561,261		$	3,565,350
Average equity	$	398,535		$	386,644		$	376,542		$	366,950		$	353,372
Average Tangible Equity	$	344,712		$	332,297		$	321,752		$	311,626		$	303,881

Adjusted diluted earnings per share	$	0.34		$	0.47		$	0.49		$	0.49		$	0.40
Adjusted return on average assets⁽³⁾		0.93	%		1.31	%		1.39	%		1.38	%		1.07	%
Adjusted return on average equity⁽³⁾		8.56	%		12.26	%		13.17	%		13.38	%		10.75	%
Adjusted return on average tangible equity⁽³⁾		9.89	%		14.26	%		15.41	%		15.75	%		12.50	%

(1) Items are tax-effected using a federal income tax rate of 21%.
(2) Includes the net impact of the new Bank Owned Life Insurance enhancement and the increased tax expense on the terminated policies.
(3) Annualized.

The MIL Network –

January 25, 2025

MIL-OSI: STOCKHOLDER INVESTIGATION: The M&A Class Action Firm Investigates the Merger of Atlantic Union Bankshares Corp. – AUB

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 23, 2024 (GLOBE NEWSWIRE) — Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report. We are headquartered at the Empire State Building in New York City and are investigating Atlantic Union Bankshares Corp. (NYSE: AUB), relating to a proposed merger with Sandy Spring Bancorp, Inc. Under the terms of the agreement, all Sandy Spring shares will automatically be converted into the right to receive 0.900 shares of AUB, and cash in lieu of fractional shares.

Click here for more information https://monteverdelaw.com/case/atlantic-union-bankshares-corp/. It is free and there is no cost or obligation to you.

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

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

About Monteverde & Associates PC

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

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

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

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

The MIL Network –

January 25, 2025

MIL-OSI: CVB Financial Corp. Reports Earnings for the Third Quarter 2024

Source: GlobeNewswire (MIL-OSI)

Third Quarter 2024

Net Earnings of $51 million, or $0.37 per share
Return on Average Assets of 1.23%
Return on Average Tangible Common Equity of 14.93%
Net Interest Margin of 3.05%

Ontario, CA, Oct. 23, 2024 (GLOBE NEWSWIRE) — CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter ended September 30, 2024.

CVB Financial Corp. reported net income of $51.2 million for the quarter ended September 30, 2024, compared with $50.0 million for the second quarter of 2024 and $57.9 million for the third quarter of 2023. Diluted earnings per share were $0.37 for the third quarter, compared to $0.36 for the prior quarter and $0.42 for the same period last year. Net income of $51.2 million for the third quarter of 2024 produced an annualized return on average equity (“ROAE”) of 9.40%, an annualized return on average tangible common equity (“ROATCE”) of 14.93%, and an annualized return on average assets (“ROAA”) of 1.23%.

David Brager, President and Chief Executive Officer of Citizens Business Bank, commented, “We are pleased with our third quarter results. The Bank continues to execute on our strategy of banking the best small to medium sized businesses in the markets we serve. The results in the third quarter represent our 190^th consecutive quarter of profitability. I am very proud of the commitment of our associates to our mission and the loyalty of our customers to our shared vision of success.“

Highlights for the Third Quarter of 2024

Net interest margin of 3.05%
Efficiency Ratio of 46.5%
TCE Ratio = 9.7% & CET1 Ratio > 15%
Net income grew by 2.4%, compared to the second quarter of 2024
Deposits and customer repurchase agreements increased $408 million compared to the end of the second quarter of 2024
Noninterest-bearing deposits were 59% of total deposits
Early redemption of $1.3 billion of Bank Term Funding Program borrowings
Sold $312 million in AFS securities for a loss of $11.6 million
Executed the sale and leaseback of two buildings generating gains of $9.1 million
Loans declined by $109 million, or 1.3% from the end of the second quarter of 2024
Net recoveries were $156,000 for the third quarter of 2024

INCOME STATEMENT HIGHLIGHTS

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
	(Dollars in thousands, except per share amounts)
Net interest income	$	113,619		$	110,849		$	123,371		$	336,929		$	368,634
Recapure of (provision for) credit losses		–			–			(2,000	)		–			(4,000	)
Noninterest income		12,834			14,424			14,309			41,371			40,167
Noninterest expense		(58,835	)		(56,497	)		(55,058	)		(175,103	)		(163,956	)
Income taxes		(16,394	)		(18,741	)		(22,735	)		(53,339	)		(67,918	)
Net earnings	$	51,224		$	50,035		$	57,887		$	149,858		$	172,927
Earnings per common share:
Basic	$	0.37		$	0.36		$	0.42		$	1.07		$	1.24
Diluted	$	0.37		$	0.36		$	0.42		$	1.07		$	1.24

NIM		3.05	%		3.05	%		3.31	%		3.06	%		3.32	%
ROAA		1.23	%		1.24	%		1.40	%		1.23	%		1.41	%
ROAE		9.40	%		9.57	%		11.33	%		9.43	%		11.50	%
ROATCE		14.93	%		15.51	%		18.82	%		15.19	%		19.24	%
Efficiency ratio		46.53	%		45.10	%		39.99	%		46.29	%		40.11	%

Net Interest Income
Net interest income was $113.6 million for the third quarter of 2024. This represented a $2.8 million, or 2.50%, increase from the second quarter of 2024, and a $9.8 million, or 7.90%, decrease from the third quarter of 2023. The quarter-over-quarter increase in net interest income was primarily due to a $7.0 million increase in interest income resulting from a $513 million average increase in our interest-earning balances due from the Federal Reserve, partially offset by a $3.8 million increase in interest on deposits. The decline in net interest income compared to the third quarter of 2023 was primarily due to a 26 basis point decline in net interest margin.

Net Interest Margin
Our tax equivalent net interest margin was 3.05% for both the second and third quarters of 2024, compared to 3.31% for the third quarter of 2023. Our cost of funds compared to the second quarter of 2024 increased nine basis points, which was offset by a six basis point increase in our interest-earning asset yield. The six basis point increase in our interest-earning asset yield was due to a five basis point increase in loan yields and funds on deposit at the Federal Reserve increasing as a percentage of earnings assets to 8.2%, from 4.8% in the prior quarter. Average funds held at the Federal Reserve of $1.22 billion, grew by $513 million from the second quarter of 2024, earning 5.4% on average for the third quarter. Our cost of funds increased in the third quarter to 1.47%, as our cost of deposits and customer repurchase agreements increased by 14 basis points to 1.01%. The cost of interest-bearing non-maturity deposits increased from the prior quarter by 22 basis points. On average, borrowings decreased by $121 million compared to the second quarter, while continuing to have an average cost of 4.77%. The 26 basis point decrease in net interest margin compared to the third quarter of 2023, was primarily the result of a 55 basis point increase in cost of funds. This increase in cost of funds from the prior year quarter was the result of a 46 basis point increase in the cost of deposits and an increase in the level of borrowings, which grew on average by $411 million. A 25 basis point increase in earning asset yields over the prior year quarter partially offset the increase in funding costs. The higher earning asset yields, included higher loan yields, which grew from 5.07% for the third quarter of 2023 to 5.31% for the third quarter of 2024. The higher earning asset yield was also the result of the increase in average funds held at the Federal Reserve, which grew from 3.1% of earning assets in the third quarter of 2023 to 8.2% in the third quarter of 2024.

Earning Assets and Deposits
On average, total earning assets grew by $262 million, or 1.79%, quarter-over-quarter. This growth includes the $513 million increase in average funds on deposit at the Federal Reserve. Investment securities and loans declined on average by $126.9 million and $126.3 million, respectively, when compared to the second quarter of 2024. The decline in investment securities includes the impact of selling approximately $300 million of AFS securities during the third quarter. Compared to the third quarter of 2023, the mix of assets changed modestly, with the average balance of investment securities decreasing by $462.6 million, declining from 37% to 34% of total earning assets. Conversely, the average amount of funds held at the Federal Reserve increased by $748.8 million, growing from 3.1% of total earning assets in the third quarter of 2023 to 8.2% for the third quarter of 2024. Noninterest-bearing deposits declined on average by $28.4 million, or 0.40%, from the second quarter of 2024 and interest-bearing deposits and customer repurchase agreements increased on average by $279.2 million. Compared to the third quarter of 2023, total deposits and customer repurchase agreements declined on average by $503.7 million, or 3.90%, including a decline of $688 million, or 8.8%, in noninterest-bearing deposits. Non-maturity interest-bearing deposits and customer repurchase agreements decreased by $247.5 million on average, while time deposits grew on average by $431.9 million. On average, noninterest-bearing deposits were 59.10% of total deposits during the most recent quarter, compared to 60.20% for the second quarter of 2024 and 62.09% for the third quarter of 2023.

		Three Months Ended
SELECTED FINANCIAL HIGHLIGHTS		September 30, 2024				June 30, 2024				September 30, 2023
		(Dollars in thousands)
Yield on average investment securities (TE)			2.67		%		2.71		%		2.64		%
Yield on average loans			5.31		%		5.26		%		5.07		%
Yield on average earning assets (TE)			4.43		%		4.37		%		4.18		%
Cost of deposits			0.98		%		0.88		%		0.52		%
Cost of funds			1.47		%		1.38		%		0.92		%
Net interest margin (TE)			3.05		%		3.05		%		3.31		%

Average Earning Asset Mix		Avg		% of Total		Avg		% of Total		Avg		% of Total
	Total investment securities	$	5,080,033	34.01	%	$	5,206,959	35.49	%	$	5,542,590	37.20	%
	Interest-earning deposits with other institutions		1,232,551	8.25	%		716,916	4.89	%		473,391	3.18	%
	Loans		8,605,270	57.61	%		8,731,587	59.51	%		8,862,462	59.48	%
	Total interest-earning assets		14,935,866				14,673,474				14,900,003

Provision for Credit Losses
There was no provision for credit losses in the third and second quarter of 2024, compared to $2.0 million in provision in the third quarter of 2023. Net recoveries for the third quarter of 2024 were $156,000, compared to net charge-offs $31,000 in the prior quarter. Allowance for credit losses represented 0.97% of gross loans at September 30, 2024, compared to 0.95% at June 30, 2024.

Noninterest Income
Noninterest income was $12.8 million for the third quarter of 2024, compared with $14.4 million for the second quarter of 2024 and $14.3 million for the third quarter of 2023. During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two buildings, which operate as Banking Centers, and were simultaneously leased back, resulting in a pre-tax net gain of $9.1 million. The gains on selling the buildings were offset by realizing a pre-tax net loss of $11.6 million on the sale of $312 million of AFS securities. Third quarter income from Bank Owned Life Insurance (“BOLI”) increased by $557,000 from the second quarter of 2024 and increased by $2 million compared to the third quarter of 2023. We experienced $320,000 in death benefits that exceeded the asset value on certain policies in the third quarter of 2024, compared to no death benefits in the second quarter of 2024 and no death benefits in the third quarter of 2023. The year-over-year increase of $2 million in BOLI income was primarily due to the restructuring and enhancements in BOLI policies during the fourth quarter of 2023. Trust and investment service fees grew by 4.0% or $137,000 compared to the prior quarter and by 9.8% or $319,000 compared to the third quarter of 2023.

Noninterest Expense
Noninterest expense for the third quarter of 2024 was $58.8 million, compared to $56.5 million for the second quarter of 2024 and $55.0 million for the third quarter of 2023. The $2.3 million quarter-over-quarter increase included a $1.2 million increase in staff related expense, as annual salary increases took effect in July. The $690,000 quarter-over-quarter increase in regulatory assessments was due to the $700,000 accrual adjustment in the second quarter of 2024 related the FDIC special assessment. There was a $750,000 recapture of provision for unfunded loan commitments in the third quarter of 2024, compared to a $500,000 recapture of provision in the second quarter of 2024 and $900,000 recaptured in the third quarter of 2023. Occupancy and equipment expense grew by $432,000 or 7%, compared to the prior quarter, including the impact of the two buildings that were sold and leased back during the third quarter.

The $3.8 million increase in noninterest expense year-over-year included increased staff related expenses of $1.9 million, or 5.48%. Professional services increased $738,000, including a $627,000 increase in legal expense year-over-year. Occupancy and equipment expense increased by $586,000, or 10.43% and software expense increased $258,000, or 7% year-over-year. As a percentage of average assets, noninterest expense was 1.42% for the third quarter of 2024, compared to 1.40% for the second quarter of 2024 and 1.33% for the third quarter of 2023. The efficiency ratio for the third quarter of 2024 was 46.53%, compared to 45.10% for the second quarter of 2024 and 39.99% for the third quarter of 2023.

Income Taxes
Our effective tax rate for the nine months ended September 30, 2024 was 26.25%, compared with 28.20% for the same period of 2023. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income from municipal securities and BOLI, as well as available tax credits.

BALANCE SHEET HIGHLIGHTS

Assets
The Company reported total assets of $15.4 billion at September 30, 2024. This represented a decrease of $748.3 million, or 4.63%, from total assets of $16.15 billion at June 30, 2024. The decrease in assets included a $416.9 million decrease in interest-earning balances due from the Federal Reserve, a $304.8 million decrease in investment securities, and a $109.4 million decrease in net loans.

Total assets decreased by $617.8 million, or 3.86%, from total assets of $16.02 billion at December 31, 2023. The decrease in assets included a $549.9 million decrease in investment securities, and a $328.4 million decrease in net loans, partially offset by a $142.9 million increase in interest-earning balances due from the Federal Reserve.

Total assets at September 30, 2024 decreased by $499.8 million, or 3.14%, from total assets of $15.90 billion at September 30, 2023. The decrease in assets was primarily due to a $491.8 million decrease in investment securities and a $299.0 million decrease in net loans, partially offset by an increase of $188.6 million in interest-earning balances due from the Federal Reserve and a $57.1 million increase in the cash surrender value of BOLI.

Sale-Leaseback Transaction
During the third quarter of 2024, the Bank executed sale-leaseback transactions and sold two buildings, that are utilized as Banking Centers, for an aggregate sale price of $17 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. These sale-leaseback transactions resulted in a pre-tax net gain of $9.1 million for the third quarter of 2024. The Bank also recorded Right of Use (“ROU”) assets and corresponding operating lease liabilities each totaling $11.2 million.

Investment Securities and BOLI
Total investment securities were $4.87 billion at September 30, 2024, a decrease of $549.9 million, or 10.14% from December 31, 2023, and a decrease of $491.8 million, or 9.17%, from $5.36 billion at September 30, 2023.

At September 30, 2024, investment securities available-for-sale (“AFS”) totaled $2.47 billion, inclusive of a pre-tax net unrealized loss of $367.7 million. AFS securities decreased by $280.2 million from the prior quarter end, by $490.5 million, or 16.59%, from December 31, 2023 and decreased by $407.6 million, or 14.19%, from $2.87 billion at September 30, 2023. Pre-tax unrealized loss decreased by $120.2 million from the end of the prior quarter, and declined by $82.1 million from December 31, 2023 and by $260.7 million from September 30, 2023.

Concurrent with the sale-leaseback transactions during the third quarter of 2024, the Bank sold AFS securities with a book value of $312 million, resulting in a net pre-tax loss of $11.6 million.

At September 30, 2024, investment securities held-to-maturity (“HTM”) totaled $2.41 billion, a decrease of $24.6 million from the prior quarter end, a $59.4 million, or 2.41% decline from December 31, 2023, and a decrease of $84.2 million, or 3.38%, from September 30, 2023.

Combined, the AFS and HTM investments in mortgage backed securities (“MBS”) and collateralized mortgage obligations (“CMO”) totaled $3.82 billion or approximately 78% of the total investment securities at September 30, 2024. Virtually all of our MBS and CMO are issued or guaranteed by government or government sponsored enterprises, which have the implied guarantee of the U.S. Government. In addition, at September 30, 2024, we had $552.6 million of Government Agency securities that represent approximately 11.3% of the total investment securities.

Our combined AFS and HTM municipal securities totaled $485.7 million as of September 30, 2024, or 10% of our total investment portfolio. These securities are located in 35 states. Our largest concentrations of holdings by state, as a percentage of total municipal bonds, are located in Texas at 16.09%, Minnesota at 11.07%, and California at 9.71%.

At September 30, 2024, the Company had $316.6 million of Bank Owned Life insurance (“BOLI”), compared to $308.7 million at December 31, 2023 and $259.5 million at September 30, 2023. The $57.1 million increase in value of BOLI, when compared to September 30, 2023, was primarily due to a restructuring of the Company’s life insurance policies at the end of 2023, including a $4.5 million write-down in value on surrender policies that was offset by a $10.9 million enhancement to cash surrender values, as well as additional policy purchases totaling $41 million. This restructuring has increased returns on our BOLI policies resulting in additional non-taxable noninterest income in 2024.

Loans
Total loans and leases, at amortized cost, of $8.57 billion at September 30, 2024 decreased by $109.3 million, or 1.26%, from June 30, 2024. The quarter-over quarter decrease in loans included decreases of $46.3 million in commercial real estate loans, $37.5 million in construction loans, $19.7 million in commercial and industrial loans, and $8.1 million in dairy & livestock and agribusiness loans.

Total loans and leases, at amortized cost, decreased by $332.3 million, or 3.73%, from December 31, 2023. The decrease in total loans included decreases of $165.9 million in commercial real estate loans, $70.5 million in dairy & livestock and agribusiness loans, $52.0 million in construction loans, and $33.4 million in commercial and industrial loans.

Total loans and leases, at amortized cost, decreased by $305.1 million, or 3.44%, from September 30, 2023. The $305.1 million decrease included decreases of $224.4 million in commercial real estate loans, $48.3 million in construction loans, $13.1 million in SBA loans, $9.0 million in dairy & livestock and agribusiness loans, and $8.0 million in municipal lease financings.

Asset Quality
During the third quarter of 2024, we experienced credit charge-offs of $26,000 and total recoveries of $182,000, resulting in net recoveries of $156,000. The allowance for credit losses (“ACL”) totaled $82.9 million at September 30, 2024, compared to $82.8 million at June 30, 2024 and $89.0 million at September 30, 2023. At September 30, 2024, ACL as a percentage of total loans and leases outstanding was 0.97%. This compares to 0.95% at June 30, 2024 and 0.98% at December 31, 2023 and 1.00% at September 30, 2023.

Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, plus loans 90 days past due and accruing interest, and nonperforming assets, defined as nonperforming plus OREO, are highlighted below.

Nonperforming Assets and Delinquency Trends

September 30,
2024

June 30,
2024

September 30,
2023

Nonperforming loans

(Dollars in thousands)

Commercial real estate

$

18,794

$

21,908

$

3,655

SBA

151

337

1,050

Commercial and industrial

2,825

2,712

4,672

Dairy & livestock and agribusiness

143

–

243

SFR mortgage

–

339

Consumer and other loans

–

4

Total

$

21,913

$

24,957

$

9,963

[1]

% of Total loans

0.26

%

0.29

%

0.11

%

OREO

Commercial real estate

$

–

$

–

$

–

Commercial and industrial

647

–

SFR mortgage

–

Total

$

647

$

647

$

–

Total nonperforming assets

$

22,560

$

25,604

$

9,963

% of Nonperforming assets to total assets

0.15

%

0.16

%

0.06

%

Past due 30-89 days (accruing)

Commercial real estate

$

30,701

$

43

$

136

SBA

–

Commercial and industrial

64

103

–

Dairy & livestock and agribusiness

–

SFR mortgage

–

Consumer and other loans

–

Total

$

30,765

$

146

$

136

% of Total loans

0.36

%

0.00

%

0.00

%

Classified Loans

$

124,606

$

124,728

$

92,246

[1] Includes $2.6 million of nonaccrual loans past due 30-89 days.

The $3.0 million decrease in nonperforming loans from June 30, 2024 was primarily due to the payoff of one nonperforming commercial real estate loans totaling $2.3 million and $1.4 million in paydowns of nonperforming commercial real estate loans associated with two relationships. Past due loans grew to more than $30 million on September 30, 2024. Classified loans are loans that are graded “substandard” or worse. Classified loans decreased $122,000 quarter-over-quarter, primarily due to a $668,000 net decrease in classified commercial real estate loans, which included the payoff of 4 loans totaling $11.5 million that were partially offset by the addition of six classified commercial real estate loans in the third quarter of 2024. Classified dairy & livestock and agribusiness loans declined by $3.5 million due to paydowns and classified commercial and industrial loans increased $3.5 million primarily due to the addition of one classified commercial and industrial loan.

