Category: Internet Communications Technology

  • MIL-OSI: PR – Bitget Reports Strong Q3 2024 Performance, Strengthening Its Position as the 4th Largest Crypto Exchange

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Oct. 28, 2024 (GLOBE NEWSWIRE) — Bitget, a leading global cryptocurrency exchange and Web3 company, has released its Q3 2024 Transparency Report, showcasing significant advancements in user growth, token offerings, and strategic initiatives. With a strong focus on enhancing financial accessibility and advancing blockchain technology, Bitget has reinforced its position as one of the top global players in the crypto industry.

    Key Q3 2024 Highlights:

    1. Surpassing 45 Million Users and Strengthening Market Position In Q3 2024, Bitget achieved a milestone by surpassing 45 million registered users globally, placing it as the 4th largest crypto exchange by trading volume. The platform’s user base growth, up by 400% since last year, was fueled by innovative product offerings and expansion into new regions, including Africa, South Asia, and Southeast Asia. The company’s focus on accessibility and user-centric design aligns with its mission of enabling financial freedom for all.
    2. Expanding Token Offerings and Staking Opportunities Bitget added 72 new token listings in Q3, bringing its lineup to over 800 tokens and 900+ spot trading pairs. Among the new listings, POL, DRIFT, WUSD, REEF, and MOTHER stood out with the highest Total Value Locked (TVL) growth. Bitget’s Pre-market platform continued to attract early traders, featuring 12 tokens like CATI, MOCA, HMSTR, DOGS, and ZKL in Q3, with 53,800 traders participating and a cumulative transaction volume of $23 million.
    3. Additionally, Bitget’s PoolX staking platform, launched in April, has become a popular choice among users, offering high-yield staking options. In Q3, PoolX recorded over 94,805 participants, with the total staked amount doubling from Q2 to reach $2.3 billion USD. Popular pools include BGB, BTC, ETH, and USDT, providing users with new avenues to earn rewards on the platform.
    4. Commitment to the TON Ecosystem and Strategic Investments As part of its $30 million joint investment with Foresight Ventures into The Open Network (TON) ecosystem, Bitget has supported the rapid expansion of Telegram-based projects, including DOGS, Hamster Kombat, and Notcoin. With nearly 1 billion Telegram users worldwide, TON’s ecosystem has seen exponential growth, making Bitget a vital entry point for users interested in TON-based projects and decentralized applications.
    5. Strategic Partnership with LALIGA to Drive Web3 Adoption Bitget expanded its footprint in sports by forming a multi-million dollar partnership with LALIGA. This collaboration aims to increase crypto awareness and Web3 adoption across Eastern Europe, Southeast Asia, and LATAM, leveraging LALIGA’s massive global audience to attract a new wave of crypto enthusiasts. This partnership aligns with Bitget’s mission to bring blockchain technology to mainstream audiences.
    6. Enhanced Token-Discovery Through Nansen Collaboration Bitget collaborated with Nansen to refine its token-discovery strategies. By leveraging on-chain data and community insights, Bitget offers traders an advanced toolkit for identifying promising tokens. The strategic approach, combined with Nansen’s analytical tools, led to 240 new token listings since April, making it one of the most active exchanges in early-stage token offerings.

    Gracy Chen, CEO of Bitget, commented on the report: “Our growth in Q3 2024 reflects our commitment to creating an accessible, secure, and innovative trading platform for users worldwide. By continuously expanding our offerings, supporting impactful projects, and forming strategic partnerships, Bitget is helping shape the future of blockchain and finance. We remain focused on our mission to drive financial freedom and to empower the next billion users through accessible and user-friendly digital solutions.”

    Bitget’s success in Q3 2024 shows its growing influence in the crypto industry, marked by strategic initiatives, innovative products, and a commitment to user engagement. Looking ahead, Bitget is bound to continue its mission of bridging the gap between centralized and decentralized finance while expanding its global reach.

    For more information, visit Bitget Blog.

    About Bitget

    Established in 2018, Bitget is the world’s leading cryptocurrency exchange and Web3 company. Serving over 45 million users in 150+ countries and regions, the Bitget exchange is committed to helping users trade smarter with its pioneering copy trading feature and other trading solutions, while offering real-time access to Bitcoin price, Ethereum price, and other cryptocurrency prices. Formerly known as BitKeep, Bitget Wallet is a world-class multi-chain crypto wallet that offers an array of comprehensive Web3 solutions and features including wallet functionality, token swap, NFT Marketplace, DApp browser, and more.

    Bitget is at the forefront of driving crypto adoption through strategic partnerships, such as its role as the Official Crypto Partner of the World’s Top Football League, LALIGA, in EASTERN, SEA and LATAM market, as well as a global partner of Turkish National athletes Buse Tosun Çavuşoğlu (Wrestling world champion), Samet Gümüş (Boxing gold medalist) and İlkin Aydın (Volleyball national team), to inspire the global community to embrace the future of cryptocurrency.

    For more information, visit: Website | Twitter | Telegram | LinkedIn | Discord | Bitget Wallet

    Risk Warning: Digital asset prices are subject to fluctuation and may experience significant volatility. Investors are advised to only allocate funds they can afford to lose. The value of any investment may be impacted, and there is a possibility that financial objectives may not be met, nor the principal investment recovered. Independent financial advice should always be sought, and personal financial experience and standing carefully considered. Past performance is not a reliable indicator of future results. Bitget accepts no liability for any potential losses incurred. Nothing contained herein should be construed as financial advice. For further information, please refer to our Terms of Use.

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/661a75c4-26df-4658-b301-5c44925c9290

    The MIL Network

  • MIL-OSI: Coastal Financial Corporation Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    EVERETT, Wash., Oct. 28, 2024 (GLOBE NEWSWIRE) — Coastal Financial Corporation (Nasdaq: CCB) (the “Company”, “Coastal”, “we”, “our”, or “us”), the holding company for Coastal Community Bank (the “Bank”), through which it operates a community-focused bank with an industry leading banking as a service (“BaaS”) segment, today reported unaudited financial results for the quarter ended September 30, 2024, including net income of $13.5 million, or $0.97 per diluted common share, compared to $11.6 million, or $0.84 per diluted common share, for the three months ended June 30, 2024. 

    Management Discussion of the Quarter

    “The third quarter demonstrated strong momentum across both our community bank and CCBX operating segments, despite a still challenging operating environment,” said CEO Eric Sprink. “We saw high quality net loan growth of $92.4 million despite selling $423.7 million in loans. We are implementing strategies to increase fee income and we continue to build out and invest in an infrastructure that is scalable, and that we believe will enable us to be innovative leaders in financial services.”

    Key Points for Third Quarter and Our Go-Forward Strategy

    • Balance Sheet Well Positioned for Lower Rates. Our balance sheet stands in a modestly liability sensitive position as of September 30, 2024, with $1.95 billion of CCBX deposits that contractually reprice lower immediately upon any reduction in the Federal Funds Rate, with $1.09 billion of CCBX loans repricing in 90 days or less following such reduction. The Federal Open Market Committee recently lowered the targeted Federal Funds rate 0.50% on September 19, 2024; a reduction of 0.50% compared to June 30, 2024 and September 30, 2023. The rate decrease came late in the quarter, so the full impact of this and any subsequent rate changes will be reflected in future periods.
    • Expanding Relationships with CCBX Partners. We continue to focus on expanding product offerings with existing CCBX partners. We believe that launching new products with existing partners positions us to reach a wide and established customer base with modest increase in enterprise risk. Products launched in 2024 with existing partners have gained traction and are growing the balance sheet and increasing income. The pipeline for CCBX is active, although we expect to remain selective in adding new partners to manage risk and capital.
    • On-going Loan Sales. We sold $423.7 million loans in the quarter ended September 30, 2024 as part of our strategy to balance credit risk, manage partner and lending limits, protect capital levels and move credit card balances to an off balance sheet fee generating model. We are retaining a portion of the fee income for our role in processing transactions on sold credit card balances. This provides an on-going and passive revenue stream with no on balance sheet risk.
    • Continued Regulatory and Compliance Infrastructure Investments Position Us Well for Next Phase of Growth. We continue to utilize co-sourced personnel as a component of our risk and compliance efforts. This flexible co-sourcing approach allows us to manage the growth of our internal team while also ensuring CCBX has the resources it needs. While we remain 100% indemnified against partner fraud losses, we were encouraged to see fraudulent activity amongst our partners remains low during the current quarter, compared to the same period last year, a positive indicator of our continued investments in our risk infrastructure.
    • Reorganization and Strengthening of Talent to Accommodate Growth and Plans for the Future. We recently announced the bifurcation of the President of the Bank into two roles, appointing Brian Hamilton as President of CCBX, the Fintech and BaaS segment of the Bank, with Curt Queyrouze serving as President of the community bank and corporate credit.

    Third Quarter 2024 Financial Highlights

    The tables below outline some of our key operating metrics.

        Three Months Ended
    (Dollars in thousands, except share and per share data; unaudited)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Income Statement Data:                    
    Interest and dividend income   $ 105,079     $ 97,487     $ 90,472     $ 88,243     $ 88,331  
    Interest expense     32,892       31,250       29,536       28,586       26,102  
    Net interest income     72,187       66,237       60,936       59,657       62,229  
    Provision for credit losses     70,257       62,325       83,158       60,789       27,253  
    Net interest (expense)/ income after provision for credit losses     1,930       3,912       (22,222 )     (1,132 )     34,976  
    Noninterest income     80,068       69,918       86,955       64,694       34,579  
    Noninterest expense     65,616       58,809       56,018       51,703       56,501  
    Provision for income tax     2,926       3,425       1,915       2,847       2,784  
    Net income     13,456       11,596       6,800       9,012       10,270  
                         
        As of and for the Three Month Period
        September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Balance Sheet Data:                    
    Cash and cash equivalents   $ 484,026     $ 487,245     $ 515,128     $ 483,128     $ 474,946  
    Investment securities     48,620       49,213       50,090       150,364       141,489  
    Loans held for sale     7,565             797              
    Loans receivable     3,418,832       3,326,460       3,199,554       3,026,092       2,967,035  
    Allowance for credit losses     (170,263 )     (147,914 )     (139,258 )     (116,958 )     (101,085 )
    Total assets     4,065,821       3,961,546       3,865,258       3,753,366       3,678,265  
    Interest bearing deposits     3,047,861       2,949,643       2,888,867       2,735,161       2,637,914  
    Noninterest bearing deposits     579,427       593,789       574,112       625,202       651,786  
    Core deposits (1)     3,190,869       3,528,339       3,447,864       3,342,004       3,269,082  
    Total deposits     3,627,288       3,543,432       3,462,979       3,360,363       3,289,700  
    Total borrowings     47,847       47,810       47,771       47,734       47,695  
    Total shareholders’ equity     331,930       316,693       303,709       294,978       284,450  
                         
    Share and Per Share Data (2):                    
    Earnings per share – basic   $ 1.00     $ 0.86     $ 0.51     $ 0.68     $ 0.77  
    Earnings per share – diluted   $ 0.97     $ 0.84     $ 0.50     $ 0.66     $ 0.75  
    Dividends per share                              
    Book value per share (3)   $ 24.51     $ 23.54     $ 22.65     $ 22.17     $ 21.38  
    Tangible book value per share (4)   $ 24.51     $ 23.54     $ 22.65     $ 22.17     $ 21.38  
    Weighted avg outstanding shares – basic     13,447,066       13,412,667       13,340,997       13,286,828       13,285,974  
    Weighted avg outstanding shares – diluted     13,822,270       13,736,508       13,676,917       13,676,513       13,675,833  
    Shares outstanding at end of period     13,543,282       13,453,805       13,407,320       13,304,339       13,302,449  
    Stock options outstanding at end of period     198,370       286,119       309,069       354,969       356,359  
                                             
    See footnotes that follow the tables below
     
        As of and for the Three Month Period
        September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Credit Quality Data:                    
    Nonperforming assets (5) to total assets     1.34 %     1.34 %     1.42 %     1.43 %     1.18 %
    Nonperforming assets (5) to loans receivable and OREO     1.60 %     1.60 %     1.71 %     1.78 %     1.47 %
    Nonperforming loans (5) to total loans receivable     1.60 %     1.60 %     1.71 %     1.78 %     1.47 %
    Allowance for credit losses to nonperforming loans     311.5 %     278.1 %     253.8 %     217.2 %     232.2 %
    Allowance for credit losses to total loans receivable     4.98 %     4.45 %     4.35 %     3.86 %     3.41 %
    Gross charge-offs   $ 53,305     $ 55,207     $ 58,994     $ 47,652     $ 37,879  
    Gross recoveries   $ 4,069     $ 1,973     $ 1,776     $ 2,781     $ 1,045  
    Net charge-offs to average loans (6)     5.65 %     6.57 %     7.34 %     5.92 %     4.77 %
                         
    Capital Ratios:                    
    Company                    
    Tier 1 leverage capital     8.40 %     8.31 %     8.24 %     8.10 %     8.03 %
    Common equity Tier 1 risk-based capital     9.26 %     9.03 %     8.98 %     9.10 %     9.00 %
    Tier 1 risk-based capital     9.35 %     9.13 %     9.08 %     9.20 %     9.11 %
    Total risk-based capital     11.90 %     11.70 %     11.70 %     11.87 %     11.80 %
    Bank                    
    Tier 1 leverage capital     9.29 %     9.24 %     9.19 %     9.06 %     8.99 %
    Common equity Tier 1 risk-based capital     10.36 %     10.15 %     10.14 %     10.30 %     10.21 %
    Tier 1 risk-based capital     10.36 %     10.15 %     10.14 %     10.30 %     10.21 %
    Total risk-based capital     11.65 %     11.44 %     11.43 %     11.58 %     11.48 %
                                             

    (1)  Core deposits are defined as all deposits excluding brokered and all time deposits.
    (2)  Share and per share amounts are based on total actual or average common shares outstanding, as applicable.
    (3)  We calculate book value per share as total shareholders’ equity at the end of the relevant period divided by the outstanding number of our common shares at the end of each period.
    (4)  Tangible book value per share is a non-GAAP financial measure. We calculate tangible book value per share as total shareholders’ equity at the end of the relevant period, less goodwill and other intangible assets, divided by the outstanding number of our common shares at the end of each period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets as of any of the dates indicated. As a result, tangible book value per share is the same as book value per share as of each of the dates indicated.
    (5)  Nonperforming assets and nonperforming loans include loans 90+ days past due and accruing interest.
    (6)  Annualized calculations.

    Key Performance Ratios

    Return on average assets (“ROA”) was 1.34% for the quarter ended September 30, 2024 compared to 1.21% and 1.13% for the quarters ended June 30, 2024 and September 30, 2023, respectively.  ROA for the quarter ended September 30, 2024, increased 0.13% and 0.21% compared to June 30, 2024 and September 30, 2023, respectively. Noninterest expenses were higher for the quarter ended September 30, 2024 compared to the quarters ended June 30, 2024 and September 30, 2023 largely due to an increase in BaaS loan expense, which is directly related to the increase in the amount of interest earned on CCBX loans.

    The following table shows the Company’s key performance ratios for the periods indicated.  

        Three Months Ended
    (unaudited)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
                         
    Return on average assets (1)   1.34 %   1.21 %   0.73 %   0.97 %   1.13 %
    Return on average equity (1)   16.67 %   15.22 %   9.21 %   12.35 %   14.60 %
    Yield on earnings assets (1)   10.79 %   10.49 %   10.07 %   9.77 %   10.08 %
    Yield on loans receivable (1)   11.43 %   11.23 %   10.85 %   10.71 %   10.84 %
    Cost of funds (1)   3.62 %   3.60 %   3.52 %   3.39 %   3.18 %
    Cost of deposits (1)   3.59 %   3.58 %   3.49 %   3.36 %   3.14 %
    Net interest margin (1)   7.41 %   7.13 %   6.78 %   6.61 %   7.10 %
    Noninterest expense to average assets (1)   6.54 %   6.14 %   6.04 %   5.56 %   6.23 %
    Noninterest income to average assets (1)   7.98 %   7.30 %   9.38 %   6.95 %   3.81 %
    Efficiency ratio   43.10 %   43.19 %   37.88 %   41.58 %   58.36 %
    Loans receivable to deposits (2)   94.46 %   93.88 %   92.42 %   90.05 %   90.19 %
                                   

    (1)  Annualized calculations shown for quarterly periods presented.
    (2)  Includes loans held for sale.

    Management Outlook; CEO Eric Sprink

    “As we look ahead to the fourth quarter and 2025, we remain laser focused on building out our technology and risk management infrastructure to more efficiently support our next phase of growth within CCBX. While the balance sheet re-mix earlier this year resulted in a short-term reduction to income, we continue to make strategic decisions which are enhancing credit quality, generating passive fee income, strengthening our talent and growing relationships with established and prospective CCBX partners all of which are expected to position Coastal to be more profitable in 2025.”

    Coastal Financial Corporation Overview

    The Company has one main subsidiary, the Bank which consists of three segments: CCBX, the community bank and treasury & administration.  The CCBX segment includes all of our BaaS activities, the community bank segment includes all community banking activities, and the treasury & administration segment includes treasury management, overall administration and all other aspects of the Company.  

    CCBX Performance Update

    Our CCBX segment continues to evolve, and we have 22 relationships, at varying stages, as of September 30, 2024.  We continue to refine the criteria for CCBX partnerships, are exiting relationships where it makes sense for us to do so and are focusing on larger more established partners, with experienced management teams, existing customer bases and strong financial positions.

    We are expanding product offerings with our existing CCBX partners. We believe that launching new products with existing partners positions us to reach a wide and established customer base with a modest increase in regulatory risk given we have already vetted these partners and have operational history. Products launched earlier in the year with existing partners have gained traction and are growing the balance sheet and increasing income. We continue to sell loans as part of our strategy to balance partner and lending limits, and manage the loan portfolio and credit quality. We retain a portion of the fee income for our role in processing transactions on sold credit card balances. This is expected to provide an on-going and passive revenue stream with no on balance sheet risk.

    The following table illustrates the activity and evolution in CCBX relationships for the periods presented.

        As of
    (unaudited)   September 30,
    2024
    June 30,
    2024
    September 30,
    2023
    Active   19 19 18
    Friends and family / testing   1 1 1
    Implementation / onboarding   1 1 1
    Signed letters of intent   1 0 1
    Wind down – active but preparing to exit relationship   0 0 1
    Total CCBX relationships   22 21 22
     

    CCBX loans increased $106.9 million, or 7.6%, despite selling $423.7 million loans during the three months ended September 30, 2024 to $1.52 billion, while we continued to enhance credit standards on new CCBX loan originations. In accordance with the program agreement for one partner, effective April 1, 2024, the portion of the CCBX portfolio that we are responsible for losses on decreased from 10% to 5%. At September 30, 2024 the portion of this portfolio for which we are responsible represented $19.8 million in loans.

    The following table details the CCBX loan portfolio:

    CCBX   As of
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Commercial and industrial loans:                        
    Capital call lines   $ 103,924     6.8 %   $ 109,133     7.7 %   $ 114,174     9.6 %
    All other commercial & industrial loans     36,494     2.4       41,731     3.0       58,869     5.0  
    Real estate loans:                        
    Residential real estate loans     265,402     17.5       287,950     20.4       251,775     21.3  
    Consumer and other loans:                        
    Credit cards     633,691     41.6       549,241     38.7       440,993     37.3  
    Other consumer and other loans     482,228     31.7       426,809     30.2       316,987     26.8  
    Gross CCBX loans receivable     1,521,739     100.0 %     1,414,864     100.0 %     1,182,798     100.0 %
    Net deferred origination (fees) costs     (447 )         (438 )         (424 )    
    Loans receivable   $ 1,521,292         $ 1,414,426         $ 1,182,374      
    Loan Yield – CCBX (1)(2)     17.35 %         17.77 %         17.05 %    
                             

    (1)  CCBX yield does not include the impact of BaaS loan expense.  BaaS loan expense represents the amount paid or payable to partners for credit enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
    (2)  Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.

    The increase in CCBX loans in the quarter ended September 30, 2024, includes an increase of $139.9 million or 14.3%, in consumer and other loans, partially offset by a $22.5 million, or 7.8%, decrease in residential real estate loans and a decrease of $5.2 million, or 4.8%, in capital call lines as a result of normal balance fluctuations and business activities. We continue to monitor and manage the CCBX loan portfolio, and sold $423.7 million in CCBX loans during the quarter ended September 30, 2024 compared to sales of $155.2 million in the quarter ended June 30, 2024. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio and generate off balance sheet fee income.

    Our credit card program through CCBX continues to grow in dollars and number of active cards as shown in the graph below:

    The following table details the CCBX deposit portfolio:

    CCBX   As of
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Demand, noninterest bearing   $ 60,655     2.9 %   $ 62,234     3.0 %   $ 67,782     3.9 %
    Interest bearing demand and money market     1,991,858     94.6       1,989,105     96.7       1,679,921     95.9  
    Savings     5,204     0.3       5,150     0.3       4,529     0.2  
    Total core deposits     2,057,717     97.8       2,056,489     100.0       1,752,232     100.0  
    Other deposits     47,046     2.2           0.0            
    Total CCBX deposits   $ 2,104,763     100.0 %   $ 2,056,489     100.0 %   $ 1,752,232     100.0 %
    Cost of deposits (1)     4.82 %         4.92 %         4.80 %    

    (1)  Cost of deposits is annualized for the three months ended for each period presented.

    CCBX deposits increased $48.3 million, or 2.3%, in the three months ended September 30, 2024 to $2.10 billion. This excludes the $214.5 million in CCBX deposits that were transferred off balance sheet for increased Federal Deposit Insurance Corporation (“FDIC”) insurance coverage purposes, compared to $117.7 million for the quarter ended June 30, 2024. Amounts in excess of FDIC insurance coverage are transferred, using a third party facilitator/vendor sweep product, to participating financial institutions.

    Community Bank Performance Update

    In the quarter ended September 30, 2024, the community bank saw net loans decrease $14.5 million, or 0.8%, to $1.90 billion.

    The following table details the Community Bank loan portfolio:

    Community Bank   As of
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Commercial and industrial loans   $ 152,161     8.0 %   $ 144,436     7.5 %   $ 158,232     8.8 %
    Real estate loans:                        
    Construction, land and land development loans     163,051     8.6       173,064     9.0       167,686     9.4  
    Residential real estate loans     212,467     11.2       229,639     12.0       225,372     12.6  
    Commercial real estate loans     1,362,452     71.5       1,357,979     70.8       1,237,849     69.1  
    Consumer and other loans:                        
    Other consumer and other loans     14,173     0.7       14,220     0.7       2,483     0.1  
    Gross Community Bank loans receivable     1,904,304     100.0 %     1,919,338     100.0 %     1,791,622     100.0 %
    Net deferred origination fees     (6,764 )         (7,304 )         (6,961 )    
    Loans receivable   $ 1,897,540         $ 1,912,034         $ 1,784,661      
    Loan Yield(1)     6.64 %         6.52 %         6.20 %    

    (1)  Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.

    Community bank loans had a $10.0 million decrease in construction, land and land development loans, partially offset by an increase of $7.7 million in commercial and industrial loans and an increase in commercial real estate loans of $4.5 million during the quarter ended September 30, 2024; consumer and other loans were flat.

    The following table details the community bank deposit portfolio:

    Community Bank   As of
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Demand, noninterest bearing   $ 518,772     34.1 %   $ 531,555     35.6 %   $ 584,004     37.9 %
    Interest bearing demand and money market     552,108     36.3       876,668     59.0       852,747     55.5  
    Savings     62,272     4.1       63,627     4.3       80,099     5.2  
    Total core deposits     1,133,152     74.5       1,471,850     98.9       1,516,850     98.6  
    Other deposits     373,681     24.5       1     0.0       1     0.0  
    Time deposits less than $100,000     6,305     0.4       6,741     0.5       8,635     0.6  
    Time deposits $100,000 and over     9,387     0.6       8,351     0.6       11,982     0.8  
    Total Community Bank deposits   $ 1,522,525     100.0 %   $ 1,486,943     100.0 %   $ 1,537,468     100.0 %
    Cost of deposits(1)     1.92 %         1.77 %         1.31 %    

    (1)  Cost of deposits is annualized for the three months ended for each period presented.

    Community bank deposits increased $35.6 million, or 2.4%, during the three months ended September 30, 2024 to $1.52 billion. This is the second consecutive quarter of growth after allowing higher rate balances to run-off earlier in the year. The community bank segment includes noninterest bearing deposits of $518.8 million, or 34.1%, of total community bank deposits, resulting in a cost of deposits of 1.92%, which compared to 1.77% for the quarter ended June 30, 2024.

    Net Interest Income and Margin Discussion

    Net interest income was $72.2 million for the quarter ended September 30, 2024, an increase of $5.9 million, or 9.0%, from $66.2 million for the quarter ended June 30, 2024, and an increase of $10.0 million, or 16.0%, from $62.2 million for the quarter ended September 30, 2023. The increase in net interest income compared to June 30, 2024, was a result of increased interest income due to an increase in average loans receivable partially offset by an increase in cost of funds. The increase in net interest income compared to September 30, 2023 was largely related to increased yield on loans resulting from higher interest rates and growth in higher yielding loans partially offset by an increase in cost of funds relating to higher interest rates and growth in interest bearing deposits.  

    Net interest margin was 7.41% for the three months ended September 30, 2024, compared to 7.13% for the three months ended June 30, 2024, with the increase primarily due to higher loan yields. Net interest margin was 7.10% for the three months ended September 30, 2023. The increase in net interest margin for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely due to an increase in loan yield partially offset by higher interest rates on interest bearing deposits. Interest and fees on loans receivable increased $8.6 million, or 9.5%, to $99.6 million for the three months ended September 30, 2024, compared to $90.9 million for the three months ended June 30, 2024, and increased $15.9 million, or 19.1%, compared to $83.7 million for the three months ended September 30, 2023, due to an increase in outstanding balances and higher interest rates. 

    Average investment securities decreased $795,000 to $49.0 million compared to the three months ended June 30, 2024 and decreased $69.0 million compared to the three months ended September 30, 2023 as a result of maturing securities.

    Cost of funds was 3.62% for the quarter ended September 30, 2024, an increase of 2 basis points from the quarter ended June 30, 2024 and an increase of 44 basis points from the quarter ended September 30, 2023. Cost of deposits for the quarter ended September 30, 2024 was 3.59%, compared to 3.58% for the quarter ended June 30, 2024, and 3.14% for the quarter ended September 30, 2023. The increased cost of funds and deposits compared to June 30, 2024 and September 30, 2023 was due to the continued high interest rate environment. The late September reduction in the Fed funds rate is expected to help to lower our cost of deposits in future periods.

    The following table summarizes the average yield on loans receivable and cost of deposits:

        For the Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
        Yield on
    Loans (2)
      Cost of
    Deposits (2)
      Yield on
    Loans (2)
      Cost of
    Deposits (2)
      Yield on
    Loans (2)
      Cost of
    Deposits (2)
    Community Bank   6.64 %   1.92 %   6.52 %   1.77 %   6.20 %   1.31 %
    CCBX (1)   17.35 %   4.82 %   17.77 %   4.92 %   17.05 %   4.80 %
    Consolidated   11.43 %   3.59 %   11.23 %   3.58 %   10.84 %   3.14 %

    (1)  CCBX yield on loans does not include the impact of BaaS loan expense.  BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans.  To determine Net BaaS loan income earned from CCBX loan relationships, the Company takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income which can be compared to interest income on the Company’s community bank loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
    (2)  Annualized calculations for periods shown.

    The following tables illustrates how BaaS loan interest income is affected by BaaS loan expense resulting in net BaaS loan income and the associated yield:

        For the Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands, unaudited)   Income /
    Expense
      Income /
    expense divided
    by average
    CCBX loans
    (2)
      Income /
    Expense
      Income /
    expense divided
    by

    average CCBX
    loans
    (2)
      Income /
    Expense
      Income /
    expense divided
    by average
    CCBX loans
    (2)
    BaaS loan interest income   $ 67,692   17.35 %   $ 60,203   17.77 %   $ 56,279   17.05 %
    Less: BaaS loan expense     32,612   8.36 %     29,076   8.58 %     23,003   6.97 %
    Net BaaS loan income (1)   $ 35,080   8.99 %   $ 31,127   9.19 %   $ 33,276   10.08 %
    Average BaaS Loans(3)   $ 1,552,443       $ 1,362,343       $ 1,309,380    

    (1) A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.
    (2) Annualized calculations shown for quarterly periods presented.
    (3) Includes loans held for sale.

    Noninterest Income Discussion

    Noninterest income was $80.1 million for the three months ended September 30, 2024, an increase of $10.2 million from $69.9 million for the three months ended June 30, 2024, and an increase of $45.5 million from $34.6 million for the three months ended September 30, 2023.  The increase in noninterest income over the quarter ended June 30, 2024 was primarily due to an increase of $9.9 million in total BaaS income.  The $9.9 million increase in total BaaS income included a $9.3 million increase in BaaS credit enhancements related to the provision for credit losses, a $300,000 increase in BaaS fraud enhancements, and an increase of $340,000 in BaaS program income. The increase in BaaS program income is largely due to higher servicing and other BaaS fees, transaction fees and interchange fees and our primary BaaS source for recurring fee income (see “Appendix B” for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements). Additionally, other income increased $229,000 largely due to increased incoming ACH activity.

    The $45.5 million increase in noninterest income over the quarter ended September 30, 2023 was primarily due to a $43.4 million increase in BaaS credit and fraud enhancements, and an increase of $2.0 million in BaaS program income.

    Noninterest Expense Discussion
    Total noninterest expense increased $6.8 million to $65.6 million for the three months ended September 30, 2024, compared to $58.8 million for the three months ended June 30, 2024, and increased $9.1 million from $56.5 million for the three months ended September 30, 2023. The increase in noninterest expense for the quarter ended September 30, 2024, as compared to the quarter ended June 30, 2024, was primarily due to a $3.8 million increase in BaaS expense (including a $300,000 increase in BaaS fraud expense and a $3.5 million increase in BaaS loan expense). BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, and originating & servicing CCBX loans. BaaS fraud expense represents non-credit fraud losses on partner’s customer loan and deposit accounts. A portion of this expense is realized during the quarter in which the loss occurs, and a portion is estimated based on historical or other information from our partners, partially offset by a $1.5 million increase in excise taxes (due to the recording of $1.2 million business and occupation tax credit from the State of Washington which resulted in the recognition of a net credit of $706,000 for the quarter ended June 30, 2024, compared to expense of $762,000 for the quarter ended September 30, 2024). We also recorded an increase of $587,000 in data processing and software licenses as a result of our continued investment in our infrastructure and the automation of our processes so that they are scalable and an increase of $499,000 in point of sale expenses as a result of increased partner transaction activity.

    The increase in noninterest expenses for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was largely due to an increase of $8.8 million in BaaS partner expense (including a $9.6 million increase in BaaS loan expense partially offset by a decrease of $766,000 in BaaS fraud expense), a $1.1 million increase in data processing and software licenses due to enhancements in technology, and a $526,000 increase in occupancy expense, largely due to higher software depreciation/amortization expense, partially offset by a $986,000 decrease in salary and employee benefits largely as a result of some one-time costs that were expensed in the quarter ended September 30, 2023 for which there was no similar expense in the current quarter, and an $850,000 decrease in legal and professional expenses as a result of risk management and projects being completed.

    Provision for Income Taxes

    The provision for income taxes was $2.9 million for the three months ended September 30, 2024, $3.4 million for the three months ended June 30, 2024 and $2.8 million for the third quarter of 2023.  The income tax provision was lower for the three months ended September 30, 2024 compared to the quarter ended June 30, 2024 as a result of the deductibility of certain equity awards which reduced tax expense despite net income being higher and higher than the quarter ended September 30, 2023, primarily due to higher net income compared to that quarter.

    The Company is subject to various state taxes that are assessed as CCBX activities and employees expand into other states, which has increased the overall tax rate used in calculating the provision for income taxes in the current and future periods. The Company uses a federal statutory tax rate of 21.0% as a basis for calculating provision for federal income taxes and 2.62% for calculating the provision for state income taxes.

    Financial Condition Overview

    Total assets increased $104.3 million, or 2.6%, to $4.07 billion at September 30, 2024 compared to $3.96 billion at June 30, 2024.  The increase is primarily due to stronger loan growth partially offset by lower cash balances. Total loans receivable increased $92.4 million to $3.42 billion at September 30, 2024, from $3.33 billion at June 30, 2024.

    As of September 30, 2024, the Company had the capacity to borrow up to a total of $656.3 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, and an additional $50.0 million from a correspondent bank no borrowings outstanding on these lines as of September 30, 2024.

    The Company had a cash balance of $5.9 million as of September 30, 2024, which is retained for general operating purposes, including debt repayment, and for funding $530,000 in commitments to bank technology funds.  

    Uninsured deposits were $542.2 million as of September 30, 2024, compared to $532.9 million as of June 30, 2024.

    Total shareholders’ equity increased $15.2 million since June 30, 2024.  The increase in shareholders’ equity was primarily due to $13.5 million in net earnings, combined with an increase of $1.8 million in common stock outstanding as a result of equity awards exercised during the three months ended September 30, 2024.

    The Company and the Bank remained well capitalized at September 30, 2024, as summarized in the following table.

    (unaudited)   Coastal
    Community
    Bank
      Coastal
    Financial
    Corporation
      Minimum Well
    Capitalized
    Ratios under
    Prompt
    Corrective
    Action
    (1)
    Tier 1 Leverage Capital (to average assets)   9.29 %   8.40 %   5.00 %
    Common Equity Tier 1 Capital (to risk-weighted assets)   10.36 %   9.26 %   6.50 %
    Tier 1 Capital (to risk-weighted assets)   10.36 %   9.35 %   8.00 %
    Total Capital (to risk-weighted assets)   11.65 %   11.90 %   10.00 %

    (1) Presents the minimum capital ratios for an insured depository institution, such as the Bank, to be considered well capitalized under the Prompt Corrective Action framework. The minimum requirements for the Company to be considered well capitalized under Regulation Y include to maintain, on a consolidated basis, a total risk-based capital ratio of 10.0 percent or greater and a tier 1 risk-based capital ratio of 6.0 percent or greater.

    Asset Quality

    The total allowance for credit losses was $170.3 million and 4.98% of loans receivable at September 30, 2024 compared to $147.9 million and 4.45% at June 30, 2024 and $101.1 million and 3.41% at September 30, 2023. The allowance for credit loss allocated to the CCBX portfolio was $150.1 million and 9.87% of CCBX loans receivable at September 30, 2024, with $20.1 million of allowance for credit loss allocated to the community bank or 1.06% of total community bank loans receivable.

    The following table details the allocation of the allowance for credit loss as of the period indicated:

        As of September 30, 2024   As of June 30, 2024   As of September 30, 2023
    (dollars in thousands; unaudited)   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total
    Loans receivable   $ 1,897,540     $ 1,521,292     $ 3,418,832     $ 1,912,034     $ 1,414,426     $ 3,326,460     $ 1,784,661     $ 1,182,374     $ 2,967,035  
    Allowance for credit losses     (20,132 )     (150,131 )     (170,263 )     (21,045 )     (126,869 )     (147,914 )     (21,316 )     (79,769 )     (101,085 )
    Allowance for credit losses to total loans receivable     1.06 %     9.87 %     4.98 %     1.10 %     8.97 %     4.45 %     1.19 %     6.75 %     3.41 %
                                                                             

    Net charge-offs totaled $49.2 million for the quarter ended September 30, 2024, compared to $53.2 million for the quarter ended June 30, 2024 and $36.8 million for the quarter ended September 30, 2023. Net charge-offs as a percent of average loans decreased to 5.65% for the quarter ended September 30, 2024 compared to 6.57% for the quarter ended June 30, 2024, which we believe is a result of the steps we took manage our credit quality.   CCBX partner agreements provide for a credit enhancement that covers the net-charge-offs on CCBX loans and negative deposit accounts by indemnifying or reimbursing incurred losses, except in accordance with the program agreement for one partner where the Company was responsible for credit losses on approximately 5% of a $400.8 million loan portfolio. At September 30, 2024, our portion of this portfolio represented $19.8 million in loans. Net charge-offs for this $19.8 million in loans were $1.1 million for the three months ended September 30, 2024, compared to $1.3 million for the three months ended June 30, 2024 and $579,000 for the three months ended September 30, 2023.

    The following table details net charge-offs for the community bank and CCBX for the period indicated:

        Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands; unaudited)   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total
    Gross charge-offs   $ 398     $ 52,907     $ 53,305     $ 2     $ 55,205     $ 55,207     $ 3     $ 37,876     $ 37,879  
    Gross recoveries     (3 )     (4,066 )     (4,069 )     (4 )     (1,969 )     (1,973 )     (3 )     (1,042 )     (1,045 )
    Net charge-offs   $ 395     $ 48,841     $ 49,236     $ (2 )   $ 53,236     $ 53,234     $     $ 36,834     $ 36,834  
    Net charge-offs to average loans (1)     0.08 %     12.52 %     5.65 %     0.00 %     15.72 %     6.57 %     0.00 %     11.16 %     4.77 %

    (1) Annualized calculations shown for periods presented.

    During the quarter ended September 30, 2024, a $72.1 million provision for credit losses – loans was recorded for CCBX partner loans based on management’s analysis, compared to the $62.2 million provision for credit losses – loans that was recorded for CCBX for the quarter ended June 30, 2024. CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by indemnifying or reimbursing incurred losses.

    In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for CCBX credit losses and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements). Expected losses are recorded in the allowance for credit losses. The credit enhancement asset is relieved when credit enhancement recoveries are received from the CCBX partner. If our partner is unable to fulfill their contracted obligations then the Bank could be exposed to additional credit losses. Management regularly evaluates and manages this counterparty risk.

    The factors used in management’s analysis for community bank credit losses indicated that a provision recapture of $519,000 and was needed for the quarter ended September 30, 2024 compared to a provision recapture of $341,000 and provision of $664,000 for the quarters ended June 30, 2024 and September 30, 2023, respectively. The recapture in the current period was largely due to a change in remaining average lives of community bank loans.

    The following table details the provision expense/(recapture) for the community bank and CCBX for the period indicated:

        Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Community bank   $ (519 )   $ (341 )   $ 664
    CCBX     72,104       62,231       26,493
    Total provision expense   $ 71,585     $ 61,890     $ 27,157

    At September 30, 2024, our nonperforming assets were $54.7 million, or 1.34%, of total assets, compared to $53.2 million, or 1.34%, of total assets, at June 30, 2024, and $43.5 million, or 1.18%, of total assets, at September 30, 2023. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of September 30, 2024, $52.0 million of the $53.6 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above.

    Nonperforming assets increased $1.5 million during the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024. This change is largely due to an increase in CCBX nonaccrual loans partially offset by a decrease in community bank nonaccrual loans. CCBX nonaccrual loans increased $8.0 million as a result of a new collection practice that places certain loans on nonaccrual status to improve collectability, $5.3 million of these loans are less than 90 days past due as of September 30, 2024. CCBX loans that are past due 90 days or more and still accruing was $45.6 million for the quarter ended September 30, 2024 compared to $45.2 million for the quarter ended June 30, 2024. As a result of the type of loans (primarily consumer loans) originated through our CCBX partners we anticipate that balances 90 days past due or more and still accruing will generally increase as those loan portfolios grow. Installment/closed-end and revolving/open-end consumer loans originated through CCBX lending partners will continue to accrue interest until 120 and 180 days past due, respectively and are reported as substandard, 90 days or more days past due and still accruing. There were no repossessed assets or other real estate owned at September 30, 2024. Our nonperforming loans to loans receivable ratio was 1.60% at September 30, 2024, compared to 1.60% at June 30, 2024, and 1.47% at September 30, 2023.

    For the quarter ended September 30, 2024, there were $395,000 community bank net charge-offs and $1.1 million nonperforming community bank loans. For the quarter ended September 30, 2024 $48.8 million in net charge-offs were recorded on CCBX loans. These CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses.

    The following table details the Company’s nonperforming assets for the periods indicated.

    Consolidated   As of
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Nonaccrual loans:            
    Commercial and industrial loans   $ 198     $     $ 2  
    Real estate loans:            
    Construction, land and land development                  
    Residential real estate     44       213       176  
    Commercial real estate     831       7,731       7,145  
    Consumer and other loans:            
    Credit cards     7,987              
    Total nonaccrual loans     9,060       7,944       7,323  
    Accruing loans past due 90 days or more:            
    Commercial & industrial loans     1,593       1,278       1,387  
    Real estate loans:            
    Residential real estate loans     3,025       2,722       1,462  
    Consumer and other loans:            
    Credit cards     34,562       36,465       24,807  
    Other consumer and other loans     6,412       4,779       8,561  
         Total accruing loans past due 90 days or more     45,592       45,244       36,217  
    Total nonperforming loans     54,652       53,188       43,540  
    Real estate owned                  
    Repossessed assets                  
    Total nonperforming assets   $ 54,652     $ 53,188     $ 43,540  
    Total nonaccrual loans to loans receivable     0.27 %     0.24 %     0.25 %
    Total nonperforming loans to loans receivable     1.60 %     1.60 %     1.47 %
    Total nonperforming assets to total assets     1.34 %     1.34 %     1.18 %
                             

    The following tables detail the CCBX and community bank nonperforming assets which are included in the total nonperforming assets table above.

    CCBX   As of
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Nonaccrual loans:            
    Consumer and other loans:            
    Credit cards   $ 7,987     $     $  
    Total nonaccrual loans     7,987              
    Accruing loans past due 90 days or more:            
    Commercial & industrial loans     1,593       1,278       1,387  
    Real estate loans:            
    Residential real estate loans     3,025       2,722       1,462  
    Consumer and other loans:            
    Credit cards     34,562       36,465       24,807  
    Other consumer and other loans     6,412       4,779       8,561  
    Total accruing loans past due 90 days or more     45,592       45,244       36,217  
    Total nonperforming loans     53,579       45,244       36,217  
    Other real estate owned                  
    Repossessed assets                  
    Total nonperforming assets   $ 53,579     $ 45,244     $ 36,217  
    Total CCBX nonperforming assets to total consolidated assets     1.32 %     1.14 %     0.98 %
    Community Bank   As of
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Nonaccrual loans:            
    Commercial and industrial loans   $ 198     $     $ 2  
    Real estate:            
    Construction, land and land development                  
    Residential real estate     44       213       176  
    Commercial real estate     831       7,731       7,145  
    Total nonaccrual loans     1,073       7,944       7,323  
    Accruing loans past due 90 days or more:            
    Total accruing loans past due 90 days or more                  
    Total nonperforming loans     1,073       7,944       7,323  
    Other real estate owned                  
    Repossessed assets                  
    Total nonperforming assets   $ 1,073     $ 7,944     $ 7,323  
    Total community bank nonperforming assets to total consolidated assets     0.03 %     0.20 %     0.20 %
                             

    About Coastal Financial

    Coastal Financial Corporation (Nasdaq: CCB) (the “Company”), is an Everett, Washington based bank holding company whose wholly owned subsidiaries are Coastal Community Bank (“Bank”) and Arlington Olympic LLC.  The $4.07 billion Bank provides service through 14 branches in Snohomish, Island, and King Counties, the Internet and its mobile banking application.  The Bank provides banking as a service to broker-dealers, digital financial service providers, companies and brands that want to provide financial services to their customers through the Bank’s CCBX segment.  To learn more about the Company visit www.coastalbank.com

    CCB-ER

    Contact

    Eric Sprink, Chief Executive Officer, (425) 357-3659
    Joel Edwards, Executive Vice President & Chief Financial Officer, (425) 357-3687

    Forward-Looking Statements

    This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the risks and uncertainties discussed under “Risk Factors” in our Annual Report on Form 10-K for the most recent period filed and in any of our subsequent filings with the Securities and Exchange Commission.

    If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as required by law.

     
    COASTAL FINANCIAL CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    (Dollars in thousands; unaudited)
     
    ASSETS
        September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Cash and due from banks   $ 45,327     $ 59,995     $ 32,790     $ 31,345     $ 29,984  
    Interest earning deposits with other banks     438,699       427,250       482,338       451,783       444,962  
    Investment securities, available for sale, at fair value     38       39       41       99,504       98,939  
    Investment securities, held to maturity, at amortized cost     48,582       49,174       50,049       50,860       42,550  
    Other investments     10,757       10,664       10,583       10,227       11,898  
    Loans held for sale     7,565             797              
    Loans receivable     3,418,832       3,326,460       3,199,554       3,026,092       2,967,035  
    Allowance for credit losses     (170,263 )     (147,914 )     (139,258 )     (116,958 )     (101,085 )
    Total loans receivable, net     3,248,569       3,178,546       3,060,296       2,909,134       2,865,950  
    CCBX credit enhancement asset     167,251       143,485       137,276       107,921       91,867  
    CCBX receivable     16,060       11,520       10,369       9,088       10,623  
    Premises and equipment, net     25,833       24,526       22,995       22,090       20,543  
    Lease right-of-use assets     5,427       5,635       5,756       5,932       6,126  
    Accrued interest receivable     23,664       23,617       24,681       26,819       23,428  
    Bank-owned life insurance, net     13,255       13,132       12,991       12,870       12,970  
    Deferred tax asset, net     3,083       2,221       2,221       3,806       4,404  
    Other assets     11,711       11,742       12,075       11,987       14,021  
    Total assets   $ 4,065,821     $ 3,961,546     $ 3,865,258     $ 3,753,366     $ 3,678,265  
                         
    LIABILITIES AND SHAREHOLDERS’ EQUITY
    LIABILITIES                    
    Deposits   $ 3,627,288     $ 3,543,432     $ 3,462,979     $ 3,360,363     $ 3,289,700  
    Subordinated debt, net     44,256       44,219       44,181       44,144       44,106  
    Junior subordinated debentures, net     3,591       3,591       3,590       3,590       3,589  
    Deferred compensation     369       405       442       479       513  
    Accrued interest payable     1,070       999       1,061       892       1,056  
    Lease liabilities     5,609       5,821       5,946       6,124       6,321  
    CCBX payable     39,188       34,536       33,095       33,651       38,229  
    Other liabilities     12,520       11,850       10,255       9,145       10,301  
    Total liabilities     3,733,891       3,644,853       3,561,549       3,458,388       3,393,815  
    SHAREHOLDERS’ EQUITY                    
    Common Stock     134,769       132,989       131,601       130,136       129,244  
    Retained earnings     197,162       183,706       172,110       165,311       156,299  
    Accumulated other comprehensive loss, net of tax     (1 )     (2 )     (2 )     (469 )     (1,093 )
    Total shareholders’ equity     331,930       316,693       303,709       294,978       284,450  
    Total liabilities and shareholders’ equity   $ 4,065,821     $ 3,961,546     $ 3,865,258     $ 3,753,366     $ 3,678,265  
     
    COASTAL FINANCIAL CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Dollars in thousands, except per share amounts; unaudited)
     
        Three Months Ended
        September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    INTEREST AND DIVIDEND INCOME                    
    Interest and fees on loans   $ 99,590   $ 90,944     $ 84,621     $ 81,159     $ 83,652
    Interest on interest earning deposits with other banks     4,781     5,683       4,780       5,687       3,884
    Interest on investment securities     675     686       1,034       1,225       766
    Dividends on other investments     33     174       37       172       29
    Total interest income     105,079     97,487       90,472       88,243       88,331
    INTEREST EXPENSE                    
    Interest on deposits     32,083     30,578       28,867       27,916       25,451
    Interest on borrowed funds     809     672       669       670       651
    Total interest expense     32,892     31,250       29,536       28,586       26,102
    Net interest income     72,187     66,237       60,936       59,657       62,229
    PROVISION FOR CREDIT LOSSES     70,257     62,325       83,158       60,789       27,253
    Net interest income/(expense) after provision for credit losses     1,930     3,912       (22,222 )     (1,132 )     34,976
    NONINTEREST INCOME                    
    Deposit service charges and fees     952     946       908       957       998
    Loan referral fees               168             1
    Gain on sales of loans, net                           107
    Unrealized gain (loss) on equity securities, net     2     9       15       80       5
    Other income     486     257       308       60       291
    Noninterest income, excluding BaaS program income and BaaS indemnification income     1,440     1,212       1,399       1,097       1,402
    Servicing and other BaaS fees     1,044     1,525       1,131       1,015       997
    Transaction fees     1,696     1,309       1,122       1,006       1,036
    Interchange fees     1,853     1,625       1,539       1,272       1,216
    Reimbursement of expenses     1,843     1,637       1,033       1,076       1,152
    BaaS program income     6,436     6,096       4,825       4,369       4,401
    BaaS credit enhancements     70,108     60,826       79,808       58,449       25,926
    BaaS fraud enhancements     2,084     1,784       923       779       2,850
    BaaS indemnification income     72,192     62,610       80,731       59,228       28,776
    Total noninterest income     80,068     69,918       86,955       64,694       34,579
    NONINTEREST EXPENSE                    
    Salaries and employee benefits     17,101     17,005       17,984       16,490       18,087
    Occupancy     1,750     1,686       1,518       1,340       1,224
    Data processing and software licenses     3,511     2,924       2,892       2,417       2,366
    Legal and professional expenses     3,597     3,631       3,672       2,649       4,447
    Point of sale expense     1,351     852       869       899       1,068
    Excise taxes     762     (706 )     320       449       541
    Federal Deposit Insurance Corporation (“FDIC”) assessments     740     690       683       665       694
    Director and staff expenses     559     470       400       478       529
    Marketing     67     14       53       138       169
    Other expense     1,482     1,383       1,867       1,089       1,523
    Noninterest expense, excluding BaaS loan and BaaS fraud expense     30,920     27,949       30,258       26,614       30,648
    BaaS loan expense     32,612     29,076       24,837       24,310       23,003
    BaaS fraud expense     2,084     1,784       923       779       2,850
    BaaS loan and fraud expense     34,696     30,860       25,760       25,089       25,853
    Total noninterest expense     65,616     58,809       56,018       51,703       56,501
    Income before provision for income taxes     16,382     15,021       8,715       11,859       13,054
    PROVISION FOR INCOME TAXES     2,926     3,425       1,915       2,847       2,784
    NET INCOME   $ 13,456   $ 11,596     $ 6,800     $ 9,012     $ 10,270
    Basic earnings per common share   $ 1.00   $ 0.86     $ 0.51     $ 0.68     $ 0.77
    Diluted earnings per common share   $ 0.97   $ 0.84     $ 0.50     $ 0.66     $ 0.75
    Weighted average number of common shares outstanding:                    
    Basic     13,447,066     13,412,667       13,340,997       13,286,828       13,285,974
    Diluted     13,822,270     13,736,508       13,676,917       13,676,513       13,675,833
     
    COASTAL FINANCIAL CORPORATION
    AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
    (Dollars in thousands; unaudited)
     
        For the Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
        Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
      Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
      Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
    Assets                                    
    Interest earning assets:                                    
    Interest earning deposits with other banks   $ 350,915     $ 4,781   5.42 %   $ 418,165     $ 5,683   5.47 %   $ 285,596     $ 3,884   5.40 %
    Investment securities, available for sale (2)     40               43         3.13       100,283       543   2.15  
    Investment securities, held to maturity (2)     48,945       675   5.49       49,737       686   5.55       17,703       223   5.00  
    Other investments     11,140       33   1.18       10,592       174   6.61       11,943       29   0.96  
    Loans receivable (3)     3,464,871       99,590   11.43       3,258,042       90,944   11.23       3,062,214       83,652   10.84  
    Total interest earning assets     3,875,911       105,079   10.79       3,736,579       97,487   10.49       3,477,739       88,331   10.08  
    Noninterest earning assets:                                    
    Allowance for credit losses     (151,292 )             (138,472 )             (100,329 )        
    Other noninterest earning assets     268,903               255,205               220,750          
    Total assets   $ 3,993,522             $ 3,853,312             $ 3,598,160          
                                         
    Liabilities and Shareholders’ Equity                                    
    Interest bearing liabilities:                                    
    Interest bearing deposits   $ 2,966,527     $ 32,083   4.30 %   $ 2,854,575     $ 30,578   4.31 %   $ 2,515,093     $ 25,451   4.01 %
    FHLB advances and other borrowings     9,717       140   5.73       1,648       3   0.73                
    Subordinated debt     44,234       598   5.38       44,197       598   5.44       44,084       580   5.22  
    Junior subordinated debentures     3,591       71   7.87       3,590       71   7.95       3,589       71   7.85  
    Total interest bearing liabilities     3,024,069       32,892   4.33       2,904,010       31,250   4.33       2,562,766       26,102   4.04  
    Noninterest bearing deposits     588,178               584,661               698,532          
    Other liabilities     60,101               58,267               57,865          
    Total shareholders’ equity     321,174               306,374               278,997          
    Total liabilities and shareholders’ equity   $ 3,993,522             $ 3,853,312             $ 3,598,160          
    Net interest income       $ 72,187           $ 66,237           $ 62,229    
    Interest rate spread           6.46 %           6.17 %           6.04 %
    Net interest margin (4)           7.41 %           7.13 %           7.10 %

    (1)  Yields and costs are annualized.
    (2) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
    (3)  Includes loans held for sale and nonaccrual loans.
    (4)  Net interest margin represents net interest income divided by the average total interest earning assets.