Deposits & Customer Repurchase Agreements
Deposits of $12.07 billion and customer repurchase agreements of $394.5 million totaled $12.47 billion at September 30, 2024. This represented a net increase of $407.9 million compared to June 30, 2024. Total deposits at September 30, 2024 included $400 million in brokered time deposits. Total deposits and customer repurchase agreements increased $761.7 million, or 6.51%, when compared to $11.71 billion at December 31, 2023 partially due to the growth in brokered deposits, and decreased $161.3 million, or 1.28% when compared to $12.63 billion at September 30, 2023.

Noninterest-bearing deposits were $7.14 billion at September 30, 2024, an increase of $46.7 million, or 0.66%, when compared to $7.09 billion at June 30, 2024. Noninterest-bearing deposits decreased by $69.4 million, or 0.96% when compared to $7.21 billion at December 31, 2023, and decreased by $449.8 million, or 5.93% when compared to $7.59 billion at September 30, 2023. At September 30, 2024, noninterest-bearing deposits were 59.12% of total deposits, compared to 60.13% at June 30, 2024, 63.03% at December 31, 2023, and 61.39% at September 30, 2023.

Borrowings
As of September 30, 2024, total borrowings consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. During the third quarter of 2024, we repaid the $1.3 billion of borrowings from the Federal Reserve’s Bank Term Funding Program, with a cost of 4.76%, that were scheduled to mature in January of 2025.

Capital
The Company’s total equity was $2.20 billion at September 30, 2024. This represented an overall increase of $119.9 million from total equity of $2.08 billion at December 31, 2023. Increases to equity included $149.9 million in net earnings and a $48.7 million increase in other comprehensive income, that were partially offset by $83.9 million in cash dividends. We engaged in no stock repurchases during the first nine months of 2024. Our tangible book value per share at September 30, 2024 was $10.17.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards.

			CVB Financial Corp. Consolidated
Capital Ratios	Minimum Required Plus Capital Conservation Buffer		September 30, 2024		December 31, 2023		September 30, 2023

Tier 1 leverage capital ratio	4.0	%	10.6	%	10.3	%	10.0	%
Common equity Tier 1 capital ratio	7.0	%	15.8	%	14.6	%	14.4	%
Tier 1 risk-based capital ratio	8.5	%	15.8	%	14.6	%	14.4	%
Total risk-based capital ratio	10.5	%	16.6	%	15.5	%	15.3	%

Tangible common equity ratio			9.7	%	8.5	%	7.7	%

CitizensTrust

As of September 30, 2024, CitizensTrust had approximately $4.7 billion in assets under management and administration, including $3.3 billion in assets under management. Revenues were $3.6 million for the third quarter of 2024, compared to $3.2 million for the same period of 2023. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

Corporate Overview
CVB Financial Corp. (“CVBF”) is the holding company for Citizens Business Bank. CVBF is one of the 10 largest bank holding companies headquartered in California with more than $15 billion in total assets. Citizens Business Bank is consistently recognized as one of the top performing banks in the nation and offers a wide array of banking, lending and investing services with more than 60 banking centers and three trust office locations serving California.

Shares of CVB Financial Corp. common stock are listed on the NASDAQ under the ticker symbol “CVBF”. For investor information on CVB Financial Corp., visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab.

Conference Call
Management will hold a conference call at 7:30 a.m. PDT/10:30 a.m. EDT on Thursday, October 24, 2024 to discuss the Company’s third quarter 2024 financial results. The conference call can be accessed live by registering at: https://register.vevent.com/register/BI6b56a1a5e9bf45efa402c04252b87308

The conference call will also be simultaneously webcast over the Internet; please visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab to access the call from the site. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company’s website approximately two hours after the conclusion of the conference call and will be available on the website for approximately 12 months.

Safe Harbor
Certain statements set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will likely result”, “aims”, “anticipates”, “believes”, “could”, “estimates”, “expects”, “hopes”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will,” “strategy”, “possibility”, and variations of these words and similar expressions help to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results or performance to differ materially from those projected. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies, goals and statements about the Company’s outlook regarding revenue and asset growth, financial performance and profitability, capital and liquidity levels, loan and deposit levels, growth and retention, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, the impact of economic developments, and the impact of acquisitions we have made or may make. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company, and there can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors, in addition to those set forth below, could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

General risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct business; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we have made or may make, including, without limitation, the failure to obtain the necessary regulatory approvals, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target, key personnel and customers into our operations; the timely development of competitive products and services and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws, and regulations, including those concerning banking, taxes, securities, and insurance, and the application thereof by regulatory agencies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible credit related impairments or declines in the fair value of loans and securities held by us; possible impairment charges to goodwill on our balance sheet; changes in customer spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; periodic fluctuations in commercial or residential real estate prices or values; our ability to attract or retain deposits (including low cost deposits) or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payment of dividends on our common stock; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; technological changes in banking and financial services; systemic or non-systemic bank failures or crises; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; catastrophic events or natural disasters, including earthquakes, drought, climate change or extreme weather events that may affect our assets, communications or computer services, customers, employees or third party vendors; public health crises and pandemics, and their effects on our asset credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and fraud and the costs of defending against them, including the costs of compliance with legislation or regulations to combat fraud and cybersecurity threats; our ability to recruit and retain key executives, board members and other employees, and our ability to comply with federal and state employment laws and regulations; ongoing or unanticipated regulatory or legal proceedings or outcomes; and our ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2023 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

Non-GAAP Financial Measures — Certain financial information provided in this earnings release has not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and is presented on a non-GAAP basis. Investors and analysts should refer to the reconciliations included in this earnings release and should consider the Company’s non-GAAP measures in addition to, not as a substitute for or as superior to, measures prepared in accordance with GAAP. These measures may or may not be comparable to similarly titled measures used by other companies.

CVB FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)


	September 30, 2024			December 31, 2023			September 30, 2023

Cash and due from banks	$	200,651		$	171,396		$	176,488
Interest-earning balances due from Federal Reserve		252,809			109,889			64,207
Total cash and cash equivalents		453,460			281,285			240,695
Interest-earning balances due from depository institutions		24,338			8,216			4,108
Investment securities available-for-sale		2,465,585			2,956,125			2,873,163
Investment securities held-to-maturity		2,405,254			2,464,610			2,489,441
Total investment securities		4,870,839			5,420,735			5,362,604
Investment in stock of Federal Home Loan Bank (FHLB)		18,012			18,012			18,012
Loans and lease finance receivables		8,572,565			8,904,910			8,877,632
Allowance for credit losses		(82,942	)		(86,842	)		(88,995	)
Net loans and lease finance receivables		8,489,623			8,818,068			8,788,637
Premises and equipment, net		36,275			44,709			44,561
Bank owned life insurance (BOLI)		316,553			308,706			259,468
Intangibles		11,130			15,291			16,736
Goodwill		765,822			765,822			765,822
Other assets		417,164			340,149			402,372
Total assets	$	15,403,216		$	16,020,993		$	15,903,015
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing	$	7,136,824		$	7,206,175		$	7,586,649
Investment checking		504,028			552,408			560,223
Savings and money market		3,745,707			3,278,664			3,906,187
Time deposits		685,930			396,395			305,727
Total deposits		12,072,489			11,433,642			12,358,786
Customer repurchase agreements		394,515			271,642			269,552
Other borrowings		500,000			2,070,000			1,120,000
Other liabilities		238,381			167,737			203,276
Total liabilities		13,205,385			13,943,021			13,951,614
Stockholders’ Equity
Stockholders’ equity		2,472,660			2,401,541			2,378,539
Accumulated other comprehensive loss, net of tax		(274,829	)		(323,569	)		(427,138	)
Total stockholders’ equity		2,197,831			2,077,972			1,951,401
Total liabilities and stockholders’ equity	$	15,403,216		$	16,020,993		$	15,903,015

CVB FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS
(Unaudited)
(Dollars in thousands)


	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Assets
Cash and due from banks	$	162,383		$	162,724		$	176,133		$	162,385		$	176,559
Interest-earning balances due from Federal Reserve		1,216,671			704,023			467,873			786,282			285,573
Total cash and cash equivalents		1,379,054			866,747			644,006			948,667			462,132
Interest-earning balances due from depository institutions		15,880			12,893			5,518			13,161			7,630
Investment securities available-for-sale		2,661,990			2,764,096			3,040,965			2,774,981			3,139,369
Investment securities held-to-maturity		2,418,043			2,442,863			2,501,625			2,439,427			2,524,799
Total investment securities		5,080,033			5,206,959			5,542,590			5,214,408			5,664,168
Investment in stock of FHLB		18,012			18,012			21,560			18,012			27,460
Loans and lease finance receivables		8,605,270			8,731,587			8,862,462			8,720,058			8,905,697
Allowance for credit losses		(82,810	)		(82,815	)		(86,986	)		(83,788	)		(86,222	)
Net loans and lease finance receivables		8,522,460			8,648,772			8,775,476			8,636,270			8,819,475
Premises and equipment, net		38,906			43,624			45,315			42,291			45,731
Bank owned life insurance (BOLI)		315,435			312,645			258,485			312,574			257,358
Intangibles		11,819			13,258			17,526			13,216			19,256
Goodwill		765,822			765,822			765,822			765,822			765,822
Other assets		365,740			390,834			357,280			368,951			343,782
Total assets	$	16,513,161		$	16,279,566		$	16,433,578		$	16,333,372		$	16,412,814
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing	$	7,124,952		$	7,153,315		$	7,813,120		$	7,153,557		$	7,908,749
Interest-bearing		4,931,220			4,728,864			4,769,897			4,705,566			4,624,848
Total deposits		12,056,172			11,882,179			12,583,017			11,859,123			12,533,597
Customer repurchase agreements		363,959			287,128			340,809			320,280			461,478
Other borrowings		1,729,405			1,850,330			1,318,098			1,856,771			1,273,521
Other liabilities		196,832			157,463			164,624			174,328			133,046
Total liabilities		14,346,368			14,177,100			14,406,548			14,210,502			14,401,642
Stockholders’ Equity
Stockholders’ equity		2,479,766			2,456,945			2,383,922			2,456,348			2,357,028
Accumulated other comprehensive loss, net of tax		(312,973	)		(354,479	)		(356,892	)		(333,478	)		(345,856	)
Total stockholders’ equity		2,166,793			2,102,466			2,027,030			2,122,870			2,011,172
Total liabilities and stockholders’ equity	$	16,513,161		$	16,279,566		$	16,433,578		$	16,333,372		$	16,412,814

CVB FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in thousands, except per share amounts)


	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Interest income:
Loans and leases, including fees	$	114,929		$	114,200		$	113,190		$	345,478		$	332,574
Investment securities:
Investment securities available-for-sale		20,178			21,225			22,441			62,849			61,393
Investment securities held-to-maturity		13,284			13,445			13,576			40,131			41,272
Total investment income		33,462			34,670			36,017			102,980			102,665
Dividends from FHLB stock		375			377			598			1,171			1,430
Interest-earning deposits with other institutions		16,986			9,825			6,422			32,884			11,583
Total interest income		165,752			159,072			156,227			482,513			448,252
Interest expense:
Deposits		29,821			25,979			16,517			77,166			32,647
Borrowings and customer repurchase agreements		22,312			22,244			16,339			68,418			46,971
Total interest expense		52,133			48,223			32,856			145,584			79,618
Net interest income before provision for (recapture of) credit losses		113,619			110,849			123,371			336,929			368,634
Provision for (recapture of) credit losses		–			–			2,000			–			4,000
Net interest income after provision for (recapture of) credit losses		113,619			110,849			121,371			336,929			364,634
Noninterest income:
Service charges on deposit accounts		5,120			5,117			5,062			15,273			15,244
Trust and investment services		3,565			3,428			3,246			10,217			9,475
Loss on sale of AFS investment securities		(11,582	)		–			–			(11,582	)		–
Gain on sale leaseback transactions		9,106			–			–			9,106			–
Other		6,625			5,879			6,001			18,357			15,448
Total noninterest income		12,834			14,424			14,309			41,371			40,167
Noninterest expense:
Salaries and employee benefits		36,647			35,426			34,744			108,474			103,539
Occupancy and equipment		6,204			5,772			5,618			17,541			16,585
Professional services		2,855			2,726			2,117			7,836			6,375
Computer software expense		3,906			3,949			3,648			11,380			10,372
Marketing and promotion		1,964			1,956			1,628			5,550			4,664
Amortization of intangible assets		1,286			1,437			1,567			4,161			5,006
(Recapture of) provision for unfunded loan commitments		(750	)		(500	)		(900	)		(1,250	)		–
Other		6,723			5,731			6,636			21,411			17,415
Total noninterest expense		58,835			56,497			55,058			175,103			163,956
Earnings before income taxes		67,618			68,776			80,622			203,197			240,845
Income taxes		16,394			18,741			22,735			53,339			67,918
Net earnings	$	51,224		$	50,035		$	57,887		$	149,858		$	172,927

Basic earnings per common share	$	0.37		$	0.36		$	0.42		$	1.07		$	1.24
Diluted earnings per common share	$	0.37		$	0.36		$	0.42		$	1.07		$	1.24
Cash dividends declared per common share	$	0.20		$	0.20		$	0.20		$	0.60		$	0.60

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Interest income – tax equivalent (TE)	$	166,285		$	159,607		$	156,771		$	484,120		$	449,888
Interest expense		52,133			48,223			32,856			145,584			79,618
Net interest income – (TE)	$	114,152		$	111,384		$	123,915		$	338,536		$	370,270

Return on average assets, annualized		1.23	%		1.24	%		1.40	%		1.23	%		1.41	%
Return on average equity, annualized		9.40	%		9.57	%		11.33	%		9.43	%		11.50	%
Efficiency ratio [1]		46.53	%		45.10	%		39.99	%		46.29	%		40.11	%
Noninterest expense to average assets, annualized		1.42	%		1.40	%		1.33	%		1.43	%		1.34	%
Yield on average loans		5.31	%		5.26	%		5.07	%		5.29	%		4.99	%
Yield on average earning assets (TE)		4.43	%		4.37	%		4.18	%		4.38	%		4.04	%
Cost of deposits		0.98	%		0.88	%		0.52	%		0.87	%		0.35	%
Cost of deposits and customer repurchase agreements		1.01	%		0.87	%		0.51	%		0.87	%		0.34	%
Cost of funds		1.47	%		1.38	%		0.92	%		1.39	%		0.75	%
Net interest margin (TE)		3.05	%		3.05	%		3.31	%		3.06	%		3.32	%
[1] Noninterest expense divided by net interest income before provision for credit losses plus noninterest income.

Tangible Common Equity Ratio (TCE) [2]
CVB Financial Corp. Consolidated		9.71	%		8.68	%		7.73	%
Citizens Business Bank		9.59	%		8.57	%		7.63	%
[2] (Capital – [GW+Intangibles])/(Total Assets – [GW+Intangibles])

Weighted average shares outstanding
Basic		138,649,763			138,583,510			138,345,000			138,415,424			138,360,531
Diluted		138,839,499			138,669,058			138,480,633			138,548,651			138,481,462
Dividends declared	$	27,977		$	28,018		$	27,901		$	83,881		$	83,695
Dividend payout ratio [3]		54.62	%		56.00	%		48.20	%		55.97	%		48.40	%
[3] Dividends declared on common stock divided by net earnings.

Number of shares outstanding – (end of period)		139,678,314			139,677,162			139,337,699
Book value per share	$	15.73		$	15.12		$	14.00
Tangible book value per share	$	10.17		$	9.55		$	8.39

	September 30, 2024			December 31, 2023			September 30, 2023
	September 30, 2024			December 31, 2023			September 30, 2023
Nonperforming assets:
Nonaccrual loans	$	21,913		$	21,302		$	9,963
Other real estate owned (OREO), net		647			–			–
Total nonperforming assets	$	22,560		$	21,302		$	9,963
Modified loans/performing troubled debt restructured loans (TDR) [4]	$	15,769		$	9,460		$	7,304

[4] Effective January 1, 2023, performing and nonperforming TDRs are reflected as Loan Modifications to borrowers experiencing financial difficulty.

Percentage of nonperforming assets to total loans outstanding and OREO		0.26	%		0.24	%		0.11	%
Percentage of nonperforming assets to total assets		0.15	%		0.13	%		0.06	%
Allowance for credit losses to nonperforming assets		367.65	%		407.67	%		893.26	%

	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Allowance for credit losses:
Beginning balance	$	82,786		$	82,817		$	86,967		$	86,842		$	85,117
Total charge-offs		(26	)		(51	)		(26	)		(4,344	)		(224	)
Total recoveries on loans previously charged-off		182			20			54			444			102
Net recoveries (charge-offs)		156			(31	)		28			(3,900	)		(122	)
Provision for (recapture of) credit losses		–			–			2,000			–			4,000
Allowance for credit losses at end of period	$	82,942		$	82,786		$	88,995		$	82,942		$	88,995

Net recoveries (charge-offs) to average loans		0.002	%		-0.000	%		0.000	%		-0.045	%		-0.001	%

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in millions)

Allowance for Credit Losses by Loan Type

	September 30, 2024					December 31, 2023					September 30, 2023
	Allowance For Credit Losses		Allowance as a % of Total Loans by Respective Loan Type			Allowance For Credit Losses		Allowance as a % of Total Loans by Respective Loan Type			Allowance For Credit Losses		Allowance as a % of Total Loans by Respective Loan Type

Commercial real estate	$	69.7		1.05	%	$	69.5		1.02	%	$	70.9		1.04	%
Construction		0.5		3.07	%		1.3		1.91	%		1.0		1.59	%
SBA		2.5		0.92	%		2.7		0.99	%		3.0		1.08	%
Commercial and industrial		5.3		0.56	%		9.1		0.94	%		9.3		0.99	%
Dairy & livestock and agribusiness		3.8		1.12	%		3.1		0.75	%		3.6		1.01	%
Municipal lease finance receivables		0.2		0.28	%		0.2		0.29	%		0.3		0.33	%
SFR mortgage		0.4		0.16	%		0.5		0.20	%		0.5		0.20	%
Consumer and other loans		0.5		0.99	%		0.4		0.85	%		0.4		0.82	%

Total	$	82.9		0.97	%	$	86.8		0.98	%	$	89.0		1.00	%

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)

Quarterly Common Stock Price

		2024					2023						2022
Quarter End	High		Low			High			Low			High			Low
March 31,	$	20.45	$	15.95		$	25.98		$	16.34		$	24.37		$	21.36
June 30,	$	17.91	$	15.71		$	16.89		$	10.66		$	25.59		$	22.37
September 30,	$	20.29	$	16.08		$	19.66		$	12.89		$	28.14		$	22.63
December 31,	$	–	$	–		$	21.77		$	14.62		$	29.25		$	25.26

Quarterly Consolidated Statements of Earnings

			Q3			Q2			Q1			Q4			Q3
				2024			2024			2024			2023			2023
Interest income
Loans and leases, including fees			$	114,929		$	114,200		$	116,349		$	115,721		$	113,190
Investment securities and other				50,823			44,872			41,340			42,357			43,037
Total interest income				165,752			159,072			157,689			158,078			156,227
Interest expense
Deposits				29,821			25,979			21,366			18,888			16,517
Borrowings and customer repurchase agreements				22,312			22,244			23,862			19,834			16,339
Total interest expense				52,133			48,223			45,228			38,722			32,856
Net interest income before (recapture of)
provision for credit losses				113,619			110,849			112,461			119,356			123,371
(Recapture of) provision for credit losses				–			–			–			(2,000	)		2,000
Net interest income after (recapture of)
provision for credit losses				113,619			110,849			112,461			121,356			121,371

Noninterest income				12,834			14,424			14,113			19,163			14,309
Noninterest expense				58,835			56,497			59,771			65,930			55,058
Earnings before income taxes				67,618			68,776			66,803			74,589			80,622
Income taxes				16,394			18,741			18,204			26,081			22,735
Net earnings			$	51,224		$	50,035		$	48,599		$	48,508		$	57,887

Effective tax rate				24.25	%		27.25	%		27.25	%		34.97	%		28.20	%

Basic earnings per common share			$	0.37		$	0.36		$	0.35		$	0.35		$	0.42
Diluted earnings per common share			$	0.37		$	0.36		$	0.35		$	0.35		$	0.42

Cash dividends declared per common share			$	0.20		$	0.20		$	0.20		$	0.20		$	0.20

Cash dividends declared			$	27,977		$	28,018		$	27,886		$	27,945		$	27,901

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands)

Loan Portfolio by Type
	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023

Commercial and industrial	$	6,618,637		$	6,664,925		$	6,720,538		$	6,784,505		$	6,843,059
Construction		14,755			52,227			58,806			66,734			63,022
SBA		272,001			267,938			268,320			270,619			283,124
SBA – PPP		1,255			1,757			2,249			2,736			3,233
Commercial and industrial		936,489			956,184			963,120			969,895			938,064
Dairy & livestock and agribusiness		342,445			350,562			351,624			412,891			351,463
Municipal lease finance receivables		67,585			70,889			72,032			73,590			75,621
SFR mortgage		267,181			267,593			276,475			269,868			268,171
Consumer and other loans		52,217			49,771			57,549			54,072			51,875
Gross loans, at amortized cost		8,572,565			8,681,846			8,770,713			8,904,910			8,877,632
Allowance for credit losses		(82,942	)		(82,786	)		(82,817	)		(86,842	)		(88,995	)
Net loans	$	8,489,623		$	8,599,060		$	8,687,896		$	8,818,068		$	8,788,637



Deposit Composition by Type and Customer Repurchase Agreements

	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023

Noninterest-bearing	$	7,136,824		$	7,090,095		$	7,112,789		$	7,206,175		$	7,586,649
Investment checking		504,028			515,930			545,066			552,408			560,223
Savings and money market		3,745,707			3,409,320			3,561,512			3,278,664			3,906,187
Time deposits		685,930			774,980			675,554			396,395			305,727
Total deposits		12,072,489			11,790,325			11,894,921			11,433,642			12,358,786

Customer repurchase agreements		394,515			268,826			275,720			271,642			269,552
Total deposits and customer repurchase agreements	$	12,467,004		$	12,059,151		$	12,170,641		$	11,705,284		$	12,628,338

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands)

Nonperforming Assets and Delinquency Trends
	September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023
Nonperforming loans:
Commercial real estate	$	18,794		$	21,908		$	10,661		$	15,440		$	3,655
Construction		–			–			–			–			–
SBA		151			337			54			969			1,050
Commercial and industrial		2,825			2,712			2,727			4,509			4,672
Dairy & livestock and agribusiness		143			–			60			60			243
SFR mortgage		–			–			308			324			339
Consumer and other loans		–			–			–			–			4
Total	$	21,913		$	24,957		$	13,810		$	21,302		$	9,963		[1]
% of Total loans		0.26	%		0.29	%		0.16	%		0.24	%		0.11	%

Past due 30-89 days (accruing):
Commercial real estate	$	30,701		$	43		$	19,781		$	300		$	136
Construction		–			–			–			–			–
SBA		–			–			408			108			–
Commercial and industrial		64			103			6			12			–
Dairy & livestock and agribusiness		–			–			–			–			–
SFR mortgage		–			–			–			201			–
Consumer and other loans		–			–			–			18			–
Total	$	30,765		$	146		$	20,195		$	639		$	136
% of Total loans		0.36	%		0.00	%		0.23	%		0.01	%		0.00	%

OREO:
Commercial real estate	$	–		$	–		$	–		$	–		$	–
SBA		–			–			–			–			–
Commercial and industrial		647			647			647			–			–
SFR mortgage		–			–			–			–			–
Total	$	647		$	647		$	647		$	–		$	–
Total nonperforming, past due, and OREO	$	53,325		$	25,750		$	34,652		$	21,941		$	10,099
% of Total loans		0.62	%		0.30	%		0.40	%		0.25	%		0.11	%

[1] Includes $2.6 million of nonaccrual loans past due 30-89 days.

CVB FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)

Regulatory Capital Ratios



			CVB Financial Corp. Consolidated
Capital Ratios	Minimum Required Plus Capital Conservation Buffer		September 30, 2024		December 31, 2023		September 30, 2023

Tier 1 leverage capital ratio	4.0	%	10.6	%	10.3	%	10.0	%
Common equity Tier 1 capital ratio	7.0	%	15.8	%	14.6	%	14.4	%
Tier 1 risk-based capital ratio	8.5	%	15.8	%	14.6	%	14.4	%
Total risk-based capital ratio	10.5	%	16.6	%	15.5	%	15.3	%

Tangible common equity ratio			9.7	%	8.5	%	7.7	%

Tangible Book Value Reconciliations (Non-GAAP)

The tangible book value per share is a Non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company stockholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of September 30, 2024, December 31, 2023 and September 30, 2023.


		September 30, 2024			December 31, 2023			September 30, 2023
		(Dollars in thousands, except per share amounts)

Stockholders’ equity	$	2,197,831		$	2,077,972		$	1,951,401
Less: Goodwill		(765,822	)		(765,822	)		(765,822	)
Less: Intangible assets		(11,130	)		(15,291	)		(16,736	)
Tangible book value	$	1,420,879		$	1,296,859		$	1,168,843
Common shares issued and outstanding		139,678,314			139,344,981			139,337,699
Tangible book value per share	$	10.17		$	9.31		$	8.39

Return on Average Tangible Common Equity Reconciliations (Non-GAAP)

The return on average tangible common equity is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of net income, adjusted for tax-effected amortization of intangibles, to net income computed in accordance with GAAP; a reconciliation of average tangible common equity to the Company’s average stockholders’ equity computed in accordance with GAAP; as well as a calculation of return on average tangible common equity.

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

	Net Income	$	51,224		$	50,035		$	57,887		$	149,858			$	172,927
	Add: Amortization of intangible assets		1,286			1,437			1,567			4,161				5,006
	Less: Tax effect of amortization of intangible assets [1]		(380	)		(425	)		(463	)		(1,230	)			(1,480	)
	Tangible net income	$	52,130		$	51,047		$	58,991		$	152,789			$	176,453

	Average stockholders’ equity	$	2,166,793		$	2,102,466		$	2,027,030		$	2,122,870			$	2,011,172
	Less: Average goodwill		(765,822	)		(765,822	)		(765,822	)		(765,822	)			(765,822	)
	Less: Average intangible assets		(11,819	)		(13,258	)		(17,526	)		(13,216	)			(19,256	)
	Average tangible common equity	$	1,389,152		$	1,323,386		$	1,243,682		$	1,343,832			$	1,226,094

	Return on average equity, annualized [2]		9.40	%		9.57	%		11.33	%		9.43	%			11.50	%
	Return on average tangible common equity, annualized [2]		14.93	%		15.51	%		18.82	%		15.19	%			19.24	%


	[1] Tax effected at respective statutory rates.
	[2] Annualized where applicable.

Contact:
David A. Brager
President and Chief Executive Officer
(909) 980-4030

The MIL Network –

January 25, 2025

MIL-OSI USA: Hold DOJ Accountable for Failure to Prosecute Noncitizen Voter Registration

US Senate News:

Source: United States Senator for Wisconsin Ron Johnson

It should be obvious to everyone — even Democrats — that we should prevent illegal immigrants from voting. Unfortunately, most Democrats in Congress do not agree. I was happy to cosponsor the SAVE Act in the Senate. This legislation aimed to secure our elections by requiring proof of citizenship to vote. It passed in the House, but not the Senate.

On October 2, I joined Republican colleagues in a letter to U.S. Attorney General Merrick Garland exposing the Department of Justice’s (DOJ) failure to prevent noncitizens from registering to vote in America’s federal elections and its refusal to prosecute those who have done so.

We need more information about the incidence of noncitizens registering to vote, and steps that the DOJ is taking to deal with the issue and secure U.S. elections.

In recent weeks, I have written two op-eds highlighting my concerns with election integrity. I urge you to read both.

The Daily Caller: FBI Ignoring Real Threats To Election Integrity

The Federalist: Democrat-Controlled States Refuse To Clean Voter Rolls And Fix Election Problems

Under the Biden-Harris administration, more than 500,000 unaccompanied migrant children have crossed the southwest border without a parent or guardian to provide care.

Last month, I joined a letter to President Biden and Vice President Harris calling out abuses in their Unaccompanied Migrant Children Program, namely the Department of Health and Human Services (HHS)’s cover-up of the crisis. HHS has failed to comply with two out of three Department of Homeland Security subpoenas and other information requests issued amid its investigation into more than 100 suspicious sponsors.

The Biden-Harris administration limited background checks for sponsors of unaccompanied children, cut back on familial DNA testing at the border, and decreased information sharing with law enforcement.

Cartel trafficking activity surged an estimated 2,500% from the Trump administration to the middle of the Biden-Harris term in 2022.

I joined another letter demanding Biden and Harris collect DNA samples from every immigrant the Department of Homeland Security (DHS) encounters, per the DNA Fingerprint Act of 2005. DHS missed three separate opportunities to gather DNA from the illegal immigrant who murdered Rachel Morin, a Maryland mother of five.

MILTON: The Milton Area Chamber of Commerce hosted a town hall at the Milton House Museum. Before the event, I took a fascinating tour of Wisconsin’s only certified Underground Railroad site which is designated a National Historic Landmark.

REESEVILLE: Caine Warehousing hosted a town hall at their Dodge County campus. It was an honor to meet the three generations of Caines who run this successful family business.

WATERTOWN: American Disposal and Lueck Recycling, another family run business, hosted a town hall at their facility. People are very concerned about open borders, the economy, and parental rights.

WATERTOWN: I always look forward to my visits to Maranatha Baptist University. I held a meeting with campus leadership and then answered questions from students, staff, and community members.

WHITEWATER: I enjoyed meeting with students at the University of Wisconsin Whitewater. When asked by a campus reporter about my main message for young people, I responded “jealously guard your freedom.”

MIL OSI USA News –

January 25, 2025

MIL-OSI USA: FBI Ignoring Real Threats To Election Integrity

US Senate News:

Source: United States Senator for Wisconsin Ron Johnson

Originally appeared in The Daily Caller

I entered the Senate SCIF (sensitive compartmented information facility) Sept. 25 to attend an “All Members Classified Briefing on Foreign Threats to U.S. Elections.” I was a little late and arrived during the presentation of Avril Haines, the Director of National Intelligence. Her presentation was followed by FBI Director Christopher Wray and CISA Director Jen Easterly. As Republican Utah Sen. Mike Lee, quoting Yogi Berra, later described the briefing, “It was deja vu all over again.”

With straight faces, these directors of federal intelligence and law enforcement were once again warning the U.S. Senate that foreign actors were trying to influence our election. Well, duh! Unfortunately, most of my Senate colleagues seemed to be lapping it up and taking the briefing seriously. After a few minutes of listening to Director Haines, I could only shake my head in disgust.

I fully acknowledge that foreign threats are real and serious, but we are well aware they exist and have been persistent for decades. Except for maybe a few specific details, I heard nothing new, and certainly nothing that should be considered or kept classified. And I heard absolutely nothing about the most egregious examples of election interference in our lifetime, or the most significant threats to the integrity of the 2024 election.

I was the last senator given the opportunity to ask a question. By this time, there were only four senators left in the briefing. I began my questioning by pointing out that the most egregious act of election interference in our lifetime was the letter solicited by current Secretary of State Antony Blinken, engineered by former Deputy CIA Director Mike Morrell and fast tracked by then-CIA Director Gina Haspel. That letter was written Oct. 19, 2020, less than a month before the November election.

A bipartisan group of former U.S. intelligence officials signed the letter, which stated, without evidence, that the Hunter Biden laptop “has all the classic earmarks of a Russian information operation.” Keep in mind, the FBI had seized Hunter’s laptop almost a year earlier and knew full well it was authentic. In the small world and circles of U.S. intelligence and law enforcement, it is inconceivable that those intelligence officials were unaware or unable to ascertain that fact.

That letter itself was a “U.S. intelligence information operation.” And it worked exceedingly well. Because of that letter, the Hunter Biden laptop story was effectively suppressed as Russian disinformation, and Joe Biden became president. Subsequent polls show that had the public known about the laptop, Joe Biden would have lost the election. Election interference doesn’t get more egregious or effective than that.

After making that point, I asked who within the Office of the Director of National Intelligence directed the unsolicited August 2020 FBI briefing given separately to Republican Iowa Sen. Chuck Grassley and me. That briefing, about us being targets of Russian disinformation, also provided no new information and was later leaked to the Washington Post to smear me, thereby interfering in my 2022 reelection. Four years after the briefing, and our relentless efforts to find out who directed it, we still have not been told. I didn’t get the answer Wednesday either.

Next, I asked Director Wray what the FBI was doing to investigate smurfing. This clear violation of campaign finance law was first revealed in March 2023 by investigative journalist, James O’Keefe. Using ActBlue, the Democrats’ donation platform, thousands of low-dollar donations are attributed to individuals allegedly without their knowledge — in one instance 5,776 donations totaling $754,124. Director Wray seemed clueless on the issue, and had no idea if the FBI was doing anything to investigate it.

At that point, the Democrat senator who chaired the briefing, concluded it. I wasn’t able to ask about my greatest concern regarding the 2024 election — illegal immigrants registering and voting in it. Don’t be under the illusion that just because noncitizens are ineligible to vote, Democrats aren’t willing to overlook that legal technicality to win an election. We already have plenty of evidence that illegal immigrants are registering, sometimes without their knowledge. Ohio just purged 499 illegal immigrants from its voter rolls following a multi-phase audit. Boston officials disclosed that 70 illegal aliens contacted county election officials asking to be removed from voter registration lists. Virginia recently cancelled 6,303 noncitizen voter registrations. Oregon “mistakenly registered nearly 1,260 possible noncitizens to vote,” its DMV admits.

President Biden threw open the borders and directed federal departments to register voters. Does anyone believe that registration effort will be non-partisan, or that some percentage of the millions of illegal immigrants won’t vote in November? Based on last Wednesday’s briefing, I’m confident federal law enforcement won’t have any interest in investigating those crimes either.

Ron Johnson is a Republican senator from Wisconsin.

MIL OSI USA News –

January 25, 2025

MIL-OSI Security: Former Teacher Sentenced to 20 Years in Prison for Producing Child Pornography with Hidden Cameras

Source: Office of United States Attorneys

ST. LOUIS – U.S. District Judge Henry E. Autrey on Wednesday sentenced a former St. Louis County, Missouri teacher to 20 years in prison for producing child pornography with hidden cameras.

Judge Autrey also ordered Joseph R. Gutowski to pay $86,500 in restitution to his victims, including those who appeared in the child sexual abuse material he collected.

Gutowski hid cameras in his office at Lafayette High School in Wildwood and in his home. He secretly filmed a minor and traded some of the images with others online. He was a member of an underground child pornography group on the cloud storage service Mega. He also traded videos he’d secretly recorded of an adult in the “Club Creep” group on Mega.

Gutowski, 42, pleaded guilty in U.S. District Court in St. Louis in July to one count of producing of child pornography and one count of receiving child pornography.

The FBI and the St. Louis County Police Department Special Investigations Unit investigated the case. Assistant U.S. Attorney Jillian Anderson prosecuted the case.

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

MIL Security OSI –

January 25, 2025

MIL-OSI Security: Former Federal Employee Pleads Guilty to Mishandling Classified Materials

Source: Office of United States Attorneys

Margaret Anne Ashby, 26, of Henderson, Nevada, pleaded guilty today for mishandling sensitive documents as a former employee of a Department of Defense component agency.

As described in the plea agreement, starting in March 2020, Ashby was a civilian employee of a Department of Defense component agency located in the Southern District of Georgia, and during this time held a top secret security clearance as required for her employment.

From February 2022 to May 2022, Ashby, without authority, knowingly removed documents and materials containing classified information “concerning the national defense or foreign relations of the United States . . . with the intent to retain them at unauthorized locations, including her residence in the Southern District of Georgia and in digital files saved via a personal computing device located in the Southern District of Georgia.”

A sentencing date has not yet been set. Ashby faces a maximum penalty of five years in prison and three years of supervised release for mishandling sensitive documents, along with substantial financial penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Jill E. Steinberg for the Southern District of Georgia, and Robert Wells of the FBI National Security Branch announced the case.

The FBI investigated the case.

Assistant U.S. Attorneys L. Alexander Hamner and Darron J. Hubbard for the Southern District of Georgia and Trial Attorney David J. Ryan of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

MIL Security OSI –

January 25, 2025

MIL-OSI Security: Santa Maria Man Charged with Weapon of Mass Destruction Offense in Connection with Bomb Attack in Lobby of County Courthouse

Source: Office of United States Attorneys

LOS ANGELES – A three-count federal grand jury indictment returned today charges a Santa Barbara County man with committing a bomb attack at a courthouse in Santa Maria in which several people were injured.

Nathaniel James McGuire, 20, of Santa Maria, was charged with one count of using a weapon of mass destruction, one count of maliciously damaging a building by means of explosive, and one count of possessing unregistered destructive devices. McGuire has been in custody since his arrest in September, shortly after the attack.

McGuire’s arraignment is scheduled for October 25 in United States District Court in downtown Los Angeles.

“The facts alleged in the indictment are disturbing,” said United States Attorney Martin Estrada. “The new charge of using a weapon of mass destruction underscores how seriously we are treating this misconduct and my office’s determination to hold accountable those who seek to bring violence upon our courts, law enforcement personnel, and the public.”

“Any time an individual commits such an act of terror, victims are traumatized and there is a potential for tragic consequences” said Akil Davis, Assistant Director in Charge of the FBI Los Angeles Field Office. “If convicted, Mr. McGuire faces significant prison time thanks to the combined efforts of our local and federal law enforcement partners.”

“We are grateful that the FBI and the U.S. Attorney’s Office have taken this serious case to the grand jury, and that they have returned an indictment,” said Santa Barbara County Sheriff Bill Brown. “This crime shocked our entire community and we are pleased to see that the suspect in this case is being held accountable.”

According to the indictment and criminal complaint, on September 25, McGuire entered a courthouse of Santa Barbara County Superior Court and threw a bag into the lobby. The bag exploded and McGuire left the courthouse on foot. The explosion injured at least five people who were near the bomb when it exploded.

Shortly thereafter, McGuire was apprehended and detained by law enforcement officials as he was trying to access a red Ford Mustang car parked outside the building. McGuire allegedly yelled that the government had taken his guns and that everyone needed to fight, rise up, and rebel.

Inside the car, a deputy saw ammunition, a flare gun, and a box of fireworks. A search of the car revealed a shotgun, a rifle, more ammunition, a suspected bomb, and 10 Molotov cocktails. Law enforcement later rendered the bomb safe. McGuire told law enforcement he intended to re-enter the courthouse with the firearms in order to kill a judge.

A search of McGuire’s residence revealed an empty can with nails glued to the outside, a duffel bag containing matches, black powder, used and unused fireworks, and papers that appeared to be recipes for explosive material.

An indictment is merely an allegation that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

If convicted of all charges, McGuire would face a mandatory minimum sentence of seven years in federal prison and a statutory maximum sentence of life in federal prison.

The FBI’s Joint Terrorism Task Force, the Santa Barbara County Sheriff’s Office, and Santa Maria Police Department are investigating this matter.

Assistant United States Attorneys Mark Takla and Kathrynne N. Seiden of the Terrorism and Export Crimes Section are prosecuting this case with substantial assistance from Trial Attorney Patrick Cashman of the Counterterrorism Section in the Department of Justice’s National Security Division.

MIL Security OSI –

January 25, 2025

MIL-OSI: SHAREHOLDER ALERT: The M&A Class Action Firm Investigates the Merger of Sandy Spring Bancorp, Inc. – SASR

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 23, 2024 (GLOBE NEWSWIRE) — Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report. We are headquartered at the Empire State Building in New York City and are investigating Sandy Spring Bancorp, Inc. (Nasdaq: SASR), relating to a proposed merger with Atlantic Union Bankshares Corp. Under the terms of the agreement, all Sandy Spring shares will automatically be converted into the right to receive 0.900 Atlantic Union shares, and cash in lieu of fractional shares.