     
    COASTAL FINANCIAL CORPORATION
    SELECTED AVERAGE BALANCES, YIELDS, AND RATES – BY SEGMENT – QUARTERLY
    (Dollars in thousands; unaudited)
     
        For the Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands, unaudited)   Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
      Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
      Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
    Community Bank                                    
    Assets                                    
    Interest earning assets:                                    
    Loans receivable (2)   $ 1,912,428   $ 31,898   6.64 %   $ 1,895,699   $ 30,741   6.52 %   $ 1,752,834   $ 27,373   6.20 %
    Total interest earning assets     1,912,428     31,898   6.64       1,895,699     30,741   6.52       1,752,834     27,373   6.20  
    Liabilities                                    
    Interest bearing liabilities:                                      
    Interest bearing deposits     982,280     7,264   2.94 %     938,033     6,459   2.77 %     920,707     5,067   2.18 %
    Intrabank liability     406,641     5,540   5.42       429,452     5,836   5.47       223,221     3,036   5.40  
    Total interest bearing liabilities     1,388,921     12,804   3.67       1,367,485     12,295   3.62       1,143,928     8,103   2.81  
    Noninterest bearing deposits     523,507             528,214             608,906        
    Net interest income       $ 19,094           $ 18,446           $ 19,270    
    Net interest margin(3)           3.97 %           3.91 %           4.36 %
                                         
    CCBX                                    
    Assets                                    
    Interest earning assets:                                    
    Loans receivable (2)(4)   $ 1,552,443   $ 67,692   17.35 %   $ 1,362,343   $ 60,203   17.77 %   $ 1,309,380   $ 56,279   17.05 %
    Intrabank asset     496,475     6,764   5.42       610,646     8,299   5.47       374,632     5,095   5.40  
    Total interest earning assets     2,048,918     74,456   14.46       1,972,989     68,502   13.96       1,684,012     61,374   14.46  
    Liabilities                                    
    Interest bearing liabilities:                                        
    Interest bearing deposits     1,984,247     24,819   4.98 %     1,916,542     24,119   5.06 %     1,594,386     20,384   5.07 %
    Total interest bearing liabilities     1,984,247     24,819   4.98       1,916,542     24,119   5.06       1,594,386     20,384   5.07  
    Noninterest bearing deposits     64,671             56,447             89,626        
    Net interest income       $ 49,637           $ 44,383           $ 40,990    
    Net interest margin(3)           9.64 %           9.05 %           9.66 %
    Net interest margin, net of Baas loan expense (5)           3.31 %           3.12 %           4.24 %
                                               
        For the Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
    (dollars in thousands, unaudited)   Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
      Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
      Average
    Balance
      Interest &
    Dividends
      Yield /
    Cost (1)
    Treasury & Administration                            
    Assets                                    
    Interest earning assets:                                    
    Interest earning deposits with other banks   $ 350,915   $ 4,781   5.42 %   $ 418,165   $ 5,683   5.47 %   $ 285,596   $ 3,884   5.40 %
    Investment securities, available for sale (6)     40             43       3.13       100,283     543   2.15  
    Investment securities, held to maturity (6)     48,945     675   5.49       49,737     686   5.55       17,703     223   5.00  
    Other investments     11,140     33   1.18       10,592     174   6.61       11,943     29   0.96  
    Total interest earning assets     411,040     5,489   5.31 %     478,537     6,543   5.50 %     415,525     4,679   4.47 %
    Liabilities                                    
    Interest bearing liabilities:                                    
    FHLB advances and borrowings   $ 9,717   $ 140   5.73 %     1,648     3   0.73 %           %
    Subordinated debt     44,234     598   5.38 %     44,197     598   5.44 %     44,084     580   5.22 %
    Junior subordinated debentures     3,591     71   7.87       3,590     71   7.95       3,589     71   7.85  
    Intrabank liability, net (7)     89,834     1,224   5.42       181,194     2,463   5.47       151,411     2,059   5.40  
    Total interest bearing liabilities     147,376     2,033   5.49       230,629     3,135   5.47       199,084     2,710   5.40  
    Net interest income       $ 3,456           $ 3,408           $ 1,969    
    Net interest margin(3)           3.34 %           2.86 %           1.88 %

    (1)  Yields and costs are annualized. 
    (2)  Includes loans held for sale and nonaccrual loans. 
    (3)  Net interest margin represents net interest income divided by the average total interest earning assets. 
    (4)  CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield. 
    (5)  Net interest margin, net of BaaS loan expense includes the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release. 
    (6) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. 
    (7)  Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above.

    Non-GAAP Financial Measures

    The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance.

    However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.

    The following non-GAAP measures are presented to illustrate the impact of BaaS loan expense on net loan income and yield on CCBX loans and the impact of BaaS loan expense on net interest income and net interest margin.

    Net BaaS loan income divided by average CCBX loans is a non-GAAP measure that includes the impact BaaS loan expense on net BaaS loan income and the yield on CCBX loans. The most directly comparable GAAP measure is yield on CCBX loans.

    Net interest income net of BaaS loan expense is a non-GAAP measure that includes the impact BaaS loan expense on net interest income. The most directly comparable GAAP measure is net interest income.

    Net interest margin, net of BaaS loan expense is a non-GAAP measure that includes the impact of BaaS loan expense on net interest rate margin. The most directly comparable GAAP measure is net interest margin.

    Reconciliations of the GAAP and non-GAAP measures are presented below.

        As of and for the Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Net BaaS loan income divided by average CCBX loans:
    CCBX loan yield (GAAP)(1)     17.35 %     17.77 %     17.05 %
    Total average CCBX loans receivable   $ 1,552,443     $ 1,362,343     $ 1,309,380  
    Interest and earned fee income on CCBX loans (GAAP)     67,692       60,203       56,279  
    BaaS loan expense     (32,612 )     (29,076 )     (23,003 )
    Net BaaS loan income   $ 35,080     $ 31,127     $ 33,276  
    Net BaaS loan income divided by average CCBX loans (1)     8.99 %     9.19 %     10.08 %
    Net interest margin, net of BaaS loan expense:                
    CCBX interest margin (1)     9.64 %     9.05 %     9.66 %
    CCBX earning assets     2,048,918       1,972,989       1,684,012  
    Net interest income     49,637       44,383       40,990  
    Less: BaaS loan expense     (32,612 )     (29,076 )     (23,003 )
    Net interest income, net of BaaS loan expense   $ 17,025     $ 15,307     $ 17,987  
    CCBX net interest margin, net of BaaS loan expense (1)     3.31 %     3.12 %     4.24 %

    (1) Annualized calculations for periods presented.

    APPENDIX A –
    As of September 30, 2024

    Industry Concentration

    We have a diversified loan portfolio, representing a wide variety of industries. Our major categories of loans are commercial real estate, consumer and other loans, residential real estate, commercial and industrial, and construction, land and land development loans. Together they represent $3.43 billion in outstanding loan balances. When combined with $2.29 billion in unused commitments the total of these categories is $5.72 billion.

    Commercial real estate loans represent the largest segment of our loans, comprising 39.8% of our total balance of outstanding loans as of September 30, 2024. Unused commitments to extend credit represents an additional $41.5 million, and the combined total in commercial real estate loans represents $1.40 billion, or 24.6% of our total outstanding loans and loan commitments.

    The following table summarizes our loan commitment by industry for our commercial real estate portfolio as of September 30, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
      Total
    Outstanding
    Balance &
    Available
    Commitment
      %
    of Total
    Loans

    (Outstanding
    Balance &

    Available
    Commitment)
      Average
    Loan
    Balance
      Number
    of
    Loans
    Apartments   $ 382,498   $ 5,685   $ 388,183   6.8 %   $ 3,714   103
    Hotel/Motel     155,441     189     155,630   2.7       6,758   23
    Convenience Store     142,366     614     142,980   2.5       2,296   62
    Office     123,423     8,204     131,627   2.3       1,371   90
    Warehouse     102,818     2,000     104,818   1.8       1,743   59
    Retail     107,934     620     108,554   1.9       1,018   106
    Mixed use     93,490     5,273     98,763   1.7       1,154   81
    Mini Storage     79,395     14,330     93,725   1.7       3,452   23
    Strip Mall     44,089         44,089   0.8       6,298   7
    Manufacturing     34,599     1,200     35,799   0.6       1,193   29
    Groups < 0.70% of total     96,393     3,392     99,785   1.8       1,205   80
    Total   $ 1,362,446   $ 41,507   $ 1,403,953   24.6 %   $ 2,055   663
     

    Consumer loans comprise 33.0% of our total balance of outstanding loans as of September 30, 2024. Unused commitments to extend credit represents an additional $1.07 billion, and the combined total in consumer and other loans represents $2.20 billion, or 38.4% of our total outstanding loans and loan commitments. As illustrated in the table below, our CCBX partners bring in a large number of mostly smaller dollar loans, resulting in an average consumer loan balance of just $900. CCBX consumer loans are underwritten to CCBX credit standards and underwriting of these loans is regularly tested, including quarterly testing for partners with portfolio balances greater than $10.0 million.

    The following table summarizes our loan commitment by industry for our consumer and other loan portfolio as of September 30, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
      Total
    Outstanding
    Balance &
    Available
    Commitment
    (1)
      %
    of Total
    Loans

    (Outstanding
    Balance &

    Available
    Commitment)
      Average
    Loan
    Balance
      Number
    of
    Loans
    CCBX consumer loans
    Credit cards   $ 633,691   $ 1,055,684   $ 1,689,375   29.5 %   $ 1.7   369,404
    Installment loans     471,813     7,112     478,925   8.4       0.9   513,897
    Lines of credit     1,362         1,362   0.0       2.4   558
    Other loans     9,053         9,053   0.2         365,834
    Community bank consumer loans
                               
    Installment loans     1,291     1     1,292   0.0       51.6   25
    Lines of credit     194     365     559   0.0       6.1   32
    Other loans     12,688     3,000     15,688   0.3       32.5   390
    Total   $ 1,130,092   $ 1,066,162   $ 2,196,254   38.4 %   $ 0.9   1,250,140

    (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.

    Residential real estate loans comprise 13.9% of our total balance of outstanding loans as of September 30, 2024. Unused commitments to extend credit represents an additional $522.8 million, and the combined total in residential real estate loans represents $1.00 billion, or 17.5% of our total outstanding loans and loan commitments.

    The following table summarizes our loan commitment by industry for our residential real estate loan portfolio as of September 30, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
      Total
    Outstanding
    Balance &
    Available
    Commitment
    (1)
      %
    of Total
    Loans

    (Outstanding
    Balance &

    Available
    Commitment)
      Average
    Loan
    Balance
      Number
    of
    Loans
    CCBX residential real estate loans                                  
    Home equity line of credit   $ 265,402   $ 472,385   $ 737,787   12.9 %   $ 25   10,742
    Community bank residential real estate loans                                  
    Closed end, secured by first liens     176,066     2,961     179,027   3.1       555   317
    Home equity line of credit     25,427     46,515     71,942   1.3       106   239
    Closed end, second liens     10,974     925     11,899   0.2       366   30
    Total   $ 477,869   $ 522,786   $ 1,000,655   17.5 %   $ 42   11,328

    (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.

    Commercial and industrial loans comprise 8.5% of our total balance of outstanding loans as of September 30, 2024. Unused commitments to extend credit represents an additional $598.4 million, and the combined total in commercial and industrial loans represents $891.0 million, or 15.6% of our total outstanding loans and loan commitments. Included in commercial and industrial loans is $103.9 million in outstanding capital call lines, with an additional $504.6 million in available loan commitments which is limited to a $350.0 million portfolio maximum. Capital call lines are provided to venture capital firms through one of our CCBX BaaS clients. These loans are secured by the capital call rights and are individually underwritten to the Bank’s credit standards and the underwriting is reviewed by the Bank on every capital call line.

    The following table summarizes our loan commitment by industry for our commercial and industrial loan portfolio as of September 30, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
      Total
    Outstanding
    Balance &
    Available
    Commitment
    (1)
      %
    of Total
    Loans

    (Outstanding
    Balance &

    Available
    Commitment)
      Average
    Loan
    Balance
      Number
    of
    Loans
    Consolidated C&I loans
    Capital Call Lines   $ 103,924   $ 504,561   $ 608,485   10.6 %   $ 764   136
    Construction/Contractor Services     27,463     34,658     62,121   1.1       136   202
    Financial Institutions     48,648         48,648   0.9       4,054   12
    Retail     33,003     5,725     38,728   0.7       15   2,247
    Manufacturing     6,124     5,460     11,584   0.2       149   41
    Medical / Dental / Other Care     6,864     2,731     9,595   0.2       528   13
    Groups < 0.20% of total     66,553     45,299     111,852   2.0       58   1,143
    Total   $ 292,579   $ 598,434   $ 891,013   15.6 %   $ 77   3,794

    (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.

    Construction, land and land development loans comprise 4.8% of our total balance of outstanding loans as of September 30, 2024. Unused commitments to extend credit represents an additional $63.5 million, and the combined total in construction, land and land development loans represents $226.6 million, or 4.0% of our total outstanding loans and loan commitments.

    The following table details our loan commitment for our construction, land and land development portfolio as of September 30, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
      Total
    Outstanding
    Balance &
    Available
    Commitment
      %
    of Total
    Loans

    (Outstanding
    Balance &

    Available
    Commitment)
      Average
    Loan
    Balance
      Number
    of
    Loans
    Commercial construction   $ 97,798   $ 41,521   $ 139,319   2.5 %   $ 7,523   13
    Residential construction     35,822     16,846     52,668   0.9       1,990   18
    Developed land loans     14,863     723     15,586   0.3       743   20
    Undeveloped land loans     8,606     4,086     12,692   0.2       574   15
    Land development     5,968     345     6,313   0.1       597   10
    Total   $ 163,057   $ 63,521   $ 226,578   4.0 %   $ 2,145   76
     

    Exposure and risk in our construction, land and land development portfolio is in line with our average historically, compared to June 30, 2024 when the balance was elevated as indicated in the following table:

        Outstanding Balance as of
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Commercial construction   $ 97,798   $ 110,372   $ 102,099   $ 81,489   $ 91,396
    Residential construction     35,822     34,652     28,751     34,213     33,971
    Undeveloped land loans     8,606     8,372     8,190     7,890     8,310
    Developed land loans     14,863     13,954     14,307     20,515     21,369
    Land development     5,968     5,714     7,515     12,993     12,640
    Total   $ 163,057   $ 173,064   $ 160,862   $ 157,100   $ 167,686
     

    Commitments to extend credit total $2.29 billion at September 30, 2024,   however we do not anticipate our customers using the $2.29 billion that is showing as available.

    The following table presents outstanding commitments to extend credit as of September 30, 2024:

    Consolidated    
    (dollars in thousands; unaudited)   As of September
    30, 2024
    Commitments to extend credit:    
    Commercial and industrial loans   $ 93,873
    Commercial and industrial loans – capital call lines     504,561
    Construction – commercial real estate loans     46,007
    Construction – residential real estate loans     17,514
    Residential real estate loans     522,786
    Commercial real estate loans     41,507
    Credit cards     1,055,684
    Consumer and other loans     10,478
    Total commitments to extend credit   $ 2,292,410
     

    We have individual CCBX partner portfolio limits with our each of our partners to manage loan concentration risk, liquidity risk, and counter-party partner risk. For example, as of September 30, 2024, capital call lines outstanding balance totaled $103.9 million, and while commitments totaled $504.6 million, the commitments are limited to a maximum of $350.0 million by agreement with the partner. If a CCBX partner goes over their individual limit, it would be a breach of their contract and the Bank may impose penalties and would not be required to fund the loan.

    See the table below for CCBX portfolio maximums and related available commitments:

    CCBX                
    (dollars in thousands; unaudited)   Balance   Percent
    of CCBX
    loans
    receivable
    Available
    Commitments
    (1)
      Maximum
    Portfolio
    Size
    Cash
    Reserve/
    Pledge
    Account
    Amount
    (2)
    Commercial and industrial loans:            
    Capital call lines   $ 103,924     6.8 % $ 504,561   $ 350,000 $
    All other commercial & industrial loans     36,494     2.4     16,922     285,153   675
    Real estate loans:                
    Home equity lines of credit (3)     265,402     17.5     472,385     375,000   35,597
    Consumer and other loans:            
    Credit cards – cash secured     180              
    Credit cards – unsecured     633,511         1,055,684       37,065
    Credit cards – total     633,691     41.6     1,055,684     807,263   37,065
    Installment loans – cash secured     129,138         7,112      
    Installment loans – unsecured     342,675               2,222
    Installment loans – total     471,813     31.0     7,112     1,630,027   2,222
    Other consumer and other loans     10,415     0.7         7,557   383
    Gross CCBX loans receivable     1,521,739     100.0 %   2,056,664     3,455,000 $ 75,942
    Net deferred origination fees     (447 )            
    Loans receivable   $ 1,521,292              

    (1) Remaining commitment available, net of outstanding balance.
    (2) Balances are as of October 4, 2024.
    (3) These home equity lines of credit are secured by residential real estate and are accessed by using a credit card, but are classified as 1-4 family residential properties per regulatory guidelines.

    APPENDIX B –
    As of September 30, 2024

    CCBX – BaaS Reporting Information

    During the quarter ended September 30, 2024, $70.1 million was recorded in BaaS credit enhancements related to the provision for credit losses – loans and reserve for unfunded commitments for CCBX partner loans and negative deposit accounts. Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans, unfunded commitments and negative deposit accounts. When the provision for credit losses – loans and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments and recoveries are received from the CCBX partner or taken from the partner’s cash reserve account. Agreements with our CCBX partners also provide protection to the Bank from fraud by indemnifying or reimbursing incurred fraud losses. BaaS fraud includes noncredit fraud losses on loans and deposits originated through partners. Fraud losses are recorded when incurred as losses in noninterest expense, and the enhancement received from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. Many CCBX partners also pledge a cash reserve account at the Bank which the Bank can collect from when losses occur that is then replenished by the partner on a regular interval. Although agreements with our CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by indemnifying or reimbursing incurred credit and fraud losses, if our partner is unable to fulfill their contracted obligation then the bank would be exposed to additional loan and deposit losses if the cash flows on the loans were not sufficient to fund the reimbursement of loan losses, as a result of this counterparty risk. If a CCBX partner does not replenish their cash reserve account the Bank may consider an alternative plan for funding the cash reserve. This may involve the possibility of adjusting the funding amounts or timelines to better align with the partner’s specific situation. If a mutually agreeable funding plan is not agreed to, the Bank could declare the agreement in default, take over servicing and cease paying the partner for servicing the loan and providing credit enhancements. The Bank would evaluate any remaining credit enhancement asset from the CCBX partner in the event the partner failed to determine if a write-off is appropriate. If a write-off occurs, the Bank would retain the full yield and any fee income on the loan portfolio going forward, and our BaaS loan expense would decrease once default occurred and payments to the CCBX partner were stopped.

    The Bank records contractual interest earned from the borrower on CCBX partner loans in interest income, adjusted for origination costs which are paid or payable to the CCBX partner. BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans. To determine net revenue (Net BaaS loan income) earned from CCBX loan relationships, the Bank takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income (A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release.) which can be compared to interest income on the Company’s community bank loans.

    The following table illustrates how CCBX partner loan income and expenses are recorded in the financial statements:

    Loan income and related loan expense   Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Yield on loans (1)     17.35 %     17.77 %     17.05 %
    BaaS loan interest income   $ 67,692     $ 60,203     $ 56,279  
    Less: BaaS loan expense     32,612       29,076       23,003  
    Net BaaS loan income (2)   $ 35,080     $ 31,127     $ 33,276  
    Net BaaS loan income divided by average BaaS loans (1)(2)     8.99 %     9.19 %     10.08 %

    (1) Annualized calculation for quarterly periods shown.
    (2) A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release.

    An increase in average CCBX loans receivable resulted in increased interest income on CCBX loans during the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024. The increase in average CCBX loans receivable was primarily due to growth in the CCBX loan portfolio as part of our strategy to optimize the CCBX loan portfolio and strengthen our balance sheet through originating higher quality new loans and enhanced credit standards. Increased interest rates and growth in CCBX loans and deposits has resulted in increases in interest income and expense for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023.

    The following tables are a summary of the interest components, direct fees, and expenses of BaaS for the periods indicated and are not inclusive of all income and expense related to BaaS.

    Interest income   Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Loan interest income   $ 67,692   $ 60,203   $ 56,279
    Total BaaS interest income   $ 67,692   $ 60,203   $ 56,279
    Interest expense   Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    BaaS interest expense   $ 24,819   $ 24,119   $ 20,384
    Total BaaS interest expense   $ 24,819   $ 24,119   $ 20,384
    BaaS income   Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    BaaS program income:            
    Servicing and other BaaS fees   $ 1,044   $ 1,525   $ 997
    Transaction fees     1,696     1,309     1,036
    Interchange fees     1,853     1,625     1,216
    Reimbursement of expenses     1,843     1,637     1,152
    BaaS program income     6,436     6,096     4,401
    BaaS indemnification income:            
    BaaS credit enhancements     70,108     60,826     25,926
    BaaS fraud enhancements     2,084     1,784     2,850
    BaaS indemnification income     72,192     62,610     28,776
    Total noninterest BaaS income   $ 78,628   $ 68,706   $ 33,177
     

    Servicing and other BaaS fees decreased $481,000 in the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024 while transaction fees and interchange fees increased $387,000 and $228,000, respectively. We expect servicing and other BaaS fees to decrease and transaction and interchange fees to increase as partner activity grows and contracted minimum fees are replaced with recurring fees and then exceed those minimum fees.

    BaaS loan and fraud expense:   Three Months Ended
    (dollars in thousands; unaudited)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    BaaS loan expense   $ 32,612   $ 29,076   $ 23,003
    BaaS fraud expense     2,084     1,784     2,850
    Total BaaS loan and fraud expense   $ 34,696   $ 30,860   $ 25,853
     

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/2d50cba0-18d9-4c78-8e96-0418250a8658

    The MIL Network

  • MIL-OSI Security: Altoona Man Sentenced to 117 Months in Federal Prison for Receiving Child Pornography

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

    COUNCIL BLUFFS, Iowa – An Altoona man was sentenced on Friday, October 18, 2024, to 117 months in federal prison for receiving child pornography.

    According to public court documents, Eduardo Ibarra Mora, 34, a Mexican national, possessed 45 images and more than 60 videos containing child sexual abuse material on his phone and a social media account. After completing his term of imprisonment, Ibarra Mora will be required to serve a five-year term of supervised release. There is no parole in the federal system.

    United States Attorney Richard D. Westphal of the Southern District of Iowa made the announcement. This case was investigated by the Federal Bureau of Investigation and the Altoona Police Department.

    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 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 https://www.justice.gov/psc.

    MIL Security OSI

  • MIL-OSI Security: Former Border Patrol Agent Sentenced to 50 Years in Federal Prison for 10 Child Pornography Charges

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

    SAN ANTONIO – A former Border Patrol agent was sentenced in a federal court in San Antonio to 50 years in prison for 10 counts related to the production, distribution and possession of child sexual abuse material.

    According to court documents, Paul Casey Whipple, 41, of Hondo, was arrested Dec. 19, 2017, during a search warrant at his residence. Agents seized evidence showing Whipple had produced and distributed hundreds of image and video files depicting a child victim engaged in sexually explicit content. The law enforcement actions came after the National Center for Missing and Exploited Children (NCMEC) received information from a foreign law enforcement agency related to seven files depicting the sexual exploitation of a prepubescent female child. Agents with the FBI, Homeland Security Investigations and IRS, worked to identify the child depicted in the images.

    Whipple was indicted for four counts of production of child pornography, five counts of distribution of child pornography, and one count of possession of child pornography. He pleaded guilty to all 10 counts June 6. In addition to spending 50 years in federal prison, Whipple was ordered to pay $54,000 in restitution, forfeit the electronic items used to commit the offenses, pay a $1,000 special assessment, and serve a term of supervised release if he is released from prison.

    “This significant 50-year sentence reflects the seriousness of Whipple’s heinous crimes and the devastating impact that child sexual abuse material has on its victims,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “Thank you to our federal agency partners for their thorough and dedicated investigative work in this case and were instrumental in securing this outcome. Together, we will continue to bring perpetrators to justice and strive to protect our children and our communities.”

    “Whipple’s long-term exploitation of a minor is reprehensible, and we hope this sentence will grant the victim some measure of comfort in knowing he will never be able to hurt another child,” said Special Agent in Charge Aaron Tapp for the FBI’s San Antonio field office. “We want to thank our partners at the IRS for their continued assistance in keeping our communities safe.”

    The FBI, HSI and IRS investigated the case.

    Assistant U.S. Attorney Tracy Thompson 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 CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

     

    ###

    MIL Security OSI

  • MIL-OSI USA: Senators Reverend Warnock, Ossoff Announce $22 Million in Federal Funding to Further Close Digital Divide Across Georgia

    US Senate News:

    Source: United States Senator Reverend Raphael Warnock – Georgia

    Senators Reverend Warnock, Ossoff Announce $22 Million in Federal Funding to Further Close Digital Divide Across Georgia

    Funding will help create programs for working Americans to access laptops and tablets, connecting millions of households to more economic and educational opportunities
    Provisions in Bipartisan Infrastructure Law were based on Senator Reverend Warnock’s Device Access for Every American Act 
    The new funding seeks to make it easier for working families to keep up with the shift to a 21st century digital economy, schooling, and more
    4.4 million households with students lack consistent access to a computer
    ICYMI from May 2024: Touting Continuing Benefits of Bipartisan Infrastructure Law, Senator Reverend Warnock, Commerce Secretary Raimondo Celebrate New Jobs at Norcross Manufacturing Facility
    Senator Reverend Warnock: “It is not enough to just put fiber cables in the ground. We need to make sure our communities have the devices, resources, training, and low costs that will allow Georgians participate and thrive in our increasingly digital economy”

    Washington, D.C. – Today, U.S. Senators Reverend Raphael Warnock (D-GA) and Jon Ossoff (D-GA) announced $22,455,639 in federal funding for Georgia to create digital literacy programs, expand community access to computers and tablets, lower costs to get connected, and more. These funds were based in part on provisions from Senator Warnock’s Device Access for Every American Act that he successfully included in the Bipartisan Infrastructure Law. Eligible uses include funding for digital literacy programs, partnerships with providers to improve internet affordability, and support for community anchor institutions like libraries, schools, community centers, and religious institutions to help connect, train, and educate communities in all aspects of digital connectivity and digital services. The grant will be distributed by the National Telecommunications and Information Administration (NTIA) to the state. This funding also allows Georgia to begin implementation of its digital equity plans.

    “I am proud to have secured provisions in the Bipartisan Infrastructure Law to make this federal funding possible and help close the digital divide for communities across Georgia–particularly in our rural and underserved communities that for too long have been left behind,” said Senator Reverend Warnock. “It is not enough to just put fiber cables in the ground. We need to make sure our communities have the devices, resources, training, and low costs that will allow Georgians participate and thrive in our increasingly digital economy, and this multi-million dollar grant will do just that by creating digital literacy programs, expanding community access to computers and tablets, lowering costs to get connected, and more.”

    “Our historic bipartisan infrastructure law continues to deliver for Georgia, including historic Federal funding Senator Warnock and I have delivered to surge broadband connectivity across our state. Today’s announcement is another major next step toward ensuring every Georgia family, business, and farm has high-speed Internet,” said Senator Ossoff. 

    The growing need for reliable Internet connectivity and access to connected devices was exacerbated during the Covid-19 pandemic, which forced millions of Americans to shift to digital platforms for school, work, and other daily activities. But the evolving 21st century economy and technological revolution is only continuing these trends. Having a reliable broadband connection is increasingly as necessary as having running water or reliable electricity. However, many households struggle to keep up due to the lack of access to connected devices and the cost of acquiring them. Nationwide, 40% of working adults do not own a desktop or laptop computer. Additionally, 4.4 million households with students lack consistent access to a computer, making it difficult for these students to participate in class and complete schoolwork.

    Senator Warnock has been a champion for strengthening broadband access for Georgians across the state. In May 2024, Senator Warnock hosted Commerce Secretary Gina Raimondo at Georgia-based OFS Fitel to uplift more $1 billion in Bipartisan Infrastructure Law funding coming to Georgia for broadband expansion to close the digital divide in communities across the state. Senator Warnock also led an effort urging the FCC to expand the E-Rate program, which would allow schools and libraries to provide Wi-Fi hotspots to students and educators. Additionally, in 2022 Senator Reverend Warnock hosted FCC Chair Rosenworcel in Jackson County to discuss the need for better broadband service in rural communities. Senator Warnock has also worked with Senator Luján to urge the FCC to prevent digital discrimination by facilitating equal access to broadband internet through its rulemaking process. Additionally, in a recent Senate Commerce committee hearing, Senator Warnock called out Congress’ inaction on funding the Affordable Connectivity Program and how a funding lapse would be detrimental to the more than 23 million Americans who depend on it, which includes 720,000 Georgians.

    MIL OSI USA News

  • MIL-OSI Security: U.S. Attorney Parker honors community, law enforcement efforts in third annual awards ceremony

    Source: Office of United States Attorneys

    CINCINNATI – Kenneth L. Parker, United States Attorney for the Southern District of Ohio, presented the 2024 Law Enforcement and Community Awards, honoring individuals and groups for their work to reduce gun violence and provide comprehensive services to victims of domestic violence, human trafficking and exploitation.

    “The recipients of this year’s awards embody the spirit and dedication of what it means to come together and work hard for the greater good,” said U.S. Attorney Parker. “These fine individuals exemplify being part of a positive community every day. They deserve our recognition and gratitude.”

    The awards include:

    Kaia Grant Badge of Bravery and Sacrifice Award

    Springboro Police Officer Christopher Heath Martin

    Officer Heath Martin, a 20-year veteran of the Springboro Police Department, was first to the scene of a fire inside a home in June 2023. Officer Martin rescued a 36-year-old man, who uses a wheelchair, from a back bedroom of the home. The victim’s battery-operated wheelchair is believed to be the cause of the fire and had exploded. The officer’s body worn camera captured his life-saving actions of finding the victim and bringing him to safety.

    Law Enforcement Excellence Award

    FBI Special Agent Robert Buzzard

    Special Agent Buzzard serves as the lead agent on the FBI’s Southern Ohio Safe Streets Task Force (SOSSTF) and is known throughout the Miami Valley for his law enforcement excellence and expertise. The depth of his drug trafficking investigations often leads to the sources of supply outside of the United States. Examples of cases in which he was the lead agent include U.S. v. Walton et al – in which the United States successfully dismantled a sophisticated long-running drug trafficking organization led by two brothers – and U.S. v. Goddard et al – a case involving two Dayton men who were convicted on all counts for crimes related to the 2019 death of Dayton Detective and DEA Task Force Officer Jorge DelRio. The defendants were each sentenced to life in prison.

    Project Safe Neighborhood’s Guardian Award

    ATF Special Agent Derek Graham

    Special Agent Graham has effectively and creatively investigated a significant number of firearms-related crimes in the Southern District of Ohio. He has developed a special expertise in investigating straw purchasing cases. In recent months, Special Agent Graham has investigated and solved cases involving more than 20 defendants and approximately 100 firearms. One case involved a murder and five armed robberies across jurisdictions. The shooter and getaway driver have since been sentenced to 40 years and 23 years in prison respectively. In 2024 alone, Special Agent Graham has also either completed or assisted with 57 call detail records, 61 pen registers, 92 ping orders, 69 location mappings and 21 forensic extractions for agents and task force officers, as well as local police departments.

    The Project Safe Childhood Shield of Innocence Award

    HSI Special Agent Sara Sellers

    Since joining Homeland Security Investigations Columbus in December 2020, Special Agent Sellers has initiated more than 80 criminal investigations. Special Agent Sellers joined the Internet Crimes Against Children (ICAC) task force in July 2023 and has developed the reputation as an extremely hardworking and diligent investigator. An example of her unwavering commitment to the investigation and prosecution of child predators around the world occurred in December 2023, when Special Agent Sellers was called after hours with an investigative referral from Australia regarding a potential minor victim currently being sexually abused in Ohio. Special Agent Sellers left the restaurant at which she was dining to begin the task of locating the victim and perpetrator immediately. Within 24 hours, Special Agent Sellers had confirmed the identity of the suspect, located her and the minor victim and secured warrants to arrest the suspect and execute a search warrant to obtain additional evidence in this investigation that also spawned new leads. Special Agent Sellers continues to dedicate her efforts to protect minor victims and is helping lead an investigation abroad into an international ring of exploiters who create and distribute child sexual abuse material.

    Polaris Community Service Award

    Department of Veteran Affairs’ Mobile Evaluation Team, Columbus Division of Police Mobile Crisis Response Team & Columbus Public Health

    The partnership between the Department of Veterans Affairs (VA) Police, Veterans Evaluation Team, and the Columbus Division of Police’s Mobile Crisis Response Team exemplifies exceptional innovation, collaboration, and dedication in community service. U.S. Attorney Parker recognized VMET’s Clinical Director Dr. Heather Robinson, Investigator Jesse King, Benjamin Stark and Alexandra Woodruff, Columbus Police Lt. Michael Voorhis, Sgt. John Cheatham and Officers Francis Scalfani, Veronica Poehler, Robert Heinzman and Anthony Roberts, and Columbus Public Health Supervisor Kerith Palletti and Social Workers Kierstin Dettmers, Kevin Kincaid, Zach Simmons and Jason Cole for the collaboration that has created a vital connection between law enforcement and the Veteran community, addressing the unique challenges faced by veterans in crisis.

    By merging the specialized expertise of the VA Police Veterans Response Team with the crisis intervention skills of the Columbus Division of Police Mobile Crisis Response Team, they have established a comprehensive support system that is both empathetic and effective. Together, these teams have introduced innovative crisis intervention strategies. Through joint protocols and training sessions, they have ensured both teams are well-prepared to handle the complexities of veteran-specific mental health crises. This partnership has pioneered the integration of mental health professionals into crisis response scenarios, leading to more informed and compassionate interactions with veterans in distress.

    Serve Thy Neighbor Award (Columbus)

    Center for Family Safety & Healing and the Columbus Division of Police’s ACT-DV program

    U.S. Attorney Parker recognized Center for Family Safety & Healing’s Interim Director Nancy Cunningham, President Melissa Graves, Justice System In-Research Supervisor Amber Howell and Sheronda Paramore, as well as Columbus Police Assistant Chief Greg Bodker and Commander Joseph Curmode for their work developing bridges to effectively link justice, advocacy and health systems and to build trust between residents and law enforcement.

    Through ACT-DV, trained victim advocates respond with police officers at the scene of domestic violence crimes. This important public safety and victim services partnership increases access to support resources by offering safety planning, shelter and linkage to health/ mental health services immediately after a traumatic incident. Advocates also prepare victims for what to expect through the criminal prosecution process. Having advocates and officers work side by side supports the victims’ best interest and builds trust between community and law enforcement. This effort also helps police officers develop a deeper understanding of domestic violence and the complexity, power and danger that far too often keeps women in abusive homes.

    Serve Thy Neighbor Award (Dayton)

    Ms. Lisa Lucchesi, CareSource Health Plan

    Ms. Lucchesi serves as the National Human Trafficking Project Manager for CareSource Health Plan, and her passion is to advocate for children who are being trafficked or at high risk of trafficking. She coordinated with local law enforcement agencies and service providers to organize a highly successful CareSource Human Trafficking Awareness Summit in Dayton. Ms. Lucchesi continues to host meetings with local and national stakeholders to focus on the crime of the sexual trafficking of minors, how to identify the victims, what resources are available for them and how to help these minor victims to improve their lives.  Thanks to Ms. Lucchesi, the Dayton Police Department, Montgomery County Childrens Services and Montgomery County Juvenile Court have improved their processes in looking below the surface in identifying youth victims of sex trafficking who sadly sometimes don’t see themselves as victims.

    Serve Thy Neighbor Award (Cincinnati)

    John McConnaughey, Cincinnati Citizens Police Association

    Mr. McConnaughey’s service to his community has included serving on the Board of Directors for the FBI Citizens’ Academy Alumni Association, as an Associate Member of the Hamilton County Police Association and as the President of the Cincinnati Citizens’ Police Association (CCPA), which provides support to the Cincinnati law enforcement community. He was one of the founders of the Gang Initiative Project and the Southern Ohio Chapter of the Midwest Gang Investigators Association. Both organizations work with the Cincinnati public schools to combat gang activity. Mr. McConnaughey is a dedicated advocate for reducing crime and violence amongst youth.

    Mitch Morris, Cincinnati Works

    Mr. Morris is a dedicated community servant leader, working to end gun violence in the community. He connects at-risk youth with mentors and helps them find work through Cincinnati Works. Cincinnati Works partners with people in poverty to assist them in advancing economic self-sufficiency. Mr. Morris oversees the organization’s Phoenix Program Outreach & Mentoring. His dedication to ending poverty and gun violence is unwavering.

    For more information about the U.S. Attorney’s Office’s annual law enforcement awards, please contact Law Enforcement Coordinator Mitchell Seckman at 614-469-5715.

    # # # 

    MIL Security OSI

  • MIL-OSI USA: Luján, Leger Fernández Welcome $8.6 Million Federal Investment for New Mexico’s Digital Equity Plan

    US Senate News:

    Source: US Senator for New Mexico Ben Ray Luján
    Multi-Million Dollar Investment Made Possible by the Bipartisan Infrastructure Law
    Santa Fe, N.M. – U.S. Senator Ben Ray Luján (D-N.M.), Chair of the Subcommittee on Communications, Media, and Broadband, and U.S. Representative Teresa Leger Fernández (D-N.M.) welcomed $8,673,975 to implement key digital equity initiatives in New Mexico. This funding comes from the $1.44 billion State Digital Equity Capacity Grant Program, one of three Digital Equity Act grant programs created by the Bipartisan Infrastructure Law that Senator Luján and Representative Leger Fernández helped pass into law.
    This funding is part of the “Internet for All” initiative, a key component of the Biden-Harris administration’s “Investing in America” agenda. New Mexico will use this funding to implement its digital equity plan, which outlines how the state will empower individuals and communities with the tools and skills necessary to benefit from meaningful access to affordable, reliable, high-speed Internet service. 
    “In today’s world, a reliable broadband connection is not a luxury, but rather a necessity for everyday life,” said Luján. “This more than $8.6 million investment by the NTIA will deliver critical broadband connection and boost digital literacy in communities across New Mexico. I’m proud to have helped deliver this funding through the Bipartisan Infrastructure Law and will continue to work to close the digital divide once and for all.”
    “We know in New Mexico that we are all connected by history, family, culture and herencias. However, in today’s world, we need to also be connected digitally. When we invest in digital equity, we are investing in education, healthcare, and economic opportunity for every family across New Mexico regardless of their income or background,” said Leger Fernández. “This $8.6 million in investments made possible by our Bipartisan Infrastructure Law will help bridge the digital divide, making sure that our rural, Tribal, and communities of opportunity can fully participate in today’s economy.”
    This approval is from the first funding round of the Digital Equity Capacity Grant Program, which made available more than $800 million for states, including Puerto Rico and the District of Columbia, U.S. Territories, and Native Entities to apply for grants to implement their digital equity plans. These plans were developed under the State Digital Equity Planning Grant Program. Awards of funding will require additional review and approval of State-submitted documentation.    

    MIL OSI USA News

  • MIL-OSI Asia-Pac: Joint Statement: 7th India-Germany Inter-Governmental Consultations (IGC)

    Source: Government of India

    Posted On: 25 OCT 2024 8:25PM by PIB Delhi

    Growing Together with Innovation, Mobility and Sustainability

    Prime Minister Narendra Modi and Federal Chancellor Olaf Scholz co-chaired the seventh round of India-Germany Inter-Governmental Consultations (7th IGC) on 25 October 2024 in New Delhi. The Delegation included Ministers of Defence, External Affairs, Commerce & Industries, Labour & Employment, Science & Technology (MoS) and Skill Development (MoS) from the Indian side and Ministers of Economic Affairs & Climate Action, Foreign Affairs, Labour & Social Affairs and Education & Research from the German side along with Parliamentary State Secretaries for Finance; Environment, Nature Conservation, Nuclear Safety and Consumer Protection; and Economic Cooperation and Development from the German side, as well as senior officials from both sides.

    2. Prime Minister Narendra Modi warmly welcomed Chancellor Olaf Scholz on his third visit to India as Chancellor. Both leaders sincerely appreciated the renewed momentum in bilateral engagement across government, industry, civil society and academia that has played an instrumental role in advancing and deepening the Strategic Partnership between India and Germany.

    3. Both leaders emphasised the importance of the Asia-Pacific Conference of German Business (APK), which takes place in New Delhi in parallel to the 7th IGC, in strengthening economic ties and strategic partnerships between Germany, India and the Indo-Pacific region as a whole. The decision to host the 2024 conference in India underscores India’s political weight in the Indo-Pacific and globally.

    4. Under the motto “Growing Together with Innovation, Mobility and Sustainability”, the 7th IGC placed particular emphasis on technology and innovation, labour and talent, migration and mobility, climate action, green and sustainable development as well as economic, defence and strategic cooperation. Both sides agree that the aforementioned domains will be the key drivers of our ever more multi-faceted partnership that spans trade, investment, defence, science, technology, innovation, sustainability, renewable energy, emerging technologies, development cooperation, culture, education, sustainable mobility, sustainable resource management, biodiversity, climate resilience and people-to-people ties.

    5. The year 2024 marks the 50th anniversary of the signing of the Inter – Governmental Agreement on Cooperation in Scientific Research and Technological Development which institutionalized the framework of Indo-German cooperation in Science & Technology, research and innovation. In this context, the 7th IGC presented an opportunity to renew the close relationship between India and Germany in this regard and to prioritize the advancement of technology and innovation as a key pillar of cooperation.

    6. During the 6th IGC, both governments had announced the Green and Sustainable Development Partnership (GSDP), which serves as an umbrella for bilateral formats and joint initiatives in this field. Subsequently, both sides signed the Migration and Mobility Partnership Agreement (MMPA) in December 2022 and launched the “India-Germany Vision to Enhance Cooperation in Innovation and Technology” in February 2023. Recalling the outcomes of the 6th IGC and various agreements concluded by the two sides thereafter, both governments launched the “India-Germany Innovation and Technology Partnership Roadmap” and introduced the “Indo-German Green Hydrogen Roadmap”, whose aim is to promote the market ramp-up of Green Hydrogen.Growing Together for Peace, Security and Stability

    7. The two leaders noted the Pact for the Future and reaffirmed their commitment to upholding shared values and principles including democracy, freedom, international peace and security and a rules-based international order in line with the purposes and principles of the UN Charter. Both governments also underscored their commitment to strengthen and reform the multilateral system including expansion of both permanent and non-permanent categories of membership of the UN Security Council to reflect contemporary realities, address current and future challenges and to support and preserve peace and stability across the world. The two leaders called for text-based negotiations at the IGN within a fixed timeframe.

    8. India and Germany agreed that the difficulties of the UN Security Council to effectively address regional and global crises offer a compelling reminder of the urgent need for reform. As members of the “Group of Four (G4)”, India and Germany reiterated their call for a Security Council that is efficient, effective, transparent and reflective of 21st century realities.

    9. The leaders expressed their deepest concern over the war raging in Ukraine including its terrible and tragic humanitarian consequences. They reiterated the need for a comprehensive, just, and lasting peace in line with international law, consistent with the purposes and principles of the UN Charter, including respect for sovereignty and territorial integrity. They also noted the negative impacts of the war in Ukraine with regard to global food and energy security, especially for developing and least developed countries. In the context of this war, they shared the view that the use, or threat of use, of nuclear weapons is unacceptable. They underscored the importance of upholding international law, and in line with the UN Charter, reiterated that all states must refrain from the threat of or use of force against the territorial integrity and sovereignty or political independence of any state.

    10. The leaders expressed their shared interest in achieving peace and stability in the Middle East. They unequivocally condemned the Hamas’ terror attacks on October 7, 2023 and expressed concern over the large-scale loss of civilian lives and the humanitarian crisis in Gaza. They called for the immediate release of all hostages taken by Hamas and an immediate ceasefire as well as the urgent improvement of access and sustained distribution of humanitarian assistance at scale throughout Gaza. The leaders underscored the need to prevent the conflict from escalating and spilling over in the region. In this regard, they called on all regional players to act responsibly and with restraint. Both sides also emphasized the urgent need to protect the lives of civilians and facilitate safe, timely and sustained humanitarian relief to civilians, and in this regard urged all parties to comply with international law. The leaders were also deeply concerned about the rapidly deteriorating situation in Lebanon, called for an urgent cessation of hostilities and agreed that a solution to the conflict in Gaza and in Lebanon can only be reached by diplomatic means. The United Nations Security Council Resolution 1701 outlines the path towards a diplomatic solution along the Blue Line. The leaders reaffirmed their commitment to a negotiated two-state solution, leading to the establishment of a sovereign, viable and independent State of Palestine, living within secure and mutually recognized borders, side by side in dignity and peace with Israel, taking into account Israel’s legitimate security concerns.

    11. The leaders underscored that as the world’s two largest democracies, India and the EU have a common interest in ensuring security, prosperity and sustainable development in a multi – polar world. They emphasized the importance of deepening the India-EU Strategic Partnership which would not only benefit both sides but also have a far-reaching positive impact globally. The leaders also expressed their strong support to the India-EU Trade and Technology Council that would serve as an innovative platform towards closer engagement in the critical areas of trade, trusted technologies and security. They agreed to coordinate efforts, both bilaterally and at the EU level, to take forward key connectivity initiatives including India-Middle East-Europe Economic Corridor in which India, Germany and EU are members as well as the EU Initiative Global Gateway.

    12. Both leaders underscored the crucial importance of a comprehensive Free Trade Agreement, Investment Protection Agreement and an Agreement on Geographical Indications between the European Union and India, while calling for an early conclusion of the negotiations.

    13. Both leaders unequivocally condemned terrorism and violent extremism in all its forms and manifestations, including the use of terrorist proxies and cross-border terrorism. Both sides agreed that terrorism remains a serious threat to international peace and stability. They further called for concerted action against all terrorist groups, including groups proscribed by the United Nations Security Council (UNSC) 1267 Sanctions Committee. Both sides also called upon all countries to continue to work towards eliminating terrorist safe havens and infrastructure as well as to disrupt terrorist networks and financing in accordance with international law.

    14. Both leaders noted with concern the emerging threats from the use of new and emerging technologies for terrorist purposes such as unmanned aircraft systems, use of virtual assets by terrorists and terrorist entities and the misuse of information and communication technologies for radicalization. In this regard they welcomed the adoption of Delhi Declaration on Countering the use of New and Emerging Technologies for Terrorism Purposes adopted during the conduct of UNCTC meetings in India in 2022.

    15. Recognizing a shared commitment to combat terrorism and strengthen the framework for global cooperation in this regard, both leaders emphasized the importance of upholding international standards on anti-money laundering and combating the financing of terrorism by all countries, including in FATF. Both sides called for bringing the perpetrators of terrorist acts to justice. Both sides reaffirmed their commitment to hold regular consultations of the Joint Working Group on Counter Terrorism to strengthen channels for real time sharing of intelligence and coordination of counter-terrorism efforts. Both sides also committed to continued exchange of information about sanctions and designations against terror groups and individuals, countering radicalism, and terrorists’ use of the internet and cross-border movement of terrorists.

    16. With a view to ensuring closer collaboration to prevent, suppress, investigate and prosecute criminals, including crime related to terrorism, India and Germany concluded the Mutual Legal Assistance Treaty in Criminal Matters (MLAT). Both leaders agreed that the India-Germany MLAT is an important milestone in strengthening security cooperation between the two countries that will enable sharing of information and evidence, mutual capacity building and sharing of best practices between the two countries.

    17. As strategic partners with a shared interest in deepening security cooperation, both sides concluded the Agreement on the Exchange and Mutual Protection of Classified Information thereby creating a legal framework for cooperation and collaboration between Indian and German entities and providing guidance on how classified information should be handled, protected and transmitted.

    18. With a view to better appreciating foreign policy perspectives in key regions across the world, both governments decided to establish an India-Germany Dialogue on West Asia and North Africa (WANA) between the respective Foreign Ministries, which would be in addition to long-standing dialogue mechanisms on Africa and East Asia. Both governments also expressed satisfaction with regular consultations on key thematic issues of mutual concern including policy planning, cyber-security, cyber issues and United Nations.

    19. Recognizing the need for a deeper understanding of each other’s perspectives, including amongst think tanks and foreign and security policy experts, both governments underscored the usefulness of India-Germany Track 1.5 dialogue between Indian Council of World Affairs (ICWA), the Research and Information System for Developing Countries (RIS) and MEA from the Indian side and German Institute for Global and Area Studies (GIGA), the German Institute for International and Security Affairs (SWP) and the German Federal Foreign Office. The next meeting of this dialogue format is planned for November 2024. Both governments also appreciated the launch of a Track 1.5 Dialogue on East Asia and agreed that these exchanges help both sides better align and coordinate their outreach. With a view to sustaining this momentum, both sides agreed to convene the next edition of the Track 1.5 Dialogue Mechanisms at the earliest opportunity.

    20. Both sides are committed to promoting a free, open, inclusive, peaceful and prosperous Indo-Pacific built on international law, mutual respect for sovereignty, and peaceful resolution of disputes, and underpinned by effective regional institutions. Both sides reaffirmed their unwavering support for ASEAN’s unity and centrality. The Government of India welcomed Germany’s leadership in the capacity-building pillar of the Indo-Pacific Oceans Initiative (IPOI) and its commitment of up to 20 Million EUR via a competitive call for ideas under its International Climate Initiative in 2022 to strengthen the resilience of Pacific Island States against climate-related loss and damage.