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

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

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

About Monteverde & Associates PC

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

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

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

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

The MIL Network –

January 25, 2025

MIL-OSI: STOCKHOLDER ALERT: The M&A Class Action Firm Investigates the Merger of SecureWorks Corp. – SCWX

Source: GlobeNewswire (MIL-OSI)

NEW YORK, Oct. 23, 2024 (GLOBE NEWSWIRE) — Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report. We are headquartered at the Empire State Building in New York City and are investigating SecureWorks Corp. (Nasdaq: SCWX), relating to a proposed merger with Sophos Inc. Under the terms of the agreement, all SecureWorks shares will automatically be converted into the right to receive $8.50 in cash.

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

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

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

About Monteverde & Associates PC

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

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

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

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

The MIL Network –

January 25, 2025

MIL-OSI: ChampionX Reports Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

Revenue of $906.5 million
Net income attributable to ChampionX of $72.0 million
Adjusted net income of $85.9 million
Adjusted EBITDA of $197.5 million
Income before income taxes margin of 11.2%
Adjusted EBITDA margin of 21.8%
Cash from operating activities of $141.3 million and free cash flow of $108.1 million

THE WOODLANDS, Texas, Oct. 23, 2024 (GLOBE NEWSWIRE) — ChampionX Corporation (NASDAQ: CHX) (“ChampionX” or the “Company”) today announced third quarter of 2024 results. Revenue was $906.5 million, net income attributable to ChampionX was $72.0 million, and adjusted EBITDA was $197.5 million. Income before income taxes margin was 11.2% and adjusted EBITDA margin was 21.8%. Cash from operating activities was $141.3 million and free cash flow was $108.1 million.

CEO Commentary

“The third quarter demonstrated the resiliency of our ChampionX portfolio as we delivered strong adjusted EBITDA and adjusted EBITDA margin, and generated robust free cash flow. These results were the direct result of our employees around the world remaining laser-focused on serving our customers well, and I am grateful to them for their dedication to our corporate purpose of improving lives,” ChampionX’s President and Chief Executive Officer Sivasankaran “Soma” Somasundaram said.

“During the third quarter of 2024, we generated revenue of $907 million, which decreased 4% year-over-year, as growth in North America, Middle East & Africa, Europe, and Asia Pacific was offset by Latin America, which was impacted by lower sales in Mexico. Revenue from all areas other than Mexico increased 6% year-over-year. Our revenue increased 1% sequentially, with both North America and international revenues increasing slightly versus the second quarter. North America revenues were up 2% sequentially, driven primarily by higher sales volumes in our artificial lift business. International revenues were up 1% sequentially, driven, in part, by the contribution of RMSpumptools, which was acquired during the quarter. We generated net income attributable to ChampionX of $72 million, income before income taxes margin of 11.2%, and we delivered adjusted EBITDA of $198 million, representing a 21.8% adjusted EBITDA margin, our highest level as ChampionX, which speaks to the productivity and profitability focus of our team.

“Cash flow from operating activities was $141 million during the third quarter, which represented 196% of net income attributable to ChampionX, and we generated strong free cash flow of $108 million, which represented 55% of our adjusted EBITDA for the period. We remain confident in achieving at least 50% adjusted EBITDA to free cash flow conversion for 2024. Our balance sheet and financial position remain strong, ending the third quarter with approximately $1.1 billion of liquidity, including $389 million of cash and $671 million of available capacity on our revolving credit facility.”

Agreement to be Acquired by SLB

On April 2, 2024, SLB (NYSE: SLB) and ChampionX jointly announced a definitive Agreement and Plan of Merger (the “Merger Agreement”) for SLB to purchase ChampionX in an all-stock transaction. The transaction was unanimously approved by the ChampionX board of directors and the transaction received the approval of the ChampionX stockholders at a special meeting held on June 18, 2024. The transaction is subject to regulatory approvals and other customary closing conditions. It is currently anticipated that the closing of the transaction will occur in the first quarter of 2025.

ChampionX may continue to pay its regular quarterly cash dividends with customary record and payment dates, subject to certain limitations under the Merger Agreement. Given the pending acquisition of ChampionX by SLB, ChampionX has discontinued providing quarterly guidance and will not host a conference call or webcast to discuss its third quarter 2024 results.

Production Chemical Technologies

Production Chemical Technologies revenue in the third quarter of 2024 was $559.5 million, a decrease of $10.0 million, or 2%, sequentially, due primarily to lower international sales volumes.

Segment operating profit was $87.3 million and adjusted segment EBITDA was $120.6 million. Segment operating profit margin was 15.6%, an increase of 60 basis points, sequentially, and adjusted segment EBITDA margin was 21.6%, an increase of 94 basis points, sequentially. The sequential increase in segment operating profit margin and adjusted segment EBITDA margin was driven by strong cost management, productivity improvements, and favorable product mix.

Production & Automation Technologies

Production & Automation Technologies revenue in the third quarter of 2024 was $275.7 million, an increase of $31.2 million, or 13%, sequentially, due primarily to higher artificial lift systems demand in North America, and the acquisition of RMSpumptools, which was completed during the quarter. Revenue from digital products was $57.9 million in the third quarter of 2024, an increase of 7% sequentially, driven by increased customer activity in North America.

Segment operating profit was $34.1 million and adjusted segment EBITDA was $69.6 million. Segment operating profit margin was 12.4%, an increase of 330 basis points, sequentially, and adjusted segment EBITDA margin was 25.2%, an increase of 118 basis points, sequentially. The increase in segment operating profit margin and adjusted segment EBITDA margin was driven by higher sales volumes, productivity improvements, and favorable product mix.

Drilling Technologies

Drilling Technologies revenue in the third quarter of 2024 was $51.8 million, a decrease of $1.1 million, or 2%, sequentially, driven by lower sales volumes in the bearings product line associated with customers managing inventory levels.

Segment operating profit was $11.5 million and adjusted segment EBITDA was $12.9 million. Segment operating profit margin was 22.2%, compared to 22.4% in the prior quarter, and adjusted segment EBITDA margin was 24.8%, a decrease of 2 basis points, sequentially, due primarily to lower volumes.

Reservoir Chemical Technologies

Reservoir Chemical Technologies revenue in the third quarter 2024 was $20.5 million, a decrease of $6.6 million, or 24%, sequentially, driven by lower sales volumes in the U.S. and internationally.

Segment operating profit was $1.7 million and adjusted segment EBITDA was $3.3 million. Segment operating profit margin was 8.2%, a decrease of 793 basis points, sequentially, and adjusted segment EBITDA margin was 16.0%, a decrease of 592 basis points, sequentially. The decrease in segment operating profit margin and adjusted segment EBITDA margin was driven by lower volumes.

Other Business Highlights

ChampionX won the Gulf Energy Information Excellence Award for best coating / corrosion advancement technology for its AnX coiled rod product line. The company was a finalist in four additional categories: SMARTEN™ XE ESP control system in the best controls, instrumentation, automation technology category; Pump Checker™ gas lift analysis module in the best digital transformation – upstream category; Chemical Technologies Decarbonization Program in the best HSE contribution category; and the ChampionX Diversity, Equality, and Inclusion programs in the DE&I in energy category.

Other Business Highlights: Production Chemical Technologies and Reservoir Chemical Technologies

In the Asia Pacific region, ChampionX secured a significant new contract to provide both engineering services and the initial chemical supply for a new Floating Production Storage and Offloading (FPSO) unit, set to be deployed at a large gas condensate field in Australasia. Operations are scheduled to begin in the first half of 2025 and contribute significantly to regional Liquified Natural Gas (LNG) production capacity. This strategic win further strengthens our presence in the region and reinforces our commitment to delivering innovative, high-quality solutions to our upstream customers.
ChampionX was awarded a large first-fill contract to supply multiple production chemicals for corrosion inhibitors, scale inhibitors, and biocides for a major onshore oil and gas incremental project in Saudi Arabia.
ChampionX has secured a first-fill contract to supply production chemicals for a significant gas development program in Qatar.
ChampionX secured a multi-million-dollar order for a novel application of UltraFab in Carbon Capture, Utilization, and Storage (CCUS) for delivery in 2025.
ChampionX recently completed the pre-commission cleaning, chemical treatment, and readiness work for the 303-mile natural gas Mountain Valley Pipeline connecting Marcellus and Utica shale production to markets in the Mid- and South-Atlantic regions.
In the Canadian oil sands, ChampionX completed a steam additive first-fill program for a major technology development trial, leading to additional market interest.
ChampionX was awarded a three-year contract extension from a major producer in the San Juan Basin in California, recognizing our service, people, and commitment to helping the producer achieve their strategic goals as reasons for the extension.
As part of an initiative to expand our technology into adjacent markets, ChampionX Reservoir Chemical Technologies was awarded business with a premier supplier of local sand used for hydraulic fracturing in the Permian Basin. Our solution affords the supplier a significant savings on sand drying costs and is designed to increase operational throughput.

Other Business Highlights: Production & Automation Technologies

In the third quarter, ChampionX completed the acquisition of RMSpumptools, a provider of advanced mechanical and electrical solutions for complex ESP systems. The acquisition expands ChampionX’s international footprint while providing greater opportunities for RMSpumptools in North America. Soon after the acquisition close, our Permian ESP team collaborated with RMSpumptools to deliver a sand control solution to a major oil company operating in the Permian basin.
ChampionX Artificial Lift expanded its Latin America footprint into Ecuador with a contract award for two 400HP multiplex surface pump systems for jet lift applications. This accomplishment is the result of a strengthening partnership with a Latin America independent operator that is expanding its operations from Colombia to Ecuador. Unlike typical systems, the surface pump and oil vessel required for jet lifted wells will be built on one skid with all the necessary piping, which reduces assembly time at the wellsite.
Building on the combined strengths of our XSPOC artificial lift software and the acquisition of Artificial Lift Performance Limited Pump Checker software, ChampionX introduced ALLY™ production optimization digital solutions, debuting a modern interface with user-friendly dashboards and intuitive workflows, paired with powerful performance—ingesting, processing, and displaying more data than ever before. It is a one-stop-shop for production teams to manage and optimize their producing assets, regardless of lift type or equipment provider. Building on the launch of this new digital solution, in the third quarter ChampionX secured seven new clients for our production optimization software solution.
ChampionX launched the PCS Ferguson new generation SMARTEN™ Unify control system, which is engineered to deliver sophisticated digital automation and optimization capabilities at a cost of ownership that fits within the narrow economic profile of plunger lifted wells. SMARTEN Unify provides enhanced visibility to what is happening “live” at any second in a plunger lift system, eliminating the need for operating based on calculated guesses.

Other Business Highlights: Drilling Technologies

Drilling Technologies’ diamond bearings products continue to see positive test results in additional downhole drilling and completion tools applications.
Drilling Technologies’ diamond inserts business had significant new products launches with four major customers.

About Non-GAAP Measures

In addition to financial results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), this news release presents non-GAAP financial measures. Management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income attributable to ChampionX and adjusted diluted earnings per share attributable to ChampionX, provide useful information to investors regarding the Company’s financial condition and results of operations because they reflect the core operating results of our businesses and help facilitate comparisons of operating performance across periods. In addition, free cash flow, free cash flow to adjusted EBITDA ratio, and free cash flow to revenue ratio are used by management to measure our ability to generate positive cash flow for debt reduction and to support our strategic objectives. Although management believes the aforementioned non-GAAP financial measures are good tools for internal use and the investment community in evaluating ChampionX’s overall financial performance, the foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying financial tables.

About ChampionX

ChampionX is a global leader in chemistry solutions, artificial lift systems, and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely, efficiently, and sustainably around the world. ChampionX’s expertise, innovative products, and digital technologies provide enhanced oil and gas production, transportation, and real-time emissions monitoring throughout the lifecycle of a well. To learn more about ChampionX, visit our website at www.ChampionX.com.

Forward-Looking Statements

This news release contains 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements relating to the proposed transaction between SLB and ChampionX, including statements regarding the benefits of the transaction and the anticipated timing of the transaction, and information regarding the businesses of SLB and ChampionX, including expectations regarding outlook and all underlying assumptions, SLB’s and ChampionX’s objectives, plans and strategies, information relating to operating trends in markets where SLB and ChampionX operate, statements that contain projections of results of operations or of financial condition and all other statements other than statements of historical fact that address activities, events or developments that SLB or ChampionX intends, expects, projects, believes or anticipates will or may occur in the future. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this communication, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” “intends,” “plans,” “seeks,” “targets,” “may,” “can,” “believe,” “predict,” “potential,” “projected,” “projections,” “precursor,” “forecast,” “ambition,” “goal,” “scheduled,” “think,” “could,” “would,” “will,” “see,” “likely,” and other similar expressions or variations, but not all forward-looking statements include such words. These forward-looking statements involve known and unknown risks and uncertainties, and which may cause SLB’s or ChampionX’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part I, “Item 1. Business”, “Item 1A. Risk Factors”, and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in SLB’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on January 24, 2024 and Part 1, Item 1A, “Risk Factors” in ChampionX’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 6, 2024, and each of their respective, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These include, but are not limited to, and in each case as a possible result of the proposed transaction on each of SLB and ChampionX: the ultimate outcome of the proposed transaction between SLB and ChampionX, including the effect of the announcement of the proposed transaction; the ability to operate the SLB and ChampionX respective businesses, including business disruptions; difficulties in retaining and hiring key personnel and employees; the ability to maintain favorable business relationships with customers, suppliers and other business partners; the terms and timing of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the anticipated or actual tax treatment of the proposed transaction; the ability to satisfy closing conditions to the completion of the proposed transaction (including the adoption of the merger agreement in respect of the proposed transaction by ChampionX stockholders); other risks related to the completion of the proposed transaction and actions related thereto; the ability of SLB and ChampionX to integrate the business successfully and to achieve anticipated synergies and value creation from the proposed transaction; changes in demand for SLB’s or ChampionX’s products and services; global market, political and economic conditions, including in the countries in which SLB and ChampionX operate; the ability to secure government regulatory approvals on the terms expected, at all or in a timely manner; the extent of growth of the oilfield services market generally, including for chemical solutions in production and midstream operations; the global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates, and potential recessionary or depressionary conditions; the impact of shifts in prices or margins of the products that SLB or ChampionX sells or services that SLB or ChampionX provides, including due to a shift towards lower margin products or services; cyber-attacks, information security and data privacy; the impact of public health crises, such as pandemics (including COVID-19) and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets; trends in crude oil and natural gas prices, including trends in chemical solutions across the oil and natural gas industries, that may affect the drilling and production activity, profitability and financial stability of SLB’s and ChampionX’s customers and therefore the demand for, and profitability of, their products and services; litigation and regulatory proceedings, including any proceedings that may be instituted against SLB or ChampionX related to the proposed transaction; failure to effectively and timely address energy transitions that could adversely affect the businesses of SLB or ChampionX, results of operations, and cash flows of SLB or ChampionX; and disruptions of SLB’s or ChampionX’s information technology systems.

These risks, as well as other risks related to the proposed transaction, are included in the Form S-4 and proxy statement/prospectus that was filed with the SEC in connection with the proposed transaction. While the list of factors presented here is, and the list of factors presented in the registration statement on Form S-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to SLB’s and ChampionX’s respective periodic reports and other filings with the SEC, including the risk factors identified in SLB’s and ChampionX’s Annual Reports on Form 10-K, respectively, and SLB’s and ChampionX’s subsequent Quarterly Reports on Form 10-Q. The forward-looking statements included in this communication are made only as of the date hereof. Neither SLB nor ChampionX undertakes any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Investor Contact: Byron Pope
byron.pope@championx.com
281-602-0094

Media Contact: John Breed
john.breed@championx.com
281-403-5751

CHAMPIONX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
(in thousands, except per share amounts)		2024			2024			2023			2024			2023
Revenue	$	906,533		$	893,272		$	939,783		$	2,721,946		$	2,814,730
Cost of goods and services		608,764			613,426			647,923			1,845,127			1,957,309
Gross profit		297,769			279,846			291,860			876,819			857,421
Costs and expenses:
Selling, general and administrative expense		180,501			182,995			162,317			535,910			485,617
(Gain) loss on sale-leaseback transaction and disposal group		57			—			—			(29,826	)		12,965
Interest expense, net		14,137			15,421			13,744			43,493			40,754
Foreign currency transaction (gains) losses, net		3,505			(2,767	)		7,992			793			21,683
Other expense (income), net		(2,176	)		938			(1,994	)		1,689			(13,494	)
Income before income taxes		101,745			83,259			109,801			324,760			309,896
Provision for income taxes		28,078			27,868			29,009			82,542			69,334
Net income		73,667			55,391			80,792			242,218			240,562
Net income attributable to noncontrolling interest		1,659			2,822			3,081			4,718			3,522
Net income attributable to ChampionX	$	72,008		$	52,569		$	77,711		$	237,500		$	237,040

Earnings per share attributable to ChampionX:
Basic	$	0.38		$	0.28		$	0.40		$	1.25		$	1.20
Diluted	$	0.37		$	0.27		$	0.39		$	1.23		$	1.18

Weighted-average shares outstanding:
Basic		190,496			190,426			195,881			190,575			197,058
Diluted		193,362			193,257			199,592			193,655			201,025

CHAMPIONX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(in thousands)	September 30, 2024			December 31, 2023
*ASSETS*
Current Assets:
Cash and cash equivalents	$	389,109		$	288,557
Receivables, net		434,107			534,534
Inventories, net		546,817			521,549
Prepaid expenses and other current assets		68,218			80,777
Total current assets		1,438,251			1,425,417

Property, plant and equipment, net		760,775			773,552
Goodwill		729,783			669,064
Intangible assets, net		270,361			243,553
Other non-current assets		178,490			130,116
Total assets	$	3,377,660		$	3,241,702

*LIABILITIES AND EQUITY*
Current Liabilities:
Current portion of long-term debt	$	6,203		$	6,203
Accounts payable		455,485			451,680
Other current liabilities		278,498			324,866
Total current liabilities		740,186			782,749

Long-term debt		592,161			594,283
Other long-term liabilities		246,296			203,639
Stockholders’ equity:
ChampionX stockholders’ equity		1,814,310			1,676,622
Noncontrolling interest		(15,293	)		(15,591	)
Total liabilities and equity	$	3,377,660		$	3,241,702

CHAMPIONX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Nine Months Ended September 30,
(in thousands)		2024			2023
Cash flows from operating activities:
Net income	$	242,218		$	240,562
Depreciation and amortization		183,291			177,226
(Gain) loss on sale-leaseback transaction and disposal group		(29,826	)		12,965
Loss on Argentina Blue Chip Swap transaction		7,086			—
Deferred income taxes		(16,810	)		(15,380	)
Loss (gain) on disposal of fixed assets		868			(1,480	)
Receivables		115,269			85,181
Inventories		(40,118	)		(50,011	)
Accounts payable		(30,577	)		(7,018	)
Other assets		6,665			17,470
Leased assets		(24,193	)		(38,597	)
Other operating items, net		(31,442	)		(49,600	)
Net cash flows provided by operating activities		382,431			371,318

Cash flows from investing activities:
Capital expenditures		(101,403	)		(110,965	)
Proceeds from sale of fixed assets		9,323			12,328
Proceeds from sale-leaseback transaction		44,292			—
Purchase of investments		(31,526	)		—
Sale of investments		24,358			—
Acquisitions, net of cash acquired		(123,269	)		—
Net cash used for investing activities		(178,225	)		(98,637	)

Cash flows from financing activities:
Proceeds from long-term debt		—			15,500
Repayment of long-term debt		(4,652	)		(43,625	)
Repurchases of common stock		(49,399	)		(159,730	)
Dividends paid		(52,430	)		(48,309	)
Other		3,854			(384	)
Net cash used for financing activities		(102,627	)		(236,548	)

Effect of exchange rate changes on cash and cash equivalents		(1,027	)		(1,314	)

Net increase in cash and cash equivalents		100,552			34,819
Cash and cash equivalents at beginning of period		288,557			250,187
Cash and cash equivalents at end of period	$	389,109		$	285,006

CHAMPIONX CORPORATION
BUSINESS SEGMENT DATA
(UNAUDITED)

	Three Months Ended
	September 30,			June 30,			September 30,
(in thousands)		2024			2024			2023
Segment revenue:
Production Chemical Technologies	$	559,539		$	569,577		$	604,254
Production & Automation Technologies		275,700			244,487			256,148
Drilling Technologies		51,792			52,888			54,869
Reservoir Chemical Technologies		20,531			27,123			25,093
Corporate and other		(1,029	)		(803	)		(581	)
Total revenue	$	906,533		$	893,272		$	939,783

Income before income taxes:
Segment operating profit (loss):
Production Chemical Technologies	$	87,260		$	85,388		$	94,560
Production & Automation Technologies		34,136			22,207			28,299
Drilling Technologies		11,501			11,863			12,255
Reservoir Chemical Technologies		1,675			4,363			2,461
Total segment operating profit		134,572			123,821			137,575
Corporate and other		18,690			25,141			14,030
Interest expense, net		14,137			15,421			13,744
Income before income taxes	$	101,745		$	83,259		$	109,801

Operating profit margin / income before income taxes margin:
Production Chemical Technologies		15.6	%		15.0	%		15.6	%
Production & Automation Technologies		12.4	%		9.1	%		11.0	%
Drilling Technologies		22.2	%		22.4	%		22.3	%
Reservoir Chemical Technologies		8.2	%		16.1	%		9.8	%
ChampionX Consolidated		11.2	%		9.3	%		11.7	%

Adjusted EBITDA
Production Chemical Technologies	$	120,622		$	117,421		$	133,101
Production & Automation Technologies		69,604			58,848			59,288
Drilling Technologies		12,867			13,149			13,786
Reservoir Chemical Technologies		3,292			5,954			4,198
Corporate and other		(8,873	)		(12,139	)		(12,837	)
Adjusted EBITDA	$	197,512		$	183,233		$	197,536

Adjusted EBITDA margin
Production Chemical Technologies		21.6	%		20.6	%		22.0	%
Production & Automation Technologies		25.2	%		24.1	%		23.1	%
Drilling Technologies		24.8	%		24.9	%		25.1	%
Reservoir Chemical Technologies		16.0	%		22.0	%		16.7	%
ChampionX Consolidated		21.8	%		20.5	%		21.0	%

CHAMPIONX CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

	Three Months Ended
	September 30,			June 30,			September 30,
(in thousands)		2024			2024			2023
Net income attributable to ChampionX	$	72,008		$	52,569		$	77,711
Pre-tax adjustments:
(Gain) loss on sale leaseback transaction and disposal group⁽¹⁾		57			—			—
Russia sanctions compliance and impacts⁽²⁾		109			32			95
Restructuring and other related charges		5,317			7,927			1,228
Merger transaction costs⁽³⁾		8,312			15,059			—
Acquisition costs and related adjustments⁽⁴⁾		753			574			—
Intellectual property defense		69			531			220
Merger-related indemnification responsibility		—			—			722
Tulsa, Oklahoma storm damage		—			—			1,895
Foreign currency transaction (gains) losses, net		3,505			(2,767	)		7,992
Loss on Argentina Blue Chip Swap transaction		—			2,994			—
Tax impact of adjustments		(4,259	)		(5,722	)		(2,702	)
Adjusted net income attributable to ChampionX		85,871			71,197			87,161
Tax impact of adjustments		4,259			5,722			2,702
Net income attributable to noncontrolling interest		1,659			2,822			3,081
Depreciation and amortization		63,508			60,203			61,839
Provision for income taxes		28,078			27,868			29,009
Interest expense, net		14,137			15,421			13,744
Adjusted EBITDA	$	197,512		$	183,233		$	197,536

_______________________

⁽¹⁾	Amount represents the gain on the sale and leaseback of certain buildings and land.
⁽²⁾	Includes charges incurred related to legal and professional fees to comply with, as well as additional foreign currency exchange losses associated with, the sanctions imposed in Russia.
⁽³⁾	Includes costs incurred in relation to the Merger Agreement with Schlumberger Limited, including third party legal and professional fees.
⁽⁴⁾	Includes costs incurred for the acquisition of businesses.

	Three Months Ended
	September 30,			June 30,			September 30,
(in thousands)		2024			2024			2023
Diluted earnings per share attributable to ChampionX	$	0.37		$	0.27		$	0.39
Per share adjustments:
(Gain) loss on sale leaseback transaction and disposal group		—			—			—
Russia sanctions compliance and impacts		—			—			—
Restructuring and other related charges		0.03			0.04			0.01
Merger transaction costs		0.04			0.08			—
Acquisition costs and related adjustments		—			—			—
Intellectual property defense		—			—			—
Merger-related indemnification responsibility		—			—			0.01
Tulsa, Oklahoma storm damage		—			—			0.01
Foreign currency transaction (gains) losses, net		0.02			(0.01	)		0.04
Loss on Argentina Blue Chip Swap transaction		—			0.02			—
Tax impact of adjustments		(0.02	)		(0.03	)		(0.02	)
Adjusted diluted earnings per share attributable to ChampionX	$	0.44		$	0.37		$	0.44

CHAMPIONX CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES BY SEGMENT
(UNAUDITED)

	Three Months Ended
	September 30,			June 30,			September 30,
(in thousands)		2024			2024			2023
Production Chemical Technologies
Segment operating profit	$	87,260		$	85,388		$	94,560
Non-GAAP adjustments		7,073			5,851			9,079
Depreciation and amortization		26,289			26,182			29,462
Segment adjusted EBITDA	$	120,622		$	117,421		$	133,101

Production & Automation Technologies
Segment operating profit	$	34,136		$	22,207		$	28,299
Non-GAAP adjustments		1,656			6,000			2,089
Depreciation and amortization		33,812			30,641			28,900
Segment adjusted EBITDA	$	69,604		$	58,848		$	59,288

Drilling Technologies
Segment operating profit	$	11,501		$	11,863		$	12,255
Non-GAAP adjustments		54			—			(8	)
Depreciation and amortization		1,312			1,286			1,539
Segment adjusted EBITDA	$	12,867		$	13,149		$	13,786

Reservoir Chemical Technologies
Segment operating profit	$	1,675		$	4,363		$	2,461
Non-GAAP adjustments		3			11			72
Depreciation and amortization		1,614			1,580			1,665
Segment adjusted EBITDA	$	3,292		$	5,954		$	4,198

Corporate and other
Segment operating profit	$	(32,827	)	$	(40,562	)	$	(27,774	)
Non-GAAP adjustments		9,336			12,488			920
Depreciation and amortization		481			514			273
Interest expense, net		14,137			15,421			13,744
Segment adjusted EBITDA	$	(8,873	)	$	(12,139	)	$	(12,837	)

Free Cash Flow

	Three Months Ended
	September 30,			June 30,			September 30,
(in thousands)		2024			2024			2023
Free Cash Flow
Cash flows from operating activities	$	141,298		$	67,625		$	163,030
Less: Capital expenditures, net of proceeds from sale of fixed assets		(33,248	)		(29,310	)		(48,469	)
Free cash flow	$	108,050		$	38,315		$	114,561

Cash From Operating Activities to Revenue Ratio
Cash flows from operating activities	$	141,298		$	67,625		$	163,030
Revenue	$	906,533		$	893,272		$	939,783

Cash from operating activities to revenue ratio		16	%		8	%		17	%

Free Cash Flow to Revenue Ratio
Free cash flow	$	108,050		$	38,315		$	114,561
Revenue	$	906,533		$	893,272		$	939,783

Free cash flow to revenue ratio		12	%		4	%		12	%

Free Cash Flow to Adjusted EBITDA Ratio
Free cash flow	$	108,050		$	38,315		$	114,561
Adjusted EBITDA	$	197,512		$	183,233		$	197,536

Free cash flow to adjusted EBITDA ratio		55	%		21	%		58	%

The MIL Network –

January 25, 2025

MIL-OSI USA: Garamendi Honors 42 Women at Annual Women of the Year Awards

Source: United States House of Representatives – Congressman John Garamendi – Representing California’s 3rd Congressional District

BENICIA, CA – Today, at his 11th annual Women of the Year event, Congressman John Garamendi (D-CA) honored 42 women from the 8th Congressional District of California who are leaders and visionaries in their communities. These honorees have all made significant contributions to society through public service, business, education, and the local economy.

“Every year, I have the privilege of celebrating the remarkable achievements and contributions of outstanding women in California’s 8th District,” Garamendi said. “These leaders come from diverse backgrounds, and each has had a profound impact on their communities and those around them. It is a privilege to honor their efforts.”

“Their commitment and passion for service merit this recognition, and through this award, their contributions will be preserved and documented in the official Congressional Record in Washington, D.C.,” Garamendi said.

You can view photos and biographies of this year’s honorees here.

A legislative update that was shared at the event is available here.

A video of the event can be found here.

The list of 2024 Women of the Year Honorees is included below:

Contra Costa County:

Angel Greer (Pittsburg)

Barbara Akoro (Bay Point)

Bisa French (Richmond)

Blanca Hernandez (Crockett)

Carole Paterson (Fairfield)

Claryssa Wilson (Antioch)

Dr. Myra Altman (Kensington)

Genoveva Garcia Calloway (San Pablo)

Harpreet Sidhu (Hercules)

LaShonda White (Richmond)

Linda Whitmore (Richmond)

Lori Ogorchock (Antioch)

Maria Theresa Viramontes (Richmond)

Maureen Toms (Pinole)

Myrtle Braxton (Richmond)

Patricia Durham (El Cerrito)

Ruthie Abelson Olivas (Pinole)

Tamara Shiloh (Richmond)

Solano County:

Brigette Hunley (Fairfield)

Caroline Villarreal (Fairfield)

Captain Rachel Marron (Travis Air Force Base)

Chief Master Sergeant Sandrine Hanley (Travis Air Force Base)

Chief Master Sargeant Laura Hoover (Travis Air Force Base)

Colonel Lisa Palmer (Travis Air Force Base)

Daria Bautista (Travis Air Force Base)

Dinah Villanueva-Ryan (Vallejo)

Dr. Bonnie Hamilton (Fairfield)

Dr. Diane Dooley (Benicia)

Dr. Tiffáni Thomas (Suisun City)

Dr. Rozzana Verder-Aliga (Vallejo)

Guillermina Loera-Diaz (Vallejo)

Gregoria Torres (Vallejo)

Kathy Kerridge (Benicia)

Keycha Gallon (Vallejo)

Kristina Kauzinger (Vacaville)

Lieutenant Colonel Christie Taylor (Travis Air Force Base)

Major Ava T. Margerison (Travis Air Force Base)

Sigrid J. Perkins (Travis Air Force Base)

Simone Lane (Vallejo)

Sriha Srinivasen (Fairfield)

Tonya Robinson (Suisun City)

Viola Robertson (Vallejo)

###

MIL OSI USA News –

January 25, 2025

MIL-OSI Video: Ahead of the Threat Podcast: Episode One

Source: Federal Bureau of Investigation (FBI) (video statements)

In December 2021, UKG Kronos was hit with a ransomware attack that impacted thousands of business customers.

On this episode of Ahead of the Threat, co-hosts Bryan Vorndran, assistant director of the FBI’s Cyber Division, and Jamil Farshchi, a strategic engagement advisor for the FBI, speak to Aaron Ain, former CEO and current Executive Chair at UKG, who gives a firsthand account of what it’s like to lead a multinational technology company during major cyber incident. Learn how Aaron handled the extreme pressure of the situation, prioritized transparency to rebuild customer trust, and made enduring structural reforms to supply-chain security and cybersecurity at the board level.

At the start of the episode, Bryan and Jamil discuss trending topics like Iran’s brazen effort to interfere in the 2024 U.S. presidential election, the Salt Typhoon hack of U.S. telecoms, and recent supply chain compromises.
—————————————————
Subscribe to Inside the FBI wherever you get your podcasts:
Spotify: https://open.spotify.com/show/4H2d3cg…
Apple Podcasts: https://podcasts.apple.com/us/podcast…
Google Podcasts: https://podcasts.google.com/feed/aHR0…
More ways to follow us: https://inside-the-fbi.transistor.fm/…

Follow us on social media:
X: https://twitter.com/fbi
Facebook: https://facebook.com/FBI
Instagram: https://instagram.com/fbi
YouTube: youtube.com/user/fbi

https://www.youtube.com/watch?v=xOsOCAaH2Ms

MIL OSI Video –

January 25, 2025

MIL-OSI Security: Election Officer Appointed for the District of South Dakota for the November 2024 General Election

Source: Office of United States Attorneys

Assistant U.S. Attorney Ann M. Hoffman to Oversee Election Day Program

SIOUX FALLS – United States Attorney Alison J. Ramsdell announced today that Assistant U.S. Attorney (AUSA) Ann M. Hoffman will lead the efforts of her Office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 5, 2024, general election. AUSA Hoffman has been appointed to serve as the District Election Officer (DEO) for the District of South Dakota, and in that capacity is responsible for overseeing the District’s handling of election day complaints of voting rights concerns, threats of violence to election officials or staff, and election fraud, in consultation with Justice Department Headquarters in Washington.

“Every citizen must be able to vote without interference or discrimination and to have that vote counted in a fair and free election,” said U.S. Attorney Ramsdell. “Similarly, election officials and staff must be able to serve without being subject to unlawful threats of violence. The Department of Justice is committed to protecting the integrity of the election process and bringing to justice those who seek to corrupt it.”

The Department of Justice has an important role in deterring and combatting discrimination and intimidation at the polls, threats of violence directed at election officials and poll workers, and election fraud. The Department will address these violations wherever they occur. The Department’s longstanding Election Day Program furthers these goals and also seeks to ensure public confidence in the electoral process by providing local points of contact within the Department for the public to report possible federal election law violations.

Federal law protects against such crimes as threatening violence against election officials or staff, intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters, and provides that they can vote free from interference, including intimidation, and other acts designed to prevent or discourage people from voting or voting for the candidate of their choice. The Voting Rights Act protects the right of voters to mark their own ballot or to be assisted by a person of their choice (where voters need assistance because of disability or inability to read or write in English).

To respond to complaints of voting rights concerns and election fraud during the upcoming election, and to ensure that such complaints are directed to the appropriate authorities, AUSA/DEO Hoffman will be on duty in this District while the polls are open. She can be reached by the public at the following telephone number: (605) 838-9446. In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day. The local FBI field office can be reached by the public at (605) 334-6881.

Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division in Washington, D.C., by filing a complaint form at https://civilrights.justice.gov/ or by phone at (800) 253-3931.

U.S. Attorney Ramsdell further stated, “Ensuring free and fair elections depends in large part on the assistance of the American electorate. It is important that those who have specific information about voting rights concerns or election fraud make that information available to the Department of Justice.”

Please note, however, in the case of a crime of violence or intimidation, please call 911 immediately and before contacting federal authorities. State and local police have primary jurisdiction over polling places, and almost always have faster reaction capacity in an emergency.

MIL Security OSI –

January 25, 2025

MIL-OSI Security: Federal Jury finds Mission Man Guilty of Aggravated Sexual Abuse and Kidnapping

Source: Office of United States Attorneys

PIERRE – United States Attorney Alison J. Ramsdell announced today that Canku Martinez, age 22, of Mission, South Dakota, was found guilty of Aggravated Sexual Abuse and Kidnapping following a four-day federal jury trial in Pierre, South Dakota. The verdict was returned on October 18, 2024.

Each charges carries a maximum sentence of life in federal prison, and/or a $250,000 fine, five years up to life of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.

Martinez was indicted by a federal grand jury in February of 2024.

At trial, the evidence established in the early morning hours of October 29, 2024, in the Rosebud Indian Reservation, Martinez agreed to give a juvenile a ride home from a party near Rosebud, South Dakota. Rather than give her a ride home, however, Martinez drove her to a secluded area outside of Rosebud and made sexual advances. When the juvenile rejected his advances, Martinez produced a knife and forced her to engage in sexual activity. Martinez subsequently dropped the victim off at her residence, told her not to tell anyone what he had done, and left the area shortly thereafter.

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

This case was investigated by the FBI, the Rosebud Sioux Tribe Law Enforcement Services, and the Winner (SD) Police Department. Senior Litigation Counsel Kirk Albertson prosecuted the case.

A presentence investigation was ordered, and a sentencing date has not been set. Martinez was remanded to the custody of the U.S. Marshals Service pending sentencing.

MIL Security OSI –

January 25, 2025

MIL-OSI Security: Justice Department Announces Four Cases Brought by Election Threats Task Force

Source: Office of United States Attorneys

WASHINGTON — The Justice Department’s Election Threats Task Force (ETTF) announced developments this week in four cases involving interstate transmissions of threats to election personnel and other victims.

Teak Brockbank, 45, of Cortez, Colorado, pleaded guilty today to threatening a Colorado election official, and admitted to making other threats to an Arizona election official, a Colorado state judge, and federal law enforcement agents between September 2021 and July 2024.

Brian Jerry Ogstad, 60, of Cullman, Alabama, was sentenced on Monday to 30 months in prison for sending messages threatening violence to election workers with Maricopa County Elections in Phoenix on Aug. 2-4, 2022, during and immediately following the Arizona primary elections.

Richard Glenn Kantwill, 61, of Tampa, Florida, was charged on Monday for allegedly sending a threat on Feb. 9 to an election official in addition to already pending charges for threats made to three other victims based on their political commentary in 2019 and 2020.

John Pollard, 62, of Philadelphia, was charged on Monday for allegedly threatening on Sept. 6 to kill a representative of a Pennsylvania state political party who was recruiting official poll watchers.

“As we approach Election Day, the Justice Department’s warning remains clear: anyone who illegally threatens an election worker, official, or volunteer will face the consequences,” said Attorney General Merrick B. Garland. “Over the past three and a half years, the Justice Department has been aggressively investigating and prosecuting those who threaten the public servants who administer our elections, and we will continue to do so in the weeks ahead. For our democracy to function, Americans who serve the public must be able to do their jobs without fearing for their lives.”

“Threats to election workers are threats to our democratic process,” said Deputy Attorney General Lisa Monaco. “No one should face violence or threats of violence simply for doing their job. The actions announced today make clear that we will not tolerate those who use or threaten violence in an effort to undermine our democratic institutions. To carry out their essential work, election officials must be free from improper influence, physical threats, and others forms of intimidation.”

“Our elections are made by possible by the hard work and patriotism of election workers in communities across the country who are also our neighbors, relatives and friends, and they deserve to do this important work without being subjected to threats,” said FBI Director Christopher Wray. “The fact that election workers need to be worried about their security is incomprehensible and unacceptable. While these four cases are examples of the kinds of threats election workers are unfortunately facing, these cases also represent the FBI’s dedication in holding accountable those who undermine our democracy with this conduct. The FBI and our partners on the ETTF will work tirelessly to charge and arrest those callous enough to make these threats and make sure they are held accountable. Free, fair, and safe elections are critical to our country and our democratic ideals.”

“These defendants made serious threats of violence against members of the election community. Threats like these strike at the very heart of our democracy,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “The cases announced today underscore the Criminal Division’s commitment to defending our democracy, safeguarding our elections, and protecting all election workers. Through the ETTF, the Department will vigorously investigate and prosecute all criminal threats against members of the election community.”

The four cases were all brought by the ETTF. Created by Attorney General Merrick B. Garland and launched by Deputy Attorney General Lisa Monaco in June 2021, the task force has led the Department’s efforts to address threats of violence against election workers, and to ensure that all election workers — whether elected, appointed, or volunteer — are able to do their jobs free from threats and intimidation. The task force engages with the election community and state and local law enforcement to assess allegations and reports of threats against election workers, and has investigated and prosecuted these matters where appropriate, in partnership with FBI Field Offices and U.S. Attorneys’ Offices throughout the country. Three years after its formation, the task force is continuing this work and supporting U.S. Attorneys’ Offices and FBI Field Offices nationwide as they join the task force in its critical work.

Under the leadership of the Attorney General and the Deputy Attorney General, the task force is led by the Criminal Division’s Public Integrity Section (PIN) and includes several other entities within the Justice Department, including the Criminal Division’s Computer Crime and Intellectual Property Section, Civil Rights Division, National Security Division, and FBI, as well as key interagency partners, such as the Department of Homeland Security and U.S. Postal Inspection Service. For more information regarding the Justice Department’s efforts to combat threats against election workers, read the Deputy Attorney General’s memo.