    21. Germany congratulated India on its successful G20 Presidency which brought the development agenda to centre stage in G20. Both Leaders acknowledged that from initiating a platform on Compact with Africa (CwA) during the German G20 Presidency to inclusion of the African Union as a permanent member of the G20 during India’s Presidency, the G20 has come a long way to ensure that the voice of the Global South is amplified. India and Germany expressed their support to the priorities set by the Brazilian G20 Presidency, especially Global Governance Reforms.Strengthening Defence and Strategic Cooperation

    22. Recognizing the shared goal of intensifying defence ties between the two countries, the Government of India welcomed the efforts of the German Federal Government to facilitate faster export clearances, including through favourable regulatory decisions such as the General Authorisation/General Licences (AGG) regime. Both sides committed to supporting strategic exports to India and encouraged co-development, co-production and joint research between the respective defence industries. Both governments appreciated the defence roundtable held in New Delhi on 24 October, to strengthen the defense industrial partnership between India and Germany.

    23. In addition to regular visits and increasing interactions between the armed forces, both sides look forward to the next High Defence Committee (HDC) meeting to be held in India next year with a view to developing defence cooperation as a key pillar of the Strategic Partnership between India and Germany. India and Germany also agreed to finalize cooperation in peacekeeping related training between the Centre for UN Peacekeeping (CUNPK), New Delhi and its counterpart in Germany, the Bundeswehr United Nations Training Centre in Hammelburg (GAFUNTC) and looked forward to the Peacekeeping Ministerial Meeting in Berlin in 2025.

    24. Both sides stressed the importance of the Indo-Pacific for prosperity and security as well as for addressing global challenges. Germany will enhance its engagement with the region in line with the Federal Government’s policy guidelines for the Indo-Pacific. Both sides also highlighted the importance of freedom of navigation and of unimpeded maritime routes in accordance with International Law, as reflected in the United Nations Convention on the Law of the Sea (UNCLOS) 1982, in all maritime domains including in the Indo-Pacific. In this context, both governments declared their joint intent to conclude a Memorandum of Arrangement regarding mutual logistics support and exchange between the armed forces of India and Germany to further intensify defence and security ties and to establish a basis for provision of mutual logistics support including in the Indo-Pacific theatre. With a view to deepening cooperation in the Indo-Pacific, Germany will permanently deploy a Liaison Officer in the Information Fusion Centre – Indian Ocean Region (IFC-IOR) at Gurugram to monitor the marine traffic in IOR, further augmenting close cooperation in this region.

    25. Both sides welcomed Germany’s growing engagement in the Indo-Pacific region in the field of security and defence cooperation and appreciated the successful cooperation of the Indian and German air forces during exercise TARANG SHAKTI in August 2024 as well as the port call in Goa and joint naval exercises between the German Naval Frigate “Baden-Württemberg” along with the Combat Support Ship “Frankfurt Am Main” and the Indian Navy. Germany also welcomed the port call of Indian naval ship INS TABAR to Hamburg in July 2024.

    26. Both governments agreed to intensify bilateral exchanges on security and defence issues also through enhancing research, co-development and co-production activities bilaterally, under EU mechanisms and with other partners. In this regard, both sides will support enhanced industry level cooperation in the defence sector with a specific focus on technology collaboration, manufacturing/co-production and co-development of defence platforms and equipment. Germany also welcomes India’s application for observer status in the Eurodrone Programme of OCCAR (Organisation for Joint Armament Co-operation).Partnering for Critical and Emerging Technologies, Science and Innovation

    27. Both leaders expressed their appreciation on the successful 50 years of long standing collaboration in science and technology between the two countries and reaffirmed their support to expand it further through launching the ‘India-Germany Innovation and Technology Partnership Roadmap’ which will serve as a guideline to the public and private sectors and research institutions of the two countries to take forward our cooperation in the areas of renewable energy, start-ups, semiconductors, AI and quantum technologies, climate risk and sustainable resource management, climate change adaptation as well as agroecology Both leaders further identified space and space technologies as an important and promising area for future prosperity, development, and possible cooperation.

    28. The two leaders expressed their satisfaction at the growing exchanges between the two countries in the field of research & education and growing number of Indian students studying in Germany. Both leaders also acknowledged the flagship role of the Indo-German Science and Technology Centre (IGSTC) in promoting bilateral industry-academia strategic research and development partnerships. Both leaders welcomed the recent initiatives of IGSTC and signing of Joint Declaration of Intent to support 2+2 projects in the field of advanced materials. Understanding the importance of IGSTC, both leaders expressed their desire to expand and forge new partnerships anchored in shared values and driven by innovation led technology development and manufacturing.

    29. Both Leaders acknowledged the launching of the first ever basic research consortia model between the two countries namely, International Research Training Group (IRTG), jointly by Department of Science and Technology (DST) & German Research Foundation (DFG) with the involvement of first group of researchers from IISER Thiruvananthapuram and Würzburg University on Photoluminescence in Supramolecular Matrices. Underpinning science and innovation landscape, they expressed their desire to initiate an Indo-German Innovation and Incubation Exchange Programme to leverage collective expertise and capacity for fostering scientific innovation and incubation ecosystems of academic & research institutions.

    30. Both Leaders also expressed their appreciation and satisfaction over the high level of engagement as exemplified by India’s participation in mega-science facilities at Facility for Anti-Proton and Ion Research (FAIR) and Deutsche Elektronen Synchrotron (DESY) in Germany. They extended their commitment including financials to ensure timely execution of the FAIR facility. The two leaders also acknowledge the continuation of the cooperation at the synchrotron radiation facility PETRA-III and the free-electron laser facility FLASH at DESY.

    31. Both governments welcomed the steadily increasing partnerships in Higher Education which facilitate dual and joint degrees and intensify collaborative research and academic and institutional exchanges between Universities and Institutions of Higher Education. In particular, both sides expressed their appreciation and full support for the first ever Indo-German joint Masters degree programme in “Water Security & Global Change”, a joint initiative of TU Dresden, RWTH-Aachen and IIT-Madras (IITM) funded by DAAD as well as a new initiative of TU Dresden and IITM to conclude an agreement establishing a “transCampus” to deepen bilateral cooperation in teaching, research, innovation and entrepreneurship. Both governments also welcomed the signing of the MoU between IIT Kharagpur and the DAAD, which will enable joint funding for Indo-German university cooperation projects. Both sides expressed their strong support for the dedicated call of the “German Indian Academic Network for Tomorrow” (GIANT) under SPARC (Scheme for Promotion of Academic and Research Collaboration) highlighting cooperation between Indian and German universities.

    32. With a view to further strengthening digital and technology partnerships between India and Germany, both governments agreed to share experience and expertise in digital public infrastructure (DPI), e.g. to explore ways in which Germany can leverage India’s expertise in DPI and the strengths of the Indian IT industry to drive innovation and digital transformation in both countries. As an important forum for exchanges on digital topics such as internet governance, tech regulations, digital transformation of economy, and emerging digital technologies, both sides welcomed the finalization of the Work Plan for 2023-24 formulated by the Indo-German Digital Dialogue (IGDD).

    33. Both sides will endeavour to leverage AI to advance the SDG, recognizing the need for an innovation-friendly, balanced, inclusive, human-centric and risk-based approach to the governance of AI. Digital solutions such as image detection and AI are playing an important role in revolutionising agriculture by assisting farmers and enhancing agricultural productivity, climate resilience, carbon sinks and sustainability. Both countries are running national programmes to facilitate the growth of digital agriculture and have agreed to intensify their Cooperation in Digital Agriculture, AI and IoT to foster ongoing cooperation, innovation and exchanges for modernising agriculture.

    34. Both governments underlined the strategic importance of collaboration in the field of critical and emerging technologies, innovation and skill development. Reaffirming the priorities for bilateral cooperation, as laid down in the Innovation and Technology Partnership Roadmap, both governments agreed to focus on collaboration in innovation, skill development and critical and emerging technologies. Forging closer linkages between the industry and academia of the two countries in key technology areas would be prioritized, in recognition of a shared commitment to ensuring an open, inclusive and secure technology architecture, built on mutual trust and respect, and reflecting shared values and democratic principles. Based on that, the two countries would achieve outcome oriented and mutually beneficial technology collaboration in identified sectors.

    35. In furthering cooperation in the field of research in disaster mitigation, tsunami warnings, coastal hazards, early warning systems, disaster risk reduction and oceanography, polar sciences, biology and biogeochemistry, geophysics and geology, both Governments welcomed the signing of the Memorandum of Understanding between Indian National Centre for Ocean Information Services (INCOIS) and Helmholtz-Zentrum Potsdam – Deutsches GeoForschungsZentrum, and between National Centre for Polar and Ocean Research (NCPOR) and AlfredWegener-Institut, Helmholtz-Zentrum für Polar- und Meeresforschung (AWI).

    36. Both Governments also welcomed the bilateral agreement in the biological, physical and mathematical sciences between National Centre for Biological Sciences (NCBS) and International Centre for Theoretical Sciences (ICTS), both centres of the Tata Institute of Fundamental Research (TIFR), under the Department of Atomic Energy (DAE), India and Max-Planck-Gesellschaft (MPG), Germany. This agreement will facilitate the exchange of scientists, including students and research staff, between the various Max Planck Institutes with ICTS and NCBS.

    37. Both Leaders noted with appreciation the collaboration between M/s New Space India Ltd and M/s GAF AG for upgrading the international ground station at Neustrelitz, Germany for the reception and processing of data from OceanSat – 3 and RISAT – 1A satellites. Partnership for a Green and Sustainable Future

    38. Both sides acknowledged the need for green, sustainable, climate resilient and inclusive development to achieve net zero emissions. Both governments aim to substantially enhance bilateral, trilateral and multilateral cooperation in climate action and sustainable development. Both sides acknowledged the progress achieved thus far under the Indo-German Green and Sustainable Development Partnership (GSDP). This partnership, guided by shared commitments, seeks to accelerate the implementation of the goals outlined in the Paris Agreement and the SDGs. In this context, both sides stressed the need to work jointly for an ambitious outcome of the upcoming UNFCCC COP29, in particular on the New Collective Quantified Goal (NCQG). Both sides will respond positively to the outcomes of COP28, including the first Global Stocktake, in light of national circumstances.

    39. Both sides appreciated the stocktaking of progress during the Ministerial meeting on the GSDP objectives. To contribute to the implementation of the GSDP, both sides are committed to regular dialogue within the existing working groups and other bilateral formats and initiatives. The next meeting of the Ministerial Mechanism shall take place at the latest within the framework of the next India-Germany Inter-Governmental Consultations, to conduct a stocktaking of the progress on GSDP objectives to achieve the Paris Agreement goals and SDGs. Both sides reaffirmed their intention to closely cooperate on combatting climate change and therefore expressed their intention to hold a meeting of the Indo-German Climate Working Group in the near future.

    40. Under the umbrella of the GSDP, both sides inter alia:

    a. Launched the Indo-German Green Hydrogen Roadmap. The Leaders agreed that the Roadmap will help support India’s ambition for production, usage and export of Green Hydrogen while also contributing to a swifter adoption of Green Hydrogen as a sustainable source of energy in both countries

    b. Launched the GSDP Dashboard, a publicly accessible online tool, which showcases the intensive cooperation between Germany and India under the GSDP. It gives an overview of key innovations and the broad range of experience covered by India-Germany cooperation. It facilitates stocktaking of the joint progress towards achieving GSDP objectives, and provides key information to relevant stakeholders on innovative solutions for global challenges.

    c. Signed a Joint Declaration of Intent to renew and further elevate the partnership in accordance with a shared vision to promoting in India sustainable urban mobility for all, recognizing the importance of green and sustainable urbanization for inclusive social and economic development and the strong results of the Green Urban Mobility Partnership since its establishment in 2019.

    d. Highly appreciated the achievements and vision for the future of the International Solar Alliance (ISA) and agreed to intensify our cooperation within ISA.

    e. Appreciated the cooperation in the area of halting deforestation and degradation and reversing the trend by restoring forest landscapes in support of the implementation of the Rio Conventions and the SDGs.

    41. The leaders acknowledged that the Indo-German Energy Forum (IGEF), through its various activities, has played a pivotal role in strengthening the general bilateral economic relations between Germany and India, promoting economic growth, and addressing global climate change challenges.

    42. Both sides underscored the role of the 4th Global RE-INVEST Renewable Energy Investors Meet & Expo, held in September 2024 in Gandhinagar with Germany as a partner country, in bringing together key stakeholders in the renewable energy sector. Both governments recalled the ‘India-Germany Platform for Investments in Renewable Energy Worldwide’ which was launched during RE-INVEST as a key initiative to fast-track renewable energy investments, foster business collaborations and expand global supply chains. The platform will accelerate the expansion of renewable energy in India and worldwide through exchanges on green financing, technology and business opportunities.

    43. Both governments expressed their wish to continue to strengthen the cooperation through the Joint Working Group on Biodiversity and acknowledged that CBD COP 16 marks a crucial moment in the global effort to implement the goals of the Global Biodiversity Framework.

    44. Recalling the deliberations and outcomes of the Joint Working Group on Waste management and Circular Economy which has created opportunities by intensifying exchanges on experiences and technologies between the two countries, both sides agreed to explore the possibility of deepening cooperation within these structures, for instance, focusing future work on inter alia Solar Waste recycling. They appreciated the Indo-German environment cooperation on the effective and efficient implementation of ambitious objectives and policies in order to prevent waste, especially plastics, from entering the marine environment. India and Germany agreed to closely cooperate towards establishing a global legally binding agreement on plastic pollution.

    45. Both leaders acknowledged the progress made under the Triangular Development Cooperation (TDC), which pools mutual strengths and experiences to offer sustainable, viable and inclusive projects in third countries as per their priorities to support the achievement of SDGs and climate targets in Africa, Asia and beyond. Both sides welcomed the encouraging results of the pilot projects in Cameroon, Ghana and Malawi, and the progress made in the ongoing initiatives with Benin and Peru. In view of the successful implementation of the aforementioned initiatives, both governments have agreed to commence upscaling of the pilot projects with Cameroon (agriculture), Malawi (women entrepreneurship) and Ghana (horticulture) in 2024 and beyond. Furthermore, both sides welcomed the start of the three millet related pilot projects: two with Ethiopia and one with Madagascar. Additionally, both sides have launched the institutional mechanism to reach out to the partners, select and implement their joint initiatives on a full scale and to this end, both governments established a Joint Steering Committee and a Joint Implementation Group.

    46. The leaders reaffirmed that Gender Equality is of fundamental importance and investing in the empowerment of women and girls has a multiplier effect in implementing the 2030 Agenda. They reiterated their commitment to encourage women-led development and enhancing womens’ full, equal, effective and meaningful participation as decision-makers for addressing global challenges inclusively while noting Germany’s Feminist Foreign and Development Policies in this regard. Both sides reaffirmed their desire to strengthen Indo-German cooperation on promoting the critical role of women in green and sustainable development.

    47. In addition, both sides welcomed the milestones already achieved with respect to the existing initiatives and new commitments for financial and technical cooperation under the framework of the GSDP, as follows:

    a.New commitments in all core areas of the GSDP of more than 1 billion EUR as agreed during the negotiations on development cooperation between the Government of India and the Government of the Federal Republic of Germany in September 2024, adding up to accumulated commitments of around 3.2 billion EUR since beginning of the GSDP in 2022;

    b.Under the Indo-German Renewable Energy Partnership, the cooperation focused on innovative solar energy, green hydrogen, other renewables, grid integration, storage and investments in the renewable energy sector to facilitate an energy transition and to address the need for a reliable, round the clock renewable power supply.

    c.The “Agroecology and Sustainable Management of Natural Resources” cooperation benefits the vulnerable rural population and small-scale farmers in India by fostering income, food security, climate resilience, soil health, biodiversity, forest ecosystems and water security.

    d.Both sides reiterated their intention to continue their successful collaboration on sustainable urban development.

    Building resilience through Trade and Economic collaboration

    48. Both leaders hailed the consistent high performance in terms of bilateral trade between the two countries in the recent years and encouraged stakeholders in India and Germany to further strengthen trade and investment flows. The leaders also noted the strong two-way investments between India and Germany and the positive impacts of such investments in diversifying the global supply chains. In this context, the leaders expressed confidence that the APK 2024, the bi-annual flagship forum of German Business with participation of top-level business executives from Germany, is a crucial platform to showcase the immense opportunities available in India for German businesses.

    49. Both sides underlined the long-standing presence of German businesses in India and Indian businesses in Germany and agreed to work towards deepening economic and trade linkages between the two countries. In this context, both sides welcomed the holding of the meeting of the India-Germany CEO Forum which serves as a high-level platform to engage business and industry leaders from India and Germany. They also underlined the achievements of the Indo-German Fast Track Mechanism to resolve trade and investment related issues, and are ready to continue its operation.

    50. In recognition of the importance of Micro, Small and Medium Enterprises (MSMEs)/Mittelstand in economic growth and job creation, both sides acknowledged the growth in bilateral investment and the success of the ‘Make in India Mittelstand’ Programme, which supports German Mittelstand enterprises seeking to invest and do business in India. In a similar vein, both governments also recognised the key role played by start-ups in fostering innovation, and commended the German Accelerator (GA) for successfully facilitating start-ups to address the Indian market, and welcomed plans to establish its presence in India. Both sides noted that a corresponding programme to assist Indian start-ups in gaining market access in Germany could further enhance economic cooperation between the two countries.

    Strengthening Labour Markets, Mobility and People-to-People Ties

    51. As bilateral cooperation on skilled migration expands across multiple fronts, involving collaboration between federal and state governments, as well as private sector stakeholders, both sides committed to full implementation of the provisions of the Migration and Mobility Partnership Agreement (MMPA). In line with the commitments outlined in the MMPA both sides remain dedicated to promoting fair and legal labor migration. This approach is guided by international standards that ensure migrant workers are treated with dignity and respect, including fair recruitment practices, transparent visa processes, and the protection of workers’ rights. By focusing on these principles, both countries aim to facilitate the mobility of skilled workers in a manner that benefits all parties while safeguarding against exploitation and ensuring compliance with international labor standards.

    52. Building on the MMPA, the two sides concluded a JDI in the field of Employment and Labour, to enhance bilateral cooperation and exchange in areas of mutual interest between the respective ministries. The German side informed that it will support a feasibility study on international reference classification, a G20 commitment undertaken by the Indian G20 presidency in 2023. Both leaders look forward to the signing of the Memorandum of Understanding in the field of occupational diseases, rehabilitation and vocational training of workers with disabilities between the Employees’ State Insurance Corporation (ESIC), the Directorate General of Employment (DGE) and the German Social Accident Insurance (DGUV).

    53. Both leaders noted that Indian professionals comprise over 1/4th of all blue card holders in Germany and that Indian students now represent the largest cohort of international students in Germany. Regarding this, they recognized the complementarities that exist between the requirements of skills and talents in Germany and the vast reservoir of young, educated and skilled persons in India, who can be an asset to the German labour market. The Federal Employment Agency will deepen the existing exchange with the National Skill Development Council, India (NSDC) and other similar Government agencies at national and state levels. Both sides welcomed the launch of the new national strategy of the German Federal government to promote skilled migration from India.

    54. Both leaders also expressed satisfaction on the signing of a Memorandum of Understanding on Skill Development and Vocational Education and Training which would leverage the strengths of India and Germany towards creating a pool of skilled workforce in India and strengthening the participation of women, especially in the areas of green skills. Both sides agreed to include elements of facilitating international mobility of labour.

    55. Both sides remain committed to the goal of expanding the teaching of the German language in India, including in secondary schools, universities and vocational education centers. They encouraged Indian and German States, culture centers and educational institutions to further promote the teaching of each other’s languages in India and Germany, including the training of language teachers. Both sides welcomed the joint efforts of the DAAD and the Goethe Institute to develop a format for the formalized training and further education of German teachers leading to a university certificate recognized in India.

    56. Both sides reaffirmed the contribution of highly skilled professionals for economic growth, noted with satisfaction the results achieved under the programme “Partnering in Business with Germany”, and renewed the JDI on advanced training of corporate executives and junior executives from India.

    57. With the Migration and Mobility Partnership Agreement (MMPA), both sides also agreed to address irregular migration. For this purpose, both sides established a cooperation in the field of return since the entry into force of the MMPA. Both sides welcomed the progress achieved so far and underline the importance of further developing and streamlining cooperation through appropriate procedural arrangements.

    58. The leaders welcomed the growing ties between the two sides and their respective nationals. They acknowledged the wide range of Consular issues stemming from these growing ties and the need for dialogue on all matters related to Consular issues. They agreed to work towards early establishment of an appropriate format for a bilateral dialogue on various Consular, Visa and other issues affecting nationals of the other side residing in their respective territories.

    59. Both sides acknowledged the role of their youth as cultural ambassadors and catalysts for innovation and promoting people – people linkages between the two countries. In this context, both leaders stressed on the importance of youth cooperation and noted the proposal for establishing forum for youth exchanges and delegations between both sides. Both sides also agree to facilitate student exchanges on a mutual basis.

    60. Both sides noted with satisfaction the substantial work being done in the field of culture and welcomed efforts towards expanding scope of the Memorandum of Understanding on Museum Cooperation between Indian and German national museums such as the Prussian Heritage Foundation and the National Gallery of Modern Art, India.

    61. In line with the G20 New Delhi Leader’s Declaration (2023), both leaders underscored the intention to cooperate closely with regards to the restitution and protection of cultural goods and the fight against illicit trafficking of cultural property at national, regional and state levels to enable its return and restitution to the country and community of origin as relevant, and called for sustained dialogue and action in that endeavour.

    62. Both Governments also appreciated substantial cultural and academic exchanges made possible via initiatives such as the establishment of Indian academic chairs at universities in Germany.

    63. Both leaders expressed satisfaction at the deliberations held at the 7th IGC and reaffirmed their commitment to further expand and deepen the Indo-German Strategic Partnership. Chancellor Scholz thanked Prime Minister Modi for his warm hospitality and conveyed that Germany looks forward to hosting the next IGC.

     

    ***

    MJPS/SR

    (Release ID: 2068257) Visitor Counter : 69

    MIL OSI Asia Pacific News

  • MIL-OSI Asia-Pac: ‘IndiaAI’ and Meta announces the establishment of the Center for Generative AI, Shrijan (सृजन) at IIT Jodhpur

    Source: Government of India (2)

    ‘IndiaAI’ and Meta announces the establishment of the Center for Generative AI, Shrijan (सृजन) at IIT Jodhpur

    Meta commits funds & its In house research support to सृजन (Srijan)

    Srijan to encourage students & young developers in India to use open-source AI models to solve real-world problems and drive positive social and economic impact

    CoE to focus researches in education, mobility and healthcare domains vis a vis the global advancements in Generative AI

    Posted On: 25 OCT 2024 8:14PM by PIB Delhi

     ‘IndiaAI’ and Meta today announced the establishment of the Center for Generative AI, Shrijan (सृजन) at IIT Jodhpur and the launch of the “YuvAI initiative for Skilling and Capacity Building”, in partnership with All India Council for Technical Education (AICTE). This is aimed at propelling the advancement of open source artificial intelligence (AI) in India.

    Establishment of the Center for Generative AI, Shrijan (सृजन)

    The CoE will Identify & empower the next generation of AI innovators and entrepreneurs using open-source AI & exploring possibilities in Large Language Model LLMs. The research under its aegis will be shared with students via AICTE and via direct connect with colleges. Srijan will engage young developers to deploy open-source LLMs across India & unearth indigenous use cases through Hackathons.

    It will conduct Master Training activation workshops for select colleges, data labs, and ITIs, introducing them to foundations of LLMs to ignite interest. It will help support in creation of Student-led Startups experimenting with Open Source LLMs by identifying the young developers.

    Highlighting the power of collaborative innovation, Shri S. Krishnan, Secretary, Ministry of Electronics and Information Technology (MeitY), emphasized the significance of the partnership between IndiaAI, IIT Jodhpur, AICTE and Meta. He stated “These initiatives are pivotal in creating a robust ecosystem for groundbreaking research, skill development, and open-source innovation, advancing AI technology while ensuring its responsible and ethical deployment.”

    The initiative will support India’s ambitious goal of becoming a $5 trillion economy by equipping the nation’s youth to lead in the global AI arena, securing India’s position as a leader in technological advancement and economic growth.

    Also commenting on the partnership, Sh. Abhishek Singh, Additional Secretary, MeitY said, “The Indian government is supporting the vision of AI innovation, skilling, and technological advancement to drive inclusive growth under the IndiaAI initiative. Our collaboration with industry leaders like Meta is vital to realizing this vision. By fostering a culture of open source innovation in AI, advancing research and skill development in emerging technologies, we are bridging the talent gap and ensuring that our youth are equipped to lead in the AI revolution, ultimately securing India’s position as a global leader in responsible development and contributing to a robust AI ecosystem.”

    The Centre of excellence was announced under the aegis of Meity on July 27th, 2023. Srijan will ensure long-term sustainability of the GenAI research beyond the initial phase supported by seed funding of Meta & support from IndiaAI. IIT Jodhpur will devise a comprehensive plan that encompasses diverse revenue streams, strategic partnerships & continuous innovation. Its progress will be yearly monitored annually by the joint committee of MeitY and Meta for the duration of the funding support.

    Srijan will nurture the startup ecosystem of AI & other Emerging Technologies. In doing so, IIT Jodhpur will enhance accessibility to AI compute resources for researchers, startups, and all the other organizations with limited resources. It will also enable knowledge sharing and collaboration through workshops, seminars, conferences, and similar platforms. Programs developed and initiatives taken by Srijan will enhance AI & Emerging Technologies skills and expertise among researchers, professionals and students in India, contributing to the growth of AI talent in the country with a focus on developing responsible AI through a collaborative development of comprehensive tools and guidelines.

    Meta has committed to invest up to INR 750 Lakhs (as donation) over the period of three years. The IndiaAI will support the researcher working in the CoE being setup at IIT Jodhpur’s Centre Srijan. The GenAI Centre of Excellence, Srijan, (सृजन) aims to foster a collaborative ecosystem in the field of Generative AI through groundbreaking research and application development to address current national challenges in education, mobility and healthcare domains. This research will contribute to global advancements in Generative AI. Through education, capacity building, and policy advisory, the center will be empowering the next generation of researchers, students, and practitioners with the knowledge and tools necessary for the responsible development and deployment of GenAI technologies. Funding will be used by IIT Jodhpur towards activities of the GenAI CoE.

    Shivnath Thukral, Vice President and Head of Public Policy, Meta India said, “By emphasizing the importance of open-source AI, Meta is committed to nurturing an ecosystem where indigenous solutions can flourish. Today’s partnership is testament to our deep commitment to furthering the advancement of emerging technologies in India, while aligning seamlessly with IndiaAI mission. These initiatives will empower the next generation of innovators and equip them with the tools to address pressing real-world challenges, ultimately propelling India to be at the forefront of global AI advancements.”

    The key objective of IIT Jodhpur’s Centre of Excellence, Srijan is to foster indigenous research ecosystem is the country. It aims to nurture 1 lakh youth developers & entrepreneurs in AI skills over next 3 years. The idea is to remain future ready in our Development of innovative indigenous AI solutions in key areas like healthcare, education, agriculture, smart cities, smart mobility, sustainability, financial and social inclusion. IIT Jodhpur COE Srijan will collaborate with academic, government & industry stakeholders both national & global to advance GenAI research and technology. This includes Open science innovation, Develop and transfer technology solutions, Education & capacity building besides Policy advisory and governance.

    The CoE will have an academic research team comprising of faculty members, post-doctoral fellows, doctorate, graduate students, and administrative staff from IIT Jodhpur to be coordinated by the center director, who will also be the Principal Investigator of the project. The team will interface with the Gati Shakti Vishwavidyalaya for railways, PGI Chandigarh, AIIMS Jodhpur, and IHBAS Delhi for the healthcare vertical.

    Launch of the “AI for Skilling and Capacity Building” Initiative as part of India’s YuvaAI (Youth for Unnati and Vikas with AI) initiative

    Meta, in collaboration with MeitY and the All India Council for Technical Education (AICTE), also launched the “YuvaAI initiative for Skilling and Capacity Building” . This program aims to bridge the AI talent gap in the country by empowering 100,000 students and young developers aged 18-30 to leverage open-source large language models (LLMs) to address real-world challenges. It aims to build capacity in generative AI skills, utilizing open-source LLMs while fostering AI innovation across key sectors. Over the next three years, the initiative will train one lakh  youth, developers, and entrepreneurs, contributing significantly to India’s AI ecosystem across critical sectors such as healthcare, education, agriculture, smart cities, and financial inclusion.

    This will include the establishment of a Gen AI Resource Hub with courses, case studies, and open datasets; an LLM for Young Developers Course designed by Meta; and Master Training Activation Workshops to introduce participants to foundational AI concepts. The program also features Unleash LLM Hackathons, where students will submit AI solutions to address real-world problems, with top ideas receiving mentoring, seed grants, and market support. Additionally, the AI Innovation Accelerator will identify and support 10 student-led startups experimenting with open-source AI models, offering incubation and visibility​.

    Commenting on the partnership, Mayank Vatsa, Professor, IIT Jodhpur said,  “Srijan, meaning ‘Creation,’ will be a leading center for Foundation Models and Generative AI research in India whose goal is to drive innovation in AI technology while ensuring ethical and responsible use. With the support from Meta and the Ministry of Electronics and Information Technology (MeitY), Srijan is aligned with the IndiaAI mission to strengthen the country’s AI ecosystem. We aim to contribute to building a robust, indigenous research ecosystem, promoting open science, nurturing the next generation of AI talent, and working with agencies to shape AI policies and standards in India.

    Commenting on the partnership, Prof. T. G. Sitharam, Chairman, AICTE, said, “The AI for Skilling and Capacity Building initiative represents a pivotal step in realizing India’s AI potential. This initiative is mobilizing institutions nationwide and fostering collaboration between academia, industry, and government, to create a robust ecosystem for AI innovation.”

    Last year, Meta partnered with ‘India AI’ to advance AI & Emerging Technologies in India.  Further, Meta also partnered with the Ministry of Education to empower students and educators via programs with CBSE and AICTE.

    *****

    Dharmendra Tewari/Kshitij Singha

    (Release ID: 2068251) Visitor Counter : 60

    MIL OSI Asia Pacific News

  • MIL-OSI Canada: CRTC sets rates that will allow for greater choice of Internet services

    Source: Government of Canada News

    Today’s decision sets interim wholesale rates that competitors will pay large telephone companies to access their modern fibre networks. The decision will increase choice of affordable Internet services at the higher speeds Canadians expect.

    October 25, 2024—Ottawa–Gatineau—Canadian Radio-television and Telecommunications Commission (CRTC)

    Today’s decision sets interim wholesale rates that competitors will pay large telephone companies to access their modern fibre networks. The decision will increase choice of affordable Internet services at the higher speeds Canadians expect.

    This is the latest step in implementing the CRTC’s policy to increase Internet competition in Canada. In November 2023, following an expedited process, the CRTC provided competitors with access to fibre networks in Ontario and Quebec, where competition had declined most significantly. In that decision, the CRTC set interim rates that have been successfully used by competitors to offer new options in those provinces.

    In August 2024, following a comprehensive review and a week-long public hearing, the CRTC broadened the access to the large telephone companies’ fibre networks across Canada. In that decision, the CRTC required that access be given by February 13, 2025, and committed to issuing interim rates this year.

    Today’s decision sets those rates. Established using the CRTC’s long-standing approach, these rates are based on a thorough analysis of detailed costing information filed by the large telephone companies. The rates reflect the actual costs of building fibre networks and will allow companies to continue investing in high-quality networks. The rates are consistent with the ones already being used by competitors in Ontario and Quebec.

    Quotes

    “Today’s decision will provide Canadians with new options for Internet, television, home phone, and smart home services. We are already seeing competitors using fibre access to bring new offers in Ontario and Quebec, and we look forward to this broader access benefiting even more Canadians.”

    –  Vicky Eatrides, Chairperson and Chief Executive Officer, CRTC  

    Quick facts

    • The CRTC is an independent quasi-judicial tribunal that regulates the Canadian communications sector in the public interest. The CRTC holds public consultations on telecommunications and broadcasting matters and makes decisions based on the public record.
    • Over the coming months, Canada’s large telephone companies will need to provide additional information for the CRTC to finalize the rates.

    Associated links

    General Inquiries
    Telephone: 819-997-0313
    Toll free: 1-877-249-CRTC (2782)
    TTY: 819-994-0423

    MIL OSI Canada News

  • MIL-OSI: Luokung Announces Receipt of Nasdaq Notices Regarding Periodic Filing Compliance and Stockholders’ Equity Deficiency

    Source: GlobeNewswire (MIL-OSI)

    BEIJING, Oct. 25, 2024 (GLOBE NEWSWIRE) — Luokung Technology Corp. (NASDAQ: LKCO) (“Luokung” or the “Company”), a leading spatial-temporal intelligent big data services company and provider of interactive location-based services (“LBS”) and high-definition maps (“HD Maps”) in China, today announced that on October 23, 2024, the Company received two letters from the Nasdaq Stock Market LLC (“Nasdaq”).

    The first letter notified the Company that, based on the filing of its Form 20-F for the year ended December 31, 2023 (the “2023 20-F”) on October 22, 2024, the Company has regained compliance with Nasdaq Listing Rule 5250(c)(1) regarding periodic filing requirements. Accordingly, Nasdaq considers this matter closed.

    The second letter notified the Company that it no longer complies with the minimum stockholders’ equity of $2.5 million for continued listing on the Nasdaq Capital Market under Listing Rule 5550(b)(1) while stockholders’ equity for the year ended December 31, 2023 was reported as ($63,228,280), and the Company does not meet the alternatives of market value of listed securities or net income from continuing operations. These determinations are based on information reported in the 2023 20-F.

    Under Nasdaq rules, the Company has 45 calendar days, or until December 9, 2024, to submit a plan to regain compliance. If the plan is accepted, Nasdaq can grant an extension of up to 180 calendar days from October 23, 2024, or April 21, 2025, to evidence compliance. The Company intends to submit a plan to regain compliance within the required timeframe. There is no assurance that such plan would be accepted by the Nasdaq.  If the plan is not accepted by the Nasdaq, the Company will have the opportunity to appeal that decision to a Hearings Panel.

    ABOUT LUOKUNG TECHNOLOGY CORP.

    Luokung Technology Corp. is a leading spatial-temporal intelligent big data services company, as well as a leading provider of LBS and HD Maps for various industries in China. Backed by its proprietary technologies and expertise in HD Maps and multi-sourced intelligent spatial-temporal big data, Luokung has established city-level and industry-level holographic spatial-temporal digital twin systems and actively serves industries including smart transportation (autonomous driving, smart highway and vehicle-road collaboration), natural resource asset management (carbon neutral and environmental protection remote sensing data service), and LBS smart industry applications (mobile Internet LBS, smart travel, smart logistics, new infrastructure, smart cities, emergency rescue, among others). The Company routinely provides important updates on its website: https://www.luokung.com.

    CONTACT:

    The Company:
    Mr. Jian Zhang
    Chief Financial Officer
    Tel: +86-10-6506-5217
    Email: ir@luokung.com

    The MIL Network

  • MIL-OSI: Anoto resolves on a SEK 15 million directed issue, a SEK 50 million rights issue and a set-off issue of SEK 21 million to strengthen the company’s financial position and for the implementation of the company’s business plan

    Source: GlobeNewswire (MIL-OSI)

    NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, BELARUS, HONG KONG, JAPAN, CANADA, NEW ZEALAND, RUSSIA, SINGAPORE, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

    Anoto Group AB (“Anoto” or the “Company“) hereby informs that the Board of Directors has resolved to carry out a directed share issue amounting to approximately SEK 15 million, a rights issue amounting to approximately SEK 50 million and a set-off issue amounting to approximately SEK 21 million. The issues are being carried out in order to strengthen the Company’s financial position and to implement the Company’s business plan. The rights issue is covered by subscription and guarantee undertakings amounting to in total 100 percent. The rights issue, the directed share issue and the set-off issue are subject to approval by an Extraordinary General Meeting.

    Background and Rationale

    Anoto is a global Swedish technology company in digital writing and drawing. The Company develops and manufactures smart pens and related software using its proprietary technology. Anoto bridges the analogue and digital worlds with its solution, pattern recognition, optics and image processing. Anoto’s business idea is to offer an intuitive digital pen that works easily, connecting the art and experience of writing on paper with instant usability on digital devices. The Company has two main business areas: B2C (Livescribe) and B2B (Enterprise Forms). Enterprise Solutions offers digital pens for professional and legal purposes, such as signatures, forms and documents while Livescribe is aimed at consumers who want to use digital pens for note-taking, meetings, messaging and creative applications. Anoto’s sales of hardware and software generate two different types of revenue streams; one-off revenue per digital pen sold from Livescribe and subscription fees from Enterprise Forms.

    Over the last year the Company has recruited a new management team with experience from building and scaling companies on an international scale as well as with a long track-record of successful product launches within the consumer sector. The new management team has, together with the Board of Directors, developed a new consumer centric strategy that is focused on growth and profitability and that includes new product launches including improved supporting software. As a first step, Anoto will launch its new product LivePen in November of 2024. The LivePen is an affordable digital pen that comes along with the accompanying LivePen app. The app allows users to instantly transfer their handwritten notes into digital form, creating a seamless integration between traditional writing and digital platforms. A key part of Anoto’s new strategy is to use a data-driven approach to understand user experiences and feedback. By analysing how users interact with the LivePen and the app, Anoto can continuously improve its products and services. This approach will inform future developments in both the pen and software segments, ensuring that products meet user needs and expectations.

    The demand for digital pens is expected to be strong and grow over the coming years, and Anoto sees a high potential for the LivePen as well as for the next-generation of digital pens and supporting software where, inter alia, Artificial intelligence (AI) powered handwriting and orientation recognition will be central. In order to capture these growth opportunities, the Company will need to build inventory and invest in marketing for LivePen with the accompanying LivePen app as well as invest in research and development for the next generation of digital pens. In order to facilitate growth, the Company also has a need to strengthen its financial position by reducing debt and improving its working capital.

    In view of the above, the Board of Directors has resolved to carry out a directed share issue of approximately SEK 15 million (the “Directed Issue”), a right issue of approximately SEK 50 million, which is covered by subscription and guarantee undertakings amounting to in total 100 percent (the “Rights Issue”), and a set-of issue of approximately SEK 21 million (the “Set-off Issue”) (and together with the Directed Issue and the Rights Issue the “Issues”).

    The proceeds from the Issues amounts to approximately SEK 86 million before transaction related costs. Of the issue proceeds, approximately SEK 40.0 million relates to set-off of loans in the Issues. The Company intends to use the net proceeds expected to be received in connection with the New Share Issues for the following purposes and in the order of priority set out below.

    The Directed Issue

    • Manufacturing                                                    approximately 47 per cent
    • Selling, general and administrative expenses        approximately 35 per cent
    • Marketing                                                          approximately 7 per cent

    Rights issue

    • Manufacturing                                                    approximately 62 per cent
    • Selling, general and administrative expenses        approximately 27 per cent
    • Marketing                                                          approximately 7 per cent
    • General corporate purpose                                  approximately 4 per cent

    Directed Issue

    The Board of Directors of Anoto has, with deviation from the shareholders’ preferential rights, resolved on the issue of no more than 125,043,750 new ordinary shares at a subscription price of SEK 0.12 per share. Payment for the subscribed shares shall be made through payment in cash or through set-off of claim. The Directed Issue provides the Company with proceeds of a total of approximately SEK 15 million before transaction related. The Directed Issue is subject to the approval by an Extraordinary General Meeting, which is scheduled to be held on 26 November 2024 (the “EGM”). The new shares have been subscribed for by institutional and other qualified investors. Payment for the subscribed shares shall be made no later than on 27 November 2024.

    The reason for the deviation from the shareholders’ preferential rights is that the Company is in great need of capital and the Board of Directors believes that the expected issue proceeds in a timely and cost-effective manner will enable the Company to (i) ensure continued operations until a rights issue has been completed, and (ii) diversify and strengthen the Company’s shareholder base with institutional investors, which justifies the issue’s deviation from the shareholders’ preferential rights. The Directed Issue will, unlike the Rights Issue, broaden the shareholder base and provide the Company with new reputable owners, which the Board of Directors believes will strengthen the liquidity of the share and be favorable for the Company. In light of the above, the Board of Directors has made the assessment that the Directed Issue with deviation from the shareholders’ preferential rights is favorable for the Company and in the best interest of the Company’s shareholders.

    The subscription price has been determined through arm’s length negotiations with the subscribers in the Directed Issue. The Board of Directors has also taken into account that the Rights Issue (as described below) is carried out with a subscription price of SEK 0.12 per ordinary share and has therefore deemed it reasonable that the Directed Issue is carried out on equivalent terms.

    The new shares in the Directed Issue corresponds to approximately 11.3 percent of the total number of shares in the Company after dilution, calculated on the number of shares in the Company after the completion of the Rights Issue and the Set-off Issue and assuming that the Rights Issue is fully subscribed.

    Rights Issue

    The Board of Directors of Anoto has resolved on the issue of no more than 414,823,830 new ordinary shares with preferential rights for the shareholders, raising proceeds of approximately SEK 50 million before transaction related costs. The Rights Issue is subject to the approval by the EGM, which is scheduled to be held on 26 November 2024.

    In the Rights Issue, Anoto’s current shareholders will have a preferential right to subscribe for new shares in proportion to the number of shares held on the record date on 28 November 2024. The last day of trading in Anoto’s share including the right to participate in the Rights Issue will be 26 November 2024. The subscription period is expected to run from 2 December 2024 to 16 December 2024.

    One (1) share held on the record date entitles to one (1) subscription right, according to the proposed terms and conditions. Four (4) subscription rights entitle the holder to subscribe for five (5) new shares. The subscription price has been set to SEK 0.12 per share.

    Shares which are subscribed for without preferential rights will be offered to current shareholders and other investors who have applied to subscribe for new shares without preferential rights. The new shares in the Rights Issue corresponds to approximately 37.6 percent of the total number of shares in the Company after dilution, calculated on the number of shares in the Company after the completion of the Directed Issue and the Set-off Issue and assuming that the Rights Issue is fully subscribed.

    Set-off Issue

    As previously communicated through a press release, on 27 June 2024, the Company entered into a convertible investment agreement with Mark Stolkin and DDM Debt AB, two major shareholders in Anoto, providing Anoto with a total of USD 1.5 million in the form of convertible loans (theInvestment Agreement“). The Investment Agreement has since been increased by a total of USD 0.5 million with the following investors having adhered the Investment Agreement: Gary Butcher, BLS Futures Limited, Rocco Homes Ltd, Machroes Holdings Ltd and Adrian Weller.

    Under the terms of the Investment Agreement, upon the request of a lender, the outstanding loan amount, in full or in part, plus accrued interest, shall be converted into newly issued ordinary shares of the Company at a conversion price of SEK 0.42, which corresponds to the current quota value of the shares, and at a fixed exchange rate of 10.51 SEK/USD. However, in the event of a Qualified Financing Round (see further details in the press release published by the Company on 27 June 2024) the outstanding loan amounts shall automatically be converted into newly issued ordinary shares in Anoto at a conversion price corresponding to 75 percent of the subscription price in the Qualified Financing Round.

    Due to the Rights Issue constituting a Qualified Financing Round, the Board of Directors has resolved on a directed issue of a total of 230,636,111 ordinary shares with payment by way of set-off to the lenders Mark Stolkin, DDM Debt AB, Gary Butcher, BLS Futures Limited, Rocco Homes Ltd., Machroes Holdings Ltd and Adrian Weller. The subscription price per ordinary share is SEK 0.09, which corresponds to 75 percent of the subscription price in the Rights Issue. The subscription price in the Set-off Issue has been determined in accordance with the Investment Agreement between Anoto and the lenders. Payment shall be made through set-off of claims in connection with subscription. The Set-off Issue is subject to the approval by the EGM, which is scheduled to be held on 26 November 2024.

    The new shares in the Set-Off Issue correspond to approximately 20.9 percent of the total number of shares in the Company after dilution, calculated on the number of shares in the Company after the completion of the Directed Issue and the Rights Issue and assuming that the Rights Issue is fully subscribed.

    Subscription undertakings and guarantee commitments

    Anoto has received subscription undertakings amounting to approximately 30.2 percent of the Rights Issue from existing shareholders.

    Furthermore, the Company has entered into underwriting agreements consisting of a so-called bottom guarantee of approximately SEK 21.2 million, corresponding to approximately 42.6 percent of the Rights Issue, and a so-called top guarantee of approximately SEK 13.6 million, corresponding to approximately 27.3 percent of the Rights Issue. The bottom guarantee ensures, provided that subscription takes place at least corresponding to the subscription undertakings, that approximately 72.7 percent of the Rights Issue is subscribed and paid. The top guarantee ensures that 100 percent of the Rights Issue is subscribed for and paid for, provided that subscriptions are at least equivalent to the subscription undertakings and the bottom guarantee.

    For the guarantee undertakings a fee of 14 percent of the guaranteed amount is paid in cash compensation or in the form of new shares. The guarantee undertakings is subject to customary conditions. The guarantee undertaking is not secured through a bank guarantee, blocked funds, or pledge of collateral or similar arrangement.  

    New Board Member

    Adrian Weller, one of the investors in the Directed Issue and the Set-off Issue, will be proposed as a new member of the Board of Directors at the EGM scheduled to be held on 26 November 2024.

    Extraordinary General Meeting

    The Rights Issue is subject to approval by the EGM scheduled to be held on 26 November 2024. Notice to the EGM will be published in a separate press release later today and will be available on www.anoto.com.

    Prospectus

    Complete terms and conditions for the Rights Issue, as well as other information regarding the Company, will be provided in the prospectus that is planned to be published on or about 29 November 2024. The Prospectus which will be published on the Company’s website (www.anoto.com).

    Advisers

    Setterwalls Advokatbyrå is acting as legal advisor and Bergs Securities AB (“Bergs Securities”) is acting as Sole Global Coordinator and Bookrunner to the Company in connection with the Issues.

    This information constitutes inside information as Anoto Group AB (publ) is obliged to disclose under the EU Market Abuse Regulation 596/2014. The information was provided by the contact person below for publication 25 October 2024 at 08:15 CEST.

    For further information, please contact:

    Kevin Adeson, Chairman of the board of Anoto Group AB (publ)

    For more information about Anoto, please visit www.anoto.com or email ir@anoto.com

    Anoto Group AB (publ), Reg.No. 556532-3929, Flaggan 1165, SE-116 74 Stockholm

    About Anoto Group

    Anoto is a publicly held Swedish technology company known globally for innovation in the area of information-rich patterns and the optical recognition of those patterns. It is a lead-er in digital writing and drawing solutions, having historically used its proprietary technology to develop smartpens and related software. These smartpens enrich the daily lives of millions of people around the world. Anoto currently has three main business lines: Livescribe retail, Enterprise Forms and OEM. Anoto also holds a stake in Knowledge AI, a leading AI based education solution company. Anoto is traded on the Small Cap list of Nasdaq Stockholm under ANOT.

    IMPORTANT INFORMATION

    The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in the Company in any jurisdiction where such offer would be considered illegal. This press release does not constitute an offer to sell or an offer to buy or subscribe for shares issued by the Company in any jurisdiction where such offer or invitation would be illegal. In a member state within the European Economic Area (“EEA”), shares referred to in the press release may only be offered in accordance with applicable exemptions under the Prospectus Regulation.

    This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. The information in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, or in any other jurisdiction where such announcement, publication or distribution of the information would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Swedish law. Actions taken in violation of this instruction may constitute a crime against applicable securities laws and regulations.

    In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, “qualified investors” who are (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

    A prospectus will be prepared in connection with the offering and admission to trading of shares in Anoto. The prospectus will be scrutinized and approved by the Swedish Financial Supervisory Authority. The Swedish Financial Supervisory Authority’s approval of the prospectus should not be understood as an endorsement of the securities being offered and admitted to trading. The prospectus will contain a description of the risks and rewards associated with an investment in Anoto and potential investors are recommended to read the prospectus in its entirety before making an investment decision.

    The prospectus will be published by the Company on or around 29 November 2024 and available on the Company’s website, www.anoto.com. This release is however not a prospectus in accordance to the definition in the Prospectus Regulation. In accordance with article 2 k of the Prospectus Regulation this press release constitutes an advertisement. Complete information regarding the Rights Issue can only be obtained through the Prospectus. Anoto has not authorized any offer to the public of shares or rights in any other member state of the EEA. In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation. This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the new shares. Any investment decision in connection with the Rights Issue must be made on the basis of all publicly available information relating to the Company and the Company’s shares. Such information has not been independently verified by Bergs Securities. Bergs Securities is acting for the Company in connection with the transaction and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the transaction or any other matter referred to herein.

    Information to distributors

    Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in Anoto have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in Anoto may decline and investors could lose all or part of their investment; the shares in Anoto offer no guaranteed income and no capital protection; and an investment in the shares in Anoto is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Rights Issue.

    For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in Anoto.

    Each distributor is responsible for undertaking its own target market assessment in respect of the shares in Anoto and determining appropriate distribution channels.

    Attachment

    The MIL Network

  • MIL-OSI: Unlock Your Crypto Potential: KuCoin Launches Advanced Options Trading Platform with Greater Investor Flexibility

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Oct. 25, 2024 (GLOBE NEWSWIRE) — KuCoin, a leading global crypto exchange, is excited to announce significant enhancements to its options trading service. The upgraded platform introduces European-style options catering to sophisticated traders seeking to optimize their cryptocurrency investments, focusing on major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).

    The new options trading feature on KuCoin allows for exercises only at the expiration date, however, positions can be closed at any time prior, providing traders with greater flexibility and control over their strategies. This service simplifies options trading by supporting major cryptocurrencies like BTC and ETH and using USDT for all transactional pricing and settlements. Such features underscore KuCoin’s commitment to accessibility and user convenience, making advanced trading tools available to a broader audience.

    KuCoin’s options trading service is tailored to maximize capital efficiency, allowing traders to control significant positions with relatively small capital outlays. This presents a substantial leverage opportunity, enhancing the potential for significant returns. Additionally, the design of KuCoin’s options trading platform emphasizes risk mitigation, limiting potential losses to the premiums paid. This feature is particularly crucial in the often volatile cryptocurrency markets, providing traders with much-needed security.

    Furthermore, the platform facilitates a variety of strategic trading approaches, including hedging and speculative trading, thereby enhancing users’ ability to manage their investment portfolios effectively. The minimum order size of just 10 USDT makes this innovative trading tool accessible to all traders, ranging from beginners to seasoned professionals.

    This launch highlights KuCoin’s ongoing commitment to innovation and its dedication to enhancing the user experience. By providing comprehensive, secure, and user-friendly trading solutions, KuCoin continues to empower its users worldwide, reinforcing its position as a leader in the crypto industry.

    About KuCoin

    Launched in September 2017, KuCoin is a leading cryptocurrency exchange with its operational headquarters in Seychelles. As a user-oriented platform with a focus on inclusiveness and community engagement. It offers over 800 digital assets across Spot trading, Margin trading, P2P Fiat trading, Futures trading, and Staking to its 36 million users in more than 200 countries and regions. KuCoin ranks as one of the top 6 crypto exchanges. KuCoin was acclaimed as “One of the Best Crypto Apps & Exchanges of June 2024” by Forbes Advisor and has been included as one of the top 50 companies in the “2024 Hurun Global Unicorn List”. Learn more at https://www.kucoin.com/.

    Contact:
    Eden Gao
    eden.gao@kucoin.com

    Disclaimer: This content is provided by KuCoin. The statements, views and opinions expressed in this column are solely those of the content provider. The information provided in this press release is not a solicitation for investment, nor is it intended as investment advice, financial advice, or trading advice. It is strongly recommended you practice due diligence, including consultation with a professional financial advisor, before investing in or trading cryptocurrency and securities. Please conduct your own research and invest at your own risk.