United States v. Brockbank (District of Colorado)

According to court documents, Brockbank admitted to using three social media accounts to post messages threatening Colorado and Arizona election officials between September 2021 and July 2024.

On Sept. 22, 2021, Brockbank posted the following message on social media:

“[Election Official-1] . . . needs to- No has to Hang she has to Hang by the neck till she is Dead Dead Dead. There will be accountability for these peoples actions in Communist Colorado and it won’t be judges and it won’t be weakmided cops that bring it!!! It will be Me it will be You it Will be every day people that understand that there life does not matter anymore with the future our country has laid out before it.”

As part of his plea, Brockbank also admitted to posting a message on Aug. 4, 2022 referring to election officials in Arizona and Colorado, stating: “Once those people start getting put to death then the rest will melt like snowflakes and turn on each other. . . . This is the only way. So those of us that have the stomach for what has to be done should prepare our minds for what we all [a]re going to do!!!!!! It is time.”

In addition, Brockbank admitted to posting a message threatening a Colorado state judge on Oct. 2, 2021: “I could pick up my rifle and I could go put a bullet in this Mans head and send him to explain himself to our Creator right now. I would be Justified!!! Not only justified but obligated by those in my family who fought and died for the freedom in this country. . . . What can I do other than kill this man my self?”

Brockbank further admitted to threatening federal law enforcement on July 13, 2024, posting: ““I believe every single FBI agent deserves to go explain themselves to our creator right away!!!! I am more than willing to send any/All of you there.”

Finally, Brockbank admitted to illegally possessing multiple firearms and ammunition.

“The security and sanctity of the American election system is core to the foundation of our Democracy,” said Acting United States Attorney Matt Kirsch for the District of Colorado. “We will prosecute people who threaten elections, election officials, or election workers to the fullest extent of the law.”

Brockbank pleaded guilty today to interstate transmission of a threat. He is scheduled to be sentenced on Feb. 3, 2025, and faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI Denver Field Office is investigating the case.

Acting Deputy Director Jonathan E. Jacobson of PIN’s Election Crimes Branch and Assistant U.S. Attorney Cyrus Y. Chung for the District of Colorado are prosecuting the case.

United States v. Ogstad (District of Arizona)

According to court documents, on or about Aug. 2, 2022, Arizona held primary elections for federal and state officeholders, including a gubernatorial primary election that received nationwide media coverage. From the day of the election through on or about Aug. 4, 2022, Ogstad sent multiple threatening direct messages to a social media account maintained by Maricopa County Elections. For instance, on or about Aug. 3, 2022, Ogstad stated: (1) “You did it! Now you are f*****.. Dead. You will all be executed for your crimes”; (2) F*** you! You are caught! They have it all. You f****** are dead”; (3) “You are lying, cheating m****** f******* . . . you better not come in my church, my business or send your kids to my school. You are f****** stupid if you think your lives are safe”; and (4) “You f****** are so dead.” On or about Aug. 4, 2022, Ogstad also stated, “[Y]ou people are so ducking stupid. Everyone knows you are lots, cheats, frauds and in doing so in relation to elections have committed treason. You will all be executed. Bang f******!” ” In the course of his messages to the recipient, Ogstad transmitted an image of the character “Woody,” from the Toy Story film franchise, lying face down with an unidentified projectile in its back.

“In this election season we honor and respect those public servants who enable Americans to exercise their constitutional right to vote,” said U.S. Attorney Gary Restaino for the District of Arizona. “And we seek to protect all election workers from intimidation and harassment. Threats of violence, whether conveyed by words or deeds or pictures, will be met in this District with robust prosecution.”

Ogstad was sentenced on Monday to 30 months in prison, followed by three years of supervised release and a $1,000 fine, after pleading guilty on July 25 to one count of interstate transmission of a threat.

The FBI Phoenix Field Office investigated the case, with substantial assistance from the FBI Birmingham Field Office.

Trial Attorney Tanya Senanayake of the National Security Division’s Counterterrorism Section and Assistant U.S. Attorney Mary Sue Feldmeier for the District of Arizona prosecuted the case.

United States v. Kantwill (Middle District of Florida)

According to court documents, from September 2019 to July 2020, Kantwill, a dentist, sent over 100 threats to various public figures via Facebook and Instagram messages, email, and text. As charged in the superseding information filed on Monday, those threats included a threat sent via email to an author, a threat sent via text to a religious leader, and a threat sent via Instagram to a television personality. From April 2022 to April 2024, Kantwill also sent at least seven additional threats to four public figures via Facebook, including a threat to an election official in another state on Feb. 9, when Kantwill wrote: “You are a degenerate c***. and you are now the target of our own investigation. Take note because liberal t***s like you get raped in alleys, by really big black guys that serve our cause. So, you t*** are going to get raped by at least 5 n*****s, and do nothing. You are the number 1 target, you degenerate t***.”

“If you threaten someone with violence, we will take you at your word,” said U.S. Attorney Roger Handberg for the Middle District of Florida. “Law enforcement officers and members of my office will work together to hold accountable and federally prosecute individuals who threaten to injure or kill others.”

Kantwill is charged with four counts of interstate transmission of a threat. If convicted, he faces a maximum penalty of five years in prison for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case.

Trial Attorney Aaron L. Jennen of PIN and Assistant U.S. Attorney Abigail K. King for the Middle District of Florida are prosecuting the case, with assistance from Assistant U.S. Attorney Cyrus Y. Chung for the District of Colorado.

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

United States v. Pollard (Western District of Pennsylvania)

According to the indictment, on Sept. 6, Pollard sent threatening text messages to Victim 1, a resident of the Western District of Pennsylvania. Victim 1 had previously posted online, in Victim 1’s capacity as an employee of a state political party, that Victim 1 was recruiting volunteers to “help[] observe at the polls on Election Day” and included Victim 1’s phone number. Pollard allegedly texted Victim 1 that he was “interested in being a poll watcher” and included Victim 1’s first name. Pollard then allegedly texted three threats to Victim 1: (1) “I will KILL YOU IF YOU DON’T ANSWER ME!”; (2) “Your days are numbered, B****!”; and (3) “GONNA F***ING FIND YOU AND SKIN YOU ALIVE AND USE YOUR SKIN FOR F***ING TOILET PAPER, YOU F***ING KKK**T!”

“Threats of violence have no place in our society,” said U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania. “This is no less true when those threats of violence are directed at individuals associated with our electoral process — in this case, someone seeking to organize poll watchers. This conduct will not be tolerated in our district, and we will continue to work with our partners at the FBI to prosecute these offenses with the full weight of the law.”

Pollard was arrested on Monday and appeared in federal court in Philadelphia. He is charged with one count of interstate transmission of a threat. If convicted, he faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI Pittsburgh Field Office is investigating the case.

Trial Attorney Jacob R. Steiner of PIN and Assistant U.S. Attorney Nicole A. Stockey for the Western District of Pennsylvania are prosecuting the case, with assistance from the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

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

*****

To report suspected threats or violent acts, contact your local FBI office and request to speak with the Election Crimes Coordinator. Contact information for every FBI field office may be found here: www.fbi.gov/contact-us/field-offices/. You may also contact the FBI at 1-800-CALL-FBI (225-5324) or file an online complaint at www.tips.fbi.gov. Complaints submitted will be reviewed by the task force and referred for investigation or response accordingly. If someone is in imminent danger or risk of harm, contact 911 or your local police immediately.

MIL Security OSI –

January 25, 2025

MIL-OSI Security: Bank fraud scheme sends Georgia man to federal prison for four years

Source: Office of United States Attorneys

MISSOULA — A federal judge today sentenced a Georgia man to four years in prison, to be followed by five years of supervised release, for a scheme that involved recruiting homeless individuals to cash fraudulent checks at Montana financial institutions, U.S. Attorney Jesse Laslovich said.

The defendant, Akia Demetrius Hills, 30, of Atlanta, Georgia, pleaded guilty in June to bank fraud and aggravated identity theft.

U.S. District Judge Dana L. Christensen presided. The court also ordered $226,500.69 in restitution.

In court documents, the government alleged that Hills and others stole mail and checks, and then fraudulently used the identities of various individuals to cash fraudulent checks throughout Montana financial institutions. On May 10, 2019, Hills and others instructed a man to enter numerous banks to attempt to cash a fraudulent check. Eventually, one bank accepted the fraudulent check, which totaled $6,734. Hills traveled across the country to defraud banks and attempted to use homeless individuals to cash fraudulent checks at banks.

The U.S. Attorney’s Office prosecuted the case. The FBI conducted the investigation.

XXX

MIL Security OSI –

January 25, 2025

MIL-OSI Security: California Man Charged with Weapon of Mass Destruction Offense in Connection with Bomb Attack in Lobby of County Courthouse

Source: Office of United States Attorneys

A three-count federal grand jury indictment was returned today charging Nathaniel James McGuire, 20, of Santa Maria, California, with committing a bomb attack at a courthouse in Santa Maria in which several people were injured. McGuire’s arraignment is scheduled for Oct. 25 in the Central District of California.

According to the indictment and criminal complaint, on Sept. 25, McGuire entered a courthouse of Santa Barbara County Superior Court and threw a bag into the lobby. The bag exploded and McGuire left the courthouse on foot. The explosion injured at least five people who were near the bomb when it exploded.

Shortly thereafter, McGuire was apprehended and detained by law enforcement officials as he was trying to access a red Ford Mustang car parked outside the building. McGuire allegedly yelled that the government had taken his guns and that everyone needed to fight, rise up, and rebel.

Inside the car, a deputy saw ammunition, a flare gun, and a box of fireworks. A search of the car revealed a shotgun, a rifle, more ammunition, a suspected bomb, and 10 Molotov cocktails. Law enforcement later rendered the bomb safe. McGuire told law enforcement he intended to re-enter the courthouse with the firearms in order to kill a judge.

A search of McGuire’s residence revealed an empty can with nails glued to the outside, a duffel bag containing matches, black powder, used and unused fireworks, and papers that appeared to be recipes for explosive material.

McGuire was charged with one count of using a weapon of mass destruction, one count of maliciously damaging a building by means of explosive, and one count of possessing unregistered destructive devices. McGuire has been in custody since his arrest in September, shortly after the attack.

If convicted of all charges, McGuire faces a mandatory minimum penalty of seven years in prison and a statutory maximum penalty of life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Martin Estrada for the Central District of California, and Executive Assistant Director Robert Wells of the FBI’s National Security Branch announced the case.

The FBI is investigating the case.

Assistant U.S. Attorneys Mark Takla and Kathrynne N. Seiden for the Central District of California are prosecuting this case with substantial assistance from Trial Attorney Patrick Cashman of the National Security Division’s Counterterrorism Section.

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

MIL Security OSI –

January 25, 2025

MIL-OSI: Northfield Bancorp, Inc. Announces Third Quarter 2024 Results

Source: GlobeNewswire (MIL-OSI)

NOTABLE ITEMS FOR THE QUARTER INCLUDE:

DILUTED EARNINGS PER SHARE WERE $0.16 FOR THE CURRENT QUARTER COMPARED TO $0.14 FOR THE TRAILING QUARTER, AND $0.19 FOR THE THIRD QUARTER OF 2023.
NET INTEREST MARGIN REMAINED RELATIVELY STABLE AT 2.08% FOR THE CURRENT QUARTER AS COMPARED TO 2.09% FOR THE TRAILING QUARTER.
AVERAGE YIELD ON INTEREST-EARNING ASSETS DECREASED ONE BASIS POINT TO 4.38%, WHILE THE AVERAGE COST OF INTEREST-BEARING LIABILITIES REMAINED STABLE AT 2.95% FOR THE CURRENT QUARTER AS COMPARED TO THE TRAILING QUARTER.
DEPOSITS (EXCLUDING BROKERED) DECREASED MODESTLY BY $5.1 MILLION, OR LESS THAN 1% ANNUALIZED, COMPARED TO JUNE 30, 2024, AND INCREASED $15.0 MILLION, OR 0.5% ANNUALIZED, FROM DECEMBER 31, 2023. COST OF DEPOSITS AT SEPTEMBER 30, 2024 WAS 2.07% AS COMPARED TO 2.10% AT JUNE 30, 2024.
LOAN BALANCES DECLINED BY $27.2 MILLION, OR 2.7% ANNUALIZED, FROM JUNE 30, 2024, WITH DECREASES IN COMMERCIAL, MULTIFAMILY AND RESIDENTIAL REAL ESTATE LOANS OFFSET BY INCREASES IN HOME EQUITY, CONSTRUCTION AND LAND, AND COMMERCIAL AND INDUSTRIAL LOANS.
ASSET QUALITY REMAINS STRONG DESPITE AN INCREASE IN NON-PERFORMING LOANS IN THE CURRENT QUARTER. NON-PERFORMING LOANS TO TOTAL LOANS WAS 0.75% AT SEPTEMBER 30, 2024 AND 0.42% AT JUNE 30, 2024.
THE COMPANY MAINTAINED STRONG LIQUIDITY WITH APPROXIMATELY $597 MILLION IN UNPLEDGED AVAILABLE-FOR-SALE SECURITIES AND LOANS READILY AVAILABLE-FOR-PLEDGE OF APPROXIMATELY $699 MILLION.
THE COMPANY REPURCHASED 560,683 SHARES FOR A COST OF $6.3 MILLION. THERE IS NO REMAINING CAPACITY UNDER THE CURRENT REPURCHASE PROGRAM.
CASH DIVIDEND DECLARED OF $0.13 PER SHARE OF COMMON STOCK, PAYABLE ON NOVEMBER 20, 2024, TO STOCKHOLDERS OF RECORD AS OF NOVEMBER 6, 2024.

WOODBRIDGE, N.J., Oct. 23, 2024 (GLOBE NEWSWIRE) — NORTHFIELD BANCORP, INC. (Nasdaq:NFBK) (the “Company”), the holding company for Northfield Bank, reported net income of $6.5 million, or $0.16 per diluted share for the three months ended September 30, 2024, compared to $6.0 million, or $0.14 per diluted share, for the three months ended June 30, 2024, and $8.2 million, or $0.19 per diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $18.7 million, or $0.45 per diluted share, compared to $29.4 million, or $0.67 per diluted share, for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net income reflected $795,000, or $0.02 per share, of additional tax expense related to options that expired in June 2024, and $683,000, or $0.01 per share, of severance expense related to staffing realignments. For the nine months ended September 30, 2023, net income reflected $440,000, or $0.01 per share of severance expense. The decrease in net income for the nine months ended September 30, 2024, compared to the comparable prior year period was primarily the result of a decrease in net interest income, which was negatively impacted by higher funding costs, partially offset by improved interest and non-interest income.

Commenting on the quarter, Steven M. Klein, the Company’s Chairman, President and Chief Executive Officer stated, “In the third quarter, the Northfield team continued to focus on financial performance, serving the businesses and consumers in our marketplace, and improving upon our operating efficiencies.” Mr. Klein continued, “We delivered solid financial performance for the quarter, increasing our net income, and earnings per share, as we manage our strong capital levels, core deposit and loan relationships, asset quality, and operating expenses. While significant risks remain, the decrease in short-term market interest rates late in the third quarter should provide increased economic activity in our marketplace and opportunities for our Company.”

Mr. Klein further noted, “I am pleased to announce that the Board of Directors has declared a cash dividend of $0.13 per common share, payable on November 20, 2024 to stockholders of record on November 6, 2024.”

Results of Operations

Comparison of Operating Results for the Nine Months Ended September 30, 2024 and 2023

Net income was $18.7 million and $29.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year period are as follows: a $10.9 million decrease in net interest income, a $1.3 million increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $3.2 million increase in non-interest expense, and a $3.1 million decrease in income tax expense.

Net interest income for the nine months ended September 30, 2024, decreased $10.9 million, or 11.4%, to $84.8 million, from $95.7 million for the nine months ended September 30, 2023 due to a $34.8 million increase in interest expense, which was partially offset by a $23.9 million increase in interest income. The increase in interest expense was largely driven by the cost of interest-bearing liabilities, which increased by 96 basis points to 2.93% for the nine months ended September 30, 2024, from 1.97% for the nine months ended September 30, 2023, driven primarily by a 114 basis point increase in the cost of interest-bearing deposits from 1.42% to 2.56% for the nine months ended September 30, 2024, and a 31 basis point increase in the cost of borrowings from 3.58% to 3.89% due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-costing certificates of deposit and a greater reliance on borrowings. The increase in interest expense was also due to a $277.1 million, or 7.0%, increase in the average balance of interest-bearing liabilities, including an increase of $149.8 million in the average balance of borrowed funds and a $127.1 million increase in average interest-bearing deposits. The increase in interest income was primarily due to a $156.1 million, or 2.9%, increase in the average balance of interest-earning assets coupled with a 47 basis point increase in the yield on interest-earning assets, which increased to 4.35% for the nine months ended September 30, 2024, from 3.88% for the nine months ended September 30, 2023, due to the rising rate environment. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of interest-earning deposits in financial institutions of $111.7 million, the average balance of other securities of $91.6 million, and the average balance of mortgage-backed securities of $88.5 million, partially offset by a decrease in the average balance of loans of $133.4 million.

Net interest margin decreased by 34 basis points to 2.07% for the nine months ended September 30, 2024, from 2.41% for the nine months ended September 30, 2023. The decrease in net interest margin was primarily due to interest-bearing liabilities repricing at a faster rate than interest-earning assets. The net interest margin was negatively affected by approximately 12 basis points due to a $300 million low risk leverage strategy implemented in the first quarter of 2024. In January 2024, the Company borrowed $300.0 million from the Federal Reserve Bank through the Bank Term Funding Program at favorable terms and conditions and invested the proceeds in interest-bearing deposits in other financial institutions and investment securities. The Company accreted interest income related to purchased credit-deteriorated (“PCD”) loans of $1.1 million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. Net interest income for the nine months ended September 30, 2024, included loan prepayment income of $648,000 as compared to $1.3 million for the nine months ended September 30, 2023.

The provision for credit losses on loans increased by $1.3 million to $2.3 million for the nine months ended September 30, 2024, compared to $1.1 million for the nine months ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship totaling $12.5 million that experienced credit deterioration and was placed on non-accrual during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our Current Expected Credit Loss (“CECL”) model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial and home equity and lines of credit portfolios related to an increase in non-performing loans in these portfolios and higher loan balances. Net charge-offs were $4.7 million for the nine months ended September 30, 2024, primarily due to $3.9 million in net charge-offs on small business unsecured commercial and industrial loans, as compared to net charge-offs of $5.2 million for the nine months ended September 30, 2023. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio, which totaled $31.0 million at September 30, 2024.

Non-interest income increased by $1.5 million, or 18.7%, to $9.8 million for the nine months ended September 30, 2024, compared to $8.3 million for the nine months ended September 30, 2023. The increase was primarily due to increases of $790,000 in fees and service charges for customer services, related to an increase in overdraft fees and service charges on deposit accounts, $260,000 in income on bank owned life insurance, and $874,000 in gains on trading securities, net. Partially offsetting the increases was a $303,000 decrease in other income, primarily due to lower swap fee income. Gains on trading securities in the nine months ended September 30, 2024, were $1.6 million, as compared to $723,000 in the nine months ended September 30, 2023. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the plan. The participants of this plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the plan.

Non-interest expense increased $3.2 million, or 5.2%, to $65.7 million for the nine months ended September 30, 2024, compared to $62.5 million for the nine months ended September 30, 2023. The increase was primarily due to a $3.3 million increase in employee compensation and benefits, primarily attributable to higher salary expense, related to annual merit increases and higher medical expense, and an increase of $874,000 in deferred compensation expense, which is described above, and had no effect on net income. Employee compensation and benefits expense also includes severance expense of $683,000 for the nine months ended September 30, 2024, as compared to $440,000 for the nine months ended September 30, 2023. During the second quarter of 2024, due to current economic conditions, the Company implemented a workforce reduction plan which included modest layoffs and staffing realignments. The annual estimated cost savings of this plan is $2.0 million, pre-tax. Partially offsetting the increase was a $461,000 decrease in stock compensation expense related to performance stock awards not expected to vest. Additionally, non-interest expense included a $727,000 increase in credit loss expense/(benefit) for off-balance sheet exposure due to a provision of $337,000 recorded during the nine months ended September 30, 2024, as compared to a benefit of $390,000 for the comparative prior year period. The benefit in the prior year period was attributable to a decrease in the pipeline of loans committed and awaiting closing. Partially offsetting the increases was a $552,000 decrease in advertising expense due to a change in marketing strategy and the timing of specific deposit and lending campaigns.