    Photos accompanying this announcement are available at
    https://www.globenewswire.com/NewsRoom/AttachmentNg/37d27027-a55e-45d1-ad7c-ebe171932581
    https://www.globenewswire.com/NewsRoom/AttachmentNg/c7d89b66-d5ca-43a7-bd54-aec113a8c70c

    The MIL Network

  • MIL-OSI Europe: Debates – Thursday, 24 October 2024 – Strasbourg – Provisional edition

    Source: European Parliament 2

    Verbatim report of proceedings
     352k  770k
    Thursday, 24 October 2024 – Strasbourg Provisional edition
    1. Opening of the sitting
      2. Composition of committees and delegations
      3. Closing the EU skills gap: supporting people in the digital and green transitions to ensure inclusive growth and competitiveness in line with the Draghi report (debate)
      4. Abuse of new technologies to manipulate and radicalise young people through hate speech and antidemocratic discourse (debate)
      5. Resumption of the sitting
      6. Sakharov Prize 2024 (announcement of the winner)
      7. Request for waiver of immunity
      8. Resumption of the sitting
      9. Voting time
        9.1. Situation in Azerbaijan, violation of human rights and international law and relations with Armenia (RC-B10-0133/2024, B10-0129/2024, B10-0131/2024, B10-0133/2024, B10-0136/2024, B10-0139/2024, B10-0141/2024, B10-0142/2024) (vote)
        9.2. People’s Republic of China’s misinterpretation of the UN resolution 2758 and its continuous military provocations around Taiwan (RC-B10-0134/2024, B10-0130/2024, B10-0132/2024, B10-0134/2024, B10-0135/2024, B10-0137/2024, B10-0138/2024, B10-0140/2024) (vote)
      10. Resumption of the sitting
      11. Approval of the minutes of the previous sitting
      12. Protecting our oceans: persistent threats to marine protected areas in the EU and benefits for coastal communities (debate)
      13. Explications de vote
        13.1. Situation in Azerbaijan, violation of human rights and international law and relations with Armenia (RC-B10-0133/2024)
        13.2. People’s Republic of China’s misinterpretation of the UN resolution 2758 and its continuous military provocations around Taiwan (RC-B10-0134/2024)
      14. Approval of the minutes of the sitting and forwarding of texts adopted
      15. Dates of forthcoming sittings
      16. Closure of the sitting
      17. Adjournment of the session

       

    IN THE CHAIR: ESTEBAN GONZÁLEZ PONS
    Vice-President

     
    1. Opening of the sitting

       

    (The sitting opened at 9:00)

     

    2. Composition of committees and delegations

     

      President. – The EPP Group has notified the President of decisions relating to changes to appointments within committees and delegations.

    These decisions will be set out in the minutes of today’s sitting and take effect on the date of this announcement.

     

    3. Closing the EU skills gap: supporting people in the digital and green transitions to ensure inclusive growth and competitiveness in line with the Draghi report (debate)


     

      Janusz Wojciechowski, Member of the Commission. – Mr President, skills cut across all policies and this House has played an important role in putting skills high on the agenda, notably with the European Year of Skills, which was a huge success.

    Mario Draghi’s report shows that we must close the skills gap if we want to make Europe simultaneously competitive, fair and secure. This means stepping up investments in skills and education and training at different places and moments, from school to adult learning. These investments need to be public and private. At the European Union level, we are investing already, as of today, around EUR 44 billion in the EU Cohesion Policy, mostly from the European Social Fund Plus, and helping upskill and reskill 38 million people.

    Member States’ national recovery and resilience plans include reforms and investments in education, training and adult learning amounting to more than EUR 85 billion. The Just Transition Mechanism supports the most affected people, workers, companies and regions heavily dependent on carbon-intensive industries, notably by helping them with training to access new jobs in their region. Other programmes such as Erasmus+ and Digital Europe also contribute to skills development in their respective areas.

    But indeed, we have a skills gap in our labour markets. In many sectors, we don’t have enough people with the skills needed and this is the key ingredient missing if we want Europe to be competitive in the face of countries like the US and China. We face significant labour shortages. The European Union labour markets are losing one million people every year between now and 2050 because of ageing. Two thirds of European companies say that the lack of skills holds back their business activities and four out of five say they cannot invest and grow as much as they could. For SMEs, it is even more difficult: only one in five can find workers with the right skills.

    To address this, we adopted the action plan on labour and skills shortages. It is based on a broad consensus between Member States and social partners. The action plan builds notably on the European Skills Agenda, which is specifically aimed at harnessing the green and digital technology transitions. The European Year of Skills, with its 2000 events, showed that we were on the right track and we should use its momentum.

    There have been good results. The Pact for Skills has brought together businesses, unions, education and training providers and other stakeholders in a large partnership, joining forces to upskill workers. In the first years, about 3.5 million workers have been upskilled through action by the 3000 pact members. Individual learning accounts, a powerful tool that offers adults incentives and guidance to train over time, are being prepared in about half of all Member States. We expect them to be very helpful, in particular for workers in SMEs, which may not be able to have their own upskilling programmes.

    We launched the EU digital decade strategy to make sure Europe’s workforce is ready for a world where digital skills are increasingly essential in many areas of life. The digital education action plan supported the adaptation of the education and training systems of Member States, aiming to boost the provision of digital skills. The European Union has introduced specific measures for learning, for sustainability, integrating green skills and competencies into education and training systems across the Member States.

    But there is a lot of work still to do. Too many people don’t have good basic skills. We are far from our 80 % target of digital skills and 60 % target of adults in training.

    Last but not least, as is also stressed in the Draghi report, we need to significantly step up the anticipation of skills needs, which is also key for addressing labour shortages in future. We can build on the good analytical work by Cedefop and Eurostat on job vacancies and on the European network graduate tracking to bring analysis closer to the local needs. Another initiative under development on skills intelligence is the common European data space for skills, which will facilitate secure data pooling and sharing to foster the development of data-driven application for skills, demand and supply analysis.

     
       

     

      Liesbet Sommen, namens de PPE-Fractie. – Voorzitter, commissaris, de groene transitie en artificiële intelligentie: dat maakt onze mensen en bedrijven soms bezorgd. Dat is ook begrijpelijk. Het is aan ons, het beleid, om duidelijkheid en zekerheid te bieden. Want wij staan als Europese Unie op een kruispunt. Wij hebben terecht de meest ambitieuze klimaatwetgeving ter wereld, maar onze economie hinkt achterop omdat wij te weinig ruimte bieden aan technologische vooruitgang. Werknemers en landbouwers zijn daardoor soms bang om hun baan en toekomst te verliezen.

    Maar het goede nieuws is: wij zijn in staat om deze transities om te buigen naar kansen. Dat gaan we doen door in te zetten op grotere vaardigheden van onze mensen, via onderwijs en opleiding. Want menselijk kapitaal is wat onze Europese bedrijven sterk maakt. Laat ons trots zijn op ons Europese sociale model. De VS en China hebben slechts een volgende rol. We hebben echt behoefte aan een allesomvattende Europese financieringsstrategie voor onderwijs en opleiding. De focus moet liggen op STEM‑sectoren, wiskunde en wetenschap. Want het zijn die opleidingen die de beroepen naar de arbeidsmarkt brengen die onze bedrijven en onze landbouw in staat zullen stellen om te verduurzamen en te digitaliseren.

    Met sterker onderwijs en opleiding voor ons Europeanen gaan we er niet alleen in slagen om het klimaat en onze Europese economie te redden, maar ook om onze mensen te versterken. En inderdaad, dat zal ervoor gaan zorgen dat Europa haar leiderschapspositie van weleer opnieuw kan innemen. Europa staat op een kruispunt. Het is aan ons om de juiste weg in te slaan.

     
       

     

      Gabriele Bischoff, im Namen der S&D-Fraktion. – Herr Präsident, sehr geehrter Herr Kommissar, Kolleginnen und Kollegen! In der Tat, diese Transformation wird gelingen, wenn wir die Beschäftigten hier mitnehmen. Und der Draghi-Bericht stellt tatsächlich die Notwendigkeit von Fort- und Weiterbildung mit ins Zentrum, nicht nur für Wettbewerbsfähigkeit, sondern auch für Innovationsfähigkeit. Und es ist gut, dass das auf der Säule sozialer Rechte aufbaut, denn die garantiert zum ersten Mal ein Recht auf Weiterbildung – das müssen wir verankern, das ist ein Job für die nächste Kommission.

    Ich bin froh, dass der Kommissar die Rolle der Sozialpartner hervorgehoben hat, weil die essenziell ist: dass beide Seiten, dass Arbeitgeber wie Gewerkschaften, wie Betriebsräte zusammen in den Betrieben Konzepte entwickeln. Und ich bin froh auch – ich komme gerade von einer Debatte, wo es um ESF-Plus-Projekte ging, wo beide Sozialpartner in Deutschland, Arbeitgeber und Gewerkschaften, ein Programm zur Beratung und Qualifizierung hingekriegt haben.

    Deshalb bitte keine verkürzte skills-Debatte, sondern sehen, wir brauchen eine gute Grundqualifizierung und Akteure in den Betrieben, die das vorantreiben.

     
       

     

      Paolo Borchia, a nome del gruppo PfE. – Signor Presidente, onorevoli colleghi, signor Commissario, io non amo particolarmente essere pessimista. Però credo che, effettivamente, per colmare il ritardo con la Cina e con gli Stati Uniti ci servirà un mezzo miracolo, perché non possiamo pensare che l’unica parola d’ordine sia decarbonizzazione.

    Infatti, senza la competitività non andiamo da nessuna parte. Sul tema della mancanza dei lavoratori, Commissario, lei giustamente ha menzionato la mancanza di competenza e io credo che la mancanza di lavoratori qualificati sia purtroppo la chiave di volta. Anche perché, purtroppo, anche in quest’Aula c’è chi pensa che il problema si possa risolvere attraverso l’importazione di un esercito di manodopera di lavoratori a basso costo, che magari arrivano da Paesi lontani.

    E poi, in conclusione, c’è un grosso tema di autocritica, perché gli stessi che ci hanno portati ad essere fanalini di coda nell’economia globale, adesso sono quelli che pretendono di continuare a comandare, senza ascoltare quello che è il volere degli elettori.

     
       

     

      Mariateresa Vivaldini, a nome del gruppo ECR. – Signor Presidente, onorevoli colleghi, signor Commissario, formare, attrarre e trattenere i talenti sono propositi che in quest’Aula condividiamo tutti. Ma la sfida sui talenti non può essere scollegata dalle sfide sulla natalità. Dobbiamo incentivare le nascite con interventi strutturali, accompagnando i figli dalla nascita al mercato del lavoro.

    Diversi studi hanno previsto che all’Europa, nel suo insieme, mancheranno 35 milioni di persone in età lavorativa entro il 2050, soprattutto nelle zone rurali, accrescendo un divario che di per sé è già allarmante con le zone urbane. Significa che scienziati, medici, ingegneri, lavoratori specializzati che avrebbero potuto contribuire a cambiare il nostro futuro, non avranno mai questa opportunità.

    È ovvio – e lo rivendico con forza – che garantire una maggiore fruibilità delle competenze e degli spazi digitali è fondamentale. Però, mentre noi portiamo avanti questa riflessione, da un lato, c’è il Consiglio che ha proposto un taglio di quasi 300 milioni ad Erasmus, dall’altro, si continua a non portare avanti nessuna iniziativa sulla tutela delle donne lavoratrici con stipendi adeguati.

    I talenti vanno coltivati, ma innanzitutto vanno messi al mondo. Altrimenti ci troveremo ad avanzare ottime proposte politiche senza avere nessuno su cui applicarle.

     
       


     

      Nela Riehl, on behalf of the Verts/ALE Group. – Mr President, as the Draghi report outlines, the question of skills is not just one of preparing the labour force for changing demands, but also about giving people the tools to adapt and engage with a changing world and benefit from new technologies. This is what competitiveness should mean.

    As a teacher, I have great respect for traditional classrooms, but classrooms are only just the beginning. At the moment, only 40 % of European adults train every year. This is very far from the 60 % target that the EU set itself to reach by 2030. Training must be a lifelong commitment.

    Lifelong learning, development, developing digital skills, must be a fundamental right and not just a privilege reserved for a few. This isn’t just about preparing for tomorrow’s jobs. It’s about empowering everyone to thrive in a world that is always evolving.

    So what does this actually mean? First, we need to address the lack of investment in skills. Every euro spent on training is a euro invested in our economy and society. This needs to be reflected in public budget decisions.

    Second, we need to establish an individual right to training for every European worker. But beyond this, we must break down the barriers that prevent skills and qualifications being recognised across borders. Let us make lifelong learning the new norm!

     
       

     

      Li Andersson, The Left-ryhmän puolesta. – Arvoisa puhemies, kaikki puhuvat nykyään taidoista. Yritykset ovat nostaneet osaavien työntekijöiden puutteen esille keskeisimpänä kasvun esteenä Euroopassa. Työvoimapula vaivaa monia aloja, ja myös Draghin raportin viesti oli, että kaikille eurooppalaisille työntekijöille pitää turvata oikeus kouluttautua.

    On tärkeää, että Eurooppa nostaa yksiselitteisesti osaamisen ja oppimisen kilpailukyvyn keskiöön. Meidän ei tule kilpailla palkkoja polkemalla, työehtoja heikentämällä, luonnonvaroja riistämällä tai antamalla eriarvoisuuden kasvaa räjähdysmäisesti. Meidän tulee tehdä asioita uudella ja paremmalla tavalla – niin talouden vahvistamiseksi kuin ihmisten elämän parantamiseksi.

    Mutta olemmeko todellakin valmiita koulutuspolitiikkaan, joka vastaa näihin suuriin haasteisiin? Silloin niin työnantajilla kuin yhteiskunnilla pitää olla valmius rahoittaa työikäisten opiskelua nykyistä enemmän. Silloin työnantajien pitää olla valmiita antamaan työntekijöiden käyttää siihen työaikaa. Silloin työttömille pitää antaa vapaus ja mahdollisuus opiskeluun. Silloin myös koulutusjärjestelmämme tulee vastata paremmin erilaisten oppijoiden tarpeisiin. Tämä kaikki edellyttää aivan eri mittaluokan panostuksia kuin mitä me tähän asti olemme nähneet.

    Meidän tulee myös ymmärtää, että työvoimapulassa ei ole kyse vain taidoista tai niiden puutteista. Siinä on myös kyse työoloista – palkasta, työoloista, työehdoista ja mahdollisuuksista vaikuttaa. Mikään määrä taitoja tai koulutusta maailmassa ei korvaa sitä, että ihmiset saavat mahdollisuuden tehdä työnsä hyvin, kunnollista korvausta vastaan.

     
       

     

      Рада Лайкова, от името на групата ESN. – Уважаеми граждани на ЕС, единственото нещо, което е по-безидейно от доклада на Марио Драги, е стратегията, заложена в този доклад. Както и очаквахме, този уж външен доклад се цитира вече за всеки план на ЕС, като задължително се добавят думи, събудени думи или „woke“ думи като зелен, устойчив, дигитално приобщаващ, климатично, неутрален и т. н.

    Със стремежа си за уеднаквяване Европейският съюз сам създаде кризата в образованието, защото университетите станаха фабрики за хора с дипломи без истински знания. Учат се да повтарят, а не да мислят. А това не е целта на критичното мислене и образованието. Трудно ми е да повярвам, че ЕС иска да подобри образованието, защото тук няма интерес от информирани граждани, иначе не биха се въвеждали закони под предлог за защита от дезинформация.

    Информираните граждани не се третират като деца. Спомнете си клиповете за миене на ръце на Урсула фон дер Лайен. Европейският съюз има нужда от покорни, дигитално маркирани данъкоплатци, които не задават въпроси, затова и преследва подобна политика в сферата на образованието. Но в последните 15 години вече беше нанесена достатъчно вреда в тази сфера и този период скоро трябва да приключи.

     
       

     

      Jagna Marczułajtis-Walczak (PPE). – Panie Przewodniczący! Panie komisarzu! Problem luki w umiejętnościach w Unii Europejskiej jest kwestią bardzo złożoną. Umiejętności pracowników i systemy kształcenia, a z drugiej strony oczekiwania rynku pracy nie zbiegają się w jednym punkcie. To problem wieloaspektowy.

    Po pierwsze, szybkie zmiany technologiczne generują nowe, wymagające umiejętności, za którymi wiele osób nie nadąża. Po drugie, w wielu krajach Unii Europejskiej systemy edukacyjne i programy nauczania wymagają uelastycznienia. Po trzecie, luki w umiejętnościach wynikają także z nierówności regionalnych. Lokalni pracodawcy często nie są w stanie znaleźć odpowiednio wykwalifikowanej kadry w swojej okolicy. Po czwarte, kolejną ważną sprawą jest kwestia starzejącego się społeczeństwa. To wyzwanie, ale i okazja do budowania lepszych i dostępnych systemów opieki i rehabilitacji.

    Wspierajmy uczenie się zawodów opiekuńczych, które są nieocenione dla członków naszych rodzin, a które kiedyś będą nieocenione i dla nas. Potrzebujemy działań na wielu frontach, ale najważniejsze jest prawidłowe zrozumienie problemu, który niewątpliwie istnieje.

     
       


     

      Pascale Piera (PfE). – Monsieur le Président, après avoir été président de la Banque centrale et si étroitement impliqué dans les orientations de l’Union européenne, Mario Draghi pose le constat de l’inefficacité totale des politiques européennes, menées à bâtons rompus au détriment des peuples. Nous le savons, notre continent n’est plus que l’ombre de lui-même sur le plan industriel, sur le plan commercial, sur le plan migratoire.

    Mario Draghi fait-il un mea culpa? Jamais. Pour expliquer ce désastre, auquel il a activement participé, il exhibe la pénurie de compétences comme s’il s’agissait d’une pénurie de marchandises. Pour tenter d’y remédier, il nous projette dans la fantasmagorie de la transition numérique et verte en nous promettant, dans une novlangue insupportable, toujours plus d’Europe, toujours plus d’argent pour d’hypothétiques programmes éducatifs, et en réalité toujours plus d’intrusion pour ce qu’il reste de souveraineté aux États souverains.

    Mario Draghi fait l’économie de toute réflexion de fond et préfère l’asservissement de notre jeunesse aux écrans et aux propagandes wokistes. Pourtant, redonner un niveau de compétence à notre jeunesse, c’est encourager la connaissance de ses racines, la richesse de la littérature, le travail et l’esprit critique. Autant de conditions qui ne sont pas aujourd’hui assurées par l’Union européenne.

     
       

     

      Georgiana Teodorescu (ECR). – Domnule președinte, România are nevoie urgentă de redeschiderea școlilor vocaționale de arte și meserii. Am ajuns o țară de absolvenți de studii superioare care nu știu să facă nimic și care nu își găsesc locuri de muncă pe măsura diplomelor, așa că fie pleacă la munci necalificate peste granițe, fie se angajează în astfel de servicii chiar în țară. Astăzi, în România, un electrician câștigă mai bine decât un avocat sau un inginer, spre exemplu, și chiar și așa nu îl găsești spre a-l angaja.

    Această imagine critică asupra țării mele riscă să se reflecte și asupra Europei în curând. Dacă nu alocăm bani mulți pentru învățământul vocațional, vom ajunge să importăm astfel de forță de muncă doar din afara granițelor Uniunii Europene, în timp ce propriii noștri cetățeni vor fi asistați social. Colaborarea între Uniunea Europeană, sectorul privat și instituțiile de învățământ este esențială. Trebuie să creăm parteneriate care să adune resurse și expertiză ca să ne asigurăm că programele de formare răspund nevoilor de mâine.

     
       

     

      Grégory Allione (Renew). – Monsieur le Président, Monsieur le Commissaire, chers collègues, le rapport Draghi nous l’a montré: l’Europe doit devenir plus compétitive. C’est un défi existentiel, un défi pour voir l’Union devenir une actrice forte et indépendante sur la scène mondiale, cheffe de file dans les domaines de l’éducation, des nouvelles technologies et de la lutte contre le changement climatique.

    Nous le savons, l’investissement dans l’éducation et la formation, dans la protection sociale et la santé contribue à créer une société souveraine, plus résiliente, plus inclusive et, de fait, plus compétitive. Oui, nous devons d’urgence combler notre déficit en matière de compétences. Actuellement, près de 80 % des employeurs peinent à recruter des travailleurs possédant les compétences requises, quand ceux que nous avons formés font valoir, bien cher et outre-Atlantique, leurs compétences acquises ici en Europe. Par ailleurs, 60 % des travailleurs déclarent avoir besoin d’être formés aux outils de l’intelligence artificielle, quand 14 % le sont réellement. Enfin, nous le savons, il y a des pénuries de main-d’œuvre dans les domaines essentiels de la transition tels que la construction, la santé ou les énergies bas carbone.

    Le chantier est énorme. Le rapport Draghi nous donne la trajectoire comme les solutions. Sans renforcer les compétences de nos travailleurs, de notre richesse humaine, l’Union restera spectatrice de sa double transition – verte et numérique.

     
       


     

      Marina Mesure (The Left). – Monsieur le Président, pour les besoins de la bifurcation écologique, 25 millions d’emplois sont nécessaires. Mais combien de ces postes resteront non pourvus, faute de travailleurs correctement formés et de conditions de travail décentes?

    Prenons un secteur clé: celui de la construction. Nous savons tous ici qu’il y a urgence à rénover les bâtiments, car il s’agit d’un enjeu social majeur pour nos concitoyens, qui peinent à se loger et à payer leur facture énergétique, et d’un enjeu écologique, puisque les bâtiments représentent 40 % des émissions de gaz à effet de serre. Et bien, dans ce secteur, le manque de main-d’œuvre est une préoccupation pour 96 % des entreprises.

    Alors pourquoi si peu de candidats? Le rapport Draghi apporte une explication parmi d’autres: les salaires peu attrayants, qui contribuent à ce déficit dans un secteur qui compte encore un mort par jour. Donc, si vous voulez parler compétitivité, très bien! Mais vous ne pouvez pas le faire sans parler démocratie sociale, valorisation de ces métiers essentiels, formation continue, conditions de travail dignes, reconnaissance de la pénibilité au travail et garantie d’un environnement de travail sain et sûr pour toutes et pour tous.

    C’est ainsi que nous rendrons les métiers essentiels à la bifurcation écologique attrayants et que nous comblerons le déficit de main-d’œuvre.

     
       

     

      Diego Solier (NI). – Señor presidente, señor comisario, señorías, si queremos una Europa competitiva, realista y sostenible, necesitamos cambios de impacto rápido en nuestros ciudadanos.

    Tenemos tres importantes áreas en las que hay que dar un giro de 180 grados.

    Primero, una pirámide poblacional suicida y totalmente invertida. Sin políticas de familia, natalidad y conciliación laboral, esto no se resolverá ni importando a millones de inmigrantes, como pretenden ustedes.

    Segundo, despolitización de la educación de Europa. Solo priorizando la excelencia y el esfuerzo de los estudiantes, superaremos la mediocridad: agilicemos la homologación de títulos universitarios europeos, desarrollemos una conexión empresarial con esos mismos entornos educativos de éxito.

    Y, tercero, la formación a los empleados en tecnologías para que exploten sus productividades. El 99 % de nuestro tejido empresarial es pequeña y mediana empresa y carece de los recursos necesarios para cumplir con toda la burocracia que les imponemos desde Europa.

    El tiempo de actuar es ahora. Mañana ya será tarde.

     
       

     

      Andreas Schwab (PPE). – Herr Präsident, Herr Kommissar, liebe Kolleginnen und Kollegen! Mario Draghi hat uns auf fast 400 Seiten hier mit seinem Bericht die Schwachstellen der EU-Gesetzgebung ins Stammbuch geschrieben. Aber er kommt anders, als die Kollegin behauptet, nicht zu dem Ergebnis, dass das, was wir gemacht haben, alles falsch ist, sondern wir haben, was die Qualifikationslücke angeht, im Binnenmarkt falsche Anreize gesetzt. Und dafür haben wir eigentlich seinen Bericht nicht gebraucht, denn es war schon bei vielen Unternehmensbesuchen offensichtlich, dass wir es mit den Berichtspflichten schlicht übertrieben haben. Nicht jedes wünschenswerte Ziel braucht auch eine Berichtspflicht.

    Das Beispiel ist bekannt aus meinem Wahlkreis: Ein kleines mittelständisches Unternehmen muss, weil es Zulieferer für ein Großunternehmen ist, 1 600 Berichtspflichten erfüllen im Rahmen der Corporate Social Responsibility-Richtlinie. Da geht es natürlich darum, dass die drei neuen Mitarbeiter, die dieses Unternehmen lange suchen muss, bevor sie eingestellt werden können, dann nicht in der Produktion sind, sondern beim Ausfüllen der Berichtspflichten. Gleichzeitig muss die große Wirtschaftsprüfungsgesellschaft auch zwei neue Mitarbeiter einstellen, um diese Berichtspflichten zu überprüfen, um den Jahresabschluss zu erstellen – das ist schlicht und ergreifend eine Fehlallokation.

    Wir müssen dazu kommen – und am besten in den ersten 100 Tagen der neuen Kommission –, dass der Unternehmer ein leeres Blatt Papier nimmt und drauf schreibt: Ich habe die Regeln verstanden und gelesen und hafte mit meinem Namen. Die Franzosen sagen dazu lu et approuvé. Das würde Bürokratie abbauen, die Sache vereinfachen und das Leben für viele Unternehmer wieder angenehmer machen mit dem Ziel, den Wohlstand der Bürgerinnen und Bürger in Europa zu steigern; und das können wir schaffen.

     
       

     

      Niels Fuglsang (S&D). – Hr. formand! Kære kolleger! I løbet af det sidste år har vi vedtaget meget vigtig lovgivning her i huset. Lovgivning om hvordan vi fremmer den grønne omstilling. Mål for vedvarende energi, hvor meget skal vi have? Mål for energieffektivitet. Lovgivning, der skal omstille industrien til at blive grøn. Men alt det her kan jo kun lade sig gøre, hvis vi har den nødvendige kvalificerede arbejdskraft. Hvis vi har tilstrækkeligt med faglærte, der kan sætte vindmøllerne op. Elektrikere, der kan sætte strøm til vores elbiler. Mekanikere, der kan reparere vores biler, og smede, der kan svejse vores pumper. Derfor har vi brug for kvalificeret arbejdskraft. Vi har brug for al den arbejdskraft, vi overhovedet kan tænke på, til at udvikle nye innovative teknologier. Og jeg er glad for at se, at Mario Draghi fokuserer på netop det her i sin rapport. Det er det, vi skal investere i sammen. Det er nu, det gælder.

     
       

     

      Annamária Vicsek (PfE). – Tisztelt Elnök Úr! A Draghi-jelentésben említett készséghiányokat és az európai versenyképesség súlyos hanyatlását nem pusztán tüneti kezelésekkel, hanem valódi versenyképesség-növelő intézkedésekkel lehet csak megoldani.

    Ilyen megoldás lehet például a magyar modell, amit a magyar elnökség programjának elemeként ismerhettünk meg. A felsőoktatásban, a szakképzésben és a felnőttképzésben kialakított stratégiai partnerség a felsőoktatási és szakképzési intézmények, valamint a gazdasági és társadalmi szereplők között öt év alatt már mérhető eredményeket hozott. Míg öt éve még csak 7 magyar egyetem, mára már 12 tartozik a világ legjobb 5 százalékába, sőt a világ legjobb 1%-ában is található magyar egyetem. 20%-kal nőttek a vállalati bevételek, nőtt a hallgatói létszám és nagy arányban csökkent a lemorzsolódás.

    A Bizottság meg kell, hogy kezdje Európa versenyképességének fokozását, ugyanakkor meg kell, hogy szüntesse a magyar felsőoktatási intézmények versenyképességét csökkentő diszkriminatív intézkedéseit, amely végső soron a teljes Európai Unió versenyképességét is csökkenti.

     
       

     

      Marlena Maląg (ECR). – Panie Przewodniczący! Panie komisarzu! Niedobór kwalifikacji to poważny problem, który dotyka całą Unię Europejską. Jak wynika z raportu Draghiego, około trzech czwartych europejskich firm zgłasza trudności ze znalezieniem pracowników z odpowiednimi umiejętnościami. Jednocześnie około 42% Europejczyków nie posiada podstawowych umiejętności cyfrowych. Nakładają się na to jeszcze problemy demograficzne starzejącego się społeczeństwa i daje to obraz rynku pracy.

    Choć polityka kształcenia i szkolenia leży w gestii państw członkowskich, Unia wspiera te wysiłki, popierając konkretnymi strategiami, programami oraz udzielając konkretnego wsparcia. Szczególne znaczenie mają tu umiejętności cyfrowe, szkolnictwo zawodowe, w tym inwestowanie w kształcenie ustawiczne. Bardzo ważne jest promowanie takich inicjatyw jak Junior Skills promujących młodych mistrzów zawodowych. Zamiast promować migrację, musimy zadbać o to, aby wykształcić własnych specjalistów po to, aby Unia Europejska była odporna na kryzysy i znacznie bardziej konkurencyjna.

     
       

     

      Христо Петров (Renew). – Г-н Комисар, инженери, IT специалисти, готвачи, Европейският съюз е изправен пред недостиг на работна ръка за много професии. В моята страна бизнесът има огромни проблеми при намирането на подходящи кадри. Докладът на Марио Драги призовава за принципно нов подход към уменията и аз съм съгласен. Но когато говорим за конкурентоспособност, трябва да говорим и за европейския социален модел, защото той прави Европа най-доброто място в света за живеене и работа.

    За да решим проблема, ние трябва да укрепим нашата стратегия за повишаване на уменията и преквалификация на работниците, както и да активираме цялото население в трудоспособна възраст с персонализирана подкрепа. Все още има нереализиран потенциал в нашите региони. Трябва и да привлечем таланти от цял свят, за това „EU Talent Pool“ ще бъде от огромно значение. Той трябва да насърчи законното наемане на работа, като гарантира безопасност, ефективност и адекватност.

    Време е да създадем правилния инструмент, който да е от полза както за работодателите, така и за търсещите работа.

     
       

     

      Benedetta Scuderi (Verts/ALE). – Signor Presidente, onorevoli colleghi, la transizione ecologica e quella digitale ci offrono un’opportunità incredibile, non solo per creare milioni di posti di lavoro ma anche per rivoluzionare il nostro paradigma produttivo e socioeconomico verso un mondo del lavoro più giusto e inclusivo.

    La carenza di manodopera qualificata è evidente ed è quindi essenziale colmare il divario di competenze con percorsi di formazione e aggiornamento professionale. Questo impegno, però, non deve essere preso solo dall’industria ma anche da noi istituzioni, dal pubblico. Solo così, infatti, possiamo includere nel mondo del lavoro tutte le persone che ne rimangono sistematicamente escluse.

    Penso alle donne, alle persone razializzate, alle persone trans, a quelle con disabilità e a tutte quelle che subiscono discriminazioni. Penso ai giovani e a tutte le difficoltà a entrare nel mondo del lavoro a suon di tirocini non pagati e salari bassissimi.

    Quindi, ben venga riportare l’industria europea al centro dell’agenda politica: ma per farlo non possiamo commettere gli stessi errori del passato. Torniamo a parlare con le parti sociali in modo serio, rafforziamo la contrattazione collettiva, garantiamo standard elevati di sicurezza sul luogo di lavoro, lotta a pratiche antisindacali, a frodi, a sfruttamento sociale e, soprattutto, salari dignitosi.

    Un mercato del lavoro frutto di una società ineguale e un tessuto sociale impoverito non può essere competitivo.

     
       

     

      Dario Tamburrano (The Left). – Signor Presidente, onorevoli colleghi, Stati Uniti e Cina concorrono per la supremazia nelle nuove tecnologie, come mobilità elettrica e intelligenza artificiale, mentre noi, con la nostra politica economica e industriale fallimentare, abbiamo perso decenni e posizioni e stiamo retrocedendo anche nelle politiche dell’istruzione e dell’educazione al digitale per le nuove generazioni.

    La nostra industria non cresce abbastanza, anche perché non coltiva abbastanza e protegge le intelligenze naturali. In questo scenario fosco, le nostre società subiscono, invece di governarli, gli effetti della digitalizzazione.

    È un’emergenza sociale e medica: il fenomeno dell’addicction digitale e di impoverimento delle capacità psico-relazionali, causati dall’esposizione permanente e inconsapevole alle nuove tecnologie digitali. È pertanto un imperativo morale rendere genitori e ragazzi più edotti degli effetti collaterali del digitale pervasivo e dell’intelligenza artificiale.

    E lancio un appello a Parlamento e Commissione, affinché si avviino programmi specifici di monitoraggio e prevenzione, soprattutto per i soggetti in età evolutiva. Per una volta, di fronte a una nuova tecnologia, preveniamo invece di curare.

     
       

     

      Pilar del Castillo Vera (PPE). – Señor presidente, señor comisario, cada persona debe tener su oportunidad en la transición digital. Solo con una formación adecuada cada uno podrá aprovechar todo el potencial que brinda la digitalización.

    Esta brecha, como señala el señor Draghi, que hay con países que tienen más desarrolladas tanto la innovación tecnológica como la formación tecnológica es, en buena medida, la que explica el déficit que tenemos nosotros respecto de la competitividad que tienen países como los Estados Unidos. Es imperativo que competitividad y formación digital vayan de la mano. La formación digital debe estar presente a lo largo de todo el período educativo; por ejemplo, la programación debe incorporarse siempre en los inicios de la educación escolar, para que los alumnos vayan comprendiendo la naturaleza digital del sistema en el que viven.

    Por otra parte, la Unión Europea debe incrementar el número de graduados CTIM, que, pese a los avances, todavía está lejos de cubrir la demanda que existe en estos perfiles. También es esencial reforzar la formación digital en los sistemas de formación profesional.

    Por último, la actualización y la adquisición de nuevas habilidades digitales deben ser constantes a lo largo de la vida; es más, hay que garantizarlo.

    En definitiva, la formación digital no solo es clave para lograr una Europa innovadora y competitiva, también lo es para que cada persona tenga su oportunidad en este proceso de transformación digital. Y, añado, no solo es esencial, también es urgente: el momento es ahora, mañana será tarde.

     
       

     

      Marcos Ros Sempere (S&D). – Señor presidente, señor comisario, hablar de juventud es hablar de futuro, y para que el futuro sea brillante necesitamos reforzar sus competencias.

    Las intenciones son buenas: la prueba es una futura vicepresidenta ejecutiva dedicada a estas competencias en la nueva Comisión Europea. Pero, sin embargo, los datos son más oscuros: los resultados de los jóvenes indican un déficit de competencias, y las proyecciones para 2035 apuntan a que este déficit aumentará.

    Debemos actuar. Necesitamos una estrategia europea para reducir el déficit en competencias en todas las fases de la educación. Tenemos que ofrecer a nuestros jóvenes herramientas para desarrollar competencias, mejorarlas y actualizarlas durante la vida adulta, y el reconocimiento automático de títulos académicos y de competencias para mejorar el entendimiento y la movilidad entre Estados miembros.

    2025 ya está aquí, y es la fecha que marcamos para pedir la implementación del Espacio Europeo de Educación. Hagámoslo realidad, hagamos brillar el futuro de nuestros jóvenes.

     
       

     

      Antonella Sberna (ECR). – Signor Presidente, onorevoli colleghi, signor Commissario, il divario delle competenze rischia di frenare il nostro sviluppo e penalizzare la competitività dell’Europa e quello di genere, in particolare, continua a penalizzare il potenziale delle donne, specialmente nei settori strategici come la tecnologia.

    Secondo l’Istituto europeo per l’uguaglianza di genere, l’eliminazione di questo divario nei settori STEM potrebbe favorire la creazione di ulteriori 1.200.000 posti di lavoro. In occasione dell’Anno europeo delle competenze, in Italia il governo Meloni ha introdotto, con la legge 187 del 2023, la Settimana nazionale delle discipline STEM, con l’obiettivo di sensibilizzare e stimolare l’interesse dei ragazzi, e soprattutto delle ragazze, verso queste discipline. È una buona prassi e quindi può ispirare il lavoro di altri Paesi membri.

    In Europa, invece, la Commissione europea ha promosso il patto per le competenze, un’iniziativa che riteniamo importante, che invita le organizzazioni pubbliche e private a unire le forze e adottare azioni concrete per migliorare – soprattutto anche riqualificare – le persone in Europa. Ma non basta: sono necessarie una vera unione delle competenze, in cui l’accesso alle discipline chiave sia equo e accessibile per tutti, e la formazione per la riqualificazione professionale dei settori meno attrattivi.

    Dobbiamo garantire che le competenze acquisite in un Paese siano facilmente riconosciute in tutti gli Stati membri, favorendo la mobilità e l’inclusione lavorativa. Solo così possiamo affrontare il futuro con fiducia e rafforzare la competitività in Europa.

     
       

     

      Ľudovít Ódor (Renew). – Vážený pán predsedajúci, pán komisár, milí kolegovia, Európska únia musí v najbližších desaťročiach zvládnuť dve veľké transformácie – zelenú a digitálnu, a to so starnúcou populáciou. Táto misia je od začiatku odsúdená na zánik, ak sa nezbavíme zlozvykov z dvadsiateho storočia. Ktoré sú to? Po prvé, nemali by sme mladých pripravovať na konkrétnu profesiu, ale potrebujeme ich naučiť zručnosti na zvládnutie týchto výziev. Po druhé, prestaňme deliť život na vzdelávanie a následnú prácu. Nebuďme naivní, že dnešné poznatky nám postačia aj o 30 rokov. Práve digitalizácia a umelá inteligencia nám môžu pomôcť, aby sme sa kontinuálne učili tempom a spôsobom, ktorý nám vyhovuje. Po tretie, netvárme sa, že výborná priemerná kvalita univerzít stačí. Európska únia má na viac. Pre globálny úspech potrebujeme excelentnosť a musíme sa stať magnetom pre zahraničný talent. V dvadsiatom storočí sme si veľmi zvykli, že investície sú len o strojoch, betóne a asfalte. V dvadsiatom prvom storočí by mali byť najmä o ľudskom kapitáli.

     
       

     

      Rasmus Andresen (Verts/ALE). – Herr Präsident! Eine Million! Eine Million Fachkräfte fehlen bis 2030 allein dem deutschen Arbeitsmarkt, und in vielen anderen europäischen Staaten sieht das nicht anders aus.

    Über 60 % der kleinen und mittelständischen Unternehmen geben an, dass sie jetzt bereits Probleme haben, Fachkräfte zu finden. Der Fachkräftemangel ist eines der größten Probleme, das wir in der Europäischen Union in den nächsten Jahren haben, und ganz ehrlich: Es passiert viel zu wenig, um ihn anzugehen.

    Deshalb ist es gut, dass wir hier darüber reden, denn wenn wir wettbewerbsfähig sein wollen, dann brauchen wir qualifizierte Arbeitskraft. Die Antwort darauf ist: mehr Migration, mehr Investitionen in Bildung, eine bessere Vereinbarkeit von Familie und Beruf und auch bessere Arbeitsbedingungen, denn nur mit attraktiven Jobs werden wir es schaffen, Menschen zu uns zu bekommen.

    Denn wir brauchen mehr Menschen, die in der EU arbeiten, und nicht weniger. Deshalb ist es ein Problem, wenn Nationalismus, Hass und Hetze die Debatte bei uns dominieren. Niemand möchte in einer Europäischen Union leben, wo Alice Weidel oder Marine Le Pen den Takt angeben. Wir brauchen eine Willkommenskultur, die Menschen begrüßt und sie dabei unterstützt, hier bei uns ihren Arbeitsweg zu bestreiten.

     
       


     

      Sérgio Humberto (PPE). – Caro Presidente, Caro Comissário, Caros Colegas, em Portugal temos um provérbio que nos ensina que não devemos chorar sobre o leite derramado, e é por isso que devemos falar de soluções para o desafio que enfrentamos. Permitam‑me que partilhe convosco três prioridades para agirmos, porque ninguém cresce na estagnação. Repito: ninguém cresce na estagnação.

    Primeira: precisamos de investir na aprendizagem ao longo da vida. Aprender é a base para sermos mais produtivos e competitivos nos nossos territórios. Aprender em qualquer momento, em qualquer lugar vai‑nos preparar para as profissões do futuro e garantir um crescimento inclusivo.

    Segunda: precisamos de apostar na transição digital e tirar mais partido dos dados e da inteligência artificial, principalmente nas áreas da saúde, da energia e da biotecnologia.

    Terceira: precisamos de transitar para uma economia mais verde, de desenvolver uma verdadeira união energética numa verdadeira União Europeia.

    Precisamos de estar mais próximos. É tentador achar que estamos todos muito longe uns dos outros. No meu país, Portugal, também já estive longe, mas o longe faz‑se perto. Todos juntos somos muito mais do que 27. Se trabalharmos todos juntos, ninguém fica para trás.

    (O orador aceita responder a uma pergunta «cartão azul»)

     
       

     

      João Oliveira (The Left), Pergunta segundo o procedimento «cartão azul». – Senhor Deputado Sérgio Humberto, falou, na sua intervenção, da importância da educação e da formação para a qualificação dos trabalhadores. E eu quero que nos diga: como é que isso se faz, aceitando as restrições orçamentais que a União Europeia nos impõe? Como é que isso se faz – como neste momento acontece em Portugal – com o Governo que o senhor apoia a apresentar uma proposta de Orçamento do Estado que, aceitando as restrições orçamentais que a União Europeia nos impõe, não investe na escola pública, não investe na contratação e na requalificação das carreiras dos professores, não investe na contratação e na valorização dos auxiliares de ação educativa, dos técnicos especializados?

    Como é que isso tudo se faz? Porque, senão, o seu discurso é uma contradição com a prática.

     
       

     

      Sérgio Humberto (PPE), Resposta segundo o procedimento «cartão azul». – Caro Colega João Oliveira, durante os últimos nove anos, o meu país foi governado pela esquerda. Uma geringonça entre o Partido Socialista, o seu partido – o Partido Comunista – e o Bloco de Esquerda. Durante nove anos, desinvestiu‑se no sistema público educativo, desinvestiu‑se na saúde, desinvestiu‑se naquilo que eram os serviços públicos e este Governo, nos últimos – apenas – seis meses, já demonstrou que está a apostar na educação, que é fundamental para as pessoas crescerem.

    Nós só conseguimos redistribuir se nós formos um país mais rico e mais próspero.

     
       

     

      Elisabetta Gualmini (S&D). – Mr President, Commissioner, the spread of digital technologies is having a huge impact on the labour market, and innovations such as AI, robotics, quantum technology and 6G are triggering a wave of new demands for a new generation of advanced digital skills.

    The Draghi report strongly highlights how digitalisation and AI are essential, for example for the public sector due to its ability to provide quality public goods in the fields of health, education, justice and welfare. We need to work hard on the European digital decade programme and its ambitious goals, pushing professional training and life-long learning.

    We are still lagging behind: in Italy, only 22 % of the population have advanced digital skills. Only 30 % of SMEs have implemented a solid digital strategy, which is not a luxury, it’s a strategic asset. So we shouldn’t be afraid of change and Europe’s strength has always relied upon its people. By empowering them, we ensure that our communities grow and that the EU remains a global leader in innovation.

     
       

     

      Kris Van Dijck (ECR). – Voorzitter, commissaris, ik kom uit een land dat geen grondstoffen heeft, maar wel hersenen. Dat is het beste menselijk kapitaal. Wat voor Vlaanderen geldt, geldt in hoge mate voor heel Europa. Echter, PISA-resultaten tonen ons keer op keer dat de studieresultaten van onze jongeren er niet op vooruit gaan. Integendeel. We moeten dus onze lidstaten oproepen – niet in hun plaats treden, maar oproepen en ondersteunen – om de kwaliteit van ons onderwijs fundamenteel te verbeteren en op topniveau te brengen.

    Daarvoor moeten we streven naar uitmuntende prestaties, met aandacht voor kennisoverdracht bij kinderen en scholieren. We moeten leerkrachten en docenten de ruimte geven om hun werk te doen: lesgeven. We moeten gebruikmaken van moderne digitale technieken in alle opleidingen. We moeten universiteiten laten samenwerken en uitwisselen, bijvoorbeeld met het Erasmus+‑programma, over de grenzen heen. We moeten technische opleidingen en kunstopleidingen elkaar laten bevruchten. We moeten onderzoekers en wetenschappers in de EU de nodige omkadering en infrastructuur bieden, zodat ze niet vertrekken. We moeten projecten waarin we veel geld hebben gestoken niet laten doodbloeden zolang er resultaten zijn, zoals nu met de fusiereactor JET dreigt te gebeuren. Goed onderwijs is de basis voor een sterk Europa.

     
       

     

      Billy Kelleher (Renew). – Mr President, the Draghi report makes very sober reading for us in the European Union with regard to the challenges that we face in the digital economy and in the green economy in particular. Also, when you couple that with the demographic changes that are happening and the fact that we are an ageing population, our skills and labour force planning leaves a lot to be desired.

    What has happened now is that we’ve been found out with regard to skills shortages in key areas right across the entire economy. For example, 54 % of EU businesses, big and small, report skills shortages as the most pressing issue facing them.

    So we need to incentivise and reward upskilling and reskilling. We also need to promote lifelong learning, something that is more important as life expectancy increases over the years, and back‑to‑education and back‑to‑work as well. There are many cohorts of people, particularly women, who are not able to get back into the workplace because of a lack of support when finished with child rearing.

    That is a key area where we have consistently failed across many economies in the European Union in terms of incentivising and supporting labour activation and back‑to‑work and back‑to‑education for cohorts that were locked out for various reasons.

    So I hope that we invest in skills and lifelong learning and back‑to‑education, and support labour mobility as well.

     
       

     

      João Oliveira (The Left). – Senhor Presidente, a produtividade do trabalho tem vindo a aumentar sempre acima da evolução dos salários reais. A consequência disto é a transferência de riqueza criada pelos trabalhadores para o capital, e esse problema só pode ser resolvido aumentando os salários e garantindo uma distribuição mais justa da riqueza criada. Essa é a questão de fundo.

    Mas, este debate sobre a competitividade centra‑se, apenas, na comparação concorrencial com os Estados Unidos e a China. O relatório de Draghi é uma espécie de Bíblia não confessada da Comissão Europeia. Nesse relatório, os trabalhadores são vistos apenas como peças de uma engrenagem de produção, os seus direitos e necessidades não são considerados e a competitividade é abordada, dando prioridade à criação de empresas monopolistas pan‑europeias, à concentração e centralização do capital, ao agravamento da exploração de quem trabalha.

    O caminho do desenvolvimento e da justiça social é outro e tem de ter no centro das preocupações e prioridades políticas os trabalhadores, os seus direitos, os seus salários, as suas condições de vida e uma distribuição mais justa da riqueza criada pelo trabalho.

     
       

     

      Giusi Princi (PPE). – Signor Presidente, onorevoli colleghi, signor Commissario, la nostra capacità di rimanere competitivi e resilienti dipende dalla qualità delle competenze. La relazione Draghi evidenzia chiaramente come l’investimento in questo contesto sia essenziale per formare una forza lavoro altamente qualificata.

    È questa l’unica via per garantire all’Europa un ruolo leadership nelle industrie chiave come il digitale, l’energia verde e la finanza sostenibile. Nei primi vent’anni del XXI secolo abbiamo assistito a forme di conoscenza e di produzioni innovative che, in ultimo, con l’avvento dell’intelligenza artificiale, hanno generato profondi cambiamenti professionali. Il 56% dei lavori sta scomparendo e subirà imponenti trasformazioni entro pochi decenni.

    Occorre affrontare le nuove sfide ripensando a nuovi modelli educativi e formativi. L’Europa è ancora indietro negli investimenti, nella ricerca e nell’educazione rispetto a Stati Uniti e Cina. Ma anche all’interno dello stesso continente vediamo i Paesi del Nord investire maggiormente risorse umane rispetto alle aree marginali del Sud Europa.

    Il gruppo PPE e Forza Italia, con il suo recente documento economico, sono fermamente convinti che l’Anno europeo delle competenze debba quindi rappresentare un’opportunità per investire in modo uniforme in ricerca, educazione e innovazione per arginare la mancanza di specializzazioni e la profonda carenza tra domanda e offerta di competenze.

    Il nostro impegno, però, non può essere esclusivamente tecnico. Dobbiamo garantire che l’accesso alle competenze sia equo e inclusivo: tutti devono poter partecipare attivamente alla crescita europea per evitare che il progresso tecnologico crei nuove disuguaglianze.

     
       

     

      Tiemo Wölken (S&D). – Sehr geehrter Herr Präsident, liebe Kolleginnen und Kollegen! Die Liste der Herausforderungen, die Draghi uns ins Pflichtenheft geschrieben hat, ist lang. Da ist der unvollendete Binnenmarkt, da ist eine unkoordinierte Industriepolitik und immer größer werdende Abhängigkeit bei kritischen Technologien, die letztlich unsere politische Handlungsfähigkeit, aber auch unsere Gesellschaft als Ganzes bedrohen. Wir diskutieren jetzt aktiv die Bewältigung dieser Mammutaufgabe. Aber zu oft bleiben wir dabei bei plakativen, einfachen Forderungen. Die einen sagen „mehr Subventionen“, die anderen sagen „weg mit jeglicher Bürokratie“ – und das Problem sei gelöst.

    Diese vermeintlich einfachen Lösungen sind aber nicht die Antwort, denn Sie vergessen am Ende, worauf es ankommt – auf die Bürgerinnen und Bürger Europas. Wir brauchen für sie und mit ihnen eine digitale, eine grüne Transformation, die ganzheitlich ansetzt und den Menschen in den Mittelpunkt stellt. Und wir müssen fragen: Liebe Bürgerinnen und Bürger, was braucht ihr, um anzupacken, damit diese Transformation gelingt?

    Und ja, dazu gehören auch Subventionen und bürokratische Entlastungen. Aber es geht um gute Arbeitsplätze, um Arbeitnehmerinnen- und Arbeitnehmerrechte, um unsere Lebensbedingungen in Europa und das richtige Handwerkszeug für uns Europäerinnen und Europäer, und deswegen müssen wir gemeinsam anpacken.

     
       

     

      Beatrice Timgren (ECR). – Herr talman! EU vill överbrygga kompetensklyftan och öka konkurrenskraften enligt Draghi-rapporten. Men vad innebär det? Fler lånefinansierade bidrag som svenska sjuksköterskor och byggarbetare kommer att behöva betala och även framtida generationer.

    Draghi vill införa EU-skatter och avskaffa vetorätten. Det här är ett direkt hot mot Sveriges självständighet.

    EU föreslås också öka stödet till den digitala och den gröna omställningen. Det låter gulligt, men det blir en dyr affär för Sverige som redan är världsledande. Vi har redan plöjt ner miljarder i gröna prestigeprojekt som inte levererar. Räcker inte det?

    Det är vanliga medborgares intressen som vi ska värna, inte EU-kläggets utopiska visioner, som gör det svårt att driva företag, betala elräkningen eller få vardagen att gå ihop.

    Enligt tidningen Näringsliv borde Draghi-rapporten skrämma slag på EU. Jag undrar, lyssnar ni borgerliga EPP? Är ni beredda att hjälpa oss att skrota dessa galna planer?