The Company recorded income tax expense of $7.9 million for the nine months ended September 30, 2024, compared to $11.0 million for the nine months ended September 30, 2023, with the decrease due to lower taxable income partially offset by a higher effective tax rate. The effective tax rate for the nine months ended September 30, 2024, was 29.7% compared to 27.2% for the nine months ended September 30, 2023. In June 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the nine months ended September 30, 2024.

Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023

Net income was $6.5 million and $8.2 million for the quarters ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year quarter are as follows: a $1.5 million decrease in net interest income, a $2.4 increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $189,000 decrease in non-interest expense, and a $513,000 decrease in income tax expense.

Net interest income for the quarter ended September 30, 2024, decreased $1.5 million, or 4.9%, to $28.2 million, from $29.7 million for the quarter ended September 30, 2023, due to an $8.0 million increase in interest expense, partially offset by an $6.6 million increase in interest income. The increase in interest expense was largely driven by the impact of rising market interest rates and a $227.0 million, or 5.7%, increase in the average balance of interest-bearing liabilities, including increases of $158.4 million and $68.4 million in the average balance of interest-bearing deposits and borrowed funds, respectively. The increase in interest income was primarily due to a $155.1 million, or 3.0%, increase in the average balance of interest-earning assets coupled with a 38 basis point increase in yields on interest-earning assets due to the rising rate environment. The increase in the average balance of interest-earning assets was due to increases in the average balance of mortgage-backed securities of $240.3 million, the average balance of other securities of $64.0 million, and the average balance of interest-earning deposits in financial institutions of $26.8 million, partially offset by decreases in the average balance of loans outstanding of $172.8 million and the average balance of Federal Home Loan Bank of New York stock of $3.2 million.

Net interest margin decreased by 17 basis points to 2.08% for the quarter ended September 30, 2024, from 2.25% for the quarter ended September 30, 2023, primarily due to the cost of interest-bearing liabilities increasing faster than the repricing of interest-earning assets. The cost of interest-bearing liabilities increased by 64 basis points to 2.95% for the quarter ended September 30, 2024, from 2.31% for the quarter ended September 30, 2023, driven primarily by a 77 basis point increase in the cost of interest-bearing deposits from 1.82% to 2.59%, and a 30 basis point increase in the cost of borrowings from 3.63% to 3.93%. The increase in the cost of interest-bearing liabilities was partially offset by an increase in the yield on interest-earning assets, which increased by 38 basis points to 4.38% for the quarter ended September 30, 2024, from 4.00% for the quarter ended September 30, 2023. Net interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000, as compared to $183,000 for the quarter ended September 30, 2023. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $325,000 for the quarter ended September 30, 2023.

The provision for credit losses on loans increased by $2.4 million to $2.5 million for the quarter ended September 30, 2024, from a provision of $188,000 for the quarter ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our CECL model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial portfolio related to an increase in non-performing loans and higher loan balances. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, and included $1.4 million in net charge-offs on small business unsecured loans, as compared to net charge-offs of $2.9 million for the quarter ended September 30, 2023.

Non-interest income increased by $1.5 million, or 68.7%, to $3.6 million for the quarter ended September 30, 2024, from $2.1 million for the quarter ended September 30, 2023, primarily due to a $294,000 increase in fees and service charges, primarily related to higher overdraft fees, a $1.0 million increase in gains on trading securities, net, and a $185,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to losses of $295,000 in the quarter ended September 30, 2023. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan.

Non-interest expense decreased by $189,000, or 0.9%, to $20.4 million for the quarter ended September 30, 2024, from $20.6 million for the quarter ended September 30, 2023. The decrease was primarily due to decreases of $386,000 in occupancy expense, attributable to lower real estate taxes, common area maintenance and electricity costs, $214,000 in data processing costs, attributable to a decrease in ongoing core processing costs related to a prior technology-related contract renewed at favorable terms, and $132,000 in advertising expense. Partially offsetting the decreases was a $504,000 increase in compensation and employee benefits, which included a $1.0 million increase in expense related to the Company’s deferred compensation plan which is described above, and had no effect on net income, that was offset by lower medical expense.

The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $2.9 million for the quarter ended September 30, 2023, with the decrease due to lower taxable income. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 26.0% for the quarter ended September 30, 2023.

Comparison of Operating Results for the Three Months Ended September 30, 2024 and June 30, 2024

Net income was $6.5 million and $6.0 million for the quarters ended September 30, 2024, and June 30, 2024, respectively. Significant variances from the prior quarter are as follows: an $458,000 decrease in net interest income, a $3.2 million increase in the provision for credit losses on loans, a $719,000 increase in non-interest income, a $2.6 million decrease in non-interest expense, and an $850,000 decrease in income tax expense.

Net interest income for the quarter ended September 30, 2024, decreased by $458,000, or 1.6%, primarily due to a $902,000 decrease in interest income, partially offset by a $444,000 decrease in interest expense on deposits and borrowings. The decrease in interest income was primarily due to a $124.4 million decrease in the average balance of interest-earning assets. The decrease in the average balance of interest-earning assets was primarily due to decreases in the average balance of interest-earning deposits in financial institutions of $91.6 million, the average balance of other securities of $60.5 million, and the average balance of loans outstanding of $48.1 million, partially offset by an increase in the average balance of mortgage-backed securities of $76.5 million. The decrease in interest expense on deposits and borrowings was primarily due to a $105.8 million, or 2.5%, decrease in the average balance of interest-bearing liabilities attributable to a $73.2 million decrease in the average balance of interest-bearing deposits and a $32.7 million decrease in the average balance of borrowed funds.

Net interest margin decreased by one basis point to 2.08% from 2.09% for the quarter ended June 30, 2024, primarily due to a one basis point decrease in yields on interest-earning assets whereas the cost of interest-bearing liabilities remained level. Net interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000 as compared to $210,000 for the quarter ended June 30, 2024. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $321,000 for the quarter ended June 30, 2024.

The provision for credit losses on loans increased by $3.2 million to $2.5 million for the quarter ended September 30, 2024, from a benefit of $618,000 for the quarter ended June 30, 2024. The increase in the provision for the current quarter was primarily due to an increase in the specific reserve component of the allowance for credit losses, attributable to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual during the current quarter, higher reserves related to changes in model assumptions during the current quarter, including the slowing of prepayment speeds and higher net-charge-offs. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, as compared to net charge-offs of $1.6 million for the quarter ended June 30, 2024.

Non-interest income increased by $719,000, or 25.1%, to $3.6 million for the quarter ended September 30, 2024, from $2.9 million for the quarter ended June 30, 2024. The increase was primarily due to a $522,000 increase in gains on sales of trading securities, net, and a $192,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to gains of $188,000 for the quarter ended June 30, 2024.

Non-interest expense decreased by $2.6 million, or 11.4%, to $20.4 million for the quarter ended September 30, 2024, from $23.0 million for the quarter ended June 30, 2024. The decrease was primarily due to a $2.0 million decrease in compensation and employee benefits, primarily attributable to a decrease in salaries and medical expense due to lower employee headcount, partially offset by a $522,000 increase in expense related to the Company’s deferred compensation plan which had no effect on net income. Also contributing to the decrease were decreases of $192,000 in occupancy expense, $397,000 in data processing costs, attributable to a decrease in ongoing core processing costs resulting from a prior technology-related contract renewed at favorable terms, $200,000 in advertising expense, and $122,000 in other non-interest expense. Partially offsetting the decreases was a $262,000 increase in professional fees, primarily due to an increase in outsourced audit services.

The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $3.2 million for the quarter ended June 30, 2024. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 35.0% for the quarter ended June 30, 2024. During the quarter ended June 30, 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the quarter ended June 30, 2024.

Financial Condition

Total assets increased by $132.5 million, or 2.4%, to $5.73 billion at September 30, 2024, from $5.60 billion at December 31, 2023. The increase was primarily due to increases in available-for-sale debt securities of $268.0 million, or 33.7%, and cash and cash equivalents of $3.4 million, or 1.5%, partially offset by a decrease in loans receivable of $139.7 million, or 3.3%.

Cash and cash equivalents increased by $3.4 million, or 1.5%, to $232.9 million at September 30, 2024, from $229.5 million at December 31, 2023. Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities, or the funding of deposit outflows or borrowing maturities.

Loans held-for-investment, net, decreased by $139.7 million, or 3.3%, to $4.06 billion at September 30, 2024 from $4.20 billion at December 31, 2023, primarily due to decreases in multifamily, commercial and one-to-four family residential real estate loans, partially offset by increases in home equity and lines of credit, construction and land, and commercial and industrial loans. The decrease in loan balances reflects the Company remaining strategically focused on both managing the concentration of its commercial and multifamily real estate loan portfolios and disciplined loan pricing, as well as lower customer demand in the recent elevated interest rate environment. Multifamily loans decreased $110.1 million, or 4.0%, to $2.64 billion at September 30, 2024 from $2.75 billion at December 31, 2023, commercial real estate loans decreased $51.4 million, or 5.5%, to $878.2 million at September 30, 2024 from $929.6 million at December 31, 2023, one-to-four family residential loans decreased $11.1 million, or 6.9%, to $149.7 million at September 30, 2024 from $160.8 million at December 31, 2023, and other loans decreased $925,000, or 35.8%, to $1.7 million at September 30, 2024 from $2.6 million at December 31, 2023. Partially offsetting these decreases were increases in commercial and industrial loans of $19.1 million, or 12.3%, to $174.4 million at September 30, 2024 from $155.3 million at December 31, 2023, home equity and lines of credit of $8.4 million, or 5.2%, to $171.9 million at September 30, 2024 from $163.5 million at December 31, 2023, and construction and land loans of $2.1 million, or 6.6%, to $33.0 million at September 30, 2024 from $31.0 million at December 31, 2023.

As of September 30, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 447%. Management believes that Northfield Bank (the “Bank”) maintains appropriate risk management practices including risk assessments, board-approved underwriting policies and related procedures, which include monitoring Bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank’s commercial real estate portfolio under severe, adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage its commercial real estate concentration risk, the Bank’s regulators could require it to implement additional policies and procedures or could require it to maintain higher levels of regulatory capital, which might adversely affect its loan originations, the Company’s ability to pay dividends, and overall profitability.

Our real estate portfolio includes credit risk exposure to loans collateralized by office buildings and multifamily properties in New York State subject to some form of rent regulation limiting rent increases for rent stabilized multifamily properties. At September 30, 2024, office-related loans represented $183.6 million, or 4.5% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 59%. Approximately 41% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are: 50.7% in New York, 47.8% in New Jersey and 1.5% in Pennsylvania. At September 30, 2024, our largest office-related loan had a principal balance of $90.0 million (with a net active principal balance for the Bank of $29.9 million as we have a 33.3% participation interest), was secured by an office facility located in Staten Island, New York, and was performing in accordance with its original contractual terms. At September 30, 2024, multifamily loans that have some form of rent stabilization or rent control totaled approximately $447.5 million, or approximately 11% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 51%. At September 30, 2024, our largest rent-regulated loan had a principal balance of $16.9 million, was secured by an apartment building located in Staten Island, New York, and was performing in accordance with its original contractual terms. Management continues to closely monitor its office and rent-regulated portfolios. For further details on our rent-regulated multifamily portfolio see “Asset Quality”.

PCD loans totaled $9.3 million and $9.9 million at September 30, 2024 and December 31, 2023, respectively. The majority of the remaining PCD loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $327,000 and $1.1 million attributable to PCD loans for the three and nine months ended September 30, 2024, respectively, as compared to $325,000 and $1.0 million for the three and nine months ended September 30, 2023, respectively. PCD loans had an allowance for credit losses of approximately $2.9 million at September 30, 2024.

Loan balances are summarized as follows (dollars in thousands):

	September 30, 2024		June 30, 2024		December 31, 2023
Real estate loans:
Multifamily	$	2,640,944	$	2,665,202	$	2,750,996
Commercial mortgage		878,173		896,157		929,595
One-to-four family residential mortgage		149,682		151,948		160,824
Home equity and lines of credit		171,946		167,852		163,520
Construction and land		33,024		32,607		30,967
Total real estate loans		3,873,769		3,913,766		4,035,902
Commercial and industrial loans		174,253		165,586		154,984
PPP loans		160		202		284
Other loans		1,660		2,322		2,585
Total commercial and industrial, PPP, and other loans		176,073		168,110		157,853
Loans held-for-investment, net (excluding PCD)		4,049,842		4,081,876		4,193,755
PCD loans		9,264		9,344		9,899
Total loans held-for-investment, net	$	4,059,106	$	4,091,220	$	4,203,654

The Company’s available-for-sale debt securities portfolio increased by $268.0 million, or 33.7%, to $1.06 billion at September 30, 2024, from $795.5 million at December 31, 2023. The increase was primarily attributable to purchases of securities, partially offset by paydowns, maturities and calls. At September 30, 2024, $869.4 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $74.9 million in U.S. Government agency securities, $118.5 million in corporate bonds, substantially all of which were investment grade, and $684,000 in municipal bonds at September 30, 2024. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $19.6 million and $219,000, respectively, at September 30, 2024, and $32.5 million and $279,000, respectively, at December 31, 2023.

Equity securities were $10.7 million at September 30, 2024 and $10.6 million at December 31, 2023. Equity securities are primarily comprised of an investment in a Small Business Administration Loan Fund. This investment is utilized by the Bank as part of its Community Reinvestment Act program.

Total liabilities increased $132.3 million, or 2.7%, to $5.03 billion at September 30, 2024, from $4.90 billion at December 31, 2023. The increase was primarily attributable to an increase in borrowings of $131.6 million, partially offset by a decrease in total deposits of $2.9 million. The Company routinely utilizes brokered deposits and borrowed funds to manage interest rate risk, the cost of interest-bearing liabilities, and funding needs related to loan originations and deposit activity.

Deposits decreased $2.9 million, or 0.1%, to $3.88 billion at September 30, 2024 as compared to December 31, 2023. Brokered deposits decreased by $17.9 million, or 17.9%, due to maturities that were replaced by borrowings. Deposits, excluding brokered deposits, increased $15.0 million, or 0.4%. The increase in deposits, excluding brokered deposits, was primarily attributable to increases of $80.9 million in time deposits, partially offset by decreases of $14.9 million in transaction accounts, $14.7 million in savings accounts, and $36.3 million in money market accounts. Growth in time deposits was attributable to the current interest rate environment and offering competitive interest rates to attract deposits. Estimated gross uninsured deposits at September 30, 2024 were $1.71 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $859.3 million, leaving estimated uninsured deposits of approximately $852.2 million, or 22.0%, of total deposits. At December 31, 2023, estimated uninsured deposits totaled $869.9 million, or 22.4% of total deposits.

Deposit account balances are summarized as follows (dollars in thousands):

	September 30, 2024		June 30, 2024		December 31, 2023
Transaction:
Non-interest bearing checking	$	681,741	$	685,574	$	694,903
Negotiable orders of withdrawal and interest-bearing checking		1,230,176		1,251,342		1,231,943
Total transaction		1,911,917		1,936,916		1,926,846
Savings and money market:
Savings		911,067		916,598		925,744
Money market		265,800		255,550		302,122
Brokered money market		—		—		50,000
Total savings		1,176,867		1,172,148		1,277,866
Certificates of deposit:
$250,000 and under		585,606		568,809		525,454
Over $250,000		119,033		120,601		98,269
Brokered		82,146		—		50,000
Total certificates of deposit		786,785		689,410		673,723
Total deposits	$	3,875,569	$	3,798,474	$	3,878,435

Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):

	September 30, 2024		June 30, 2024		December 31, 2023

Business customers	$	869,990	$	866,403	$	893,296
Municipal (governmental) customers	$	799,249	$	815,086	$	768,556

Borrowed funds increased to $1.05 billion at September 30, 2024, from $920.5 million at December 31, 2023. The increase in borrowings for the period was primarily due to a $205.5 million increase in borrowings under the Federal Reserve Bank Term Funding Program, which included favorable terms and conditions as compared to FHLB advances. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent from time to time, as part of leverage strategies.

The following table sets forth borrowing maturities (excluding overnight borrowings and subordinated debt) and the weighted average rate by year at September 30, 2024 (dollars in thousands):

Year	Amount ⁽¹⁾	Weighted Average Rate
2024	$25,000	4.71%
2025	483,184	4.00%
2026	148,000	4.36%
2027	173,000	3.19%
2028	154,288	3.96%
	$983,472	3.92%

__________________________________________________
⁽¹⁾ Borrowings maturing in 2025 include $300.0 million of FRB borrowings that can be repaid without any penalty.

Total stockholders’ equity increased by $119,000 to $699.6 million at September 30, 2024, from $699.4 million at December 31, 2023. The increase was attributable to net income of $18.7 million for the nine months ended September 30, 2024, a $14.1 million increase in accumulated other comprehensive income, associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio due to the increase in market interest rates, and a $1.9 million increase in equity award activity, partially offset by $18.1 million in stock repurchases and $16.5 million in dividend payments. On April 24, 2024, the Board of Directors of the Company approved a $5.0 million stock repurchase program, which was completed in May 2024, and on June 14, 2024, the Board of Directors of the Company approved a $10.0 million stock repurchase program. During the nine months ended September 30, 2024, the Company repurchased 1.8 million of its common stock outstanding at an average price of $10.03 for a total of $18.1 million pursuant to the approved stock repurchase programs. As of September 30, 2024, the Company had no remaining capacity under its current repurchase program.

The Company’s most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac, that we can either borrow against or sell. We also have the ability to surrender bank-owned life insurance contracts. The surrender of these contracts would subject the Company to income taxes and penalties for increases in the cash surrender values over the original premium payments. We also have the ability to obtain additional funding from the FHLB and Federal Reserve Bank of New York utilizing unencumbered and unpledged securities and multifamily loans. The Company expects to have sufficient funds available to meet current commitments in the normal course of business. The Company’s on-hand liquidity ratio as of September 30, 2024 was 16.4%.

The Company had the following primary sources of liquidity at September 30, 2024 (dollars in thousands):

Cash and cash equivalents⁽¹⁾	$	218,733
Corporate bonds⁽²⁾	$	104,633
Multifamily loans⁽²⁾	$	699,343
Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac)⁽²⁾	$	491,985

__________________________________________________
(1) Excludes $14.2 million of cash at Northfield Bank.
(2) Represents estimated remaining borrowing potential.

The Company and the Bank utilize the Community Bank Leverage Ratio (“CBLR”) framework. The CBLR replaces the risk-based and leverage capital requirements in the generally applicable capital rules. At September 30, 2024, the Company and the Bank’s estimated CBLR ratios were 12.03% and 12.26%, respectively, which exceeded the minimum requirement to be considered well-capitalized of 9%.