     
       


     

      Andrea Wechsler (PPE). – Sehr geehrter Herr Präsident, sehr geehrte Damen und Herren! Am gestrigen Abend saß ich mit vielen jungen Menschen aus der Textilindustrie zusammen, die die Hoffnungsträger dieser Branche sind. Ich saß aber auch mit vielen Unternehmerinnen und Unternehmern zusammen, die diese Branche vertrauensvoll in die Hände der nächsten Generation geben wollen. Die Diskussion drehte sich immer wieder um die Frage: „Wie können wir, Alt und Jung gemeinsam, in Europa zusammenstehen, um den Wandel und die Transformation in Europa hin zu einer nachhaltigen, zu einer digitalen Zukunft zu gestalten?“

    Es zeigten sich immer wieder die zwei gleichen Herausforderungen: Es fehlt in der Textilindustrie, genauso wie in vielen anderen Branchen, der Nachwuchs; und zweitens stellen wir über die gesamte Arbeitnehmerschaft fest, dass essenzielle Kompetenzen, insbesondere im handwerklichen und digitalen Bereich, fehlen.

    Diese Herausforderungen können wir sogar in konkrete Zahlen fassen. Fast drei Millionen junge Menschen in Deutschland zwischen 20 und 34 Jahren haben keinen Berufsabschluss. Ihnen fehlen die essenziellen Kompetenzen, die Qualifikationen, die unser Arbeitsmarkt auch braucht. Das ist kein deutsches Phänomen; wenn wir den Bericht von Herrn Draghi ansehen, sehen wir, dass 42 % der Europäer die digitalen Fähigkeiten nicht haben, die sie für die Zukunft in Europa benötigen.

    Das ist nicht nur ein Alarmsignal, sondern das ist Auftrag für uns. Wir müssen mit aller Dringlichkeit den Fokus auf digitale und technische Kompetenzen legen und das in das Zentrum unserer Bildungslandschaft setzen. Wir müssen den Fokus auf lebenslanges Lernen legen und auch der älteren Generation eine Chance auf Weiterbildung geben.

    Für uns Christdemokraten steht der Mensch im Mittelpunkt unserer Politik. Wenn wir in unsere Bürgerinnen und Bürger, unsere jungen Talente, unsere erfahrenen Kräfte investieren, investieren wir in die Zukunft Europas.

     
       


     

      Tobiasz Bocheński (ECR). – Panie Przewodniczący! Dzisiejsza debata jest niesłychana, ponieważ kolejny raz, już niezliczoną liczbę razy dyskutujemy tutaj o tym samym. Unia Europejska znajduje się naprawdę w bardzo poważnym kryzysie gospodarczym i w kryzysie konkurencyjności, co wykazał raport Draghiego.

    Ale przychodzicie tutaj, deliberujecie i posługujecie się ciągle tymi samymi okrągłymi określeniami, z których nic nie wynika. Konkurencyjność nie bierze się z biurokracji, konkurencyjność nie bierze się z nadregulacji, nie bierze się z inflacji prawa. Konkurencyjność budowana jest przez przedsiębiorców. Konkurencyjność budowana jest przez wolność gospodarczą, która jest gnieciona od czasu przyjęcia traktatu z Lizbony przez dyrektywy i rozporządzenia Unii Europejskiej. Nie gwarantujecie i nie dajecie żadnej rękojmi, że jesteście w stanie przeprowadzić jakikolwiek skomplikowany, ambitny program, który doprowadzi do zwiększenia konkurencyjności w Unii Europejskiej.

    Powinniście zejść z tej drogi i dokonać głębokiej reformy ustawodawstwa europejskiego. Inaczej biegniemy ku ścianie i będziemy skansenem w porównaniu z Chinami i Stanami Zjednoczonymi.

    (Mówca zgodził się na pytanie zasygnalizowane przez podniesienie niebieskiej kartki)

     
       


     

      Tobiasz Bocheński (ECR), odpowiedź na pytanie zadane przez podniesienie niebieskiej kartki. – Ma pan częściowo rację, o tyle, o ile każde przedsiębiorstwo składa się zarówno z pracowników, jak i z pracodawcy. Ale nie jest prawdą, że powinniśmy akcentować jedynie rolę pracowników, ponieważ jeżeli tak będziemy robili, to doprowadzimy do sytuacji, w której nie będzie żadnych przedsiębiorstw i skończymy jak Związek Radziecki. Bogactwo narodów bierze się z pracy, jak pisał Adam Smith. Bogactwo narodów bierze się z przedsiębiorczości, a pracownicy mają dostawać godne wynagrodzenie za pracę, którą wykonują.

     
       



     

      Paulius Saudargas (PPE). – Mr President, Commissioner, dear colleagues, Europe is in a vicious circle. We all knew it, but Mario Draghi clearly stated it: the king is naked.

    We are not competitive anymore. We lack innovation. But who creates innovation? The people. But we are in a big shortage of those people. First of all, the demography. We are dying out. Secondly, the immigration does not solve the problem of shrinking labour force and does not reduce the skills gap because the migrants do not necessarily meet the right skills portfolio.

    This debate should be a clear message to our educational sector as well. The universities and schools should provide more up-to-date programmes in accordance with the market demand. But, of course, I do not question the need for EU to invest more. Investment in our brightest people and their haute couture skills is a most worthy investment.

    The skills shortage is a growing barrier to innovation. We have talent, but not enough. Europe produces only 850 science, technology, engineering and math graduates per million inhabitants per year, compared to more than 1 100 in the United States. So, having this type of dynamics, the problems will eventually grow. Additionally to the direct solutions in the educational system, we should also have in mind the demography and targeted immigration policy.

    Dear colleagues, the developing artificial intelligence and its adaptation in various sectors will open problems in the labour market that we never faced. Let’s be aware.

     
       


     

      Andrzej Buła (PPE). – Panie Przewodniczący! Panie komisarzu! Raport Draghiego i wiele innych badań oraz dokumentów pokazują, że mieszkańcy Europy dla własnego bezpieczeństwa zawodowego i poczucia osobistej wartości muszą mieć możliwość podnoszenia kompetencji i kwalifikacji. Chcemy, aby mieli warunki do kształcenia się przez całe życie. Trudno zmierzyć te wartości przez pryzmat potrzeb przedsiębiorców, ale wskazują oni, że konkurencja gospodarcza wymaga wysoko wykwalifikowanych kadr. Natomiast żaden mieszkaniec Europy nie powinien obawiać się, że czegoś nie umie, i bać się podejmować nowych wyzwań.

    Europejski Fundusz Społeczny ma ogromny, lecz wciąż niewykorzystany potencjał w zapewnieniu ukierunkowanych szkoleń i możliwości podnoszenia kwalifikacji. Dlatego też program ten powinien być kontynuowany także po 2027 roku, z odpowiednim, wysokim budżetem, tak aby mógł pełnić kluczową rolę w wyposażaniu naszego społeczeństwa w umiejętności przyszłości.

     
       

     

      Estelle Ceulemans (S&D). – Monsieur le Président, il est clair que des engagements forts doivent être pris pour améliorer les compétences et la formation, qui sont des composantes clés pour relever les défis des transitions climatique et numérique, mais aussi pour répondre à l’enjeu des pénuries d’emplois dans certains secteurs, comme ceux de l’aide aux personnes, des soins de santé et de l’enseignement.

    Mais il est important de souligner que cette question est surtout liée à celle de la qualité de l’emploi dans ces secteurs dits en pénurie. Tout d’abord, les salaires sont souvent trop faibles. Il faut donc faire en sorte de les hausser. Mais les conditions de travail posent aussi problème. Il faut donc œuvrer ensemble pour mieux aborder des sujets tels que les risques psychosociaux, le surmenage, le télétravail et le droit à la déconnexion.

    Enfin, reste la question de la conciliation entre vie privée et vie professionnelle. Ce point est déterminant pour mieux intégrer les femmes sur le marché du travail, il est aussi crucial pour les jeunes. Et puis, il faut reconnaître, et c’est essentiel, le rôle des interlocuteurs sociaux, qui sont les seuls à véritablement connaître les besoins des travailleurs et les réalités du monde du travail, et par conséquent à pouvoir répondre à ces enjeux de formation.

     
       

     

      Axel Voss (PPE). – Herr Präsident, Herr Kommissar, liebe Kolleginnen und Kollegen! Wir können nicht wirklich geschockt sein über die Erkenntnisse aus dem Draghi-Bericht. Seit Jahren hören wir eigentlich das Klagen, und wir nehmen es irgendwie nicht wirklich ernst. Wann müssen wir eigentlich mal aufwachen, glaube ich?

    Die digitale Agenda gehört an die Spitze unserer ganzen Agenda, und das muss wirklich ganz oben stehen, um die Menschen hier auch mitzunehmen. Bei dem digitalen Wettbewerb brauchen wir: erstens eine Garantie für die Hochgeschwindigkeitsverbindungen, für eine robuste digitale Infrastruktur; zweitens eine klare Strategie für digital skills, die die Ressourcen auch entsprechend bündelt; drittens ein EU-Visa-Programm auch für die digitalen Talente in der Welt; viertens eine offene und einheitliche Datenbank für Einzelpersonen und Unternehmen, um Umschulungsmöglichkeiten und Trainingsprogramme zu finden; und fünftens sollten wir auch umsonst Onlinekurse anbieten, um Kompetenzen im digitalen Bereich auch auszubauen.

    Jedenfalls sollten wir diese Entwicklungen wirklich ernst nehmen, und wir können uns heute nicht ernsthaft darüber beschweren, dass jemand außerhalb der Europäischen Kommission oder außerhalb des Parlaments uns erzählt, was wir machen müssen; das sollte schon von uns selber kommen. Deshalb hoffe ich, dass wir diesen Weg jetzt auch endlich beschreiten.

     
       


     

      Esther Herranz García (PPE). – Señor presidente, señor comisario, cuando hablamos del déficit de capacidades de competitividad, solemos siempre centrarnos en sectores relacionados con el desarrollo informático o la economía 4.0. Sin embargo, hay un sector económico clave para nuestra autonomía estratégica y nuestra competitividad al que no se le suele prestar atención, como es el de la agricultura y la ganadería.

    En las últimas décadas ha habido una enorme evolución en el uso de las nuevas tecnologías y técnicas de precisión en el sector primario, que requieren formación específica y avanzada para que pueda exprimirse todo su potencial. En esta línea, quiero felicitar a la Comisión Europea por impulsar el Pacto por las Capacidades en el sector agroalimentario: sé que hay voluntad de seguir apoyándolo durante este mandato y así espero que sea. Es vital para el desarrollo del tejido económico de las áreas rurales y para incentivar el relevo generacional.

    Y en esa misma línea, quiero aprovechar, antes de terminar, para pedir que se impulse una visión de la agricultura como sector económico atractivo también en las etapas formativas obligatorias. La agricultura y la ganadería deben ser un elemento fundamental en nuestras estrategias de competitividad y, sin atraer a futuros profesionales, será extremadamente difícil conseguirlo.

     
       

     

      Marc Angel (S&D). – Mr President, dear all, closing the EU’s skills gap is a must for all transitions that our society, our workforce and our economy are facing now and in the future. When it comes to the climate and to digital transitions, we need to come back to a positive narrative – highlighting the opportunities, but of course also addressing fears and doubts.

    To close our skills gap, we also need a true single market of skills by facilitating the recognition of the competencies of our workforces between our Member States.

    I want to thank Commissioner Nicolas Schmit for the work already delivered with the European Years of Skills, individual learning accounts and the extension of the Erasmus+ mission. All this has improved access to vocational education and training for all, and we must continue on that path.

    If the new Commission wants to use ‘skills, skills, skills’ as a mantra, we must not forget that our citizens, our workforce, young and old, will only embrace this if lifelong learning and upskilling lead to better jobs, to quality jobs.

    Indeed, when we discuss skills, we have to address the social dimension of competitiveness and jobs, and cherish social dialogue.

     
       


     

      Annalisa Corrado (S&D). – Signor Presidente, onorevoli colleghi, stiamo navigando in acque in tempesta, con profondi cambiamenti in atto che dobbiamo governare. Quando soffia il vento del cambiamento, gli stolti costruiscono muri, i saggi mulini a vento.

    L’Europa, alla prova di questa sfida, deve saper costruire un sistema di formazione e ricerca inclusivo e integrato, che consenta di sviluppare competenze con uno sguardo sistemico e multidisciplinare a servizio del bene comune, a servizio della trasformazione ecologica e digitale delle nostre economie e società.

    Serve una particolare attenzione alle competenze tecnico scientifiche. Impossibile governare questo cambiamento senza politiche di inclusione e sostegno per i giovani; impossibile, senza liberare l’enorme potenziale delle donne che sono tenute lontane dalle discipline tecnico-scientifiche da una spaventosa e antistorica arretratezza culturale, che non ha alcuna ragione di esistere: parola di ingegnera meccanica.

    Colleghe, colleghi, a partire dal bilancio 2025 e per il quadro finanziario del prossimo settennato, servono risorse all’altezza di questa sfida.

     
       

     

      Bruno Gonçalves (S&D). – Senhor Presidente, Mario Draghi avisou‑nos de que a Europa está a ficar para trás – uma economia menos competitiva, pouco inovadora e dependente de importações. A resposta da direita é sempre a mesma: cortes indiscriminados de impostos em benefício sobretudo das grandes empresas multinacionais. Mas não é assim que nós conseguimos mudar o nosso rumo.

    Reduzir o diferencial para os Estados Unidos e para a China, mas também para as assimetrias internas da nossa União, desenvolvendo as economias periféricas, exige uma indústria a sério, que contribua para uma redução das emissões com mais energias renováveis, uma indústria limpa, sustentável, que ofereça bons empregos para todos, sejam mais ou menos qualificados.

    Uma revolução digital tem também de ser social. Para isso, não há melhor solução do que investir nas pessoas. Só assim podemos garantir que a Europa de hoje tenha mão de obra especializada que nos faz falta; e, mais importante do que isso, que no futuro ninguém fica para trás. Ou esta é uma socialmente justa transição ou corre o risco de nunca ver a luz do dia.

     
       

       

    Catch-the-eye procedure

     
       

     

      Hélder Sousa Silva (PPE). – Senhor Presidente, Caro Comissário, Caros Colegas, o relatório de Draghi é bem claro: sem trabalhadores qualificados, o nosso futuro está claramente em risco. Hoje, as competências vão muito além da matemática e da gramática, é preciso dominar o digital e dominar também áreas transversais, como a sustentabilidade e a criatividade.

    Aqui, o Erasmus+ é verdadeiramente um aliado e este programa é muito mais do que mobilidade, é uma ponte entre a educação e o mercado de trabalho. Por isso, os cortes propostos pelo Conselho para o programa Erasmus+ são um erro estratégico e são verdadeiramente inaceitáveis. Daí que o Parlamento – e bem – proponha um reforço, para o ano de 2025, de cerca de 70 milhões de EUR.

    Agora, é tempo de agir, fortalecendo a competitividade, através do reforço da formação na nossa União.

     
       

       

    PRESIDENZA: PINA PICIERNO
    Vicepresidente

     
       


     

      Nina Carberry (PPE). – Madam President, Commissioner, the greatest asset that Europe has is its people. Since its inception, the European Union has funded and driven the development of its people through education, skills and apprenticeships.

    But if we are to compete on a global scale, we need to break down the barriers that are causing the skills gap in Europe. Housing, infrastructure, red tape, the cost of living – things that are not just unique to Ireland – are the main barriers. And while our urban areas are very attractive for our young skilled workforce, we need a more comprehensive plan for our rural areas. In my constituency, in the Midlands–North-West in Ireland, young people often see Dublin and other urban areas as their only option for work and education.

    The EU needs to be at the forefront of solving these problems with a comprehensive plan for the development of rural areas. We need to show young people that their future can be at home, that they can innovate and thrive, not tens of thousands of miles away, but right here in the European Union.

     
       


     

      Tomislav Sokol (PPE). – Poštovana predsjedavajuća, države članice, sve se više susreću s problemom nedostatka radne snage, a 54 % poduzetnika ističe da je žurno potrebno riješiti ovaj problem.

    U Draghijevom izvješću ispravno je primijećeno da su uzroci manjka radne snage neusklađenost obrazovnih sustava s potrebama tržišta rada, sve manji broj radno aktivnog stanovništva, ali i loši radni uvjeti gdje svakako spadaju i nekonkurentne plaće. Nedostatak kvalificirane radne snage i dalje je najvažniji ograničavajući čimbenik proizvodnje i sprečava jačanje europske konkurentnosti, a posebno ovim problemom pogođen je sektor turizma. Pored toga, nedostatak medicinskog osoblja, među kojima liječnika, medicinskih sestara i primalja, odavno je poznat i bitno utječe na kvalitetu pružanja zdravstvene skrbi pacijentima. Međutim, uvoz nisko kvalificirane radne snage iz trećih država nije dugoročno rješenje za ovaj problem. Zato odobravanju radnih dozvola ne smijemo olako pristupati. Stoga je važno kontinuirano raditi na poboljšanju radnih uvjeta, prilagođavanju obrazovnih programa potrebama tržišta rada, posebno u STEM području, te oblikovanju programa prekvalifikacija.

    Kolegice i kolege, neograničen uvoz radne snage dugoročno je neodrživ. Zato EU mora hitno djelovati na više razina. Očekujem stoga da nova Komisija u prvih 100 dana predstavi Akcijski plan za rješavanje pitanja nedostatka radne snage.

     
       

     

      Maria Grapini (S&D). – Doamnă președintă, domnule comisar, nu discutăm un subiect nou. De foarte mult timp constatăm că avem decalaje de competențe în Uniunea Europeană. Problema este, domnule comisar, dacă găsiți metodele bune, dacă se aplică. Avem multe programe: de reconversie, programe pentru competențe, mecanisme de ajustare, dar care este rezultatul? Vedem că nu reușim să eliminăm acest decalaj de competență. De ce?

    Educația trebuie suprapusă peste cerințele economiei. Avem o strategie acum de reindustrializare. De ce competențe avem nevoie? N-avem nevoie numai de diplome, avem nevoie de personal calificat. IMM-urile – 4 din 5 – nu-și găsesc oameni calificați. Nici celelalte companii n-au curajul să investească pentru că nu au personal calificat. De aceea, domnule comisar, sper ca noua Comisie să gândească când investește dacă are și un rezultat al investiției, și anume să eliminăm acest decalaj de competențe din Uniunea Europeană și între statele membre, dar și în raport cu piața globală.

     
       

     

      Branislav Ondruš (NI). – Vážená pani predsedajúca, dámy a páni, pri investíciách, aby znalosti a zručnosti pracujúcich zodpovedali technológiám či novým pracovným postupom, musíme dávať dôraz na to, aby z toho nemali prospech len firmy. U nás posilňujeme minimálnu mzdu, aby rástli aj tie ostatné, lebo zamestnávatelia si stále málo uvedomujú, že lepší zárobok a lepšie pracovné podmienky sú kľúčovou motiváciou pre celoživotné vzdelávanie. Ak nemajú ľudia zarábať viac, prečo by mali získavať nové znalosti a zručnosti len preto, lebo firmy, pre ktoré pracujú, budú konkurencieschopné? Lenže konkurencieschopnosť firiem, dámy a páni, má význam, iba ak sa prejaví aj na lepších pracovných podmienkach a vyšších platoch zamestnancov, nielen na ziskoch korporácií. Na Slovensku vytvárame systém individuálnych účtov, ktoré budú ľuďom poskytovať financie na vzdelávacie kurzy. Chcem presadiť, aby zamestnanci absolvovali vzdelávanie výlučne v pracovnom čase, a teda aby za čas strávený v kurze im firmy dali mzdu. Keďže kurzy zaplatíme z daní ľudí, považujem za férové, aby firmy prispeli aspoň takto.

     
       

     

      Grzegorz Braun (NI). – Madam President, ladies and gentlemen, this is no crisis. This is the result of your socialist policies. Just like famous and notorious socialist leaders Hitler, Stalin, Roosevelt had their plans – five-year plans, four-year plans, New Deal – so you have your Green Deal, Blue Deal, your migration pacts and so on and so on.

    You just can’t stop designing people’s future, stop messing around with our lives and our property. You don’t understand that you’re the main obstacle. While the other nations are conquering space, you’re changing bottle caps.

    This is the dimension of your ability. So please stop. The European Union has to be overthrown because the only dimension in which you could and you should be active is stability and security. The majority of you here are warmongers. So, the European Union, the Euro cohorts, should be overthrown.

     
       

     

      Milan Mazurek (NI). – Vážená pani predsedajúca, pomaly každý deň tu hovoríme stále o tom istom. Európska únia zaostáva, naše štáty sa prepadajú do chudoby. mladí ľudia si nie sú schopní zadovážiť normálne dostupné bývanie, pretože ceny nehnuteľností sú extrémne vysoké. Ale s čím máte, kolegovia, najväčší problém, je pomenovať vinníka tohto stavu. Ten vinník ste práve vy, ktorí hlasujete za väčšinu týchto nezmyselných európskych politík. Vinníkom sú ľudia, ktorí podporili v tomto pléne greend deal, ktorý obmedzuje životy ľudí na tej najzákladnejšej bazálnej úrovni. Vy zavádzate emisné povolenky pre domácnosti, vy predražuje palivá, vy spôsobujete vašimi ekonomickými sankciami, že život v Európe sa jednoducho prepadáva k stále horším a horším atribútom. Potom sa divíte, že Čína, Amerika, Rusko Európskej únii unikajú? Vy jednoducho potrebujete prestať s týmito nezmyselnými plánmi a nechať ľudí žiť normálne slobodne prosperovať a vyvíjať sa tak, ako to bolo v Európe odveky, keď Európa bola práve nositeľom inovácií vo svete. Toto plénum, Európska komisia a Európska rada sú kľúčovým dôvodom, prečo sa dnes takýmto spôsobom prepadáme.

     
       

       

    (Fine della procedura “catch the eye”)

     
       

     

      Janusz Wojciechowski, Member of the Commission. – Madam President, honourable Members, thank you very much for all contributions in this very interesting, inspiring debate. Particularly, as Commissioner for Agriculture, I’d like to thank those speakers who mentioned the importance of skills and education in agriculture. The modern agriculture requires high skills. Education and multidisciplinary knowledge is needed in this difficult job.

    There was in many speeches the question to compare development between the European Union and the United States. Maybe this is a good opportunity to mention that, in agriculture, despite having two times less agricultural land and having 12 times smaller farms in the European Union, the value of agricultural production is higher in the EU than in the US.

    We have also a very positive trade balance with United States, because the value of exports is about EUR 28 billion and imports about EUR 11 billion.

    Thank you again for the discussion. Adapting skills policy to the changing society and the changing labour market is, by definition, a continuous process. The European Year of Skills has left an important legacy. This legacy is reflected in the political guidelines of President von der Leyen, committing to the establishment of a Union of Skills in her next mandate. Europe needs this overarching political strategy to close the skills gap, to strengthen our competitiveness and social well-being.

     
       

     

      Presidente. – La discussione è chiusa.

     

    4. Abuse of new technologies to manipulate and radicalise young people through hate speech and antidemocratic discourse (debate)


     

      Janusz Wojciechowski, Member of the Commission. – Madam President, honourable Members, respect for human dignity and fundamental rights, including equality, are founding values of the Union.

    Hate speech, inciting violence and hatred on the grounds of race, colour, religion or ethnic origin is illegal in the EU also when it happens online. Hate waves starting online lead to polarisation and radicalisation and many turn into violent attacks.

    We have seen that new technologies are abused to foster anti-democratic views. Young people are particularly targeted and exposed. We must help young people become more resilient to extreme views. For them and for our democracies, as youngsters are the citizens of tomorrow.

    The EU horizontal framework to create a safer online space is the Digital Services Act (DSA). Under the DSA, online platforms have to set up new and user-friendly mechanisms to flag illegal content, and they must better explain their content moderation decisions. They are also obliged to promptly inform law enforcement or judicial authorities of any suspicion of a criminal offence involving a threat to the life or safety of a person.

    The major platforms like TikTok, Instagram, Facebook, Snapchat or YouTube need to identify and assess any systemic risk their services may pose. They need to ensure that illegal contact content does not go viral easily, and adapt their algorithms to protect minors.

    During the last six months, the Commission has opened investigations against TikTok, Meta and Instagram related to the protection of minors. The industry has committed to a voluntary code of conduct on countering illegal hate speech. Signatories must swiftly review hate speech noticed within 24 hours and swiftly remove illegal content. An updated version of this code is in the process of being integrated in the Digital Services Act, thus becoming part of its risk mitigation approach.

    The response of hate speech needs to involve citizens at large. We made this clear in the Commission communication of December last year on combating hate. In June, the Commission organised a European Citizens’ Panel on tackling hatred in society and focusing on digital threats. It showed that dialogue can overcome polarisation. The Commission is committed to following up on the citizens’ recommendations.

    In the fight against disinformation, the EU supports the European Digital Media Observatory. Independent fact-checkers, researchers and media literacy experts detect, analyse and expose potential disinformation threats. A wide network of trusted vloggers are already active in identifying illegal hate speech. They will soon benefit from the trusted flagger mechanism in the DSA.

    In the fight against hate and disinformation, it is also crucial to promote transparency, democratic accountability, pluralism and free and vibrant democratic debates. Last year, to support young citizens in the exercise of their electoral rights, the Commission adopted recommendations to Member States. This led to the signature of a joint code of conduct by European political parties ahead of the recent European Parliament elections. Your parties agreed to encourage inclusive political discourse and committed to refrain from disseminating content that incites violence or hate speech.

    Young people constitute a vulnerable group which can be exploited through the misuse of political advertising. With the new Political Advertising Regulation, it will not be possible to target political ads to young people at least one year under the voting age. Education plays a vital role in equipping all young people with the competencies to think critically about the content and discourse they encounter online and to actively combat efforts to radicalise and divide.

    Democratic citizenship education should equip all citizens with specific competencies to build their resilience against disinformation. Digital literacy is a key prerequisite for informed, confident and empowered digital citizens. The digital education action plan frames the commitment to implementing high-quality and inclusive digital education.

    Honourable Members, radicalisation is a complex process. It starts when somebody embraces an ideology or belief that accepts violence to reach a political or ideological goal. Artificial intelligence is increasingly being used for the dissemination of violent and terrorist content online that can lead to radicalisation.

    To counter that, the Commission has taken a number of important actions. This year we launched the EU Knowledge Hub for Prevention of Radicalisation to support Member States in preventing violent extremism at national level. Terrorists and violent extremists misuse the internet to spread their message to intimidate, radicalise, recruit and facilitate their actions.

    The European Union Internet Forum brings together tech companies, Member States, law enforcement agencies, civil society organisations and academia. Together, they develop concrete actions to address violent extremism and terrorist content online.

    In 2021, we adopted a regulation allowing Member States to issue removal orders of terrorist content to online service providers to be acted upon within 24 hours. So far, more than 1 100 removal orders were already issued.

    Looking after the well-being of younger people and children is a duty that we all have. We need to support them and give them the means they need to stand strong in the face of polarisation and not to fall prey to radicalisation. We need to understand the broader impacts of social media on them, and it is with this in mind that President von der Leyen announced an EU-wide inquiry on this topic in her political guidelines.

    I look forward to listening to your views in this multidimensional challenge.

     
       

     

      Lídia Pereira, em nome do Grupo PPE. – Senhora Presidente, o discurso do ódio online pode ser virtual, mas as consequências são bem reais. Há estudos que mostram que, em países como Portugal, um em cada dez jovens é vítima deste tipo de violência – um círculo vicioso que se perpetua, com vítimas a tornarem‑se agressores, e que vai afetando gerações. Embora as ofensas sejam virtuais, elas, de facto, têm impacto nas vidas reais; e a história de Nicole Fox, Coco, é um exemplo duro, como o PPE bem demonstrou numa campanha recente.

    No entanto, homens e mulheres sofrem de forma diferente com este fenómeno. Em Portugal, um grupo de Telegram onde 70 000 participantes, pessoas, devassam a intimidade das mulheres e, em alguns casos, de familiares. Este caso merece a nossa condenação e consternação. Seja a participação, a presença ou a própria existência desse grupo merecem o nosso repúdio. Este é um exemplo de um caso, e permitam‑me utilizar a palavra, de um caso nojento e inaceitável, cuja resposta só pode ser uma: meios para investigação e mão pesada nas penas.

    Mas, este combate não pode transformar‑se numa censura digital. Não podemos, sequer, cair na tentação de privatizar a responsabilidade pela gestão do discurso público digital, ao responsabilizar apenas as plataformas digitais. Isso representaria uma censura privada. Precisamos de maior capacitação judicial, maior colaboração com as plataformas digitais, maior consciencialização dos utilizadores – especialmente dos mais jovens – na utilização e nos riscos das redes sociais.

    O buraco negro do mundo digital cresce. O respeito entre homens e mulheres alicerça a convivência, a concórdia e a harmonia em sociedade, e esse, sim, tem de ser real.

     
       

     

      Alex Agius Saliba, on behalf of the S&D Group. – Madam President, what is illegal offline should be illegal online. Tech firms often use every dirty trick that they can think of to maximise their profits and keep their audience hooked through sensationalist and harmful content. Unfortunately, violent extremists are using the same tricks, and with predatory algorithms, troll farms and bots spewing misinformation and disinformation, catchy memes and short clips are finding ways to recruit, socialise and target young people that are particularly vulnerable to online propaganda, hate speech and violent content.

    The problem is not a new one, yet for many years we have treated the web as the digital Wild West, where everything was allowed. To change this, we must ensure that companies running social media platforms are not exploitative and do not cause harm, and that they keep their services safe and free from hate speech, misinformation and malicious algorithmic activities. To this end, we need to properly enforce the legislation already in place, demand results and impose larger sanctions on tech giants that fall short.

    Second, we need media and digital competences enshrined to all educational levels and for all generations. This will help young people, in particular, to develop critical‑thinking skills and build resilience to violent, extremist and terrorist content online. Young people need to know their rights, distinguish facts from opinions, understand how societies work and should work, the value of privacy and the protection of their personal data, and how technologies and social media can be manipulated, and how to safeguard themselves against it.

    Last but not least, we need to address the root causes of radicalisation, since there is no single cause or pathway into radicalisation and violent extremism. The digital technologies might be a facilitator, but they are rarely the cause. Radicalisation doesn’t happen overnight and, as a community, we all have a crucial role to play in ensuring our young people remain safe.

     
       

     

      Jorge Buxadé Villalba, en nombre del Grupo PfE. – Señora presidente, jamás en la historia de Occidente el ser humano ha sido sometido a este nivel de censura y tortura intelectual, convirtiendo al criminal en víctima y a la víctima en criminal.

    Publicar un tuit preguntando cuál es la nacionalidad del último asesino o violador en Barcelona no es un crimen; no es un crimen denunciar que las mujeres han perdido 900 medallas en competiciones deportivas porque hombres que dicen ser mujeres les han arrebatado los triunfos injustamente; no es un crimen publicar que tu novia se siente insegura desde que el presidente de turno de tu región decidió abrir un centro de inmigrantes ilegales en tu barrio; no es un crimen denunciar los asesinatos masivos de inocentes por parte de comunistas en Paracuellos o en Katyn; no es un crimen publicar la foto de un feto triturado en una clínica abortista; no es un crimen contar que España civilizó a América, acabó con el canibalismo y construyó hospitales, templos y universidades.

    Pero sí es un crimen introducir algoritmos para dirigir al usuario hacia los mensajes que los millonarios quieren que veas en Telegram o en Facebook; bloquear y suspender la cuenta de Donald Trump; ofrecer a Elon Musk —como hizo la Comisión Europea— un acuerdo secreto e ilegal para censurar el discurso político a cambio de no ser multado; detener a decenas de británicos por convocar en redes sociales manifestaciones contra la inseguridad y la inmigración ilegal; utilizar el Centro para Contrarrestar el Odio Digital del Reino Unido para matar la red social de Elon Musk; o, como está haciendo Kamala Harris, pagar a falsos verificadores de noticias para desinformar y cancelar.

    Así que, jóvenes, seguid haciéndolo: contad lo que vivís, denunciad a los responsables y sentíos libres para expresar lo que os dé la puñetera gana. La libertad de expresión es la libertad de los patriotas.

     
       

     

      Piotr Müller, w imieniu grupy ECR. – Pani Przewodnicząca! Nie ma wątpliwości co do tego, że powinniśmy zajmować się ochroną przed treściami, które mogą być szkodliwe, przed treściami, które mogą wpływać źle na społeczeństwo, a w szczególności na wychowanie dzieci.

    Natomiast w tej Izbie i również w Komisji Europejskiej ten temat jest wykorzystywany bardzo często do tego, aby podjąć kroki idące o wiele dalej. Kroki, które powodują, że ogranicza się możliwość swobody wypowiedzi. Kroki, które powodują, że wprowadza się prewencyjną cenzurę. Wreszcie kroki, które powodują, że pada propozycja wycofania się z możliwości szyfrowania danych, szyfrowania komunikacji w takich komunikatorach jak Signal, WhatsApp, Messenger i tak dalej.

    Komisja Europejska ostatnio przedstawiła jeden z projektów, który zakłada między innymi właśnie likwidację szyfrowanej komunikacji i prewencyjne skanowanie treści obywateli. Szanowni państwo, to jest chyba wersja chińskiego internetu, a nie europejskiego!

    Ja od Komisji Europejskiej domagam się jasnej deklaracji, że projekt Chat Control pod kątem likwidacji szyfrowania zostanie wycofany. To jest pierwsza rzecz. I domagam się wreszcie odpowiedzi na pytanie, czy proponowaliście nielegalne porozumienia pod adresem X, pod adresem Elona Muska?

     
       

     

      Laurence Farreng, au nom du groupe Renew. – Madame la Présidente, Monsieur le Commissaire, depuis peu la propagande néonazie est devenue cool. Ça s’appelle le «pop fascisme», ça fait florès sur les réseaux sociaux, c’est du prêt-à-penser pour les jeunes. Il y a quelques semaines, j’ai été profondément choquée en découvrant un clip et un jeu vidéo sur le thème de la remigration créé par la branche jeunesse de l’AfD, parti allemand d’extrême droite dont quatorze députés siègent ici, dans ce Parlement. C’est pourquoi j’ai demandé ce débat. Les images, créées par intelligence artificielle, utilisent tous les codes de la propagande nazie. On y voit des personnes blanches, blondes, aryennes, qui dansent sur de la musique techno en refoulant dans des avions des personnes racisées. Le refrain? «Nous les renvoyons tous!» C’est intolérable.

    Si les œuvres racistes envahissent l’internet, je note ici une escalade, parce que ce clip et ce jeu vidéo ont été créés par un parti politique – l’AfD. On peut certes s’abriter derrière les législations. Oui, nous avons le règlement sur les services numériques pour rendre les plateformes responsables des contenus qu’elles hébergent – et notamment TikTok, quand on s’adresse aux jeunes. Oui, il faut rendre ces plateformes responsables, mais, à ma connaissance, cette vidéo circule toujours sur X.

    Alors qu’en France, par exemple, un jeune sur cinq ne sait pas ce qu’est la Shoah, il faut aller plus loin et condamner effectivement tous les contenus racistes, en commençant par sanctionner les ennemis de la démocratie qui sont déjà parmi nous.

     
       


     

      Pernando Barrena Arza, en nombre del Grupo The Left. – Señora presidenta, como todo cambio disruptivo, las enormes ventajas derivadas de la utilización de las nuevas tecnologías también tienen otra cara, en este caso proporcionada por la deshumanización que permite el anonimato. El crecimiento de las posiciones de ultraderecha tiene mucho que ver con la manipulación online para difundir mensajes de odio y antidemocráticos, desde los deepfakes a la mera difusión masiva de información falsa y difamante: todo vale. Y hasta las nuevas mayorías en este Parlamento tienen mucho que ver con la utilización de esos recursos oscuros. Creo que ustedes ya me entienden.

    Es especialmente grave que las plataformas que permiten este comportamiento estén en manos de magnates que las explotan en clave pura y dura de negocio. Son cuentas empresariales que no tienen ningún interés ni responsabilidad social y a quienes no interesan ni la veracidad ni el interés público.

    Existe una necesidad de nuevas plataformas, nuevas herramientas moderadas en contenidos veraces y legítimos, por encima de la rentabilidad y de la cuenta de resultados, que prioricen el interés público. No hay iniciativa privada que asegure el interés público; esto solo puede ser garantizado desde el ámbito público y, por lo tanto, emplazamos a la próxima Comisión a que nos haga llegar una reflexión sobre cómo desde ese ámbito público europeo se pueden crear nuevas plataformas que superen el modelo de negocio actual y garanticen la utilidad pública.

     
       

     

      Petras Gražulis, ESN frakcijos vardu. – Sveiki, esu paskutinis Sovietų Sąjungos politinis kalinys. Dėl to, kad kovojau prieš komunizmą, prieš šią ideologiją, buvau sovietiniuose lageriuose kalinamas. Šiandien, atgavus nepriklausomybę Lietuvai, ir vėl matosi kuriama nauja ideologija – genderistinė ideologija, baisesnė už komunistinę ideologiją. Ir tie, kurie gina krikščioniškas vertybes, pasisako prieš genderizmą, jie yra persekiojami Europos Sąjungos, jie yra teisiami. Neduok Dieve, „Facebook’e“ ar socialiniame tinkle išsakysi savo krikščionišką poziciją, kad tai yra nusikaltimas, homoseksualizmas. Tu būsi teisiamas. Ir man Lietuvoje iškelta byla, kad skaičiau apaštalo Pauliaus laišką romiečiams. Kur mes einame? Ta pati diktatūra, sukurta Europoje, tik ne komunizmo, o kažkokio genderizmo ir prisidengiant žmogaus teisių pagrindu. Mes einame, Europa, į susinaikinimą. Kadangi atsisakome savo vertybių, priimame kažkokią tai iškrypusią ideologiją. Kai atėjo galas Sovietų Sąjungai, ateis galas ir Europos Sąjungai, jeigu ji nekeis savo ideologijos ir nedraus žodžio laisvo, o krikščionims išpažinti ir reikšti savo tikėjimą.

     
       

     

      Ελεονώρα Μελέτη (PPE). – Κυρία Πρόεδρε, αγαπητοί συνάδελφοι, στη χώρα μου, την Ελλάδα, πρόσφατα, μια ομάδα ανήλικων κοριτσιών οργάνωσαν μέσω διαδικτυακής πλατφόρμας τον ξυλοδαρμό μιας συμμαθήτριάς τους. Τα ηχητικά μηνύματα και το οπτικό υλικό που είδαν το φως της δημοσιότητας ήταν σοκαριστικά. Το βίντεο του ξυλοδαρμού έγινε viral. Το κορίτσι κατέληξε στο νοσοκομείο και οι φίλοι της παρακίνησαν τον κόσμο σε εκδίκηση μέσω ρητορικής μίσους, δημοσιοποιώντας στα μέσα κοινωνικής δικτύωσης τα στοιχεία των δραστών. Στο Βέλγιο ένας άνδρας αυτοκτόνησε γιατί εικονικός συνομιλητής, προϊόν τεχνητής νοημοσύνης, τον έπεισε να θυσιάσει τη ζωή του για να σταματήσει η κλιματική αλλαγή. Σε πολλά κράτη μέλη οι ίδιες οι πλατφόρμες χρησιμοποιούνται για να πολώσουν και να στρατολογήσουν νέους για τρομοκρατικές επιθέσεις.

    Είναι ξεκάθαρο πως οι νέες τεχνολογίες αποτελούν πλέον ένα νέο κανάλι διάδοσης εξτρεμιστικών απόψεων και στρατολόγησης ατόμων σε εγκληματικές πράξεις. Η Ευρώπη πρέπει να αντιδράσει και να δράσει. Έχει γίνει μια καλή αρχή με τους κανόνες που περιγράφονται στην πράξη για τις ψηφιακές υπηρεσίες. Χρειάζεται όμως και άλλη πίεση. Οφείλουμε να ποινικοποιήσουμε τη ρητορική μίσους. Χρειάζεται η ανωνυμία του διαδικτύου να αίρεται όταν αυτό είναι απαραίτητο. Πρέπει να βρεθεί ένας τρόπος να δαμάσουμε τη σκοτεινή πλευρά της τεχνητής νοημοσύνης. Είναι ανάγκη να ελέγχεται η πρόσβαση των παιδιών στο διαδίκτυο και να απαγορεύεται ρητά σε συγκεκριμένες παιδικές ηλικίες για το καλό όλων μας. Στη χώρα μου, η κυβέρνησή μας έχει ήδη ενσωματώσει την πράξη για τις ψηφιακές υπηρεσίες. Η Επιτροπή όμως οφείλει να ελέγχει την ενσωμάτωση του κανόνα σε όλα τα κράτη μέλη.

    Οι νέες τεχνολογίες έχουν να προσφέρουν πολλά καλά στην ανθρωπότητα, αλλά αυταπόδεικτα μπορούν να μετατραπούν σε σκληρά όπλα, ικανά να προάγουν τον τρόμο, το ψέμα, το φόβο, το μίσος, τη βία. Είναι στο χέρι μας αυτό να αλλάξει.

     
       

     

      Sabrina Repp (S&D). – Frau Präsidentin! Neue Technologien bieten große Chancen: Sie eröffnen den Zugang zu einer Welt des Wissens und der Vernetzung. Doch es gibt auch eine Kehrseite: Die Macht der großen digitalen Plattformen ist mittlerweile überdimensional gewachsen. Es beunruhigt mich, dass wir uns auf die moralischen Vorstellungen der wenigen Milliardäre verlassen, die diese Plattformen kontrollieren. Wir sollten uns nicht von der Tageslaune eines Elon Musk, eines Mark Zuckerbergs oder gar eines Wladimir Putins abhängig machen.

    Der Einfluss dieser Plattformen auf unsere Demokratie ist unübersehbar. Der Brexit war nur ein Vorgeschmack dessen, was passieren kann, wenn Algorithmen entscheiden, welche Inhalte wir sehen. Je radikaler der Inhalt, desto mehr Klicks bekommt er. Und das Ergebnis: eine verzerrte Realität, in der Angst, Hass und Misstrauen gegenüber unseren demokratischen Institutionen genährt wird. Das machen sich auch Abgeordnete der AfD hier aus dem Europäischen Parlament zu eigen: Wenn sie beispielsweise auf TikTok eine klare Abneigung gegenüber Immigration, Islam oder queeren Rechten zeigen, werden häufig Fake News und Hassreden verbreitet.

    Besonders betroffen von diesen Entwicklungen sind junge Menschen. Oft fehlt das Bewusstsein, um zwischen wahrer Information und gezielter Desinformation zu unterscheiden. Die psychologischen und emotionalen Auswirkungen von Hassrede und Hetze auf Jugendliche sind enorm; sie gefährden ihr Vertrauen in die Gesellschaft, in die Demokratie und in ihre Zukunft. Auch das sehen wir beim Wahlverhalten junger Menschen bei den Ost-Landtagswahlen in Deutschland: In Thüringen setzten laut der Forschungsgruppe Wahlen 35 % der Menschen zwischen 18 und 29 Jahren ihr Kreuz bei der AfD.

    Wir müssen digitale Plattformen daher stärker in die Pflicht nehmen. Es braucht klare Regeln und effektive Mechanismen, um hasserfüllte und antidemokratische Inhalte schnell zu erkennen und zu entfernen. Zudem müssen wir zivilgesellschaftliche Organisationen, die gegen eine solche Radikalisierung kämpfen, stärker unterstützen und gemeinsam Hassrede und Fake News entgegentreten.

    Das Internet soll ein Ort des Wissens und des Miteinanders bleiben und kein Raum, der unsere Demokratie untergräbt.

     
       


     

      Ивайло Вълчев (ECR). – Уважаеми колеги, безспорно трябва да се борим срещу радикализацията в интернет, но аз бих казал, че трябва да осъждаме всяка една дискриминация и радикализация.

    Да, расизмът и ксенофобията са недопустими, но нека със същия плам да осъждаме и радикалните действия на зелени активисти, които застрашават обществения ред и сигурността. Заливането на културно наследство с боя, блокирането на пътища и летища не могат да бъдат приемливи форми на протест. А твърде често виждаме как те биват нормализирани.

    От друга страна, скъпи колеги, технологиите сами по себе си не могат да бъдат винени за процеса на радикализация на младите там, където това се случва. Общественият дебат в последните десетилетия прие твърде рязък идеологически завой наляво. Това означава, че днес политически позиции, например срещу еднополовите бракове или срещу нелегалната миграция, oт допустими в обществения дебат преди години сега се обявяват за радикални. И ако това имате предвид под антидемократични изказвания, то аз ви поздравявам. Джордж Оруел би се гордял с вашия новговор.

     
       

     

      Христо Петров (Renew). – Уважаеми колеги, ние тук си говорим за нови технологии и за социални мрежи и казваме, че те са част от живота на младите хора, но за много млади хора социалните мрежи не са част, те са целият им живот и това е проблем. Проблем е, защото освен загубата на време, човек става много по-лесно жертва на пропаганда, на радикализация или проводник на реч на омразата.

    Замислете се колко от вас в тази зала, ако имаха шанса да се върнат в своето детство или в своята младост, биха прекарвали времето си в социалните мрежи. Аз вярвам, че решението на проблема, който обсъждаме, е в образованието, в образование, което да подготвя младите хора за съвременната реалност и да им обясни една проста истина, че няма нито един успешен човек на тоя свят, който да прекарва основното си време в социалните мрежи.

     
       

     

      Alexandra Geese (Verts/ALE). – Frau Präsidentin, Herr Kommissar, sehr verehrte Kolleginnen und Kollegen! Nazipropaganda, rechtsextreme Hetze, Hass auf Frauen oder extremistischer Salafismus: auf TikTok findet man das alles. Aber welcher junge Mensch sucht denn aktiv nach solchen Inhalten? Fast niemand. TikTok sorgt dafür, dass sie sie trotzdem sehen, denn die Plattform spült grenzwertige Videos in die Timeline. Und wer aus Neugier oder sogar Entsetzen den Fehler macht, sie bis zu Ende zu schauen oder gar zu kommentieren, vielleicht auch kritisch, der bekommt immer wieder den gleichen Content vorgesetzt und landet in einem rabbit hole.

    Und wenn man überlegt, dass im Durchschnitt Nutzer 1,5 Stunden am Tag auf TikTok verbringen, dann kann man sich vorstellen, was passiert, wenn jedes zweite oder dritte Video extremistisch ist: Dann entsteht ein Weltbild, das mit der realen Welt praktisch nichts mehr zu tun hat. Und so werden Menschen radikalisiert – islamistisch, rechtsradikal, antisemitisch oder frauenfeindlich.

    Mit Technologie hat das nichts zu tun, aber ganz viel mit Geschäftsmodell. Aber glücklicherweise können wir handeln. Mit dem Digital Services Act können wir diese Radikalisierungsalgorithmen so ändern, dass Nutzerinnen und Nutzer ihre Inhalte selbst auswählen können und dass sie ihnen nicht vorgesetzt werden. Und das ist jetzt unsere dringlichste Aufgabe, um die Demokratie, aber auch die Sicherheit unserer Bürgerinnen und Bürger in Europa zu schützen.

    (Die Rednerin ist damit einverstanden, auf eine Frage nach dem Verfahren der „blauen Karte“ zu antworten.)

     
       

     

      Sebastian Tynkkynen (ECR), sinisen kortin kysymys. – Arvoisa puhemies, olen puhujan kanssa aivan samaa mieltä siitä, että natsipropagandaan pitää puuttua. Se on väärin, ja olitte huolissanne siitä, kuinka se lisää antisemitismiä. Minä ihmettelen sitä, että te kuitenkin jätätte sen puolen mainitsematta, mikä on tällä hetkellä suurin syy antisemitismiin niin TikTokissa kuin muissa kanavissa. Nämä videot, joissa huudetaan, että “From the river to the sea”, eli Hamas-symppaaminen, se leviää tällä hetkellä. Miksi jätitte tämän asian mainitsematta?

     
       

     

      Alexandra Geese (Verts/ALE), blue-card answer. – You might have noticed from my speech, I am German and I know that the biggest source of antisemitism has not come from Palestine, but from Europe. I have studied my history.

    As far as current antisemitism is concerned, I don’t care what the source is. I don’t care if it’s far right, you know, or whether it is Muslim. It’s not important. The important thing is that we combat it and that we protect Jews. This is what we need to do on the internet and that means going against terrorist or clearly illegal content.

    But as far as legal content is concerned – and a lot of content is legal – having opinions about the way Israel is defending itself, that is legal if it’s not antisemitic. And this is where we need to change the algorithms to make sure that people access content they actually want to see and not the content that TikTok, that the platform, wants them to see, pushing them into a rabbit hole, because this is what drives radicalisation.

     
       

     

      Ivan David (ESN). – Paní předsedající, dámy a pánové, od doby, kdy se po celém dříve demokratickém světě zmocnili všech nejvýznamnějších médií miliardáři, aby manipulovali veřejností, jsou jedinou šancí demokracie, tedy vlády lidu, sociální sítě a internet. Do konce minulého století byli světovládní darebáci v klidu, protože nebylo možné veřejně se bránit pomluvám a jiným lžím. Chápu, že hluboký stát nese nelibě omezení svého monopolu na ovládání veřejného mínění.

    Ale důrazně připomínám článek 17 Listiny základních práv a svobod, který zní: „Každý má právo vyjadřovat své názory, jakož i svobodně vyhledávat, přijímat a rozšiřovat ideje a informace bez ohledu na hranice státu. Cenzura je nepřípustná.“ Je marné zakazovat nenávist, kterou vyvolávají zločiny.

     
       

     

      Milan Mazurek (NI). – Vážený pán predsedajúci, pán komisár, aj Mao Ce-tung a súdruh Stalin by boli hrdí na to, čo ste tu vo svojom prejave povedali. Veď to je príšerné, do akej totality sa Európska únia pod vaším vedením aktuálne uberá! Viete, kto sú skutoční extrémisti? Tí, ktorí tu nariadili ľuďom žiť pod nezmyselným green dealom, ktorý im ničí ich životnú úroveň, vďaka ktorej si normálni mladí ľudia nemôžu kúpiť ani len nový dom, v ktorom by zakladali svoje rodiny. Extrémisti sú tí blázni, ktorí sa lepia o chodníky a asfalty, aby bránili ľuďom, aby mohli autami prísť normálne domov. Extrémisti sú tí, ktorí do Európy vozia milióny nelegálnych imigrantov a pomáhajú im v rozpore so zákonom prekračovať hranice našich štátov. To sú skutoční extrémisti, nie vlastenci, nie patrioti, nie tí, ktorí milujú svoje štáty. Tí, ktorí milujú svoje krajiny, ktorí chcú chrániť svoje deti a svoje rodiny pred nebezpečenstvom, ktoré im aktuálne hrozí. My chceme zachovať svet a Európu slobodnú, a preto sa potrebujeme zbaviť ľudí, ako ste Vy, vo vedení Európskej komisie. Potrebujeme návrat k zdravému rozumu, a keď to pre Vás bude znamenať radikalizmus, tak sa k tomu hrdo hlásim, pretože sloboda je to, čo Európska únia aktuálne potrebuje.

     
       


     

      Zoltán Tarr (PPE). – Tisztelt Elnök Asszony! Kedves kollégák és kedves fiatalok, akik nagyon sokan ültök fönt a lelátókon. Örülünk, hogy itt vagytok. Én azt gondolom, hogy sokan egyetérthetünk abban, hogy nagyon sok jó lehetőséget kínálnak nekünk az új digitális technológiák, az új technológiák. Nem is szeretném démonizálni őket. Ugyanakkor azt is tudjuk, hogy ezek az eszközök sokszor a politikai manipulációra és radikalizálódásra használódnak a fiatalok között, tovább súlyosbítva az álhírek terjedésével és az összeesküvés-elméletek terjedésével ezeken az eszközökön keresztül.