Asset Quality

The following table details total non-accrual loans (excluding PCD), non-performing assets, loans over 90 days delinquent on which interest is accruing, and accruing loans 30 to 89 days delinquent at September 30, 2024, June 30, 2024, and December 31, 2023 (dollars in thousands):

	September 30, 2024			June 30, 2024			December 31, 2023
Non-accrual loans:
Held-for-investment
Real estate loans:
Multifamily	$	2,651		$	2,691		$	2,709
Commercial		8,823			10,244			6,491
One-to-four family residential		66			69			104
Home equity and lines of credit		1,123			1,124			499
Commercial and industrial		15,117			2,570			305
Other		6			6			7
Total non-accrual loans		27,786			16,704			10,115
Loans delinquent 90 days or more and still accruing:
Held-for-investment
Real estate loans:
Multifamily		—			—			201
Commercial		1,161			—			—
One-to-four family residential		304			136			406
Home equity and lines of credit		343			467			711
Commercial and industrial		835			—			—
Total loans held-for-investment delinquent 90 days or more and still accruing		2,643			603			1,318
Total non-performing loans/assets	$	30,429		$	17,307		$	11,433
Non-performing loans to total loans		0.75	%		0.42	%		0.27	%
Non-performing assets to total assets		0.53	%		0.30	%		0.20	%
Accruing loans 30 to 89 days delinquent	$	16,057		$	6,265		$	8,683

The Company’s non-performing loans at September 30, 2024 totaled $30.4 million, or 0.75%, of total loans as compared to $11.4 million, or 0.27%, at December 31, 2023. The $19.0 million increase in non-performing loans was primarily attributable to an increase in non-performing commercial and industrial loans of $15.6 million and an increase of $3.5 million in non-performing commercial real estate loans. One commercial and industrial relationship with an outstanding balance of $12.5 million at September 30, 2024, experienced credit deterioration and was placed on non-accrual status during the third quarter of 2024. The loan is currently in the process of being restructured and we expect to receive a partial payment of $10.0 million on or before October 31, 2024, with the remaining $2.5 million to be repaid over three years. The loan was individually evaluated for impairment, we charged off $878,000 and provided a specific reserve of $1.3 million. Additionally, management evaluated the collateral from the Company and assets subject to personal guarantees and, based on current estimates, believes there is adequate collateral and assets to support the current value of the loan absent the expected repayment of $10.0 million. Another commercial and industrial relationship with an outstanding balance of $750,000 is in the process of maturity extension. Additionally, there was an increase in non-performing unsecured small business loans. Unsecured small business loans totaled $31.0 million and $37.4 million at September 30, 2024 and December 31, 2023, respectively. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio.

The increase in non-performing commercial real estate loans was primarily attributable to one loan with a balance of $4.4 million, which was put on non-accrual status during the first quarter of 2024. Based on the results of the impairment analysis for this loan, no impairment reserve was necessary as the loan is adequately covered by collateral (a private residence and retail property, both located in New Jersey), with aggregate appraised values totaling $8.7 million.

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $16.1 million, $6.3 million and $8.7 million at September 30, 2024, June 30, 2024, and December 31, 2023, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2024, June 30, 2024, and December 31, 2023 (dollars in thousands):

	September 30, 2024		June 30, 2024		December 31, 2023
Held-for-investment
Real estate loans:
Multifamily	$	2,259	$	168	$	740
Commercial		5,689		1,557		1,010
One-to-four family residential		2,286		1,769		3,339
Home equity and lines of credit		1,369		786		817
Commercial and industrial loans		4,450		1,977		2,767
Other loans		4		8		10
Total delinquent accruing loans held-for-investment	$	16,057	$	6,265	$	8,683

The increase in multifamily delinquent loans was primarily due to two relationships totaling $1.5 million that became current subsequent to September 30, 2024. The increase in commercial real estate delinquent loans was primarily due to two participation loans totaling $5.6 million that matured, and the lead bank is in the process of extending their maturity and should become current in the fourth quarter of 2024. The increase in commercial and industrial delinquent loans from December 31, 2023, was primarily due to two loans to one borrower totaling $1.5 million which we expect to become current in the fourth quarter of 2024, and, to a lesser extent, an increase in delinquencies in unsecured small business loans.

Subsequent to the quarter end, $1.1 million of home equity and lines of credit loans, $1.5 million of one-to-four family residential loans, and $1.5 million of commercial and industrial loans became current.

PCD Loans (Held-for-Investment)

The Company accounts for PCD loans at estimated fair value using discounted expected future cash flows deemed to be collectible on the date acquired. Based on its detailed review of PCD loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans ($9.3 million at September 30, 2024 and $9.9 million at December 31, 2023, respectively) as accruing, even though they may be contractually past due. At September 30, 2024, 2.1% of PCD loans were past due 30 to 89 days, and 24.6% were past due 90 days or more, as compared to 2.9% and 27.1%, respectively, at December 31, 2023.

Our multifamily loan portfolio at September 30, 2024 totaled $2.64 billion, or 65% of our total loan portfolio, of which $447.5 million, or 11%, included loans collateralized by properties in New York with units subject to some percentage of rent regulation. The table below sets forth details about our multifamily loan portfolio in New York (dollars in thousands).

% Rent Regulated	Balance		% Portfolio Total NY Multifamily Portfolio		Average Balance		Largest Loan		LTV^*	Debt Service Coverage Ratio (DSCR)^*	30-89 Days Delinquent		Non-Accrual		Special Mention		Substandard
0	$	286,728	39.1	%	$	1,166	$	16,603	51.0%	1.57x	$	1,709	$	534	$	782	$	874
>0-10		4,745	0.7			1,582		2,128	51.4	1.46		—		—		—		—
>10-20		18,681	2.5			1,437		2,865	49.2	1.59		—		—		—		—
>20-30		19,585	2.7			2,176		5,512	54.1	1.64		—		—		—		—
>30-40		15,183	2.1			1,265		3,088	48.3	1.63		—		—		—		—
>40-50		22,208	3.0			1,306		2,740	48.2	1.84		—		—		—		—
>50-60		9,452	1.3			1,575		2,341	39.9	2.03		—		—		—		—
>60-70		19,201	2.6			3,200		11,339	53.0	1.46		—		—		—		—
>70-80		22,405	3.1			2,489		4,914	48.0	1.53		—		—		—		—
>80-90		20,820	2.8			1,157		3,148	46.6	1.71		—		—		—		—
>90-100		295,256	40.1			1,779		16,909	52.6	1.65		—		2,117		1,204		4,482
Total	$	734,264	100.0	%	$	1,454	$	16,909	51.2%	1.62x	$	1,709	$	2,651	$	1,986	$	5,356

The table below sets forth our New York rent-regulated loans by county (dollars in thousands).

County	Balance		LTV^*	DSCR^*
Bronx	$	118,400	51.7%	1.64x
Kings		191,745	51.5%	1.66
Nassau		2,176	36.2%	1.88
New York		49,871	47.3%	1.64
Queens		38,864	44.3%	1.81
Richmond		28,790	60.6%	1.64
Westchester		17,689	61.8%	1.37
Total	$	447,535	51.4%	1.65x

* Weighted Average

None of the loans that are rent-regulated in New York are interest only. During the remainder of 2024, one loan with an aggregate principal balance of $1.8 million will re-price.

About Northfield Bank

Northfield Bank, founded in 1887, operates 38 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.

Forward-Looking Statements: This release may contain certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong. They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties as described in our SEC filings, including, but not limited to, those related to general economic conditions, particularly in the market areas in which the Company operates, changes in liquidity, the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio, competition among depository and other financial institutions, including with respect to fees and interest rates, changes in laws or government regulations or policies affecting financial institutions, including changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, changes in asset quality, prepayment speeds, charge-offs and/or credit loss provisions, our ability to access cost-effective funding, changes in the value of our goodwill or other intangible assets, changes in regulatory fees, assessments and capital requirements, inflation and changes in the interest rate environment that reduce our margins, reduce the fair value of financial instruments or reduce our ability to originate loans, cyber security and fraud risks against our information technology and those of our third-party providers and vendors, the effects of war, conflict, and acts of terrorism, our ability to successfully integrate acquired entities, adverse changes in the securities markets, and the effects of the COVID-19 pandemic. Consequently, no forward-looking statement can be guaranteed. Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.


(Tables follow)

NORTHFIELD BANCORP, INC. SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA (Dollars in thousands, except per share amounts) (unaudited)

							At or For the
	At or For the Three Months Ended						Nine Months Ended
	September 30,				June 30		September 30,
	2024		2023		2024		2024		2023
Selected Financial Ratios:
Performance Ratios ⁽¹⁾
Return on assets (ratio of net income to average total assets)	0.46	%	0.59	%	0.41	%	0.43	%	0.71	%
Return on equity (ratio of net income to average equity)	3.74		4.74		3.45		3.59		5.69
Average equity to average total assets	12.24		12.49		12.00		12.09		12.44
Interest rate spread	1.42		1.69		1.44		1.42		1.91
Net interest margin	2.08		2.25		2.09		2.07		2.41
Efficiency ratio ⁽²⁾	64.07		64.65		72.89		69.44		60.06
Non-interest expense to average total assets	1.43		1.49		1.60		1.53		1.50
Non-interest expense to average total interest-earning assets	1.50		1.56		1.68		1.60		1.57
Average interest-earning assets to average interest-bearing liabilities	128.75		132.21		128.47		128.63		133.66
Asset Quality Ratios:
Non-performing assets to total assets	0.53		0.19		0.30		0.53		0.19
Non-performing loans ⁽³⁾ to total loans ⁽⁴⁾	0.75		0.24		0.42		0.75		0.24
Allowance for credit losses to non-performing loans	115.67		378.67		200.96		115.67		378.67
Allowance for credit losses to total loans held-for-investment, net ⁽⁵⁾	0.87		0.91		0.85		0.87		0.91

(1)	Annualized where appropriate.
(2)	The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(3)	Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCD loans), and are included in total loans held-for-investment, net.
(4)	Includes originated loans held-for-investment, PCD loans, acquired loans and loans held-for-sale.
(5)	Includes originated loans held-for-investment, PCD loans, and acquired loans.


NORTHFIELD BANCORP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share amounts) (unaudited)

	September 30, 2024			June 30, 2024			December 31, 2023
ASSETS:
Cash and due from banks	$	14,193		$	14,575		$	13,889
Interest-bearing deposits in other financial institutions		218,733			138,914			215,617
Total cash and cash equivalents		232,926			153,489			229,506
Trading securities		13,759			12,939			12,549
Debt securities available-for-sale, at estimated fair value		1,063,486			1,119,439			795,464
Debt securities held-to-maturity, at amortized cost		9,681			9,749			9,866
Equity securities		10,699			13,964			10,629
Loans held-for-sale		4,897			—			—
Loans held-for-investment, net		4,059,106			4,091,220			4,203,654
Allowance for credit losses		(35,197	)		(34,780	)		(37,535	)
Net loans held-for-investment		4,023,909			4,056,440			4,166,119
Accrued interest receivable		19,299			19,343			18,491
Bank-owned life insurance		174,482			173,483			171,543
Federal Home Loan Bank of New York stock, at cost		37,269			41,785			39,667
Operating lease right-of-use assets		28,943			29,305			30,202
Premises and equipment, net		22,973			23,628			24,771
Goodwill		41,012			41,012			41,012
Other assets		47,516			51,785			48,577
Total assets	$	5,730,851		$	5,746,361		$	5,598,396

LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits	$	3,875,569		$	3,798,474		$	3,878,435
Securities sold under agreements to repurchase		—			—			25,000
Federal Home Loan Bank advances and other borrowings		990,871			1,089,727			834,272
Subordinated debentures, net of issuance costs		61,386			61,331			61,219
Lease liabilities		33,529			34,035			35,205
Advance payments by borrowers for taxes and insurance		22,492			26,113			25,102
Accrued expenses and other liabilities		47,440			43,657			39,718
Total liabilities		5,031,287			5,053,337			4,898,951

STOCKHOLDERS’ EQUITY:
Total stockholders’ equity		699,564			693,024			699,445
Total liabilities and stockholders’ equity	$	5,730,851		$	5,746,361		$	5,598,396

Total shares outstanding		42,904,342			43,466,961			44,524,929
Tangible book value per share ⁽¹⁾	$	15.35		$	15.00		$	14.78

(1)

Tangible book value per share is calculated based on total stockholders’ equity, excluding intangible assets (goodwill and core deposit intangibles), divided by total shares outstanding as of the balance sheet date. Core deposit intangibles were $90, $111, and $154 at September 30, 2024, June 30, 2024, and December 31, 2023, respectively, and are included in other assets.


NORTHFIELD BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share and per share amounts) (unaudited)

	For the Three Months Ended									For the Nine Months Ended
	September 30,						June 30,			September 30,
		2024			2023			2024			2024			2023
Interest income:
Loans	$	46,016		$	46,213		$	45,967		$	138,030		$	135,220
Mortgage-backed securities		8,493			3,664			7,355			20,246			11,170
Other securities		2,684			1,095			3,506			10,031			3,593
Federal Home Loan Bank of New York dividends		914			933			935			2,819			2,125
Deposits in other financial institutions		1,211			831			2,457			7,060			2,225
Total interest income		59,318			52,736			60,220			178,186			154,333
Interest expense:
Deposits		20,304			13,614			20,664			60,241			31,918
Borrowings		9,949			8,593			10,041			30,653			24,182
Subordinated debt		836			837			828			2,492			2,484
Total interest expense		31,089			23,044			31,533			93,386			58,584
Net interest income		28,229			29,692			28,687			84,800			95,749
Provision/(benefit) for credit losses		2,542			188			(618	)		2,339			1,082
Net interest income after (benefit)/provision for credit losses		25,687			29,504			29,305			82,461			94,667
Non-interest income:
Fees and service charges for customer services		1,611			1,317			1,570			4,796			4,006
Income on bank-owned life insurance		999			920			976			2,939			2,679
(Losses)/gains on available-for-sale debt securities, net		(7	)		—			1			(6	)		(17	)
Gains/(losses) on trading securities, net		710			(295	)		188			1,597			723
Gain on sale of loans		—			99			51			51			134
Other		265			80			73			441			744
Total non-interest income		3,578			2,121			2,859			9,818			8,269
Non-interest expense:
Compensation and employee benefits		11,424			10,920			13,388			37,577			34,310
Occupancy		3,030			3,416			3,222			9,805			10,032
Furniture and equipment		450			479			477			1,411			1,393
Data processing		1,780			1,994			2,177			6,104			6,308
Professional fees		943			883			681			2,433			2,622
Advertising		282			414			482			1,282			1,834
Federal Deposit Insurance Corporation insurance		626			591			649			1,863			1,763
Credit loss expense/(benefit) for off-balance sheet exposures		151			160			103			337			(390	)
Other		1,692			1,710			1,814			4,891			4,598
Total non-interest expense		20,378			20,567			22,993			65,703			62,470
Income before income tax expense		8,887			11,058			9,171			26,576			40,466
Income tax expense		2,364			2,877			3,214			7,882			11,019
Net income	$	6,523		$	8,181		$	5,957		$	18,694		$	29,447
Net income per common share:
Basic	$	0.16		$	0.19		$	0.14		$	0.45		$	0.67
Diluted	$	0.16		$	0.19		$	0.14		$	0.45		$	0.67
Basic average shares outstanding		41,028,213			42,866,246			41,999,541			41,794,149			43,848,873
Diluted average shares outstanding		41,088,637			42,918,174			42,002,650			41,829,230			43,927,350


NORTHFIELD BANCORP, INC. ANALYSIS OF NET INTEREST INCOME (Dollars in thousands) (unaudited)

	For the Three Months Ended
	September 30, 2024						June 30, 2024						September 30, 2023
	Average Outstanding Balance		Interest		Average Yield/ Rate ⁽¹⁾		Average Outstanding Balance		Interest		Average Yield/ Rate ⁽¹⁾		Average Outstanding Balance		Interest		Average Yield/ Rate ⁽¹⁾
Interest-earning assets:
Loans ⁽²⁾	$	4,079,974	$	46,016	4.49	%	$	4,128,105	$	45,967	4.48	%	$	4,252,752	$	46,213	4.31	%
Mortgage-backed securities ⁽³⁾		901,042		8,493	3.75			824,498		7,355	3.59			660,753		3,664	2.20
Other securities ⁽³⁾		273,312		2,684	3.91			333,855		3,506	4.22			209,341		1,095	2.08
Federal Home Loan Bank of New York stock		38,044		914	9.56			38,707		935	9.72			41,278		933	8.97
Interest-earning deposits in financial institutions		99,837		1,211	4.83			191,470		2,457	5.16			73,005		831	4.52
Total interest-earning assets		5,392,209		59,318	4.38			5,516,635		60,220	4.39			5,237,129		52,736	4.00
Non-interest-earning assets		275,342						265,702						248,315
Total assets	$	5,667,551					$	5,782,337					$	5,485,444

Interest-bearing liabilities:
Savings, NOW, and money market accounts	$	2,417,725	$	12,717	2.09	%	$	2,490,372	$	13,183	2.13	%	$	2,408,218	$	8,865	1.46	%
Certificates of deposit		700,763		7,587	4.31			701,272		7,481	4.29			551,904		4,749	3.41
Total interest-bearing deposits		3,118,488		20,304	2.59			3,191,644		20,664	2.60			2,960,122		13,614	1.82
Borrowed funds		1,008,338		9,949	3.93			1,041,035		10,041	3.88			939,922		8,593	3.63
Subordinated debt		61,350		836	5.42			61,294		828	5.43			61,127		837	5.43
Total interest-bearing liabilities		4,188,176		31,089	2.95			4,293,973		31,533	2.95			3,961,171		23,044	2.31
Non-interest bearing deposits		683,283						691,384						739,266
Accrued expenses and other liabilities		102,233						103,082						100,103
Total liabilities		4,973,692						5,088,439						4,800,540
Stockholders’ equity		693,859						693,898						684,904
Total liabilities and stockholders’ equity	$	5,667,551					$	5,782,337					$	5,485,444

Net interest income			$	28,229					$	28,687					$	29,692
Net interest rate spread ⁽⁴⁾					1.42	%					1.44	%					1.69	%
Net interest-earning assets ⁽⁵⁾	$	1,204,033					$	1,222,662					$	1,275,958
Net interest margin ⁽⁶⁾					2.08	%					2.09	%					2.25	%
Average interest-earning assets to interest-bearing liabilities					128.75	%					128.47	%					132.21	%

(1)	Average yields and rates are annualized.
(2)	Includes non-accruing loans.
(3)	Securities available-for-sale and other securities are reported at amortized cost.
(4)	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.
(5)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)	Net interest margin represents net interest income divided by average total interest-earning assets.

	For the Nine Months Ended
	September 30, 2024						September 30, 2023
	Average Outstanding Balance		Interest		Average Yield/ Rate ⁽¹⁾		Average Outstanding Balance		Interest		Average Yield/ Rate ⁽¹⁾
Interest-earning assets:
Loans ⁽²⁾	$	4,127,409	$	138,030	4.47	%	$	4,260,827	$	135,220	4.24	%
Mortgage-backed securities ⁽³⁾		791,850		20,246	3.42			703,320		11,170	2.12
Other securities ⁽³⁾		332,831		10,031	4.03			241,280		3,593	1.99
Federal Home Loan Bank of New York stock		38,781		2,819	9.71			41,093		2,125	6.91
Interest-earning deposits in financial institutions		184,420		7,060	5.11			72,683		2,225	4.09
Total interest-earning assets		5,475,291		178,186	4.35			5,319,203		154,333	3.88
Non-interest-earning assets		269,180						244,319
Total assets	$	5,744,471					$	5,563,522

Interest-bearing liabilities:
Savings, NOW, and money market accounts	$	2,457,320	$	38,231	2.08	%	$	2,443,400	$	19,194	1.05	%
Certificates of deposit		685,510		22,010	4.29			572,283		12,724	2.97
Total interest-bearing deposits		3,142,830		60,241	2.56			3,015,683		31,918	1.42
Borrowed funds		1,052,589		30,653	3.89			902,802		24,182	3.58
Subordinated debt		61,294		2,492	5.43			61,164		2,484	5.43
Total interest-bearing liabilities	$	4,256,713		93,386	2.93		$	3,979,649		58,584	1.97
Non-interest bearing deposits		691,406						788,991
Accrued expenses and other liabilities		101,639						102,765
Total liabilities		5,049,758						4,871,405
Stockholders’ equity		694,713						692,117
Total liabilities and stockholders’ equity	$	5,744,471					$	5,563,522

Net interest income			$	84,800					$	95,749
Net interest rate spread ⁽⁴⁾					1.42	%					1.91	%
Net interest-earning assets ⁽⁵⁾	$	1,218,578					$	1,339,554
Net interest margin ⁽⁶⁾					2.07	%					2.41	%
Average interest-earning assets to interest-bearing liabilities					128.63	%					133.66	%

(1)	Average yields and rates are annualized.
(2)	Includes non-accruing loans.
(3)	Securities available-for-sale and other securities are reported at amortized cost.
(4)	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.
(5)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)	Net interest margin represents net interest income divided by average total interest-earning assets.

Company Contact:
William R. Jacobs
Chief Financial Officer
Tel: (732) 499-7200 ext. 2519

The MIL Network –

January 25, 2025

Category: Intelligence