    A tartalomgyártók és a platformok üzemeltetői hatalmas felelősséggel tartoznak ebben a helyzetben. Alapvető kötelességük az, hogy a platformjaikon megjelenő tartalmakat jobban monitorozzák, és felelősségteljesebben szűrjék azért, hogy a fiatalok, akik most is itt vannak, és esetleg néznek bennünket, minél kevesebb káros tartalommal találkozzanak.

    Az a megoldás – azt gondolom –, hogy a tudatos médiahasználatot erősítsük az oktatásban, nem pedig a modern média kizárása az iskolákból. A meglévő szabályok, törvények alkalmazása a tagállamokban, valamint a nagy online platformok magatartási kódexeinek folyamatos fejlesztése és monitorozása.

    Meg kell akadályoznunk, hogy a gyűlöletbeszéd és az antidemokratikus propaganda és a politikai manipuláció terjedjen a gyermekek között, és ebben nekünk is, képviselőknek is nagy felelősségünk van. Az, hogy mi hogy szerepelünk, mit mondunk, óriási jelentőséggel bír.

     
       

     

      Francisco Assis (S&D). – Senhora Presidente, Senhor Comissário, a tolerância ilimitada leva ao desaparecimento da tolerância. Se estendermos a tolerância ilimitada mesmo aos intolerantes e se não estivermos preparados para defender a sociedade tolerante do assalto da intolerância, então os tolerantes serão destruídos e a tolerância com eles. Estas palavras são da autoria de um dos maiores filósofos democrato‑liberais do século XX, Karl Popper, e constam da sua obra conhecida A Sociedade Aberta e os seus Inimigos.

    E é precisamente disto que estamos a falar. Popper tanto contestou os totalitarismos de direita como os totalitarismos de esquerda. Defendeu claramente o primado da democracia liberal e tinha consciência de uma coisa: que o único limite que se pode estabelecer é o limite em relação àqueles que, sendo intolerantes, põem em causa os pressupostos básicos e fundamentais da convivência cívica democrático‑liberal. Isso, infelizmente, hoje, está a suceder em grande escala nas redes digitais, afeta vários segmentos da população e tem um efeito particularmente nocivo junto dos mais jovens.

    A resposta para isso passa por duas coisas: por um lado, por uma melhor regulação das redes sociais, em nome da defesa da liberdade – não é em nome da atrofia da liberdade, como alguns aqui pretendem afirmar, é em nome da defesa dos valores da liberdade –, e, em segundo lugar, pela promoção de um pensamento crítico, autónomo, livre e consciente em cada jovem europeu. É esse o caminho que nós temos de seguir.

     
       

     

      Susanna Ceccardi (PfE). – Signora Presidente, onorevoli colleghi, l’Unione europea sta trasformando il contrasto d’odio online in un cavallo di Troia per soffocare la libertà di espressione sul web.

    È vero, le nuove tecnologie possono essere usate per diffondere offese, minacce e odio. Ne so qualcosa: ogni giorno ricevo minacce dai fondamentalisti islamici o dai “leoni da tastiera”. Ma la soluzione non è imbavagliare chi esprime idee scomode e soffocare il dissenso.

    Il Commissario Breton ha tentato di oscurare il dibattito tra Elon Musk e Trump. È questa la vostra democrazia? La democrazia vive di dialettica. Il pensiero occidentale vive sulla libertà, è fondato sulla libertà di pensiero. Se noi soffochiamo la libertà di pensiero, soffochiamo l’Occidente, soffochiamo ciò che siamo, soffochiamo l’Europa e quindi l’Unione europea sta tradendo se stessa, sta tradendo tutta la filosofia del pensiero occidentale.

    Con questo regolamento sui servizi digitali noi mettiamo il bavaglio alle persone, soprattutto a quelle idee scomode che non piacciono alla sinistra woke, che non piacciono alla sinistra perbenista che in queste aule fa tanta teoria, è brava ad insegnare a tutti ma non sa bene ancora su che pilastri si regge l’Europa.

     
       

     

      Paolo Inselvini (ECR). – Signora Presidente, onorevoli colleghi, è vero che le nuove tecnologie, come i social media, hanno un’enorme influenza sulle menti dei giovani. Tuttavia, la radicalizzazione che subiscono è anche quella promossa dalla sinistra, che parla di libertà ma spesso non la pratica nei fatti.

    Ogni giorno assistiamo a bombardamenti mediatici che esaltano teorie LGBT, il fanatismo green e una società liquida, ideologie contro l’identità e la comunità, che promuovono l’individualismo e discriminano chi difende con fermezza i principi della nostra civiltà. Guardate il caso di Päivi Räsänen, accusata di incitamento all’odio solo per aver citato la Bibbia, o alla censura nei confronti di coloro che osano contrastare l’immigrazione incontrollata, difendere la vita e la famiglia o criticare il pensiero unico.

    Ecco, questo è davvero antidemocratico. Il pensiero unico che la sinistra vuole imporre al mondo, impedendo a chi è fuori dal coro di affermare le proprie idee, tacciandolo di fomentare odio solo per estrometterlo dal dibattito.

    Avete ragione, dobbiamo proteggere i giovani da questo mondo falso e artificiale che qualcuno ha costruito intorno a loro per controllarli meglio. Facciamoli uscire da questa gabbia: riportiamoli a rivivere la bellezza vera della vita.

     
       

     

      Irena Joveva (Renew). – Gospa predsednica! Zgodovina se ponavlja. To je vselej moja prva misel ob spremljanju razvoja uničujoče propagandne retorike, ki jo vedno bolj aktivno uporabljajo skrajneži.

    Namen je jasen: razdvajanje, destabilizacija demokratične družbe. To isto sovražno ideologijo z istimi idejami in istim načinom komuniciranja smo nekoč, po bolečih lekcijah, potisnili skrajno na rob. Toda zdaj so se z roba uspešno prikradli nazaj v središče, kjer poleg uporabe umetne inteligence za širitev svoje ideologije sočasno z dezinformacijami diskreditirajo vse, ki ne mislijo tako kot oni.

    Gre za usklajeno, dobro financirano, nadnacionalno propagandno kampanjo za širitev in uveljavitev avtoritarnosti, če ne še česa hujšega, v Evropi. V času porasta nacizma so to počeli s prevzemom radiev, danes to počnejo prek družbenih omrežij.

    In prav imajo. Izbira je res naša. Ali torej res želite, da to spet postane prevladujoča retorika in normalna? Jaz ne.

     
       

     

      Lena Schilling (Verts/ALE). – Frau Präsidentin, liebe Kolleginnen und Kollegen! Eigentlich wollte ich anders anfangen, aber wir haben gerade ein Lehrbeispiel gesehen vom Kollegen Mazurek, der erklärt hat, wie man eine Rede hält, die man dann auf Social Media stellt, wo man rechtsextremes Gedankengut verbreitet, manipuliert und unsere Gesellschaft radikalisieren kann. Ja, es sind Autokraten und Rechtsextreme, die weltweit Social Media dafür einsetzen, Wahlen zu beeinflussen, dazu einsetzen, Gesellschaften weiter zu spalten, und dazu einsetzen, Fake News zu verbreiten. Und er ist damit nicht alleine, aber danke für dieses perfekte example.

    Donald Trump wirft Migranten vor, Haustiere zu essen, Moskauer Propagandafirmen wiederholen millionenfach Lügen – 33,9 Millionen Kommentare, 39 899 Inhalte, darunter tausende Videos, Memes und Grafiken innerhalb der letzten vier Monate: Das ist mittlerweile Teil unserer politischen Praxis. Und ich sage Ihnen etwas: Wir junge Menschen, die Social Media nutzen, die damit aufwachsen, wir werden uns das auch irgendwann nicht mehr gefallen lassen, dass unsere Plattformen als geopolitischer Spielball instrumentalisiert werden. Sie sollten dazu dienen, dass wir uns ausdrücken können, dass wir miteinander kommunizieren können, und nicht von politischen, verschiedenen, Mächten hier instrumentalisiert werden.

    Zu diesem Punkt: Wir werden daran arbeiten, dass es klare Regeln gibt, und Menschen darüber informieren, welcher Blödsinn ihnen hier vorgesetzt wird.

     
       

     

      Christine Anderson (ESN). – Frau Präsidentin! Heute beklagen Sie nun also den Missbrauch neuer Technologien, der angeblich unsere Jugend radikalisiert. Dabei ist es doch Ihre radikale Politik, die die Menschen spaltet und aufhetzt. Während Corona haben Sie Teile des Volkes zu Feinden erklärt, Ungeimpfte zu Sündenböcken gemacht. Stimmen zur Schädlichkeit der mRNA-Injektion wurden wegzensiert, damit Ihre Impfpropaganda unwidersprochen blieb.

    Regierungskritische Stimmen unterdrücken Sie, während Sie geflissentlich wegschauen, wenn auf YouTube, TikTok und Co. übelster islamischer Antisemitismus gefeiert wird und sich diese frauenfeindliche, menschenverachtende und totalitäre Ideologie des Islams durch unsere Gesellschaft frisst. Die vermeintliche Radikalisierung, die Sie bekämpfen wollen, ist die längst überfällige Antwort auf die Radikalität Ihrer Politik, dieser unsäglichen, illegalen Masseninvasion.

    Hören Sie doch endlich auf, sich lächerlich zu machen! Anstatt Kritiker zu zensieren, nehmen Sie die Kritik ernst und machen Sie endlich wieder Politik für das eigene Volk, dann gibt es auch keine Radikalisierung unterm Volk!

     
       

     

      Ondřej Dostál (NI). – Paní předsedající, děkuji za otevření tohoto tématu. My žijeme v zemi, kde provládní aktivisté na sítích přáli smrt či covidový koncentrák každému, kdo odmítal nosit roušky v lese nebo kdo chtěl večer běhat v parku. Žijeme v zemi, kde se netrestá tvrzení, že staří lidé volící konzervativní levici musí vymřít, aby zvítězily ty správné progresivní síly, že staří jsou hloupí a nevzdělaní a měli by volit pod dohledem, kde se natočil klip „Přesvědč bábu, přesvědč dědka“. Žijeme v zemi, kde vláda na strategickou komunikaci najala plukovníka armády, hrubého a sprostého, který nazývá oponenty sviněmi a šmejdy, a kde i usměvavé poslankyně tohoto parlamentu mluví o opozičních poslancích jako o košťatech, paní Nerudová, nebo o špínách, paní Gregorová.

    Žijeme v zemi, kde britská či americká ambasáda včetně National Endowment for Democracy financují neziskové organizace, které cíleně dehonestují oponenty provládního narativu. To všechno se promítá do extrémního prostředí na sociálních sítích, kde je demokratická diskuse takřka nemožná. Starší Češi jsou díky historii odolní vůči propagandě, ale mladí se bohužel radikalizují. Rád bych proto z tohoto místa vyzval českou vládu, ambasády cizích velmocí a kolegy poslance EP, aby se šířením hate speech skončili.

     
       

     

      Manuela Ripa (PPE). – Frau Präsidentin! Wir sprechen über eine neue Sucht: Empfehlungsalgorithmen haben die meisten Jugendlichen auf Social Media fest im Griff. Das heißt: Schauen sie sich ein Video an, bekommen sie unaufgefordert immer weitere, teils immer extremere Inhalte vorgesetzt. Den Jugendlichen bleibt oftmals keine Wahl, sie kommen davon nicht mehr los. Nicht nur, dass die Suchtgefahr steigt, Hassbotschaften und Hetze können sie auch radikalisieren – vor Wahlen ist dies sogar demokratiegefährdend.

    Gut, dass die Kommission hier gegen abhängig machende Algorithmen den Digital Services Act anwendet, aber das reicht nicht. Die Berichtspflicht der Plattformen muss qualitativ verbessert werden, am besten, indem sie ihre Berichte durch externe Prüfer prüfen lassen. Weiterführende Videos sollten nur angezeigt werden, wenn man tatsächlich auch draufgeht. In Schulen muss digitale Kompetenz vermittelt werden, sodass sie lernen, Informationen und Quellen kritisch zu hinterfragen. Sie sollten einen KI-Führerschein machen. Dass Schüler mittels KI ihre Hausaufgaben machen dürfen, ist sicherlich keine Lösung.

    Achten wir auf unsere Kinder und Jugendlichen, sie sind unsere Zukunft!

     
       


     

      Veronika Cifrová Ostrihoňová (Renew). – Vážená pani predsedajúca, ďakujem veľmi pekne, dobrý deň – a začnem osobným presvedčením: mladí ľudia nie sú ani horší, ani lepší, ani radikálnejší ako iní, ale dnes sa stretávajú so silou, ktorej v takejto miere nemusela čeliť žiadna iná generácia predtým, a tou je online svet. Ak si niekto myslí, že sa tam veci dejú náhodou, tak sa mýli. Algoritmy sociálnych sietí nielen pre mladých vytvárajú pasce, do ktorých môžu ľahko spadnúť, a internet už dávno nie je iba slobodný priestor, ale je to miesto, kde sa šíri radikalizmus, kde je priestor pre trestné činy a pre násilie a našou úlohou tu je urobiť všetko pre to, aby sme tieto pasce odstránili. Nie ste dobrá firma, ak obsah, ktorým kŕmite mladých, je toxický. A toto je presne dôvod, prečo tak veľmi potrebujeme poctivo dodržiavať zákon o digitálnych službách. Nástroje na bezpečnejší internet naozaj máme, tak ich využime. Máme na to teraz šancu. Mladým ľuďom totiž ako spoločnosť vieme dať oveľa viac, ako dnes od nás dostávajú.

     
       

     

      Jaume Asens Llodrà (Verts/ALE). – Señora presidenta, el señor Buxadé ha hablado de la libertad de los patriotas y de las manifestaciones legítimas en el Reino Unido contra la inmigración, pero seguro que ustedes se acuerdan: eso no fueron manifestaciones pacíficas, fueron disturbios racistas donde se apaleó y apuñaló a personas vulnerables y se quemaron casas. ¿Y por qué? Porque difundieron un bulo —con la ayuda de Elon Musk— atribuyendo falsamente unos asesinatos a una persona inmigrante cuando, en verdad, el autor era inglés. Y en España intentaron hacer lo mismo.

    Señor Buxadé, ustedes están en guerra con la verdad. Y el problema es que mucha gente —sobre todo jóvenes— se instala en un mundo paralelo, y crecen el miedo, el odio, las agresiones; porque ustedes, cuando señalan a los que vienen con patera, huyendo de la guerra o del hambre, es para que no veamos a los de arriba, a las élites, a los que los explotan, a los responsables de las crisis.

    Por eso, señor comisario, necesitamos una legislación europea que nos proteja de la extrema derecha, de sus bulos, como el que hoy el señor Buxadé ha dicho.

    La mentira destruye la democracia, el derecho a tener información veraz y, por tanto, a formarnos una opinión y poderla expresar. Eso no es censura, como ha dicho la extrema derecha; si no hay verdad, no hay libertad: hay opresión. Y como dijo Camus: «La peor epidemia no es biológica, sino moral». La epidemia de la mentira.

     
       


     

      Łukasz Kohut (PPE). – Pani Przewodnicząca! Media społecznościowe bardzo szybko stały się piątą władzą i jak każda władza także i ta w niewłaściwych rękach staje się bronią. Internet, a później media społecznościowe miały łączyć ludzi na całym świecie i dać dostęp do wiedzy. Miały. A już dziś musimy mierzyć się z konsekwencjami wykorzystywania sieci niezgodnie z przeznaczeniem. Cud techniki, który miał łączyć, stwarza coraz większe podziały za pomocą manipulacji, fałszywych informacji i mowy nienawiści. Tak jak lekarstwo od trucizny różni dawka, tak kreacyjny i destrukcyjny wpływ mediów cyfrowych zależy od tego, w czyich rękach się znajdą.

    Brexit i to, że nie ma tutaj z nami Wielkiej Brytanii, jest efektem manipulacji. Rosyjska dezinformacja walczy o rozpad demokratycznego świata od wielu lat. Pierwsza kampania Trumpa przy wsparciu fake newsów i Cambridge Analytica pokazała siłę sieci. Dzisiaj milionem dolarów dziennie ma wspierać Trumpa właściciel portalu X. To jest obłęd. Nie może być tak, że algorytmy uprawiają inżynierię wyborczą, a my biernie stoimy i patrzymy, jak giganci cyfrowi czy służby obcych mocarstw urządzają nam świat. Internet w ich rękach stał się groźnym narzędziem. Dokładnie tak jak bomba atomowa Oppenheimera, która miała służyć pokojowi. Czas przestać się łudzić. Musimy zapanować nad siecią albo ona zapanuje nad naszą rzeczywistością. Trzy postulaty: lepsze prawo, kontrola IP i konsekwencje działań w sieci.

     
       

     

      Alexandre Varaut (PfE). – Madame la Présidente, la haine en ligne, que nous devons combattre, c’est d’abord le harcèlement, les injures, la diffusion de montages qui poussent des enfants, parfois très jeunes, à tomber en dépression ou même à se suicider. Il faut cependant nous garder d’abuser de ce terme pour tenter de criminaliser des opinions. Et certains, au sein de l’Union européenne, ont très souvent cette tentation.

    La haine est un sentiment. Il est bien difficile de légiférer sur des sentiments. Nous ne pouvons légiférer que sur des actes concrets, qui causent des préjudices concrets à des victimes concrètes. Nous n’avons pas le droit d’en profiter pour traquer des opinions et pour sacraliser des notions wokes qui, matériellement, n’existent pas – telles que l’imaginaire collectif, la conscience humaine ou les valeurs universelles.

    Le risque serait le règne d’un arbitraire idéologique, qui pourrait parfaitement se retourner contre chacun d’entre nous, d’entre vous, même si à cet instant, ce sont sans nul doute les patriotes qui sont visés par la police de la pensée.

     
       

     

      Танер Кабилов (Renew). – Г-жо Председател, свободата на словото е едно от най-важните постижения на демокрацията и модерното гражданско общество. Достиженията на дигиталната ера, в която живеем, предоставя безпрецедентни възможности за комуникация и обмен на информация, но и нови предизвикателства, пред които се изправяме.

    Социалните мрежи се превръщат в арена за разпространение на омраза, особено в нейните най-опасни измерения – етническа и религиозна. Нараства злоупотребата с фалшиви профили и ботове, а хибридните атаки и дезинформационни кампании, манипулиращи общественото мнение, стават все по-често, особено по време на избори. Младите, с техните отворени сетива за знания, са чувствително уязвими за радикални идеи, които им се предоставят от алгоритмите, търсещи все повече гледания и интеракции. Това е сериозна заплаха за бъдещето на демокрацията.

    Категорично осъждам езика на омразата във всяка негова форма. Трябва да сме чувствителни като гражданско общество и да сме проактивни като политици. Трябва да намерим правилния баланс между свободата на словото и злоупотребата с него.

     
       


     

      Tiago Moreira de Sá (PfE). – Senhora Presidente, vivemos tempos em que o discurso de ódio e a retórica anti‑democrática se tornaram desculpas perfeitas para justificar um novo despotismo – a censura camuflada de virtude. Sempre que o poder se sente ameaçado, a liberdade é o seu primeiro alvo, e o caso de Elon Musk, do Prémio Sakharov, é disso exemplo – excluído num processo opaco, uma voz silenciada, a pretexto da própria liberdade de expressão.

    A Comissão Europeia entrou em confronto aberto com Musk, acusando‑o de falhar na monitorização do discurso de ódio na sua plataforma X. A polémica já fez cair o ex‑comissário europeu Thierry Breton, mas os processos judiciais que a Comissão move contra as empresas de Musk, incluindo a aplicação de possíveis multas severas, caso não cumpra com a lei dos serviços digitais, continuam bem vivos.

    Este fim de semana, o Der Spiegel chamou a Elon Musk o inimigo público número dois, atrás de Donald Trump, imaginem. A União Europeia e o Der Spiegel estão a fazer a Musk o mesmo que o Brasil de Lula e a Venezuela de Maduro. Como em O Nome da Rosa, de Umberto Eco, onde os livros eram envenenados para proteger os monges da dúvida e do riso, hoje envenena‑se o debate público para proteger a sociedade da liberdade. E, como sabemos, do veneno só pode resultar sempre a morte.

    (O orador aceita responder a uma pergunta «cartão azul»)

     
       

     

      Bruno Gonçalves (S&D), Pergunta segundo o procedimento «cartão azul». – Senhor Deputado, é incrível ouvi‑lo falar de liberdade, quando o problema é mesmo com a verdade. Enquanto, neste Parlamento, debate o ódio, debate o discurso do ódio, debate a proliferação do ódio no digital, em Portugal, sabemos bem o que está a acontecer e com o qual o seu partido e os seus representantes não têm o mínimo de empatia.

    Deixe‑me citar, o líder parlamentar do seu partido diz: «se a polícia atirar mais a matar, o país fica em ordem»; o assessor do seu partido diz: « menos um criminoso, menos um eleitor do Bloco» sobre a morte de um cidadão português. O que eu lhe pergunto, com empatia, Senhor Deputado: pode ou não condenar este ódio? Pode ou não condenar estas declarações?

     
       

     

      Tiago Moreira de Sá (PfE). – Senhor Deputado, eu confesso que pensei fazer a minha intervenção justamente sobre o que está a acontecer em Portugal. Depois, achei que não o devia fazer aqui, neste local, devia fazer em Portugal e para os portugueses. O que eu acho que contribui muito para o discurso de ódio – realmente o que está a acontecer em Portugal, sim – é quando nós confundimos polícias com ladrões, quando nos pomos do lado de quem prevarica e não cumpre a lei e incita à violência, em vez de protegermos a autoridade do Estado e as forças da autoridade.

    Eu acho que nós devemos pensar muito bem, porque a sua própria pergunta, ela própria, tem por detrás – eu sei que não foi com intenção – extremar, por detrás, polarizar, por detrás, criar esta visão de bons e maus. Eu, o que devo dizer, terei todo o gosto em ter esse debate consigo, mas não o vou fazer aqui. Farei no meu país.

     
       

     

      Hermann Tertsch (PfE). – Señora presidente, ayer estuve en una cena de la Asociación Parlamentaria Europea, en la que la mayoría son todos de los que gobiernan, de estos que gobiernan en la Comisión, es decir, del Partido Popular Europeo y de la izquierda, los perdedores abrazados al Partido Popular Europeo para seguir gobernando.

    Allí se iba a hablar de las elecciones norteamericanas y se habló de Trump. Y, de repente, Trump era Hitler. Trump era Hitler. Allí, en una asamblea de una serie de eurodiputados, se hablaba de Trump con mentiras sobre su pasado y con especulaciones insidiosas sobre su futuro.

    La señora Applebaum, supuestamente una gran intelectual a quien le han dado un premio en Fráncfort, habla de Trump como Hitler. Hemos visto también a la señora Harris —la candidata— hablando de Trump como Hitler.

    Ese insulto a la inteligencia por parte de la izquierda al tachar de Hitler, de fascistas, de nazis, a todos aquellos que no le interesan, eso sí que es una censura y un atentado contra todo el pensamiento europeo.

    Quieren ustedes un Ministerio de la Verdad para imponer una mentira, y no lo vamos a permitir.

     
       

     

      Mathilde Androuët (PfE). – Madame la Présidente, les jeunes âgés de 13 à 19 ans passent en moyenne plus de cinq heures par jour devant un écran. Il s’agit, pour certains, du seul moyen de se sociabiliser, et cela peut générer des violences – contre soi-même ou contre d’autres. Mais au lieu de lutter contre l’abandon de nos jeunes au virtuel, la Commission européenne préfère s’attaquer aux outils que sont Telegram ou X pour entraver la liberté d’expression.

    Alors oui, Daech a recruté des terroristes et des soldats sur les réseaux sociaux. Oui, des jeunes adoptent des mœurs archaïques pour intégrer une soi-disant nouvelle famille. Mais s’en prendre aux outils, plutôt que de chercher à répondre à ce besoin légitime d’appartenir à un groupe fort et exaltant, est idiot. C’est aussi idiot que d’interdire les voitures ou l’usage des couteaux de cuisine au prétexte que certains s’en servent pour tuer.

    C’est pourtant ce que fait la Commission en censurant – prioritairement d’ailleurs – ceux qui essaient de lutter contre le wokisme ou l’islamisme et en laissant pulluler antifas et prêcheurs de haine. Il ne faut pas changer d’outil, mais de modèle. Il faut offrir un vrai modèle de société à la jeunesse européenne, qui magnifie les richesses du passé dans l’objectif d’exalter l’avenir. Le problème, ce n’est pas l’internet, c’est une société occidentale qui, refusant toute pulsion de vie, pousse sa jeunesse vers des sectes où la pulsion de mort est devenue leur vie.

     
       

       

    Procedura “catch-the-eye”

     
       

     

      Matej Tonin (PPE). – Gospa predsednica! Drage kolegice in kolegi! Pred petnajstimi leti se je zdelo, da so socialna omrežja prihodnost, da bodo ključno orodje za spodbujanje demokracije. In petnajst let po tem se zdi, da so socialna omrežja predvsem orodja za širitev sovraštva in nestrpnosti.

    Kaj se je v teh petnajstih letih zgodilo tako dramatičnega, da je iz enega dobrega orodja nastalo slabo? Algoritmi. Algoritmi so tisti, ki spodbujajo sovraštvo, ki spodbujajo nestrpnost, ker v današnjem svetu enostavno dobra novica ni več novica. In zato algoritmi spodbujajo negativne stvari, spodbujajo predvsem nestrpnost.

    Sem pa prepričan, da prepoved ni rešitev, ampak da je ključna stvar za prihodnost ozaveščanje mladih, kakšne posledice ima lahko nekritična uporaba socialnih omrežij.

     
       

     

      Juan Fernando López Aguilar (S&D). – Señora presidenta, señor comisario, el modelo de negocio de las plataformas —normalmente regidas por magnates de ultraderecha— no reside solamente en explotar las debilidades, las vulnerabilidades y las características personales que los usuarios ponen a su disposición, sino, sobre todo, en generar algoritmos adictivos que se ensañan, especialmente, con la gente joven, que son los usuarios preferentes que pasan media vida ante las pantallas, consumiendo discursos de odio que radicalizan, que estigmatizan, a categorías enteras de personas, además de contenidos violentos.

    El problema no reside solamente en los contenidos, sino en la explotación de la vulnerabilidad de la gente joven: un desafío enorme para la próxima Comisión. Hemos adoptado el Reglamento de Servicios Digitales, hemos puesto en pie una estrategia contra el discurso de odio que incluye también no solamente un código de conducta para las plataformas —escasamente vinculante— sino, sobre todo, la orden de que la Comisión traiga a este Parlamento una iniciativa legislativa para hacer del delito de odio que incita la violencia de odio un delito europeo.

    Pero no es suficiente: alfabetización digital, educación, todo lo que la Comisión pueda hacer para proteger a la gente joven, que es el futuro de la Unión Europea, frente a la propagación del discurso de odio en las redes.

     
       

     

      Sebastian Tynkkynen (ECR). – Arvoisa puhemies, vihapuhe, radikalisoituminen ja demokratiavastaisuus. Tämä hetki on varattu sille, että tämä koko sali keskustelee näistä aiheista. Itse asiassa tämä on hyvin ajankohtainen aihe, joten siitä onkin hyvä keskustella. Me olemme nimittäin todistaneet viime aikoina tapahtumia, jotka täyttävät nämä kaikki tunnusmerkit: vihaa, radikalisoitumista ja demokratiavastaisuutta. Lukuisissa Palestiina-mielenosoituksissa aina huippuyliopistoihin saakka ovat raikuneet antisemitistiset huudot. Lähi-idän ainoalle demokratialle Israelille on toivottu tuhoa, ja radikaali terroristijärjestö Hamas on nauttinut monen mielenosoittajan tukea.

    Miksi en ole kuullut, että vasemmisto olisi tästä puhunut tänään? Haluan muistuttaa teitä tästä, kun te etsitte vihapuhetta ja radikaalia puhetta kaikkialta, niin käykääpä joskus vasemmiston Palestiina-mielenosoituksissa. Saatatte löytää sieltä sitä, mitä olette kaikkialta muualta etsimässä.

     
       

     

      Lukas Sieper (NI). – Madam President, dear colleagues, honourable House, as we talk of young people here with my, in other cases, little life experience of 27 years, I am happy to take the floor today.

    I may present you with three truths. Number one: TikTok is owned and controlled by the Chinese Communist Party, responsible for atrocities like putting Uyghurs in concentration camps.

    Number two: because of that, the algorithm is, of course, also controlled and manipulated by the Chinese Communist Party.

    Number three: if you, my dear colleagues, do not join TikTok, and if you are not active there, you will leave this platform and the young people on this platform to the enemies of democracy inside this House and outside this House.

    So please be active there no matter what. I am not much, but I am young, so I hope you trust me on that.

     
       

       

    (Fine della procedura “catch the eye”)

     
       

     

      Janusz Wojciechowski, Member of the Commission. – Madam President, honourable Members, thank you for your contributions. It is clear that new technologies have transformed our economies, our societies, our lives. They have multiple benefits, but we cannot ignore the risks. Hate speech, often fuelled by disinformation, is one of them.

    We need to keep our values of equality, tolerance, non-discrimination. We also need to keep our focus on delivering policies which improve citizens’ lives. We want to support active citizenship and social inclusion with the aim of fostering more equitable and tolerant societies. There is a pivotal role here as concerns the smart and safe use of digital technologies. The scope of prevention activities is broad, and we can extend it to education, employment, justice, social inclusion or sports.

    Within the framework of the Digital Services Act, the industry’s thorough commitment is necessary to succeed. We have a good basis, but we need to intensify our efforts and adopt the fast development of new technologies.

     
       


       

    IN THE CHAIR: ROBERTA METSOLA
    President

     

    5. Resumption of the sitting

       

    (The sitting resumed at 12:05)

     

    6. Sakharov Prize 2024 (announcement of the winner)

     

      President. – Dear colleagues, it is my privilege to announce that the 2024 Sakharov Prize for Freedom of Thought has been awarded to María Corina Machado, leader of the democratic forces in Venezuela, and President-elect Edmundo González Urrutia, representing all Venezuelans inside and outside the country, fighting to restore freedom and democracy in the face of injustice.

    (Loud and sustained applause)

    Edmundo and María have continued to fight for the free, fair and peaceful transition of power and have fearlessly upheld those values that millions of Venezuelans and this Parliament hold so dear: justice, democracy and the rule of law. This Parliament stands with the people of Venezuela and with María and Edmundo in their struggle for the democratic future of their country. This award is for them, and we are confident that Venezuela and democracy will ultimately prevail.

    I also want to extend this House’s wholehearted support to the other Sakharov Prize finalists: the Israeli and Palestinian movements ‘Women Wage Peace’ and ‘Women of the Sun’.

    (Loud and sustained applause)

    We also have the finalist Azerbaijani academic and anti-corruption activist Dr Gubad Ibadoghlu.

    (Loud and sustained applause)

    All three are bravely standing up for human rights and for freedom of thought in the face of unimaginable challenges.

    I also share the tragic news that Dr Ibadoghlu’s health condition is currently deteriorating significantly. He is being kept under house arrest following his arbitrary detainment, and I take this opportunity to call on the Azerbaijani authorities to drop all charges against Dr Ibadoghlu and lift his travel ban.

    (Applause)

     

    7. Request for waiver of immunity


       

    (The sitting was briefly suspended)

     
       

       

    PRESIDE: JAVI LÓPEZ
    Vicepresidente

     

    8. Resumption of the sitting


     

      Lukas Sieper (NI). – Mr President, honourable House, Rule 202 deals with the point of order. Last plenary week, I had the honour to shed some light on the blatant misuse of this rule inside this House. We were talking about Rule 202(1) that states that you shall use a point of order to address a failure to comply with the parliamentary Rules of Procedure.

    Today, I want to talk about Rule 202(4) that states that in all regular cases like this, the President shall take an immediate decision about the point of order raised. That is not what happened to my point of order. Instead, right after I finished, we kept on seeing the same thing. For example, since then we heard about the suffering of the Palestinian people or the necessity to honour a Polish priest. Understandable topics, but nothing to state inside a point of order.

    In my legal opinion, immediate means on the spot. So, Mr President, with all due respect and being thankful to also having the possibility to forewarn President Metsola on this directly yesterday, I request an immediate decision about stopping the point of order being misused.

     
       

     

      President. – Thank you very much. You have the answer: we take note of your comment.

     

    9. Voting time

     

      President. – The next item is the vote.

     

    9.1. Situation in Azerbaijan, violation of human rights and international law and relations with Armenia (RC-B10-0133/2024, B10-0129/2024, B10-0131/2024, B10-0133/2024, B10-0136/2024, B10-0139/2024, B10-0141/2024, B10-0142/2024) (vote)

     

      President. – The first vote is on the situation in Azerbaijan, violation of human rights and international law and relations with Armenia (see minutes, item 9.1.).

     

    10. Resumption of the sitting

       

    (La seduta è ripresa alle 15.00)

     

    11. Approval of the minutes of the previous sitting

     

      Presidente. – La seduta è ripresa.

    Il processo verbale della seduta di ieri e i testi approvati sono stati distribuiti.

    Se non ci sono osservazioni, il processo verbale si considera approvato.

     

    12. Protecting our oceans: persistent threats to marine protected areas in the EU and benefits for coastal communities (debate)


     

      Janusz Wojciechowski, Member of the Commission. – Madam President, honourable Members, thank you for the opportunity to address this important topic today. The ocean is a magnificent ecosystem. A healthy ocean has an essential role as a climate regulator and food provider. It is at the heart of the blue economy and cultural identity of our coastal communities.

    However, our ocean faces multiple threats from climate change, unsustainable activities that lead to biodiversity loss and pollution, or illegal fishing globally. This is clearly evidenced by the EU-driven Copernicus satellite data reported in the annual Ocean State Report by the Copernicus Marine Service.

    Therefore, we need to continue the efforts to protect and restore marine ecosystems, including through the establishment of marine protected areas. I cannot stress enough the importance and positive effects of marine protected areas. They not only protect and restore biodiversity, they also ensure that the ocean is able to deliver the multiple environmental services our coastal communities have relied on for ages.

    There are many examples of effective marine protected areas which bring long-term economic and social benefits for fishers and entire coastal communities. I’m thinking about the Columbretes marine reserve in Spain or Torre Guaceto protected area in Italy, where protection is implemented in cooperation with fishers, who benefit from better catches and receive recognition for their engagement in ocean conservation.

    However, most of our marine protected areas are not effectively managed today, which is putting at risk our goals for restoration of marine ecosystems. We cannot afford to have ‘paper parks’ in the EU. We need urgent and greater efforts from all those responsible, from local to national and EU level.

    The European Union is a worldwide leader when it comes to the protection of the oceans and seas. It played a key role in reaching the United Nations agreement on biodiversity beyond national jurisdiction and strongly encourages all countries to promptly ratify the treaty to protect at least 30 % of the planet by 2030.

    At European Union level, our environmental laws, the Birds and Habitats Directives and the Marine Strategy Framework Directive provide for creation and management of marine protected areas. In our biodiversity strategy for 2030, we committed to expand our network of protected areas to cover 30 % of our seas, of which one third should be strictly protected. All MPAs should be effectively managed and should have the necessary fisheries management measures in place.

    The common fisheries policy contributes to the implementation of these policy goals and legislation. Whilst we made progress on the recovery of many fish populations, more efforts are needed to effectively protect and restore other species and marine habitats. In particular, in our marine Natura 2000 network.

    The Commission also adopted the marine action plan, setting out a non-binding path to achieving a protection of 30 % of our seas by 2030. The recently adopted Nature Restoration Regulation set the goal of covering 20 % of our seas, with restoration measures by 2030 and achieving specific nature restoration objectives in the marine environment.

    Member States need to implement and enforce existing legislation, and all stakeholders need to take further ownership. Therefore, a dialogue is required, as well as a strong science-based approach.

    Another challenge for marine protected areas is the increasing competition for maritime space. We are working with Member States and experts to deliver ecosystem-based maritime spatial planning. The aim is to foster the blue economy while ensuring the achievement of good environmental status.

    In conclusion, the Commission will continue the close cooperation with Member States and all stakeholders to ensure that marine protected areas effectively deliver to the benefit of our coastal communities.

     
       

     

      Francisco José Millán Mon, en nombre del Grupo PPE. – Señora presidenta, señor comisario, los océanos se enfrentan a numerosas amenazas, es cierto: el cambio climático, la contaminación por desechos y vertidos, los plásticos, el transporte marítimo, la explotación de hidrocarburos, la pesca ilegal… Debemos proteger los océanos, pero sin caer en extremismos maximalistas: la protección no es incompatible con toda actividad humana. El llamado «pacto europeo de los océanos» debería tener una visión holística, global, que trate de integrar las actividades humanas de una manera sostenible y en diálogo con los afectados. Hay que preparar debidamente la próxima conferencia de Niza.

    Me centro ahora en la pesca: proteger los océanos es vital, también para el sustento de nuestros pescadores. El sector pesquero europeo es un sector muy regulado, lleva a cabo una pesca sostenible, lucha contra la pesca ilegal y contribuye a nuestra seguridad alimentaria: debemos velar por su prosperidad y su competitividad.

    Quiero destacar la importancia de las OROP, las organizaciones regionales de ordenación pesquera. Precisamente, el acuerdo sobre la diversidad biológica marina en alta mar, conocido como BBNJ, reconoce el papel de las OROP y de las reglamentaciones que estas adoptan. En las OROP y en el resto de organismos internacionales necesitamos, comisario, liderazgo de la Unión Europea para conseguir que se globalicen nuestros altos estándares: así lograremos no solo una verdadera protección de los océanos, sino también la igualdad de condiciones que tanto desean nuestros pescadores.

    Las áreas marinas protegidas, como usted señala, requieren un trato especial, pero este debe basarse en criterios científicos y atender a los objetivos específicos del área en cuestión, no a meros porcentajes. Por ejemplo, si de lo que se trata es de proteger a las aves marinas, no tiene sentido ahora insistir en la prohibición del arrastre de fondo. No podemos caer en la demonización de ciertas artes pesqueras como hace, por ejemplo, el plan de acción marino presentado el año pasado por la Comisión Europea.

     
       

     

      Christophe Clergeau, au nom du groupe S&D. – Madame la Présidente, Monsieur le Commissaire, il y a quinze jours, avec mes collègues de l’intergroupe du Parlement européen «Mers, rivières, îles et zones côtières», nous avons accueilli à Bruxelles la Semaine des océans, organisée par les ONG. Voici ce qu’elles nous ont dit:

    En premier lieu, il y a urgence à se mobiliser pour restaurer la bonne santé des océans.

    En deuxième lieu, il faut faire appliquer les lois qui existent – qui aujourd’hui ne sont pas appliquées – et surveiller de près comment les États travaillent sur le règlement relatif à la restauration de la nature. Parce que 2030 va arriver très, très rapidement.

    En troisième lieu, il faut certes, Monsieur le Commissaire, aborder l’océan et son aménagement comme un écosystème, mais cette approche écosystémique n’est pas possible dans le cadre de la directive actuelle relative à la planification de l’espace maritime: il est donc urgent d’engager sa révision.

    Dernièrement, nous avons besoin d’une ambition globale – ce fameux pacte européen pour les océans promis par Ursula von der Leyen, qui permettra de concilier la santé des océans et les activités de l’économie bleue –, menée avec ce Parlement, avec les collectivités locales et avec toutes les parties prenantes, tous les acteurs associatifs et économiques.

     
       

     

      France Jamet, au nom du groupe PfE. – Madame la Présidente, monsieur le Commissaire, mes chers collègues, la protection de nos océans est un enjeu crucial sur le plan économique, environnemental et géopolitique, notamment pour la France, qui possède le deuxième plus grand domaine maritime du monde.

    Mais la multiplication des aires marines protégées n’en garantit pas l’intégrité. La pêche financière est mondialisée et prospère, sans respect de la ressource, de Mayotte à nos côtes, en toute légalité. Quant à la pêche illégale, elle ravage nos territoires maritimes, de la Nouvelle-Calédonie jusqu’en Guyane, en toute impunité.

    Au-delà de ces déclarations de bonnes intentions et autres interdictions unilatérales, c’est d’une vraie stratégie de protection des océans que nous avons besoin pour appuyer les moyens de défense de notre souveraineté alimentaire nationale et pour revaloriser notre domaine maritime ainsi que l’économie bleue.

     
       

     

      Billy Kelleher, on behalf of the Renew Group. – Madam President, this is a very important topic for a number of reasons, and for a large number of communities in our Union.

    As an MEP for an island nation, I’m acutely aware of the importance of our oceans, seas and coasts to sustain an abundance of life and communities, both socially and economically.

    As such, today’s debate on protecting our oceans, persistent threats to marine protected areas in the EU and benefits to our coastal communities is an important milestone. At present, 10% of Irish waters are now classified as marine protected areas, up from 2.4 % in 2020. The Irish Government is committed to achieving a 30 % coverage rate by 2030 and will, in the early 2025, pass legislation putting in place a legal commitment to do so. This is something I and the Fianna Fáil party supports.

    However, as an island nation, we have competing objectives and goals. In the first instance, we want to protect our marine ecosystems, but equally we want to support our fishing communities, many of whom have fished in areas set to be designated as marine protected areas for generations. Thirdly, we want to become an offshore wind energy superpower.

    Our challenge is to ensure that all these objectives can be met. It is therefore a necessity that all the stakeholders involved enter into this process with an open mind and without narrow ideological opinions.

    Fishers have a right to fish and not have their livelihoods destroyed by losing access to waters that they have historically fished in. Countries have a right to diversify their electricity generation, their waters. And yes, we have a moral obligation to protect our oceans, rivers and coastal areas.

    However, Commissioner, we have a significant challenge in Ireland, as Norway is being granted access to Irish waters for mackerel fishing. Mackerel stocks are being overfished. Irish mackerel quota will be cut by 22 % in 2025, and it will cost the Irish fishing industry EUR 18 million. Yet at the same time, we grant access to Norwegian supertrawlers to fish in Irish waters and to overfish and exploit mackerel stocks. The Irish fishing industry is very dependent on the mackerel stocks.

    So, Commissioner, I cannot understand how in one way we are talking about sustainability and ensuring we protect marine life and at the same time grant unlimited access to supertrawlers to fish in Irish waters, to exploit fish stocks and undermine the Irish fishing industry and the coastal communities that depend on it.

    When we are talking about sustainability, we must have fairness for the Irish fishing industry and the coastal communities that depend on it.

     
       

     

      Isabella Lövin, för Verts/ALE gruppen. – Fru talman! Allt liv på jorden startade i haven. Haven ger oss mat. De ger oss glädje. De producerar hälften av allt syre som vi andas. Ändå misshandlar vi haven, använder dem som soptipp och tömmer dem på fisk.

    Nu har vi också gett dem hög feber, och det är väldigt allvarligt. Som en forskare sa till mig: Klimatkrisen, den drabbar precis som covid de svagaste värst. Och havet är redan försvagat.

    I Östersjön, där jag bor, har medeltemperaturen redan ökat med två grader sedan 1990, och nere på 30 meters djup var det förra sommaren 20 grader varmt, något som aldrig har noterats förut.

    Ett område stort som Danmark är död botten. Vi måste göra någonting snabbt för denna döende patient, och vi måste göra någonting nytt.

    Vi behöver en ny havspolitik som samlat kan hjälpa våra hav att tillfriskna, så att de åter kan binda kol i bottnarna, som nu rivs upp av bottentrålning, och åter har stabila, livskraftiga ekosystem som gör vattnet klart och rent igen och som kan förse Europa med hållbart fiskad fisk.

    För det behöver vi inte bara 30 % skyddade områden, utan vi behöver en helhetssyn. Därför välkomnar jag den europeiska havspakten. Den måste ha som högsta prioritet att låta haven tillfriskna igen. Alla politikområden behöver samspela för att nå dit.

    Haven är grunden för allt liv. Skyddar vi havet så skyddar vi också oss själva.

     
       

     

      Emma Fourreau, au nom du groupe The Left. – Madame la Présidente, monsieur le Commissaire, j’imagine que votre jardin est une zone protégée. Alors, que diriez‑vous si je venais demain dans votre jardin pour y déterrer vos carottes et ramasser vos tomates, avant de repartir en piétinant tout le potager pour être sûre que vos légumes ne repoussent pas l’année prochaine? Nul doute que cela vous déplairait fortement. Et je vous répondrais que j’étais dans votre jardin comme un chalutier de fond dans les aires marines protégées, qui n’ont de protégées que le nom.

    Car, si 12 % des eaux de l’Union européenne entrent dans la définition des aires marines protégées, seules 0,2 % le sont de façon stricte. Alors qu’est-ce qui est protégé dans les autres? Rien ou presque: 86 % des aires dites protégées d’Europe sont intensément exploitées, au moyen de méthodes de pêche destructrices, comme le chalutage de fond, ou d’autres activités industrielles extractivistes.

    La pêche industrielle a des conséquences délétères: pour la biodiversité, mais aussi pour les petits pêcheurs. Au-delà du chalutage de fond, ces derniers subissent également de plein fouet la concurrence des méga-chalutiers pélagiques, qui n’hésitent pas à traverser les aires marines protégées. Exclure la pêche industrielle des aires marines protégées, comme le recommande l’Union internationale pour la conservation de la nature, c’est donner de l’oxygène à la pêche artisanale, dont les incidences environnementales sont moindres, et qui favorise le renouvellement des espèces.

    La Commission s’est engagée à sortir du chalutage de fond dans les aires marines protégées d’ici 2030. Soyez à la hauteur de l’engagement en adoptant un plan de transition juste, qui accompagne les pêcheurs, leur donne de la visibilité, des incitations et des solutions de rechange, et qui prévoie un véritable plan de déchalutisation de la flotte européenne.

    Sans action concrète de la Commission comme des États, vos promesses resteront vaines.

     
       

     

      Siegbert Frank Droese, im Namen der ESN-Fraktion. – Frau Präsidentin, Herr Kommissar, sehr geehrte Kollegen! Niemand Vernünftiges ist gegen den Schutz der Ozeane vor Zerstörung, aber Umweltschutz funktioniert nicht mit starren Daten, utopischen Zielvorgaben und ideologischer Verblendung.

    Sinnvoll sind praktische Dinge, etwa harte Bestrafung von Kapitänen, die ihre Abfälle ins Meer werfen, oder Firmen, die Tankerunfälle fahrlässig verursachen, aber wir brauchen keine Blue Economy als neue sozialistische Planwirtschaft. Ein Beispiel dafür: Bis 2030 sollen 30 % der Ozeane als Schutzzone fungieren – das ist ein utopisches Ziel.

    Die Natur ist stärker als die Europäische Kommission, sie regeneriert sich selbst. Biodiversität gibt es seit Millionen von Jahren. Deshalb brauchen wir weder in der Landwirtschaft noch im Fischfang oder sonstwo EU-Naturalisierungsgesetze. Aber ich frage mich: Wo war und ist eigentlich der Schutz der Ozeane bei der Sprengung von Nord Stream 2 geblieben? Wo ist der akribische Wille der Kommission, diese Sprengung von Nord Stream 2 aufzuklären? Es ist schon sehr sonderbar, dass Brüssel hier nichts tut, obwohl doch sonst die Kommission den lieben langen Tag vom Grünen Deal träumt oder das böse CO2 jagt.

    Wenn wir über den Schutz der Ozeane sprechen, muss ich auch auf die Sanktionen gegen Russland zu sprechen kommen. Die Sanktionen sollten Russland treffen, gefährden aber mittlerweile unsere Ozeane, unsere Umwelt, weil Russland eben nicht untergeht, sondern seine Rohstoffe mit alten, rostigen Schiffen um den Globus schickt; ein schönes Beispiel dafür, wie sich die Kommission selbst ins Knie schießt, unter großem Applaus vieler Mitglieder dieses Hauses.

    Ja, wir müssen die Ozeane schützen, aber vor Sozialistischen, Grünen, Eurokraten. Deshalb sagen wir von der ESN: Wir stimmen guten Ideen zu, die praktikabel sind und vor allem wirtschaftlich; wir stimmen dem Statement in der großen Zielsetzung des Schutzes der Meere zu, aber wir lehnen die Blue-Economy-Basis ab: Sie sind nichts anderes als grüne Experimente und Utopien.

     
       

     

      Hélder Sousa Silva (PPE). – Senhora Presidente, Caro Comissário, Caros Colegas, o oceano é claramente um aliado indispensável para a União Europeia reforçar a sua competitividade em áreas estratégicas como a inovação, a segurança alimentar, a autonomia energética e a sustentabilidade ambiental. Por isso, digo que o Pacto Europeu para os Oceanos é uma grande oportunidade. A proteção das zonas costeiras e das comunidades piscatórias é um claro objetivo, mas também temos de assegurar uma justa remuneração para os profissionais.

    Elogio a delimitação, na passada semana, por parte dos Açores, da maior área marinha protegida da Europa, protegendo 30 % do seu mar. E, enquanto autarca, participei ativamente na delimitação da área marinha protegida da Ericeira, de Sintra e de Cascais, a primeira em Portugal, que envolveu ativamente a comunidade local na sua delimitação.

    Dada a relação intrínseca entre as nossas comunidades e os mares que nos circundam, direi que a preservação do eixo atlântico europeu é um desígnio de todos nós.

     
       

     

      André Rodrigues (S&D). – Senhora Presidente, Senhor Comissário, a União Europeia estabeleceu metas ambiciosas para a proteção de pelo menos 30 % das águas marinhas até 2030. Mas não tenhamos ilusões, isto só pode ser assegurado se garantirmos, de facto, o envolvimento de pescadores, comunidades pesqueiras, profissionais da aquicultura, ONG ambientais e demais agentes relevantes e se também assegurarmos as devidas compensações para que os profissionais das pescas não sejam vítimas deste processo.

    Saúdo, por isso, o exemplo da minha região, os Açores, que há dias aprovou o plano de reestruturação do setor da pesca, proposto pelo Partido Socialista, que prevê compensações a todos os profissionais afetados pela criação de áreas marinhas protegidas. Com um orçamento superior a 10 milhões de EUR para o período de 2025 a 2030, este plano acompanhará a implementação da proteção de 30 % do mar de uma das maiores zonas económicas exclusivas da Europa.

    Este é o exemplo que a União deve seguir, com a definição de um ambicioso fundo que acompanhe e financie um verdadeiro pacto para os oceanos.

     
       

     

      André Rougé (PfE). – Madame la Présidente, monsieur le Commissaire, chers collègues, l’outre-mer permet à la France, deuxième zone économique exclusive au monde, d’être au premier rang de la protection des océans: une priorité environnementale mondiale, dont les zones marines protégées sont l’élément le plus marquant.

    Aussi sommes-nous inquiets des menaces qui pèsent sur les îles Éparses, désormais revendiquées par Madagascar. Ces îles sont qualifiées de sanctuaires océaniques de la nature primitive. Elles sont les laboratoires de référence au niveau mondial pour étudier l’influence des changements climatiques, car elles sont vierges de toute présence humaine, ce qui en fait des modèles de naturalité.

    Il est indispensable que l’Union européenne soutienne fermement la souveraineté française sur les îles Éparses. Face à l’appétit dévorant d’une grande puissance mondiale et hégémonique qui instrumentalise la République de Madagascar dans l’océan Indien, comment l’Union européenne pourrait-elle se désintéresser de ce sanctuaire naturel? Comment l’Union européenne pourrait-elle se désintéresser, parmi ses îles, de celle qui, symboliquement, porte jusqu’à son nom – Europa?

    Dans cette partie du monde, personne n’est dupe de ce qui se cache derrière la prétention malgache à annexer les îles Éparses. Pour garantir l’avenir de ces territoires et leur biodiversité, l’Union européenne doit intégrer cette réalité géopolitique dans sa stratégie de protection des océans, mais aussi dans sa diplomatie.

     
       

     

      Ana Miranda Paz (Verts/ALE). – Senhora Presidente, venho de um país marítimo, a Galiza, um país do eixo atlântico europeu. Ali, temos duas reservas marinhas, duas áreas marinhas protegidas de interesse pesqueiro ou piscatório, também dito na nossa língua. A reserva marinha de Cedeira, que é uma verdadeira oportunidade, na qual o setor das pescas trabalha também na defesa do meio ambiente e na defesa de um recurso económico vital para o meu país.

    No meu país, que é rico em biodiversidade marinha, os governos estão contra as áreas marinhas protegidas. Preferem apoiar a macroeólica marinha, as empresas elétricas que não deixam benefícios, preferem que os marinheiros fiquem sem trabalho, para apoiar os macroparques eólicos.

    Senhor Comissário, como é possível que a Comissão Europeia proíba a pesca de fundo e, depois, permita, em áreas marinhas protegidas de especial interesse, que se metam estas macroelétricas a tirar os recursos e o peixe e a vida das nossas comunidades piscatórias, como é o caso de Cedeira?

     
       

     

      Per Clausen (The Left). – Fru formand! En af de største og mest vedvarende trusler mod vores havområder – beskyttede eller ej – er vandkvaliteten. Alt for mange steder ser vi, at den økologiske tilstand i havområderne ikke alene er dårlig, den forværres også hele tiden. Det behøver ikke at være sådan. For det er en udvikling, vi ved, hvordan vi kan gøre noget ved. Men det kræver, at vi tør tage fat i årsagerne. Det er den forurening, der kommer fra en industrialiseret landbrugsproduktion, kemikalieindustrien. Det er anvendelse af fiskeredskaber, som ødelægger havbunden. Og her mangler modet til at handle desværre ofte. Det gælder, selv når det er klart, at biodiversiteten i havene forværres år efter år. Et af de steder, hvor modet mangler, er i mit eget hjemland, Danmark. Her taler regeringen varmt om vandmiljøet, men nægter samtidig at implementere vandrammedirektivet på den rigtige måde, eller for den sags skyld at skride ind mod landbrugets udledning af pesticider og kvælstof eller den forurening, som stammer fra kemiske kemikalievirksomheder i Danmark, hvoraf en af dem ovenikøbet producerer pesticider, som er ulovlige at bruge i EU-landene. Vores have gisper bogstaveligt talt efter vejret. Fisk, havdyr og planter forsvinder, hvis EU og medlemsstaterne ikke forstår, at vores have har brug for alvorlig førstehjælp.

     
       


     

      Thomas Bajada (S&D). – Madam President, this is embarrassing. We are discussing the future of our ocean when the plenary has practically already ended, when most MEPs have already gone. Is this the attention our future deserves? This is a clear statement that our ocean, our future, is not a priority for the leadership of this Parliament.

    Dear colleagues – whoever is left – the ocean is in peril, with climate change, unruly destruction of our biodiversity and our fishers desperately trying to survive. It is vital to have a properly‑managed international network of marine protected areas, not just for biodiversity, but for the survival of our coastal communities that rely on a healthy ocean for their livelihood.

    We can’t let this failure continue. The time to act is now. Let us deliver an Ocean Pact that truly protects our ocean and safeguards our livelihood. Empty promises won’t cut it. We need binding targets like real funding, and the international political will to deliver, through marine protected areas, for our ocean, our communities and our future.

     
       

       

    Procedura “catch-the-eye”

     
       

     

      Niels Geuking (PPE). – Frau Präsidentin! Die Meere sind der größte Lebensraum auf Erden und bedrohter denn je: Klimawandel, Überfischung, auch die eigenen Fangflotten, Verschmutzung, Nährstoff- und Plastikeintrag – und wir schaden uns dadurch auch selbst. Wer Fisch in seinen ganz normalen Speiseplan integriert hat, nimmt am Ende von zwei Wochen knapp diese Plastikkarte Mikroplastik zu sich, also eine Kreditkarte Mikroplastik, weil die Meere dementsprechend verschmutzt sind.

    Wir sollten uns unter anderem auch kritischer mit den Fangquoten auseinandersetzen, um den Fischarten überhaupt eine echte Erholungschance zu ermöglichen und am Ende auch die Arbeitsplätze längerfristig zu sichern. Jedes zu späte Handeln wird seine Folgen mit sich bringen; siehe die Störe, den Aal, Dorsch, Kabeljau, Hering, Schellfisch, Heringshai, Dornhai, die Seezunge, Lachs, Meerforelle – und das waren nur Nord- und Ostsee.

    Aktuell bieten Offshore-Windparks einen der besten Schutzräume für viele Meerestiere, wie z. B. die Nordseegarnele – an sich ein trauriger Fakt. Effektiv wäre es auch, wenn wir einmal darüber sprechen würden, dass Haifischflossen ein großes Problem darstellen. Würde der Hai als Ganzes in einen europäischen Hafen einlaufen müssen, wäre das Problem wahrscheinlich gar nicht so groß. Insofern, einfache Regelung mit enormer Wirkung.

     
       

     

      Jean-Marc Germain (S&D). – Madame la Présidente, mes chers collègues, comment parler de la protection des océans sans évoquer la nécessaire protection des lanceurs d’alerte? Paul Watson croupit en prison depuis près de cent jours pour avoir voulu faire respecter le moratoire sur la pêche à la baleine. Nous devons nous battre pour sa liberté. Je me réjouis cette initiative de la Ville de Paris qui en a fait un citoyen d’honneur de la capitale de mon pays. J’appelle par ailleurs le président de la République à lui accorder la nationalité française, qu’il demande, et j’appelle de nouveau l’Union européenne à lui offrir la protection de la directive de 2019 sur la protection des personnes qui signalent des violations du droit de l’Union européenne.

    La liste des destructions à l’œuvre dans nos océans est aussi longue que le temps est court pour agir. Agir, c’est sortir de la pêche industrielle, c’est établir de vraies aires maritimes protégées, c’est adopter un moratoire sur les exploitations minières en eaux profondes, c’est bannir les polluants qui détruisent la vie marine, c’est garantir de puissants moyens financiers et de contrôle.

    Les océans sont vitaux pour la préservation du vivant. Mes chers collègues, protégeons-les!

     
       

     

      Pernando Barrena Arza (The Left). – Señora presidenta, en este punto sobre las amenazas persistentes a zonas marinas protegidas y comunidades costeras quiero llamar la atención de sus señorías sobre un proyecto para la construcción en Gernika (País Vasco) de un nuevo museo Guggenheim en plena reserva de la biosfera de Urdaibai, que es un estuario en la desembocadura del río Oca al mar Cantábrico, en el océano Atlántico.

    Estamos hablando de un proyecto que vulnera la legislación europea al plantearse en la marisma de Urdaibai, una Zona de Especial Protección para las Aves o ZEPA y, por lo tanto, parte de la Red Natura 2000. Por esta zona, declarada de especial protección, se estima que circularían alrededor de 140 000 visitantes anuales, según los promotores del museo, lo cual es absolutamente un sinsentido.

    Esta situación hace que el proyecto cuente con una enorme oposición de los habitantes del lugar, que exigen detener este proyecto porque creen que pone en riesgo una zona que debiera estar especialmente protegida y que necesita un plan de desarrollo acorde con el valor del entorno ambiental de Urdaibai.

    Queremos interpelar a la Comisión para que actúe en consecuencia, proteja los intereses medioambientales de los ciudadanos de la zona y no permita el deterioro absoluto de este espacio costero, protegido por una figura diseñada por la propia Comisión Europea como es la Red Natura 2000.

     
       

     

      Lukas Sieper (NI). – Frau Präsidentin, Hohes Haus! Zum Abschluss dieser Plenarwoche möchte ich noch einmal auf die Grundsätze hinweisen, die zu befolgen in diesem Haus wichtig ist. Ich weiß, ich selbst bin auch manchmal disruptiv, wenn es um die Gepflogenheiten des Parlaments geht, aber manche Dinge sollten wir doch auf jeden Fall hier befolgen.

    Eines davon ist es, die Wahrheit zu sprechen, und zwar die ganze Wahrheit, nicht nur einen Teil davon. Deswegen möchte ich auf eine Wahrheit eingehen, die der Kollege Droese vorhin angesprochen hat. Herr Kollege Droese von der rechtsextremen Partei AfD sagte, dass es schon immer klimatische Veränderungen auf der Welt gegeben hat, schon immer Veränderungen der Biodiversität gegeben hat.

    Ja, das stimmt, das bezweifelt auch keiner. Tatsache ist aber, dass diese Veränderungen in den letzten Jahren und Jahrzehnten in einem Ausmaß stattfinden, wie es das noch nie auf der Welt gegeben hat. Auch wenn der Kollege mir offensichtlich leider nicht zuhört – was schade ist an der Stelle –, möchte ich ihm trotzdem bewusst machen: Sie müssen immer die ganze Wahrheit betrachten, vor allen Dingen, wenn es um Themen des Klimawandels geht, wie den Schutz der Ozeane.

     
       

       

    (Fine della procedura “catch the eye”)

     
       

     

      Janusz Wojciechowski, Member of the Commission. – Madam President, honourable Members, thank you very much for all the inspiring contributions.

    The Commission has engaged with citizens, businesses, scientists, NGOs, cities, coastal communities and our international partners. They all expect us to act. Achieving a coherent and effectively‑managed EU network of marine protected areas will remain a high priority for the Commission. We need more marine protected areas and we need them to be truly protected through effective conservation measures.

    We have the awareness of our citizens, we have the knowledge and we have solutions. Now we need the political will, across Member States, to engage the dialogue, to strengthen the knowledge base, to support the innovations, to achieve full compliance with European law.

    Honourable Members, let’s secure together a better future for our ocean to the benefit of all of us.

    Pani Przewodnicząca! Jeszcze pozwolę sobie na zakończenie kilka słów powiedzieć w moim ojczystym języku polskim, bo padła tutaj wypowiedź jednego z Państwa, z panów posłów, że sankcje, którymi Unia Europejska obejmuje Rosję, są po to, żeby Rosja cierpiała. Otóż nie, one nie są po to, żeby Rosja cierpiała. One są po to, żeby nie cierpiała Ukraina, a w dalszej przyszłości, aby podobne cierpienie nie spotkało żadnego innego kraju, w tym mojego ojczystego kraju Polski.

     
       

     

      Presidente. – La discussione è chiusa.

     

    13. Explications de vote

     

      Presidente. – L’ordine del giorno reca le dichiarazioni di voto.

     

    13.1. Situation in Azerbaijan, violation of human rights and international law and relations with Armenia (RC-B10-0133/2024)


     

      Seán Kelly (PPE). – A Uachtaráin, ní ráiteas polaitiúil amháin é an tairiscint i gcomhair rúin ar an staid san Asarbaiseáin, ach ráiteas morálta. Ní mór dúinn freagairt ar ghlanadh eitneach na nAirméineach, ar ionsaí míleata leanúnach agus ar neamhaird gan náire na hAsarbaiseáine ar chearta an duine. Ní mór don Aontas Eorpach an daonlathas a chosaint, agus ní mór an smacht reachta agus na luachanna sin a urramú go leanúnach. Ní hamháin nach mór dúinn na gníomhaíochtaí sin a cháineadh, ach ní mór dúinn gníomhú ina leith freisin. Caithfimid an Asarbaiseáin a thabhairt chun cuntais. Úsáidimis an rún seo chun ár dtiomantas do chearta an duine a athdhearbhú, ní hamháin le briathar ach le gníomh. Agus anois freagróidh mé an fón.

     

    13.2. People’s Republic of China’s misinterpretation of the UN resolution 2758 and its continuous military provocations around Taiwan (RC-B10-0134/2024)


     

      Seán Kelly (PPE). – A Uachtaráin, thacaigh mé leis an rún seo toisc go bhfuil rannpháirtíocht fhiúntach tuillte ag an Téaváin i bhfóraim idirnáisiúnta. Cé go dtugtar aitheantas i rún 2758 na Náisiún Aontaithe i 1971 do Dhaon-Phoblacht na Síne, ní réitíonn sé stádas na Téaváine ná ní thugann sé ceannasacht don tSín ar an Téaváin. Tá ról ríthábhachtach ag an Téaváin, ar thír dhaonlathach bhríomhar í ar fud an domhain, ón gcúram sláinte go dtí an teicneolaíocht. Ba cheart a toghcháin shíochánta agus a dearcadh comhoibrithe domhanda a léiriú ina rannpháirtíocht le heagraíochtaí idirnáisiúnta amhail EDS agus ICAO. Ní hamháin go bhfuil sé cóir, ach tá sé riachtanach freisin go dtacaímid le rannpháirtíocht na Téaváine chun an dlí idirnáisiúnta agus an daonlathas a urramú.

     

    14. Approval of the minutes of the sitting and forwarding of texts adopted

     

      Presidente. – Il processo verbale della seduta odierna verrà sottoposto all’approvazione del Parlamento all’inizio della prossima seduta.

    Se non vi sono obiezioni, procedo alla trasmissione immediata delle risoluzioni approvate nella seduta odierna ai loro destinatari.

     

    15. Dates of forthcoming sittings

     

      Presidente. – La prossima tornata si svolgerà dal 13 al 14 novembre 2024 a Bruxelles.

     

    16. Closure of the sitting

       

    (La seduta è tolta alle 15.41)

     

    17. Adjournment of the session

     

      Presidente. – Dichiaro interrotta la sessione del Parlamento europeo.

    La seduta è tolta.

     

    MIL OSI Europe News

  • MIL-OSI China: Industrial coordination of Beijing-Tianjin-Hebei region bears fruit in 10 years

    Source: People’s Republic of China – State Council News

    TIANJIN, Oct. 25 — Industrial coordination of the Beijing-Tianjin-Hebei region has yielded rich results with the rise of a number of world-class manufacturing clusters, 10 years after China designated it as a national strategy to foster the regional coordinated development.

    This is underlined in a report on the region’s coordinated development released on Friday at the 2024 Beijing-Tianjin-Hebei Industrial Chain and Supply Chain Conference held in north China’s Tianjin Municipality.

    The industrial added value of the Beijing-Tianjin-Hebei region increased from 1.7 trillion yuan (about 238 billion U.S. dollars) in 2013 to 2.43 trillion yuan in 2023, with a cumulative growth of 43 percent, according to the report.

    The industrial coordination has become a key support for the collaborative development of the Beijing-Tianjin-Hebei region, said Yang Dongmei, deputy director of the Tianjin Industrial and Information Technology Bureau.

    In the first half of this year, the total profit of major industrial enterprises in the Beijing-Tianjin-Hebei region reached a record high of 231 billion yuan, up 10.2 percent year on year.

    The Beijing-Tianjin-Hebei region, with a number of first-rate colleges and universities and abundant high-end research talent, has a solid foundation for developing China’s strategic emerging industries such as integrated circuits, cybersecurity, biomedicine, power equipment, and emergency response equipment.

    According to the report, the output value of two manufacturing clusters in the region — life and health, and power and new energy high-end equipment — have accounted for more than 20 percent of the national total in the respective sectors. The industrial scale of the new generation of information technology application innovation and network security in the region has exceeded half of the national total.

    To further optimize regional industrial division and productivity distribution, the Beijing-Tianjin-Hebei region has laid out six key industrial chains, namely hydrogen energy, new energy and intelligent connected vehicles, biomedicine, cybersecurity and industrial Internet, robots and high-end industrial mother-machines, which refer to machine tools for manufacturing machines.

    “The Beijing-Tianjin-Hebei region boasts strong international influence, which gives it an advantage to be more closely integrated into the global economic network,” said Yin Jihui, director of the Tianjin Industrial and Information Technology Bureau.

    The gross domestic product of Beijing-Tianjin-Hebei, one of the country’s most economically vibrant regions, reached 10.4 trillion yuan in 2023, almost doubling that of 2013, with an average annual growth rate of 5.8 percent.

    MIL OSI China News

  • MIL-OSI: Bitget Wallet Powers Nearly 50% of Catizen Airdrop

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Oct. 25, 2024 (GLOBE NEWSWIRE) — Bitget Wallet, the leading non-custodial Web3 wallet, facilitated nearly 50% of claims for the Catizen’s CATI token airdrop, according to onchain data. This positions Bitget Wallet as the most popular choice for users claiming the Catizen airdrop, underscoring its dominance in accessing the latest Web3 opportunities.

    Catizen is an innovative game within the TON and Mantle ecosystems, seamlessly blending gaming with crypto rewards in a play-for-airdrop format. Its integration with Telegram’s mini-app ecosystem has made it highly accessible, creating a dynamic hub for Web 3.0 traffic and quickly attracting players eager to explore the next generation of blockchain gaming. The CATI airdrop claim period, which ran from September 19 to October 24, nearly 50% of all claims were made through Bitget Wallet, underscoring its popularity among users.

    Bitget Wallet partnered with Catizen to enhance its airdrop experience by providing full gas fee subsidies, enabling users to claim CATI tokens on-chain at no cost. The initiative also included a prize pool of 50,000 CATI tokens for users completing designated tasks. Furthermore, Bitget Wallet integrated Catizen’s Game Center by adding a dedicated section within its DApp platform for easy access. This collaboration enriches the Catizen community and solidifies Bitget Wallet’s role within the expanding TON ecosystem.

    Alvin Kan, COO of Bitget Wallet, stated, “Our partnership with Catizen is a step for making blockchain gaming more accessible. By facilitating seamless access to the Catizen game and its token airdrop, we are removing barriers to participation and empowering users to explore new opportunities, ultimately fostering a vibrant blockchain gaming community and Web3 ecosystem.

    About Bitget Wallet

    Bitget Wallet is the home of Web3, where endless possibilities come together in one wallet. Uniting over 40 million users, this non-custodial wallet brings everything onchain in one place—asset management, quick swaps, rewards, staking, trading tools, live market data, a DApp browser, and an NFT marketplace. With wallet options like mnemonic, MPC, AA, and a Telegram bot, Bitget Wallet serves everyone from beginners to advanced traders. Supporting 100+ blockchains, 20,000+ DApps and 500,000+ tokens, it connects to hundreds of DEXs and cross-chain bridges for seamless multi-chain trading, and offers a $300 million protection fund to keep your digital assets safe.

    Experience Bitget Wallet Lite to start your Web3 journey.

    For more information, visit: Website | Twitter | Telegram | Instagram | YouTube | LinkedIn | TikTok | Discord

    About Catizen

    Catizen is a revolutionary gaming bot on Telegram that seamlessly integrates the messaging app Telegram with multiple blockchains, including TON and Mantle Network. It redefines Web 3.0 experiences by enabling -mobile payments with both crypto currencies and fiat currencies. By tapping into Telegram’s vast user base, Catizen aims to create a Web 3.0 traffic hub on an unprecedented scale.

    Additionally, Catizen is evolving into a Mini-app Center, integrating features from launchpool platforms, such as early access to new projects, token-based activities, transaction capabilities, along with short videos and e-commerce functionalities. This innovative approach will attract and engage users through gamification and strategic Play-to-Airdrop initiatives, transforming how users access and engage with the Web 3.0 ecosystem.

    For more information, visit: X | Official Website | Telegram | Telegram Chat | Bot

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/ce6b68b3-c33e-45b6-bd97-85090f45a5c4

    The MIL Network

  • MIL-OSI Security: California Resident Sentenced To 30 Years In Federal Prison For Producing Sexual Abuse Photo Of 3-Year-Old Child In Florida

    Source: Office of United States Attorneys

    Jacksonville, Florida – Chief United States District Judge Timothy J. Corrigan has sentenced Henry Obdulio Cordon (39, Antioch, California) to 30 years in federal prison for producing a photo of a 3-year-old child being sexually abused by Cordon. He was also ordered to serve a life term of supervised release and to register as a sex offender. Cordon was arrested at his residence on May 16, 2019, and has been in custody since that time. He pleaded guilty to the offense on June 14, 2024.

    According to court documents, this investigation began in April 2019 when an internet service provider sent a series of CyberTipline reports to the National Center for Missing and Exploited Children (NCMEC). These reports related to the discovery of child sexual abuse photos detected within an email account that geolocated to Contra Costa County in California. Law enforcement officers obtained search warrants and discovered that this email account and telephone number were associated with Cordon. The email account contained several photos depicting children being sexually abused. 

    Further investigation reveal that another email account used by Cordon contained a photo that depicted a young child being sexually abused by an adult male. The metadata associated with this photo indicated that it had been produced on July 11, 2011, using a Blackberry device. Search warrants revealed that this email account was used during April and May 2019, at Cordon’s apartment in California.

    On May 16, 2019, law enforcement officers executed a search warrant at Cordon’s residence. During an interview, Cordon admitted that he had searched the internet for “nude teen pictures.” When asked if he ever had a Blackberry device, Cordon said he had one years before when he lived in Florida. He was asked about a particular photo depicting the sexual abuse of a child that was recovered from his email account. Cordon eventually admitted that he knew the child in the photo and that the child was “maybe” under four years of age. Cordon claimed that his sexual abuse of this child only happened one time, and that he remembered emailing this photo to himself to save it. Cordon admitted taking this photo with his Blackberry in the child’s residence in Florida. 

    Further investigation confirmed that Cordon took the photo depicting his sexual abuse of the child in Florida and later emailed the photo to his own email account. This same photo was also recovered from his iPhone device that he possessed in California on May 16, 2019. Law enforcement authorities in Florida were able to confirm the identity and age of this child, as well as the residence in Florida where Cordon had taken the photo depicting him sexually abusing this child. 

    This case was investigated by the Internet Crimes Against Children (ICAC) Task Force of Contra Costa County (California), the Contra Costa Sheriff’s Department, the Contra Costa District Attorney’s Office, the Clay County Sheriff’s Office, and Homeland Security Investigations. It was prosecuted by Assistant United States Attorney D. Rodney Brown.

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

    MIL Security OSI

  • MIL-OSI: Fentura Financial, Inc. Announces Third Quarter 2024 Earnings (unaudited)

    Source: GlobeNewswire (MIL-OSI)

    Dollars in thousands except per share amounts. Certain items in the prior period financial statements have been reclassified to conform with the September 30, 2024 presentation.

    FENTON, Mich., Oct. 25, 2024 (GLOBE NEWSWIRE) — Fentura Financial, Inc. (OTCQX: FETM) announces quarterly net income results of $867 and $5,637 for the three and nine months ended September 30, 2024, respectively.

    Ronald L. Justice, President and CEO, stated, “We ended the 2024 third quarter with record total assets, deposits, and shareholders’ equity. These results are a testament to the continued hard work of our team members, and the local value we provide our Michigan communities. During the third quarter, we announced a merger with ChoiceOne Financial Services, Inc., pursuant to which ChoiceOne and Fentura will merge in an all-stock transaction. Once completed, the combination will create the third largest publicly traded bank in Michigan with approximately $4.3 billion in consolidated total assets and 56 offices in Western, Central and Southeastern Michigan. We continue to expect to close the transaction in the first quarter of 2025, subject to the satisfaction of customary closing conditions and regulatory approvals.”

    Following is a discussion of our financial performance as of, and for the three and nine months ended September 30, 2024. At the end of this document is a list of abbreviations and acronyms.

    Results of Operations (unaudited)
    The following table outlines our QTD results of operations and provides certain performance measures as of, and for the three months ended:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    INCOME STATEMENT DATA                    
    Interest income   $ 22,194     $ 21,487     $ 21,541     $ 21,033     $ 20,416  
    Interest expense     10,202       9,650       9,315       8,526       7,757  
    Net interest income     11,992       11,837       12,226       12,507       12,659  
    Credit loss expense (reversal)     1,203       796       (43 )     (190 )     (309 )
    Noninterest income     2,210       2,314       2,355       2,145       2,338  
    Noninterest expenses     11,974       10,921       11,166       10,121       10,594  
    Federal income tax expense     158       454       668       937       937  
    Net income   $ 867     $ 1,980     $ 2,790     $ 3,784     $ 3,775  
    PER SHARE                    
    Earnings   $ 0.19     $ 0.44     $ 0.63     $ 0.85     $ 0.85  
    Dividends   $ 0.11     $ 0.11     $ 0.11     $ 0.10     $ 0.10  
    Tangible book value(1)   $ 30.51     $ 29.84     $ 29.38     $ 28.92     $ 27.64  
    Quoted market value                    
    High   $ 40.00     $ 24.39     $ 27.20     $ 27.20     $ 23.74  
    Low   $ 22.16     $ 22.33     $ 24.00     $ 22.26     $ 19.10  
    Close(1)   $ 39.07     $ 22.50     $ 24.40     $ 27.20     $ 23.74  
    PERFORMANCE RATIOS                    
    Return on average assets     0.19 %     0.45 %     0.63 %     0.86 %     0.86 %
    Return on average shareholders’ equity     2.37 %     5.59 %     7.98 %     11.11 %     11.27 %
    Return on average tangible shareholders’ equity     2.54 %     5.98 %     8.55 %     11.94 %     12.14 %
    Efficiency ratio     84.31 %     77.17 %     76.58 %     69.08 %     70.64 %
    Yield on average earning assets (FTE)     5.17 %     5.18 %     5.15 %     5.06 %     4.92 %
    Rate on interest bearing liabilities     3.28 %     3.22 %     3.11 %     2.90 %     2.66 %
    Net interest margin to average earning assets (FTE)     2.80 %     2.85 %     2.92 %     3.01 %     3.05 %
    BALANCE SHEET DATA(1)                    
    Total investment securities   $ 99,724     $ 100,167     $ 103,210     $ 107,615     $ 109,543  
    Gross loans   $ 1,442,389     $ 1,459,929     $ 1,461,465     $ 1,473,471     $ 1,483,720  
    Allowance for credit losses   $ 14,700     $ 15,300     $ 15,300     $ 15,400     $ 15,400  
    Total assets   $ 1,807,370     $ 1,756,629     $ 1,764,629     $ 1,738,952     $ 1,744,939  
    Total deposits   $ 1,470,586     $ 1,427,059     $ 1,438,408     $ 1,394,182     $ 1,401,797  
    Borrowed funds   $ 179,970     $ 178,397     $ 178,500     $ 198,500     $ 201,050  
    Total shareholders’ equity   $ 146,398     $ 143,301     $ 141,074     $ 138,702     $ 132,902  
    Net loans to total deposits     97.08 %     101.23 %     100.54 %     104.58 %     104.75 %
    Common shares outstanding     4,495,005       4,490,087       4,484,447       4,470,871       4,466,221  
    QTD BALANCE SHEET AVERAGES                    
    Total assets   $ 1,797,307     $ 1,762,651     $ 1,771,614     $ 1,740,526     $ 1,739,510  
    Earning assets   $ 1,708,177     $ 1,669,862     $ 1,683,708     $ 1,649,091     $ 1,646,848  
    Interest bearing liabilities   $ 1,237,665     $ 1,204,370     $ 1,205,162     $ 1,165,064     $ 1,156,835  
    Total shareholders’ equity   $ 145,240     $ 142,577     $ 140,574     $ 135,157     $ 132,860  
    Total tangible shareholders’ equity   $ 135,959     $ 133,252     $ 131,204     $ 125,723     $ 123,349  
    Earned common shares outstanding     4,466,951       4,461,580       4,449,376       4,443,463       4,437,415  
    Unvested stock grants     26,500       26,500       31,821       26,018       26,668  
    Total common shares outstanding     4,493,451       4,488,080       4,481,197       4,469,481       4,464,083  
    ASSET QUALITY                    
    Nonperforming loans to gross loans (1)     0.71 %     0.66 %     0.39 %     0.38 %     0.24 %
    Nonperforming assets to total assets (1)     0.58 %     0.56 %     0.34 %     0.35 %     0.23 %
    Allowance for credit losses to gross loans (1)     1.02 %     1.05 %     1.05 %     1.05 %     1.04 %
    Net charge-offs (recoveries) to QTD average gross loans     0.12 %     0.05 %     %   (0.01)%   (0.03)%
    Credit loss expense (reversal) to QTD average gross loans     0.08 %     0.05 %     %   (0.01)%   (0.02)%
    CAPITAL RATIOS(1)                    
    Total capital to risk weighted assets     12.48 %     12.38 %     12.27 %     11.91 %     11.59 %
    Tier 1 capital to risk weighted assets     11.42 %     11.28 %     11.17 %     10.82 %     10.51 %
    CET1 capital to risk weighted assets     10.40 %     10.28 %     10.17 %     9.83 %     9.53 %
    Tier 1 leverage ratio     8.78 %     8.92 %     8.78 %     8.77 %     8.58 %
                         
    (1)At end of period                    

    The following table outlines our YTD results of operations and provides certain performance measures as of, and for the nine months ended (unaudited):

        9/30/2024   9/30/2023   9/30/2022   9/30/2021   9/30/2020
    INCOME STATEMENT DATA                    
    Interest income   $ 65,222     $ 58,648     $ 41,438     $ 35,161     $ 34,355  
    Interest expense     29,167       19,561       3,122       2,091       4,952  
    Net interest income     36,055       39,087       38,316       33,070       29,403  
    Credit loss expense (reversal)     1,956       132       2,258       (218 )     4,652  
    Noninterest income     6,879       7,126       7,997       11,092       15,190  
    Noninterest expenses     34,061       32,547       30,870       27,815       23,939  
    Federal income tax expense     1,280       2,689       2,616       3,328       3,271  
    Net income   $ 5,637     $ 10,845     $ 10,569     $ 13,237     $ 12,731  
    PER SHARE                    
    Earnings   $ 1.26     $ 2.45     $ 2.39     $ 2.86     $ 2.73  
    Dividends   $ 0.33     $ 0.3     $ 0.27     $ 0.24     $ 0.225  
    Tangible book value(1)   $ 30.51     $ 27.64     $ 25.22     $ 26.53     $ 23.50  
    Quoted market value                    
    High   $ 40.00     $ 24.10     $ 29.25     $ 27.40     $ 26.00  
    Low   $ 22.16     $ 18.70     $ 23.00     $ 21.90     $ 12.55  
    Close(1)   $ 39.07     $ 23.74     $ 23.00     $ 25.75     $ 16.93  
    PERFORMANCE RATIOS                    
    Return on average assets     0.42 %     0.85 %     0.95 %     1.36 %     1.45 %
    Return on average shareholders’ equity     5.27 %     11.15 %     11.71 %     14.55 %     15.79 %
    Return on average tangible shareholders’ equity     5.64 %     12.03 %     12.75 %     15.00 %     16.40 %
    Efficiency ratio     79.33 %     70.43 %     66.66 %     62.98 %     53.68 %
    Yield on average earning assets (FTE)     5.17 %     4.84 %     3.99 %     3.83 %     4.12 %
    Rate on interest bearing liabilities     3.20 %     2.35 %     0.49 %     0.37 %     0.93 %
    Net interest margin to average earning assets (FTE)     2.86 %     3.23 %     3.69 %     3.60 %     3.52 %
    BALANCE SHEET DATA(1)                    
    Total investment securities   $ 99,724     $ 109,543     $ 129,886     $ 138,476     $ 78,179  
    Gross loans   $ 1,442,389     $ 1,483,720     $ 1,350,851     $ 1,015,177     $ 1,060,885  
    Allowance for credit losses   $ 14,700     $ 15,400     $ 12,200     $ 10,500     $ 10,100  
    Total assets   $ 1,807,370     $ 1,744,939     $ 1,588,592     $ 1,329,300     $ 1,284,845  
    Total deposits   $ 1,470,586     $ 1,401,797     $ 1,345,209     $ 1,144,291     $ 1,061,470  
    Borrowed funds   $ 179,970     $ 201,050     $ 116,600     $ 50,000     $ 96,217  
    Total shareholders’ equity   $ 146,398     $ 132,902     $ 121,630     $ 124,809     $ 114,081  
    Net loans to total deposits     97.08 %     104.75 %     99.51 %     87.80 %     98.99 %
    Common shares outstanding     4,495,005       4,466,221       4,434,937       4,569,935       4,691,142  
    YTD BALANCE SHEET AVERAGES                    
    Total assets   $ 1,777,188     $ 1,710,941     $ 1,485,489     $ 1,297,657     $ 1,171,415  
    Earning assets   $ 1,687,249     $ 1,620,015     $ 1,391,179     $ 1,230,553     $ 1,116,861  
    Interest bearing liabilities   $ 1,215,731     $ 1,111,687     $ 858,600     $ 748,472     $ 711,449  
    Total shareholders’ equity   $ 142,796     $ 130,068     $ 120,704     $ 121,659     $ 107,711  
    Total tangible shareholders’ equity   $ 133,470     $ 120,482     $ 110,792     $ 117,991     $ 103,712  
    Earned common shares outstanding     4,459,303       4,428,963       4,425,818       4,630,709       4,665,951  
    Unvested stock grants     28,274       28,530       25,462       21,088       13,966  
    Total common shares outstanding     4,487,577       4,457,493       4,451,280       4,651,797       4,679,917  
    ASSET QUALITY                    
    Nonperforming loans to gross loans (1)     0.71 %     0.24 %     0.12 %     0.82 %     0.07 %
    Nonperforming assets to total assets (1)     0.58 %     0.23 %     0.12 %     0.63 %     0.06 %
    Allowance for credit losses to gross loans (1)     1.02 %     1.04 %     0.90 %     1.03 %     0.95 %
    Net charge-offs (recoveries) to YTD average gross loans     0.18 %   (0.03)%     0.05 %     0.02 %     0.03 %
    Credit loss expense (reversal) to YTD average gross loans     0.13 %     0.01 %     0.19 %   (0.02)%     0.44 %
    CAPITAL RATIOS(1)                    
    Total capital to risk weighted assets     12.48 %     11.59 %     10.96 %     13.63 %     15.57 %
    Tier 1 capital to risk weighted assets     11.42 %     10.51 %     10.07 %     12.64 %     14.40 %
    CET1 capital to risk weighted assets     10.40 %     9.53 %     9.04 %     11.33 %     12.77 %
    Tier 1 leverage ratio     8.78 %     8.58 %     8.91 %     10.21 %     9.86 %
                         
    (1)At end of period                    

    Income Statement Breakdown and Analysis

        Quarter to Date
        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Net income   $ 867     $ 1,980     $ 2,790     $ 3,784     $ 3,775  
    Acquisition related items (net of tax)                    
    Other acquisition related expenses     753                          
    Amortization of core deposit intangibles     35       34       36       60       60  
    Total acquisition related items (net of tax)     788       34       36       60       60  
    Other nonrecurring items (net of tax)                    
    Proxy contest related expenses                              
    Prepayment penalties collected     (24 )     (40 )     (58 )     (85 )     (29 )
    Total other nonrecurring items (net of tax)     (24 )     (40 )     (58 )     (85 )     (29 )
    Adjusted net income from operations   $ 1,631     $ 1,974     $ 2,768     $ 3,759     $ 3,806  
                         
    Net interest income   $ 11,992     $ 11,837     $ 12,226     $ 12,507     $ 12,659  
    Prepayment penalties collected     (31 )     (51 )     (73 )     (107 )     (37 )
    Adjusted net interest income   $ 11,961     $ 11,786     $ 12,153     $ 12,400     $ 12,622  
                         
    PERFORMANCE RATIOS                    
    Based on adjusted net income from operations                    
    Earnings per share   $ 0.37     $ 0.44     $ 0.62     $ 0.85     $ 0.86  
    Return on average assets     0.36 %     0.45 %     0.63 %     0.86 %     0.87 %
    Return on average shareholders’ equity     4.47 %     5.57 %     7.92 %     11.03 %     11.37 %
    Return on average tangible shareholders’ equity     4.77 %     5.96 %     8.49 %     11.86 %     12.24 %
    Efficiency ratio     77.45 %     77.15 %     76.65 %     69.06 %     70.31 %
                         
    Based on adjusted net interest income                    
    Yield on average earning assets (FTE)     5.16 %     5.17 %     5.13 %     5.03 %     4.91 %
    Rate on interest bearing liabilities     3.28 %     3.22 %     3.11 %     2.90 %     2.66 %
    Net interest margin to average earning assets (FTE)     2.79 %     2.84 %     2.90 %     2.98 %     3.04 %
                         
        Year to Date September 30   Variance
          2024       2023     Amount   %
    Net income   $ 5,637     $ 10,845     $ (5,208 )   (48.02)%
    Acquisition related items (net of tax)                
    Other acquisition related expenses     753             753     N/M
    Amortization of core deposit intangibles     105       180       (75 )   (41.67)%
    Total acquisition related items (net of tax)     858       180       678     376.67 %
    Other nonrecurring items (net of tax)                
    Proxy contest related expenses           413       (413 )   (100.00)%
    Prepayment penalties collected     (122 )     (133 )     11     (8.27)%
    Total other nonrecurring items (net of tax)     (122 )     280       (402 )   (143.57)%
    Adjusted net income from operations   $ 6,373     $ 11,305     $ (4,932 )   (43.63)%
                     
    Net interest income   $ 36,055     $ 39,087     $ (3,032 )   (7.76)%
    Prepayment penalties collected     (155 )     (169 )     14     (8.28)%
    Adjusted net interest income   $ 35,900     $ 38,918     $ (3,018 )   (7.75)%
                     
    PERFORMANCE RATIOS                
    Based on adjusted net income from operations                
    Earnings per share   $ 1.43     $ 2.55     $ (1.12 )   (43.92)%
    Return on average assets     0.48 %     0.88 %       (0.40)%
    Return on average shareholders’ equity     5.96 %     11.62 %       (5.66)%
    Return on average tangible shareholders’ equity     6.38 %     12.55 %       (6.17)%
    Efficiency ratio     77.08 %     69.06 %       8.02 %
                     
    Based on adjusted net interest income                
    Yield on average earning assets (FTE)     5.16 %     4.83 %       0.33 %
    Rate on interest bearing liabilities     3.20 %     2.35 %       0.85 %
    Net interest margin to average earning assets (FTE)     2.85 %     3.22 %       (0.37)%
                     

    Average Balances, Interest Rate, and Net Interest Income

    The following tables present the daily average amount outstanding for each major category of interest earning assets, nonearning assets, interest bearing liabilities, and noninterest bearing liabilities. These tables also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a FTE basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances.

    Net interest income is the amount by which interest income on earning assets exceeds the interest expenses on interest bearing liabilities. Net interest income, which includes loan fees, is influenced by changes in the balance and mix of assets and liabilities and market interest rates. We exert some control over these factors; however, FRB monetary policy and competition have a significant impact. For analytical purposes, net interest income is adjusted to a FTE basis by adding the income tax savings from interest on tax exempt loans, and nontaxable investment securities, thus making period-to-period comparisons more meaningful.

        Three Months Ended
        September 30, 2024   June 30, 2024   September 30, 2023
        Average Balance   Tax Equivalent Interest   Average Yield / Rate   Average Balance   Tax Equivalent Interest   Average Yield / Rate   Average Balance   Tax Equivalent Interest   Average Yield / Rate
    Interest earning assets                                    
    Total loans   $ 1,450,371     $ 19,599   5.38 %   $ 1,462,362     $ 19,550   5.38 %   $ 1,477,343     $ 19,170   5.15 %
    Taxable investment securities     89,175       335   1.49 %     89,751       350   1.57 %     101,549       397   1.55 %
    Nontaxable investment securities     10,580       57   2.14 %     11,059       62   2.25 %     12,670       70   2.19 %
    Interest earning cash and cash equivalents     148,872       2,023   5.41 %     97,511       1,331   5.49 %     43,865       594   5.37 %
    Federal Home Loan Bank stock     9,179       192   8.32 %     9,179       207   9.07 %     11,421       199   6.91 %
    Total earning assets     1,708,177       22,206   5.17 %     1,669,862       21,500   5.18 %     1,646,848       20,430   4.92 %
                                         
    Nonearning assets                                    
    Allowance for credit losses     (15,282 )             (15,300 )             (15,503 )        
    Premises and equipment, net     13,514               13,964               15,210          
    Accrued income and other assets     90,898               94,125               92,955          
    Total assets   $ 1,797,307             $ 1,762,651             $ 1,739,510          
                                         
    Interest bearing liabilities                                    
    Interest bearing demand deposits   $ 460,256     $ 4,054   3.50 %   $ 429,141     $ 3,745   3.51 %   $ 416,500     $ 3,230   3.08 %
    Savings deposits     261,620       416   0.63 %     266,731       408   0.62 %     290,939       429   0.59 %
    Time deposits     336,570       3,865   4.57 %     330,024       3,756   4.58 %     248,389       2,280   3.64 %
    Borrowed funds     179,219       1,867   4.14 %     178,474       1,741   3.92 %     201,007       1,818   3.59 %
    Total interest bearing liabilities     1,237,665       10,202   3.28 %     1,204,370       9,650   3.22 %     1,156,835       7,757   2.66 %
                                         
    Noninterest bearing liabilities                                    
    Noninterest bearing deposits     402,274               405,985               435,398          
    Accrued interest and other liabilities     12,128               9,719               14,417          
    Shareholders’ equity     145,240               142,577               132,860          
    Total liabilities and shareholders’ equity   $ 1,797,307             $ 1,762,651             $ 1,739,510          
    Net interest income (FTE)       $ 12,004           $ 11,850           $ 12,673    
    Net interest margin to earning assets (FTE)           2.80 %           2.85 %           3.05 %
                                         
        Nine Months Ended
        September 30, 2024   September 30, 2023
        Average Balance   Tax Equivalent Interest   Average Yield / Rate   Average Balance   Tax Equivalent Interest   Average Yield / Rate
    Interest earning assets                        
    Total loans   $ 1,461,289     $ 58,758   5.37 %   $ 1,464,959     $ 55,749   5.09 %
    Taxable investment securities     91,041       1,044   1.53 %     106,158       1,250   1.57 %
    Nontaxable investment securities     11,200       186   2.22 %     13,403       227   2.26 %
    Interest earning cash and cash equivalents     114,540       4,673   5.45 %     24,484       955   5.21 %
    Federal Home Loan Bank stock     9,179       600   8.73 %     11,011       515   6.25 %
    Total earning assets     1,687,249       65,261   5.17 %     1,620,015       58,696   4.84 %
                             
    Nonearning assets                        
    Allowance for credit losses     (15,328 )             (15,290 )        
    Premises and equipment, net     13,957               15,342          
    Accrued income and other assets     91,310               90,874          
    Total assets   $ 1,777,188             $ 1,710,941          
                             
    Interest bearing liabilities                        
    Interest bearing demand deposits   $ 436,997     $ 11,358   3.47 %   $ 385,316     $ 7,927   2.75 %
    Savings deposits     266,883       1,237   0.62 %     312,762       1,336   0.57 %
    Time deposits     331,113       11,265   4.54 %     196,838       4,595   3.12 %
    Borrowed funds     180,738       5,307   3.92 %     216,771       5,703   3.52 %
    Total interest bearing liabilities     1,215,731       29,167   3.20 %     1,111,687       19,561   2.35 %
                             
    Noninterest bearing liabilities                        
    Noninterest bearing deposits     408,449               455,069          
    Accrued interest and other liabilities     10,212               14,117          
    Shareholders’ equity     142,796               130,068          
    Total liabilities and shareholders’ equity   $ 1,777,188             $ 1,710,941          
    Net interest income (FTE)       $ 36,094           $ 39,135    
    Net interest margin to earning assets (FTE)           2.86 %           3.23 %
                             

    Volume and Rate Variance Analysis

    The following table sets forth the effect of volume and rate changes on interest income and expense for the periods indicated. For the purpose of this table, changes in interest due to volume and rate were determined as follows:

    Volume – change in volume multiplied by the previous period’s rate.
    Rate – change in the FTE rate multiplied by the previous period’s volume.

    The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

        Three Months Ended   Three Months Ended   Nine Months Ended
        September 30, 2024   September 30, 2024   September 30, 2024
        Compared To   Compared To   Compared To
        June 30, 2024   September 30, 2023   September 30, 2023
        Increase (Decrease) Due to   Increase (Decrease) Due to   Increase (Decrease) Due to
        Volume   Rate   Net   Volume   Rate   Net   Volume   Rate   Net
    Changes in interest income                                    
    Total loans   $ 49     $     $ 49     $ (1,847 )   $ 2,276     $ 429     $ (227 )   $ 3,236     $ 3,009  
    Taxable investment securities     (2 )     (13 )     (15 )     (47 )     (15 )     (62 )     (175 )     (31 )     (206 )
    Nontaxable investment securities     (2 )     (3 )     (5 )     (12 )     (1 )     (13 )     (37 )     (4 )     (41 )
    Interest earning cash and cash equivalents     825       (133 )     692       1,424       5       1,429       3,672       46       3,718  
    Federal Home Loan Bank stock           (15 )     (15 )     (161 )     154       (7 )     (137 )     222       85  
    Total changes in interest income     870       (164 )     706       (643 )     2,419       1,776       3,096       3,469       6,565  
                                         
    Changes in interest expense                                    
    Interest bearing demand deposits     380       (71 )     309       359       465       824       1,162       2,269       3,431  
    Savings deposits     (25 )     33       8       (147 )     134       (13 )     (258 )     159       (99 )
    Time deposits     158       (49 )     109       922       663       1,585       4,001       2,669       6,670  
    Borrowed funds     9       117       126       (896 )     945       49       (1,265 )     869       (396 )
    Total changes in interest expense     522       30       552       238       2,207       2,445       3,640       5,966       9,606  
    Net change in net interest income (FTE)   $ 348     $ (194 )   $ 154     $ (881 )   $ 212     $ (669 )   $ (544 )   $ (2,497 )   $ (3,041 )
                                         
        Average Yield/Rate for the Three Months Ended
        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Total earning assets   5.17 %   5.18 %   5.15 %   5.06 %   4.92 %
    Total interest bearing liabilities   3.28 %   3.22 %   3.11 %   2.90 %   2.66 %
    Net interest margin to earning assets (FTE)   2.80 %   2.85 %   2.92 %   3.01 %   3.05 %
                         
        Quarter to Date Net Interest Income (FTE)
        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Interest income   $ 22,194     $ 21,487     $ 21,541   $ 21,033     $ 20,416  
    FTE adjustment     12       13       14     14       14  
    Total interest income (FTE)     22,206       21,500       21,555     21,047       20,430  
    Total interest expense     10,202       9,650       9,315     8,526       7,757  
    Net interest income (FTE)   $ 12,004     $ 11,850     $ 12,240   $ 12,521     $ 12,673  
                         

    Noninterest Income

        Three Months Ended
        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Service charges and fees                    
    Trust and investment services     619       607       641       433       572  
    ATM and debit card     541       545       512       549       568  
    Service charges on deposit accounts     163       162       140       211       244  
    Total     1,323       1,314       1,293       1,193       1,384  
    Net gain on sales of residential mortgage loans     211       177       143       96       164  
    Net gain on sales of commercial loans     133       98       296       226        
    Change in fair value of equity investments     33       (3 )     (10 )     42       (28 )
    Changes in the fair value of MSR     (175 )     (44 )     (96 )     (108 )     119  
    Other                    
    Mortgage servicing fees     389       386       394       398       398  
    Change in cash surrender value of corporate owned life insurance     206       207       204       192       181  
    Other     90       179       131       106       120  
    Total     685       772       729       696       699  
    Total noninterest income   $ 2,210     $ 2,314     $ 2,355     $ 2,145     $ 2,338  
                         
    Memo items:                    
    Residential mortgage operations   $ 425     $ 519     $ 441     $ 386     $ 681  
        Nine Months Ended September 30   Variance
          2024       2023     Amount   %
    Service charges and fees                
    Trust and investment services   $ 1,867     $ 1,704     $ 163     9.57 %
    ATM and debit card     1,598       1,669       (71 )   (4.25)%
    Service charges on deposit accounts     465       686       (221 )   (32.22)%
    Total     3,930       4,059       (129 )   (3.18)%
    Net gain on sales of residential mortgage loans     531       523       8     1.53 %
    Net gain on sales of commercial loans     527       95       432     454.74 %
    Change in fair value of equity investments     20       (29 )     49     (168.97)%
    Changes in the fair value of MSR     (315 )     218       (533 )   (244.50)%
    Other                
    Mortgage servicing fees     1,169       1,210       (41 )   (3.39)%
    Change in cash surrender value of corporate owned life insurance     617       531       86     16.20 %
    Other     400       519       (119 )   (22.93)%
    Total     2,186       2,260       (74 )   (3.27)%
    Total noninterest income   $ 6,879     $ 7,126     $ (247 )   (3.47)%
                     
    Memo items:                
    Residential mortgage operations   $ 1,385     $ 1,951     $ (566 )   (29.01)%
                     

    Residential Mortgage Operations

    Residential mortgage operations includes net gains on sales of loans, changes in the fair value of mortgage servicing rights, and mortgage servicing fees.

    Net gain on sales of residential mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. Although elevated interest rates and limited inventories have significantly driven down the volume of new originations and refinancing activity, we continue to actively sell residential mortgage loans into the secondary market. During the third quarter of 2024, residential mortgage originations sold into the secondary market totaled $10,722.

    Changes in the fair value of MSR are highly correlated to changes in interest rates and prepayment speeds. During the third quarter of 2024, the fair value of the servicing portfolio decreased primarily due to a decline in the size of the servicing portfolio, as the portfolio declined by $4,741. Mortgage servicing rights are expected to continue to decline due to likely further reductions in the size of our servicing portfolio as paydowns and maturities are expected to outpace new originations.

    Mortgage servicing fees includes the fees earned for servicing loans that have been sold into the secondary market. The annual decrease in mortgage servicing fees is directly related to the size of the serviced portfolio. Due to reduced levels of secondary market originations and prepayments, the serviced loan portfolio declined by $22,584, or 3.58%, since September 30, 2023. We expect mortgage servicing fees to trend modestly downward in future periods due to decreased secondary market originations.

    All Other Noninterest Income

    Trust and investment services includes income earned from contracts with customers to manage assets for investment and/or to transact on their accounts through the wealth management and trust department. Trust services and wealth management fees are subject to market fluctuations and interest rate changes. We expect trust and investment services fees to modestly increase in future periods.

    ATM and debit card income represents fees earned on ATM and debit card transactions. We expect these fees to approximate current levels in 2024.

    Service charges on deposit accounts includes fees earned from deposit customers for transaction-based charges, account maintenance and overdraft services. These charges have declined in 2024 due to a reduced level of NSF fees charged to customers based on regulatory guidance and overall industry trends. Service charges on deposit accounts are expected to approximate current levels throughout the remainder of the year.

    Net gain on sales of commercial loans represents the income earned from the sale of commercial loans into the secondary market. Throughout 2024, we sold the guaranteed portion of select SBA loans. We anticipate this strategy to continue throughout the remainder of the year.

    Change in cash surrender value of corporate owned life insurance is expected to modestly increase throughout 2024.

    Other includes miscellaneous other income items, none of which are individually significant.

    Noninterest Expenses

        Three Months Ended
        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Compensation and benefits   $ 5,839   $ 5,842   $ 6,066   $ 5,521   $ 5,592
    Professional services     799     963     894     695     726
    Furniture and equipment     668     689     727     696     668
    Occupancy     622     605     623     610     591
    Data processing     751     490     547     505     576
    Loan and collection     349     425     322     301     232
    Advertising and promotional     312     337     348     139     506
    Other                    
    Acquisition related expenses     953                
    FDIC insurance premiums     275     327     299     270     330
    ATM and debit card     214     188     171     158     153
    Telephone and communication     95     86     109     103     115
    Amortization of core deposit intangibles     44     44     45     76     75
    Other general and administrative     1,053     925     1,015     1,047     1,030
    Total     2,634     1,570     1,639     1,654     1,703
    Total noninterest expenses   $ 11,974   $ 10,921   $ 11,166   $ 10,121   $ 10,594
                         
        Nine Months Ended
    September 30
      Variance
          2024     2023   Amount   %
    Compensation and benefits   $ 17,747   $ 16,876   $ 871     5.16 %
    Professional services     2,656     2,729     (73 )   (2.67)%
    Furniture and equipment     2,084     2,079     5     0.24 %
    Occupancy     1,850     1,815     35     1.93 %
    Data processing     1,788     1,654     134     8.10 %
    Loan and collection     1,096     929     167     17.98 %
    Advertising and promotional     997     1,466     (469 )   (31.99)%
    Other                
    Acquisition related expenses     953         953     N/M
    FDIC insurance premiums     901     861     40     4.65 %
    ATM and debit card     573     493     80     16.23 %
    Telephone and communication     290     334     (44 )   (13.17)%
    Amortization of core deposit intangibles     133     227     (94 )   (41.41)%
    Other general and administrative     2,993     3,084     (91 )   (2.95)%
    Total     5,843     4,999     844     16.88 %
    Total noninterest expenses   $ 34,061   $ 32,547   $ 1,514     4.65 %
                     

    Compensation and benefits includes salaries, commissions and incentives, employee benefits, and payroll taxes. Compensation and benefits has increased in 2024 due to an increase in the size of the organization, merit increases, and market based adjustments. We expect a modest increase in overall compensation and benefits throughout the remainder of 2024.

    Professional services include expenses relating to third-party professional services. These services include, but are not limited to, regulatory, auditing, consulting, and legal. Professional services expenses are expected to approximate current levels in future periods.

    Furniture and equipment and occupancy expenses primarily consist of depreciation, repairs and maintenance, certain service contracts, and other related items. These expenses are expected to approximate current levels throughout the remainder of 2024.

    Data processing primarily includes the expenses relating to our core data processor. The increase in data processing in the third quarter of 2024 is primarily due to the loss of incentive credits from our core data processor following our proposed merger announcement. Data processing expenses are expected to modestly increase throughout 2024 due to annual contractual increases from our core data processor.

    Loan and collection includes expenses related to the origination and collection of loans. The increase in such expenses in 2024 is due to increased levels of home ownership grants. Loan and collection expenses are expected to approximate current levels in future periods as loan growth is expected to approximate current levels.

    Advertising and promotional expenses includes media costs and any donations or sponsorships. These expenses also include marketing efforts to attract new and expand existing customer loan and deposit account relationships. Total advertising and promotional expenses have declined in 2024 due to the expiration of certain long-term sponsorship commitments. Advertising and promotional expenses are expected to approximate current levels in future periods.

    Acquisition related expenses includes expenses related to our proposed merger with ChoiceOne Financial Services, Inc., which was announced during the third quarter of 2024. These expenses include services rendered for investment banking, legal and accounting. We expect to incur additional acquisition related expenses in future periods.

    FDIC insurance premiums typically fluctuate each period based on the size of the balance sheet, capital position and overall risk profile. FDIC insurance premiums are expected to approximate current levels in future periods.

    ATM and debit card expenses fluctuate based on customer and non-customer utilization of ATMs and customer debit card volumes. We expect these fees to approximate current levels in future periods.

    Telephone and communication includes expenses relating to our communication systems. These expenses are expected to approximate current levels in future periods.

    Amortization of core deposit intangibles relates to the core deposits acquired from Community Bancorp, Inc. on December 31, 2016 and FSB on December 1, 2021. These core deposit intangibles are being amortized using an accelerated sum-of-years-digits method over their estimated useful lives of seven years. The core deposit intangibles associated with the acquisition of Community Bancorp, Inc. were fully amortized as of December 31, 2023. The core deposit intangibles associated with the acquisition of FSB will be amortized through 2028.

    Other general and administrative includes miscellaneous other expense items. Other general and administrative expenses are expected to approximate current levels in future periods.

    Balance Sheet Breakdown and Analysis

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    ASSETS                    
    Cash and due from banks   $ 199,717   $ 128,590   $ 132,349   $ 90,661   $ 83,365
    Total investment securities     99,724     100,167     103,210     107,615     109,543
    Residential mortgage loans held-for-sale, at fair value     1,861     2,440     1,067     747     1,037
    Gross loans     1,442,389     1,459,929     1,461,465     1,473,471     1,483,720
    Less allowance for credit losses     14,700     15,300     15,300     15,400     15,400
    Net loans     1,427,689     1,444,629     1,446,165     1,458,071     1,468,320
    All other assets     78,379     80,803     81,838     81,858     82,674
    Total assets   $ 1,807,370   $ 1,756,629   $ 1,764,629   $ 1,738,952   $ 1,744,939
                         
    LIABILITIES AND SHAREHOLDERS’ EQUITY                    
    Total deposits   $ 1,470,586   $ 1,427,059   $ 1,438,408   $ 1,394,182   $ 1,401,797
    Total borrowed funds     179,970     178,397     178,500     198,500     201,050
    Accrued interest payable and other liabilities     10,416     7,872     6,647     7,568     9,190
    Total liabilities     1,660,972     1,613,328     1,623,555     1,600,250     1,612,037
    Total shareholders’ equity     146,398     143,301     141,074     138,702     132,902
    Total liabilities and shareholders’ equity   $ 1,807,370   $ 1,756,629   $ 1,764,629   $ 1,738,952   $ 1,744,939
                         
        9/30/2024 vs 6/30/2024   9/30/2024 vs 9/30/2023
        Variance   Variance
        Amount   %   Amount   %
    ASSETS                
    Cash and due from banks   $ 71,127     55.31 %   $ 116,352     139.57 %
    Total investment securities     (443 )   (0.44)%     (9,819 )   (8.96)%
    Residential mortgage loans held-for-sale, at fair value     (579 )   (23.73)%     824     79.46 %
    Gross loans     (17,540 )   (1.20)%     (41,331 )   (2.79)%
    Less allowance for credit losses     (600 )   (3.92)%     (700 )   (4.55)%
    Net loans     (16,940 )   (1.17)%     (40,631 )   (2.77)%
    All other assets     (2,424 )   (3.00)%     (4,295 )   (5.20)%
    Total assets   $ 50,741     2.89 %   $ 62,431     3.58 %
                     
    LIABILITIES AND SHAREHOLDERS’ EQUITY                
    Total deposits   $ 43,527     3.05 %   $ 68,789     4.91 %
    Total borrowed funds     1,573     0.88 %     (21,080 )   (10.48)%
    Accrued interest payable and other liabilities     2,544     32.32 %     1,226     13.34 %
    Total liabilities     47,644     2.95 %     48,935     3.04 %
    Total shareholders’ equity     3,097     2.16 %     13,496     10.15 %
    Total liabilities and shareholders’ equity   $ 50,741     2.89 %   $ 62,431     3.58 %
                     

    Cash and due from banks

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Cash and due from banks                    
    Noninterest bearing   $ 37,871   $ 35,437     $ 26,128   $ 29,997   $ 35,121  
    Interest bearing     161,846     93,153       106,221     60,664     48,244  
    Total   $ 199,717   $ 128,590     $ 132,349   $ 90,661   $ 83,365  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Cash and due from banks                    
    Noninterest bearing   $ 2,434     6.87 %       $ 2,750     7.83 %
    Interest bearing     68,693     73.74 %         113,602     235.47 %
    Total   $ 71,127     55.31 %       $ 116,352     139.57 %
                         

    Cash and due from banks fluctuates from period to period based on loan demand and variances in deposit account balances.

    Primary and secondary liquidity sources

    The following table outlines our primary and secondary sources of liquidity as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Cash and cash equivalents   $ 199,717   $ 128,590   $ 132,349   $ 90,661   $ 83,365
    Fair value of unpledged investment securities     77,019     74,775     73,680     80,247     82,103
    FHLB borrowing availability     190,000     190,000     190,000     170,000     170,000
    Unsecured lines of credit     23,000     23,000     23,000     20,000     20,000
    Funds available through the Fed Discount Window     109     106     107     111     110
    Parent company line of credit     5,100     7,000     3,500     3,500     950
    Total liquidity sources   $ 494,945   $ 423,471   $ 422,636   $ 364,519   $ 356,528
                         

    The increase in cash and cash equivalents as of September 30, 2024 was due to an increase in total deposits (see “Total deposits” below).

    In addition to the above liquidity sources, we also have the option of utilizing wholesale funding sources, such as brokered NOW accounts, brokered time deposits, and internet time deposits. Although wholesale funding sources are typically more expensive than core deposits and other liquidity sources, they are an integral part of our overall asset and liability management strategy.

    Investment securities

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Available-for-sale                    
    U.S. Government and federal agency   $ 19,432     $ 20,430     $ 20,427     $ 22,425     $ 23,420  
    State and municipal     18,997       19,108       20,403       20,460       20,992  
    Mortgage backed residential     44,086       45,808       47,505       49,076       50,786  
    Certificates of deposit     2,234       2,481       2,729       2,728       3,956  
    Collateralized mortgage obligations – agencies     21,640       22,213       22,778       23,320       24,062  
    Unrealized gain/(loss) on available-for-sale securities     (8,798 )     (12,179 )     (13,027 )     (12,760 )     (15,958 )
    Total available-for-sale     97,591       97,861       100,815       105,249       107,258  
    Held-to-maturity state and municipal     535       791       877       878       879  
    Equity securities     1,598       1,515       1,518       1,488       1,406  
    Total investment securities   $ 99,724     $ 100,167     $ 103,210     $ 107,615     $ 109,543  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Available-for-sale                    
    U.S. Government and federal agency     (998 )   (4.88)%       $ (3,988 )   (17.03)%
    State and municipal     (111 )   (0.58)%         (1,995 )   (9.50)%
    Mortgage backed residential     (1,722 )   (3.76)%         (6,700 )   (13.19)%
    Certificates of deposit     (247 )   (9.96)%         (1,722 )   (43.53)%
    Collateralized mortgage obligations – agencies     (573 )   (2.58)%         (2,422 )   (10.07)%
    Unrealized gain/(loss) on available-for-sale securities     3,381     (27.76)%         7,160     (44.87)%
    Total available-for-sale     (270 )   (0.28)%         (9,667 )   (9.01)%
    Held-to-maturity state and municipal     (256 )   (32.36)%         (344 )   (39.14)%
    Equity securities     83       5.48 %         192       13.66 %
    Total investment securities   $ (443 )   (0.44)%       $ (9,819 )   (8.96)%
                         

    The amortized cost and fair value of AFS investment securities as of September 30, 2024 were as follows:

        Maturing        
        Due in One Year or Less   After One Year But Within Five Years   After Five Years But Within Ten Years   After Ten Years   Securities with Variable Monthly Payments or Noncontractual Maturities   Total
    U.S. Government and federal agency   $ 6,481   $ 12,951   $   $   $   $ 19,432
    State and municipal     1,624     15,190     1,113     1,070         18,997
    Mortgage backed residential                     44,086     44,086
    Certificates of deposit     2,234                     2,234
    Collateralized mortgage obligations – agencies                     21,640     21,640
    Total amortized cost   $ 10,339   $ 28,141   $ 1,113   $ 1,070   $ 65,726   $ 106,389
    Fair value   $ 10,111   $ 26,620   $ 1,017   $ 1,001   $ 58,842   $ 97,591
                             

    The amortized cost and fair value of HTM investment securities as of September 30, 2024 were as follows:

        Maturing        
        Due in One Year or Less   After One Year But Within Five Years   After Five Years But Within Ten Years   After Ten Years   Securities with Variable Monthly Payments or Noncontractual Maturities   Total
    State and municipal   $ 85   $ 295   $ 155   $   $   $ 535
    Fair value   $ 84   $ 290   $ 152   $   $   $ 526
                             

    Total investment securities have declined in recent periods primarily due to maturities and prepayments. As a result of overall market conditions, we have not replenished maturing securities with new purchases.

    Residential mortgage loans held-for-sale, at fair value

    Loans HFS represent the fair value of loans that have been committed to be sold to the secondary market, but have not yet been delivered. The level of loans HFS fluctuates based on loan demand as well as the timing of loan deliveries to the secondary market.

    Loans and allowance for credit losses

    As outlined in the following tables, our loan portfolio has strategically declined throughout the past 12 months. As a result of current market conditions, we expect minimal loan growth throughout the remainder of 2024. Specifically, our commercial pipeline has declined significantly, and the requests that are being presented are lower dollar balances and often carry an SBA guarantee.

    The following tables outline the composition and changes in the loan portfolio as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Commercial and industrial   $ 109,188     $ 120,331     $ 114,772     $ 118,089     $ 125,330  
    Commercial real estate     855,270       864,200       867,270       870,693       874,870  
    Total commercial loans     964,458       984,531       982,042       988,782       1,000,200  
    Residential mortgage     419,140       418,403       426,762       431,836       431,740  
    Home equity     55,475       53,133       48,568       48,380       47,069  
    Total residential real estate loans     474,615       471,536       475,330       480,216       478,809  
    Consumer     3,316       3,862       4,093       4,473       4,711  
    Gross loans     1,442,389       1,459,929       1,461,465       1,473,471       1,483,720  
    Allowance for credit losses     (14,700 )     (15,300 )     (15,300 )     (15,400 )     (15,400 )
    Loans, net   $ 1,427,689     $ 1,444,629     $ 1,446,165     $ 1,458,071     $ 1,468,320  
                         
    Memo items:                    
    Residential mortgage loans serviced for others   $ 609,113     $ 613,854     $ 619,160     $ 624,765     $ 631,697  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Commercial and industrial   $ (11,143 )   (9.26)%       $ (16,142 )   (12.88)%
    Commercial real estate     (8,930 )   (1.03)%         (19,600 )   (2.24)%
    Total commercial loans     (20,073 )   (2.04)%         (35,742 )   (3.57)%
    Residential mortgage     737       0.18 %         (12,600 )   (2.92)%
    Home equity     2,342       4.41 %         8,406       17.86 %
    Total residential real estate loans     3,079       0.65 %         (4,194 )   (0.88)%
    Consumer     (546 )   (14.14)%         (1,395 )   (29.61)%
    Gross loans     (17,540 )   (1.20)%         (41,331 )   (2.79)%
    Allowance for credit losses     600     (3.92)%         700     (4.55)%
    Loans, net   $ (16,940 )   (1.17)%       $ (40,631 )   (2.77)%
                         
    Memo items:                    
    Residential mortgage loans serviced for others   $ (4,741 )   (0.77)%       $ (22,584 )   (3.58)%
                         

    The following table presents historical loan balances by portfolio segment as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Loans collectively evaluated                    
    Commercial and industrial   $ 102,523   $ 113,254   $ 112,542   $ 115,665   $ 124,860
    Commercial real estate     854,038     864,026     867,270     870,524     874,701
    Residential mortgage     416,864     416,130     423,881     429,109     428,927
    Home equity     55,416     53,056     48,388     48,136     46,898
    Consumer     3,325     3,862     4,093     4,473     4,711
    Subtotal     1,432,166     1,450,328     1,456,174     1,467,907     1,480,097
    Loans individually evaluated                    
    Commercial and industrial     6,665     7,077     2,230     2,424     470
    Commercial real estate     1,232     174         169     169
    Residential mortgage     2,276     2,273     2,881     2,727     2,813
    Home equity     48     77     180     244     171
    Consumer     2                
    Subtotal     10,223     9,601     5,291     5,564     3,623
    Gross Loans   $ 1,442,389   $ 1,459,929   $ 1,461,465   $ 1,473,471   $ 1,483,720
                         

    The following table presents historical allowance for credit losses allocations by portfolio segment as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Allowance for credit losses for collectively evaluated loans                    
    Commercial and industrial   $ 1,436   $ 1,434   $ 1,300   $ 1,407   $ 1,362
    Commercial real estate     8,347     8,903     8,359     8,467     8,703
    Residential mortgage     4,131     4,133     4,202     4,409     4,439
    Home equity     348     327     305     321     315
    Consumer     51     80     38     44     36
    Unallocated             670     355     294
    Subtotal     14,313     14,877     14,874     15,003     15,149
    Allowance for credit losses for individually evaluated loans                    
    Commercial and industrial     385     423     423     363     248
    Commercial real estate                    
    Residential mortgage             3     34     3
    Home equity                    
    Consumer     2                
    Unallocated                    
    Subtotal     387     423     426     397     251
    Allowance for credit losses   $ 14,700   $ 15,300   $ 15,300   $ 15,400   $ 15,400
                         
    Commercial and industrial   $ 1,784   $ 1,857   $ 1,723   $ 1,770   $ 1,610
    Commercial real estate     8,347     8,903     8,359     8,467     8,703
    Residential mortgage     4,131     4,133     4,205     4,443     4,442
    Home equity     348     327     305     321     315
    Consumer     53     80     38     44     36
    Unallocated             670     355     294
    Allowance for credit losses   $ 14,700   $ 15,300   $ 15,300   $ 15,400   $ 15,400
                         

    Loan concentration analysis

    As a result of current economic conditions, there continues to be a heightened focus in the financial industry for non-owner occupied commercial real estate loans, most specifically retail and office space industries. While we continue to monitor various industries that have been impacted by the pandemic, we also continue to monitor the effects of inflation, supply chain disruption, elevated interest rates, and office space usage associated with an increased remote workforce. The overall credit quality indicators of non-owner occupied commercial real estate loan portfolio have remained strong. Performance is based on debt service coverage ratio, loan to value ratio and payment trends. As of September 30, 2024, there were no delinquencies in the non-owner occupied commercial real estate loan portfolio. We expect the non-owner occupied commercial real estate loan portfolio to experience insignificant growth, if any, in future periods.

    Within the net lease and retail strip center non-owner occupied commercial real estate pools, we have exposure to Rite Aid. During the fourth quarter of 2023, Rite Aid, which operates over 2,000 retail pharmacies across 17 states, filed for Chapter 11 bankruptcy protection. During the third quarter of 2024, Rite Aid announced that it successfully emerged from bankruptcy protection and will now operate as a private company. However, all Rite Aid stores in Michigan were closed as part of the company’s restructuring. As a result, one commercial real estate loan was partially charged off and its remaining balance was moved to nonaccrual status during the third quarter of 2024. We continue to actively monitor five remaining loans previously associated with Rite Aid.

    With the ongoing pressures on the office sector due to remote work capabilities and less required office space, we continue to monitor the office pool more closely for potential deterioration. It is not expected that there will be much, if any, impact on portfolio performance in this pool in the near future due to existing lease terms, tenant mix, office size, and strong underwriting at origination. Due to current economic uncertainty and the pressures noted above, it is unlikely that we will seek new loan originations in the non-owner occupied office pool in 2024.

    Below is a description of each industry pool within the non-owner occupied commercial real estate loan portfolio:

    Net lease: Loans in this pool represent national credit tenants (or franchisees of the same) or large regional tenants with excellent credit. These loans are typically single tenant net lease credits with strong debt service coverage ratios and lease terms that extend beyond the maturity of the loan.

    Retail strip centers: Loans in this pool represent loans collateralized by retail strip centers. The tenant base within this pool consists primarily of retail space whose average lease periods run between one and ten years. Larger strip centers are usually anchored by a national or regional tenant. Guarantors in this category typically have large liquid reserves.

    Office: Loans in this pool represent loans collateralized by non-owner occupied office buildings. The tenant base includes legal and other professional services whose average lease periods run from three to fifteen years.

    Special use: Loans in this pool represent loans collateralized by special use buildings, which include hotels, motels, assisted living and nursing homes that are not classified as construction or SBA loans.

    Industrial: Loans in this pool represent investment properties used for manufacturing and production.

    Medical office: Loans in this pool represent loans collateralized by non-owner occupied medical office buildings. The tenant base includes medical services whose average lease periods run from three to fifteen years.

    Self storage: Loans in this pool represent self storage buildings. Loan terms are generally five years or less and the lease terms of the units are typically on a month-to-month basis.

    Mixed use: Loans in this pool represent loans collateralized by mixed use real estate. The tenant base within this pool consists primarily of office-retail, office-residential or retail-residential space. The properties are most often purchased by individuals for investment purposes.

    Retail: Loans in this pool represent loans collateralized by single tenant retail buildings whose average lease periods run over five years.

    The following tables present the composition of current and historical non-owner occupied commercial real estate loans, based on loan collateral, by industry pool:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Net lease   $ 137,406     $ 141,064     $ 147,103   $ 149,056     $ 160,077  
    Retail strip centers     106,948       106,631       107,834     98,588       96,567  
    Office     61,897       62,237       61,657     61,822       62,959  
    Special use     71,307       71,006       58,278     58,710       57,612  
    Industrial     23,338       23,107       22,575     28,380       28,906  
    Medical office     24,551       24,818       25,380     25,842       28,591  
    Self storage     32,797       32,502       25,660     23,455       21,993  
    Mixed use     16,829       16,980       17,174     17,335       19,833  
    Retail     15,183       17,191       12,533     12,981       14,115  
                         
    Total non-owner occupied commercial real estate loans   $ 490,256     $ 495,536     $ 478,194   $ 476,169     $ 490,653  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Net lease   $ (3,658 )   (2.59)%       $ (22,671 )   (14.16)%
    Retail strip centers     317       0.30 %         10,381       10.75 %
    Office     (340 )   (0.55)%         (1,062 )   (1.69)%
    Special use     301       0.42 %         13,695       23.77 %
    Industrial     231       1.00 %         (5,568 )   (19.26)%
    Medical office     (267 )   (1.08)%         (4,040 )   (14.13)%
    Self storage     295       0.91 %         10,804       49.12 %
    Mixed use     (151 )   (0.89)%         (3,004 )   (15.15)%
    Retail     (2,008 )   (11.68)%         1,068       7.57 %
                         
    Total non-owner occupied commercial real estate loans   $ (5,280 )   (1.07)%       $ (397 )   (0.08)%
                         

    The following table presents the average loan size of current and historical non-owner occupied commercial real estate loans, based on loan collateral, by industry pool:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Net lease   $ 1,383   $ 1,291   $ 1,311   $ 1,316   $ 1,300
    Retail strip centers     2,379     2,197     2,231     2,135     2,115
    Office     1,370     1,363     1,296     1,297     1,294
    Special use     2,612     2,546     2,064     2,079     2,134
    Industrial     933     925     941     1,092     1,072
    Medical office     1,116     1,128     1,103     1,078     1,145
    Self storage     1,923     1,926     1,509     1,380     1,692
    Mixed use     1,324     1,334     1,321     1,333     1,240
    Retail     407     513     447     461     429
                         
    Total non-owner occupied commercial real estate loans   $ 1,489   $ 1,448   $ 1,392   $ 1,379   $ 1,362
                         

    The following table presents current and historical non-owner occupied commercial real estate loans, based on loan collateral, by industry pool as a percentage of gross loans:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Net lease   9.53 %   9.66 %   10.07 %   10.12 %   10.79 %
    Retail strip centers   7.41 %   7.30 %   7.38 %   6.69 %   6.51 %
    Office   4.29 %   4.26 %   4.22 %   4.20 %   4.24 %
    Special use   4.94 %   4.86 %   3.99 %   3.98 %   3.88 %
    Industrial   1.62 %   1.58 %   1.54 %   1.93 %   1.95 %
    Medical office   1.70 %   1.70 %   1.74 %   1.75 %   1.93 %
    Self storage   2.27 %   2.23 %   1.76 %   1.59 %   1.48 %
    Mixed use   1.17 %   1.16 %   1.18 %   1.18 %   1.34 %
    Retail   1.05 %   1.18 %   0.86 %   0.88 %   0.95 %
                         
    Total non-owner occupied commercial real estate loans to gross loans   33.98 %   33.93 %   32.74 %   32.32 %   33.07 %
                         

    Asset quality

    The following table summarizes our current, past due, and nonaccrual loans as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Accruing interest                    
    Current   $ 1,428,014   $ 1,445,780   $ 1,451,432   $ 1,463,668   $ 1,477,386
    Past due 30-89 days     4,152     4,534     4,344     4,239     2,711
    Past due 90 days or more         14     398        
    Total accruing interest     1,432,166     1,450,328     1,456,174     1,467,907     1,480,097
    Nonaccrual     10,223     9,601     5,291     5,564     3,623
    Total loans   $ 1,442,389   $ 1,459,929   $ 1,461,465   $ 1,473,471   $ 1,483,720
    Total loans past due and in nonaccrual status   $ 14,375   $ 14,149   $ 10,033   $ 9,803   $ 6,334
                         

    The following table summarizes the our nonperforming assets as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Nonaccrual loans   $ 10,223   $ 9,601   $ 5,291   $ 5,564   $ 3,623
    Accruing loans past due 90 days or more         14     398        
    Total nonperforming loans     10,223     9,615     5,689     5,564     3,623
    Other real estate owned     293     293     345     597     345
    Total nonperforming assets   $ 10,516   $ 9,908   $ 6,034   $ 6,161   $ 3,968
                         

    The following table summarizes our charge-offs, recoveries and allowance for credit losses as of, and for the three-month periods ended:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Total charge-offs   $ 1,814   $ 814   $ 86     $ 110     $ 16  
    Total recoveries     11     18     29       300       455  
    Net charge-offs (recoveries)   $ 1,803   $ 796   $ 57     $ (190 )   $ (439 )
    Allowance for credit losses   $ 1,203   $ 796   $ (43 )   $ (190 )   $ (309 )
                         

    During the third quarter of 2024, we partially charged off one commercial real estate loan for $1,443 related to the Rite Aid bankruptcy filing. We believe that the credit characteristics are unique and are not an indication of softening in the remainder of our commercial loan portfolio.

    The following table summarizes the our primary asset quality measures as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Nonperforming loans to gross loans   0.71 %   0.66 %   0.39 %   0.38 %   0.24 %
    Nonperforming assets to total assets   0.58 %   0.56 %   0.34 %   0.35 %   0.23 %
    Allowance for credit losses to gross loans   1.02 %   1.05 %   1.05 %   1.05 %   1.04 %
    Net charge-offs (recoveries) to QTD average gross loans   0.12 %   0.05 %   %   (0.01)%   (0.03)%
    Credit loss expense (reversal) to QTD average gross loans   0.08 %   0.05 %   %   (0.01)%   (0.02)%
                         

    The following table summarizes the average loan size as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Commercial and industrial   $ 310   $ 343   $ 326   $ 334   $ 353
    Commercial real estate     901     906     900     905     896
    Total commercial loans     740     754     746     752     751
    Residential mortgage     235     234     234     236     234
    Home equity     58     56     53     53     52
    Total residential real estate loans     173     173     174     175     174
    Consumer     12     13     13     13     12
    Gross loans   $ 335   $ 337   $ 336   $ 337   $ 335
                         

    All other assets

    The following tables outline the composition and changes in other assets as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Premises and equipment, net   $ 13,203     $ 13,661     $ 14,111   $ 14,561     $ 14,928  
    Federal Home Loan Bank stock     9,179       9,179       9,179     9,179       9,179  
    Corporate owned life insurance     28,129       27,877       27,670     27,466       27,274  
    Mortgage servicing rights     8,461       8,636       8,680     8,776       8,884  
    Accrued interest receivable     4,354       4,747       4,869     4,472       4,485  
    Goodwill     8,853       8,853       8,853     8,853       8,853  
    Other assets                    
    Core deposit intangibles     400       444       488     533       609  
    Right-of-use assets     1,062       1,142       1,237     1,333       1,426  
    Other real estate owned     293       293       345     597       345  
    Other     4,445       5,971       6,406     6,088       6,691  
    Total     6,200       7,850       8,476     8,551       9,071  
    All other assets   $ 78,379     $ 80,803     $ 81,838   $ 81,858     $ 82,674  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Premises and equipment, net   $ (458 )   (3.35)%       $ (1,725 )   (11.56)%
    Federal Home Loan Bank stock           %               %
    Corporate owned life insurance     252       0.90 %         855       3.13 %
    Mortgage servicing rights     (175 )   (2.03)%         (423 )   (4.76)%
    Accrued interest receivable     (393 )   (8.28)%         (131 )   (2.92)%
    Goodwill           %               %
    Other assets                    
    Core deposit intangibles     (44 )   (9.91)%         (209 )   (34.32)%
    Right-of-use assets     (80 )   (7.01)%         (364 )   (25.53)%
    Other real estate owned           %         (52 )   (15.07)%
    Other     (1,526 )   (25.56)%         (2,246 )   (33.57)%
    Total     (1,650 )   (21.02)%         (2,871 )   (31.65)%
    All other assets   $ (2,424 )   (3.00)%       $ (4,295 )   (5.20)%
                         

    The annual decrease in premises and equipment was due to depreciation on our existing premises and equipment.

    Total deposits

    The following tables outline the composition and changes in the deposit portfolio as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Noninterest bearing demand   $ 398,338     $ 404,521     $ 401,518   $ 423,019     $ 425,820  
    Interest bearing                    
    Savings     264,337       262,538       274,922     273,302       293,310  
    Money market demand     250,715       230,304       229,584     223,827       225,138  
    NOW                    
    Retail NOW     202,030       205,383       203,614     178,892       198,271  
    Brokered NOW                            
                         
    Total NOW Accounts     202,030       205,383       203,614     178,892       198,271  
    Time deposits                    
    Other time deposits     294,862       264,009       268,466     234,838       198,509  
    Brokered time deposits     60,304       60,304       60,304     60,304       60,251  
    Internet time deposits                           498  
                         
    Total time deposits     355,166       324,313       328,770     295,142       259,258  
                         
    Total deposits   $ 1,470,586     $ 1,427,059     $ 1,438,408   $ 1,394,182     $ 1,401,797  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Noninterest bearing demand   $ (6,183 )   (1.53)%       $ (27,482 )   (6.45)%
    Interest bearing                    
    Savings     1,799       0.69 %         (28,973 )   (9.88)%
    Money market demand     20,411       8.86 %         25,577       11.36 %
    NOW                    
    Retail NOW     (3,353 )   (1.63)%         3,759       1.90 %
    Brokered NOW           %               %
                         
    Total NOW Accounts     (3,353 )   (1.63)%         3,759       1.90 %
    Time deposits                    
    Other time deposits     30,853       11.69 %         96,353       48.54 %
    Brokered time deposits           %         53       0.09 %
    Internet time deposits           %         (498 )   (100.00)%
                         
    Total time deposits     30,853       9.51 %         95,908       36.99 %
                         
    Total deposits   $ 43,527       3.05 %       $ 68,789       4.91 %
                         

    Between March 2022 and July 2023, the FOMC raised its target federal funds rate 11 times, from a target range of 0.00-0.25% to 5.25-5.50%, or 525 basis points, in order to combat rising inflation. This rapid increase in interest rates led to significant competition amongst financial institutions for deposits. In September 2024, the FOMC lowered the target federal funds rate 50 basis points to a target range of 4.75-5.00%. Due to the overall uncertainty regarding potential rate changes in the future, customers have not sought out long-term funds, leading to a shift in demand to higher-yielding non-maturity deposit accounts as well as short-term time deposits.

    Total borrowed funds

    The following tables outline the composition and changes in borrowed funds as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Federal Home Loan Bank borrowings   $ 160,000   $ 160,000     $ 160,000   $ 180,000     $ 180,000  
    Subordinated debentures     14,000     14,000       14,000     14,000       14,000  
    Other borrowings     5,970     4,397       4,500     4,500       7,050  
    Total borrowed funds   $ 179,970   $ 178,397     $ 178,500   $ 198,500     $ 201,050  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Federal Home Loan Bank borrowings   $     %       $ (20,000 )   (11.11)%
    Subordinated debentures         %               %
    Other borrowings     1,573     35.77 %         (1,080 )   (15.32)%
    Total borrowed funds   $ 1,573     0.88 %       $ (21,080 )   (10.48)%
                         

    We utilize a mix of borrowed funds and organic deposit growth to fund loan demand. As loan growth has slowed in recent periods, our reliance on FHLB advances has declined.

    Wholesale funding sources

    Although we have been successful at growing market deposits, we utilize wholesale funding sources when necessary to fill gaps when asset growth outpaces deposit growth. Our wholesale funding sources include Federal Home Loan Bank borrowings, correspondent Fed Funds lines and brokered deposits. Although wholesale funding sources are typically more expensive than core deposits, they are an integral part of our funding.

    The following tables outline the composition and changes in wholesale funding sources as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Federal Home Loan Bank borrowings   $ 160,000   $ 160,000     $ 160,000   $ 180,000     $ 180,000  
    Subordinated debentures     14,000     14,000       14,000     14,000       14,000  
    Other borrowings     5,970     4,397       4,500     4,500       7,050  
    Brokered NOW accounts                          
    Brokered time deposits     60,304     60,304       60,304     60,304       60,251  
    Internet time deposits                         498  
    Total wholesale funds   $ 240,274   $ 238,701     $ 238,804   $ 258,804     $ 261,799  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Federal Home Loan Bank borrowings   $     %         (20,000 )   (11.11)%
    Subordinated debentures         %               %
    Other borrowings     1,573     35.77 %         (1,080 )   (15.32)%
    Brokered NOW accounts       N/A             N/A
    Brokered time deposits         %         53       0.09 %
    Internet time deposits       N/A         (498 )   (100.00)%
    Total wholesale funds   $ 1,573     0.66 %       $ (21,525 )   (8.22)%
                         

    Accrued interest payable and other liabilities

    Accrued interest payable and other liabilities includes accrued interest payable, federal income taxes payable, deferred federal income taxes payable, and all other liabilities (none of which are individually significant).

    Total shareholders’ equity

    We are considered a “well-capitalized” institution, as our capital ratios exceed the minimum designated standards necessary in accordance with Basel III guidelines. As of September 30, 2024, the Bank’s total capital ratio was 12.78%, tier 1 capital ratio was 11.72%, and tier 1 leverage ratio was 9.02%. The minimum requirements to be considered well-capitalized are a total capital ratio of 10.00%, tier 1 capital ratio of 8.00%, and tier 1 leverage ratio of 5.00%. While we continue to be considered well-capitalized, we are focused on enhancing our capital ratios through earnings of the Bank as well as asset growth moderation strategies in 2024.

    The following tables outline the composition and changes in shareholders’ equity as of:

        9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Common stock   $ 74,826     $ 74,690     $ 74,555     $ 74,230     $ 74,118  
    Retained earnings     78,467       78,094       76,607       74,309       70,972  
    Accumulated other comprehensive (loss) income     (6,895 )     (9,483 )     (10,088 )     (9,837 )     (12,188 )
    Total shareholders’ equity   $ 146,398     $ 143,301     $ 141,074     $ 138,702     $ 132,902  
                         
        9/30/2024 vs 6/30/2024       9/30/2024 vs 9/30/2023
        Variance       Variance
        Amount   %       Amount   %
    Common stock   $ 136       0.18 %       $ 708       0.96 %
    Retained earnings     373       0.48 %         7,495       10.56 %
    Accumulated other comprehensive (loss) income     2,588     (27.29)%         5,293     (43.43)%
    Total shareholders’ equity   $ 3,097       2.16 %       $ 13,496       10.15 %
                         

    The Board of Directors has authorized the repurchase of up to $10,000 of common stock. As of September 30, 2024, we had $1,393 of common stock available to repurchase through the program. We did not execute any repurchases of our common stock during 2024.

    Stock Performance

    The following table compares the cumulative total shareholder return on our common stock for the year-to-date, 1 year, 3 year, and 5 year periods ended September 30, 2024. The National OTC Peer Group was developed by selecting all OTC traded bank holding companies with total assets between $1 billion and $3 billion as of 03/31/2024 that had a quoted stock price on Bloomberg. The Midwest / Great Lakes OTC Peer Group represents those institutions included in the National OTC Peer Group that are headquartered in Illinois, Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin.

      # in Peer Group   YTD   1 Year   3 Year   5 Year
    Fentura Financial, Inc. (OTCQX:FETM)     45.40 %   67.28 %   59.12 %   100.80 %
                       
    National OTC Peers 43   (1.01)%   (3.49)%   2.11 %   8.44 %
    Fentura Ranking out of 44     1     1     4     4  
                       
    Midwest / Great Lakes OTC Peers 17   (1.97)%   (5.16)%   (1.63)%   1.35 %
    Fentura Ranking out of 18     1     1     1     1  
                       

    Abbreviations and Acronyms

    ABA: American Bankers Association FTE: Fully taxable equivalent
    ACH: Automated Clearing House GAAP: Generally Accepted Accounting Principles
    ACL: Allowance for credit losses HFS: Held-for-sale
    AFS: Available-for-sale HTM: Held-to-maturity
    AIR: Accrued interest receivable HFS: Held-for-sale
    AOCI: Accumulated other comprehensive income HTM: Held-to-maturity
    ARRC: Alternative Reference Rates Committee IRA: Individual retirement account
    ASC: Accounting Standards Codification ITM: Interactive Teller Machine
    ASU: Accounting Standards Update LIBOR: London Interbank Offered Rate
    ATM: Automated teller machine MSR: Mortgage servicing rights
    CDI: Core deposit intangible N/M: Not meaningful
    CET1: Common equity tier 1 NASDAQ: National Association of Securities Dealers Automated Quotations
    COLI: Corporate owned life insurance NOW: Negotiable order of withdrawal
    DRIP: Dividend Reinvestment Plan NSF: Non-sufficient funds
    EPS: Earnings Per Common Share OCI: Other comprehensive income
    ESOP: Employee Stock Ownership Plan OIS: Overnight Index Swap
    FASB: Financial Accounting Standards Board OREO: Other real estate owned
    FDIC: Federal Deposit Insurance Corporation OTTI: Other-than-temporary impairment
    FHLB: Federal Home Loan Bank QTD: Quarter-to-date
    FHLLC: Fentura Holdings LLC SAB: Staff Accounting Bulletin
    FHLMC: Federal Home Loan Mortgage Corporation SBA: U.S. Small Business Administration
    FNMA: Federal National Mortgage Association SEC: Securities and Exchange Commission
    FOMC: Federal Open Market Committee SERP: Supplemental Executive Retirement Plan
    FRB: Federal Reserve Bank SOFR: Secured Overnight Funding Rate
    FSB: Farmers State Bank of Munith TLM: Troubled loan modifications
       

    About Fentura Financial, Inc. and The State Bank

    Fentura Financial, Inc. is the holding company for The State Bank. It was formed in 1987 and is traded on the OTCQX exchange under the symbol FETM, and has been recognized as one of the Top 50 performing stocks on that exchange.

    The State Bank is a 5-Star Bauer Financial rated commercial, retail and trust bank headquartered in Fenton, Michigan. It currently operates 20 full-service offices and one loan production center serving Bay, Genesee, Ingham, Jackson, Livingston, Oakland, Saginaw, and Shiawassee counties. The State Bank believes in the potential of banking to help create better lives, better businesses, and better communities, and works to achieve this through its full array of consumer, mortgage, SBA, commercial and wealth management banking and advisory services, together with philanthropic and volunteer support to organizations and groups within the communities it serves. More information can be found at www.thestatebank.com or www.fentura.com.

    Cautionary Statement: This press release contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning future growth in earning assets and net income. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

    Contacts:  Ronald L. Justice  Aaron D. Wirsing
      President & CEO Chief Financial Officer
      Fentura Financial, Inc.   Fentura Financial, Inc.
      810.714.3902 810.714.3925
      ron.justice@thestatebank.com aaron.wirsing@thestatebank.com

    The MIL Network

  • MIL-OSI: Seacoast Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    Strong Growth in Loans and Deposits

    Annualized 20% Increase in Tangible Book Value Per Share

    Well-Positioned Balance Sheet with Strong Capital and Liquidity

    STUART, Fla., Oct. 24, 2024 (GLOBE NEWSWIRE) — Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) (NASDAQ: SBCF) today reported net income in the third quarter of 2024 of $30.7 million, or $0.36 per diluted share, compared to $30.2 million, or $0.36 per diluted share in the second quarter of 2024 and $31.4 million, or $0.37 per diluted share in the third quarter of 2023.

    Pre-tax pre-provision earnings1 were $46.1 million in the third quarter of 2024, an increase of 3% compared to the second quarter of 2024 and an increase of 6% compared to the third quarter of 2023. Adjusted pre-tax pre-provision earnings1 were $46.4 million in the third quarter of 2024, an increase of 4% compared to the second quarter of 2024 and a decrease of 2% compared to the third quarter of 2023.

    For the third quarter of 2024, return on average tangible assets was 0.99% and return on average tangible shareholders’ equity was 10.31%, compared to 1.00% and 10.75%, respectively, in the prior quarter, and 1.04% and 11.90%, respectively, in the prior year quarter.

    Charles M. Shaffer, Chairman and CEO of Seacoast, stated, “I would like to thank all of the Seacoast associates for their unwavering dedication during the challenging impact of back-to-back significant hurricanes. Your commitment to our customers and the well-being of our communities is commendable. I am very proud to serve alongside such an amazing and dedicated group of bankers. Furthermore, our hearts and sympathy go out to all those in our communities who lost loved ones and experienced catastrophic outcomes as a result of the storms.”

    Shaffer added, “Turning to third quarter results, this marks the turn in organic growth we had anticipated, with nearly 7% annualized loan growth and 7% annualized customer deposit growth, clearly showcasing the results of our previous investments in banking teams across the state. Additionally, this quarter demonstrated continued growth in net interest income, noninterest income and, when removing accretion on acquired loans, expansion in the net interest margin. Our competitive transformation is taking shape as we build Seacoast into Florida’s leading regional bank. We expect to continue to see positive results from recent talent acquisitions, which will drive further organic growth in the coming periods.”

    Shaffer concluded, “We remain committed to a disciplined approach to credit, and our balance sheet is one of the strongest in the industry, with a Tier 1 capital ratio of 14.8%2 as of September 30, 2024. The ratio of tangible common equity to tangible assets has increased to a strong 9.64%. Our liquidity position is also robust, with a loan-to-deposit ratio of 83%, providing us with balance sheet flexibility as we continue to work towards stronger earnings in the coming periods.”

    Update on Hurricane Recovery

    In late September and early October 2024, communities across our corporate footprint were impacted by Hurricanes Helene and Milton. We maintained uninterrupted digital and telephone access for our customers and, having experienced minimal impacts to our branch properties, we fully reopened to serve our communities shortly after each storm passed. Recovery efforts in many areas continue and the full impacts on people and businesses in the most hard-hit regions are not fully known. We do not expect a significant impact from Hurricane Helene, but an additional provision for credit losses may be warranted in the fourth quarter of 2024 for Hurricane Milton, in a range between approximately $5 million and $10 million.

    Financial Results

    Income Statement

    • Net income in the third quarter of 2024 was $30.7 million, or $0.36 per diluted share, compared to $30.2 million, or $0.36 per diluted share in the prior quarter and $31.4 million, or $0.37 per diluted share in the prior year quarter. For the nine months ended September 30, 2024, net income was $86.9 million, or $1.02 per diluted share, compared to $74.5 million, or $0.89 per diluted share, for the nine months ended September 30, 2023. Adjusted net income1 for the third quarter of 2024 was $30.5 million, or $0.36 per diluted share, compared to $30.3 million, or $0.36 per diluted share, for the prior quarter, and $34.2 million, or $0.40 per diluted share, for the prior year quarter. For the nine months ended September 30, 2024, adjusted net income1 was $91.9 million, or $1.08 per diluted share, compared to $101.9 million, or $1.21 per diluted share, for the nine months ended September 30, 2023.
    • Net revenues were $130.3 million in the third quarter of 2024, an increase of $3.7 million, or 3%, compared to the prior quarter, and a decrease of $6.8 million, or 5%, compared to the prior year quarter. For the nine months ended September 30, 2024, net revenues were $382.5 million, a decrease of $56.7 million, or 13%, compared to the nine months ended September 30, 2023. Adjusted net revenues1 were $130.5 million in the third quarter of 2024, an increase of $3.6 million, or 3%, compared to the prior quarter, and a decrease of $7.2 million, or 5%, compared to the prior year quarter. For the nine months ended September 30, 2024, adjusted net revenues1 were $382.9 million, a decrease of $55.2 million, or 13%, compared to the nine months ended September 30, 2023.
    • Pre-tax pre-provision earnings1 were $46.1 million in the third quarter of 2024, an increase of $1.5 million, or 3%, compared to the second quarter of 2024 and an increase of $2.7 million, or 6%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, pre-tax pre-provision earnings1 were $126.3 million, a decrease of $5.5 million, or 4%, compared to the nine months ended September 30, 2023. Adjusted pre-tax pre-provision earnings1 were $46.4 million in the third quarter of 2024, an increase of $1.9 million, or 4%, compared to the second quarter of 2024 and a decrease of $1.0 million, or 2%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, adjusted pre-tax pre-provision earnings1 were $133.4 million, a decrease of $35.5 million, or 21%, compared to the nine months ended September 30, 2023.
    • Net interest income totaled $106.7 million in the third quarter of 2024, an increase of $2.2 million, or 2%, compared to the prior quarter, and a decrease of $12.6 million, or 11%, compared to the prior year quarter. For the nine months ended September 30, 2024, net interest income was $316.2 million, a decrease of $61.3 million, or 16%, compared to the nine months ended September 30, 2023. In the loan portfolio, higher interest income from new loan production was partially offset by lower accretion of purchase discount on acquired loans. Included in loan interest income was accretion on acquired loans of $9.2 million in the third quarter of 2024, $10.2 million in the second quarter of 2024, and $14.8 million in the third quarter of 2023. For the nine months ended September 30, 2024, accretion on acquired loans totaled $30.0 million, compared to $45.4 million for the nine months ended September 30, 2023. Recent purchases in the securities portfolio contributed to higher securities yields. Higher interest expense on deposits reflects the impact of higher rates, with cuts to the federal funds rate late in the quarter not yet fully impacting the third quarter 2024 results.
    • Net interest margin decreased one basis point to 3.17% in the third quarter of 2024 compared to 3.18% in the second quarter of 2024. Excluding the effects of accretion on acquired loans, net interest margin increased three basis points to 2.90% in the third quarter of 2024 compared to 2.87% in the second quarter of 2024. Loan yields were 5.94%, an increase of one basis point from the prior quarter. Securities yields increased six basis points to 3.75%, compared to 3.69% in the prior quarter. The cost of deposits increased three basis points from 2.31% in the prior quarter, to 2.34% in the third quarter of 2024. We expect the cost of deposits to decline in the fourth quarter of 2024.
    • Noninterest income totaled $23.7 million in the third quarter of 2024, an increase of $1.5 million, or 7%, compared to the prior quarter, and an increase of $5.9 million, or 33%, compared to the prior year quarter. For the nine months ended September 30, 2024, noninterest income totaled $66.4 million, an increase of $4.5 million, or 7%, compared to the nine months ended September 30, 2023. Results in the third quarter of 2024 included:
      • Service charges on deposits totaled $5.4 million, an increase of $0.1 million, or 1%, from the prior quarter and an increase of $0.8 million, or 16%, from the prior year quarter. Our investments in talent and significant market expansion across the state have resulted in continued growth in treasury management services to commercial customers.
      • Wealth management income totaled $3.8 million, an increase of $0.1 million, or 2%, from the prior quarter and an increase of $0.7 million, or 22%, from the prior year quarter. The wealth management division continues to grow and add new relationships, with assets under management increasing 26% year over year to $2.0 billion at September 30, 2024.
      • Insurance agency income totaled $1.4 million, an increase of 3% from the prior quarter and an increase of 18% from the prior year quarter, reflecting continued growth and expansion of services.
      • SBA gains totaled $0.4 million, a decrease of $0.3 million, or 44%, from the prior quarter and a decrease of $0.2 million, or 36%, from the prior year quarter, due to lower saleable originations.
      • Other income totaled $7.5 million, an increase of $1.5 million, or 26%, from the prior quarter and an increase of $3.2 million, or 74% from the prior year quarter. Increases in the third quarter of 2024 include gains on SBIC investments and higher swap-related fees.
    • The provision for credit losses was $6.3 million in the third quarter of 2024, compared to $4.9 million in the second quarter of 2024 and $2.7 million in the third quarter of 2023.
    • Noninterest expense was $84.8 million in the third quarter of 2024, an increase of $2.3 million, or 3%, compared to the prior quarter, and a decrease of $9.1 million, or 10%, compared to the prior year quarter. Noninterest expense for the nine months ended September 30, 2024, totaled $257.7 million, a decrease of $51.5 million, or 17%, compared to the nine months ended September 30, 2023. With significant cost-saving initiatives now complete, Seacoast has prudently managed expenses while strategically investing to support continued growth. Results in the third quarter of 2024 included:
      • Salaries and wages totaled $40.7 million, an increase of $1.8 million, or 5%, compared to the prior quarter and a decrease $5.7 million, or 12%, from the prior year quarter. The third quarter of 2024 reflects continued additions to the banking team as the Company focuses on organic growth.
      • Outsourced data processing costs totaled $8.0 million, a decrease of $0.2 million, or 3%, compared to the prior quarter and a decrease of $0.7 million, or 8%, from the prior year quarter, reflecting the benefit of lower negotiated rates with key service providers.
      • Marketing expenses totaled $2.7 million, a decrease of $0.5 million, or 16%, compared to the prior quarter and an increase of $0.9 million, or 45%, from the prior year quarter, primarily associated with the timing of various campaigns. We will continue to invest in marketing and branding supporting customer growth.
      • Legal and professional fees totaled $2.7 million, an increase of $0.7 million, or 37%, compared to the prior quarter and an increase of $29 thousand, or 1%, from the prior year quarter. Professional services engaged in connection with contract negotiations contributed to the increase in the third quarter of 2024.
    • Seacoast recorded $8.6 million of income tax expense in the third quarter of 2024, compared to $8.9 million in the second quarter of 2024, and $9.1 million in the third quarter of 2023. Tax benefits related to stock-based compensation totaled $0.1 million in the third quarter of 2024, compared to tax expense of $0.2 million in the second quarter of 2024 and a nominal tax benefit in the third quarter of 2023.
    • The efficiency ratio was 59.84% in the third quarter of 2024, compared to 60.21% in the second quarter of 2024 and 62.60% in the prior year quarter. The adjusted efficiency ratio1 was 59.84% in the third quarter of 2024, compared to 60.21% in the second quarter of 2024 and 60.19% in the prior year quarter. The Company continues to remain keenly focused on disciplined expense control, while making investments for growth.

    Balance Sheet

    • At September 30, 2024, the Company had total assets of $15.2 billion and total shareholders’ equity of $2.2 billion. Book value per share was $25.68 as of September 30, 2024, compared to $24.98 as of June 30, 2024, and $24.06 as of September 30, 2023. Tangible book value per share increased 20% annualized from the prior quarter to $16.20 as of September 30, 2024, compared to $15.41 as of June 30, 2024, and $14.26 as of September 30, 2023.
    • Debt securities totaled $2.8 billion as of September 30, 2024, an increase of $180.8 million compared to June 30, 2024. Debt securities include approximately $2.2 billion in securities classified as available for sale and recorded at fair value.
      • During the third quarter of 2024, net unrealized losses associated with available for sale securities declined by $59.6 million due to changes in the interest rate environment. This contributed $0.53 to the increase in tangible book value per share during the quarter. The unrealized loss on available for sale securities is fully reflected in the value presented on the balance sheet.
      • The portfolio also includes $646.1 million in securities classified as held to maturity with a fair value of $538.5 million. Held-to-maturity securities consist solely of mortgage-backed securities and collateralized mortgage obligations guaranteed by U.S. government agencies, each of which is expected to recover any price depreciation over its holding period as the debt securities move to maturity. The Company has significant liquidity and available borrowing capacity and has the intent and ability to hold these investments to maturity.
      • In October, we took advantage of favorable market conditions and repositioned a portion of the available for sale securities portfolio. We sold securities with an average book yield of 2.8%, resulting in a pre-tax loss of approximately $8.0 million impacting fourth quarter results. The proceeds, approximately $113 million, were reinvested in agency mortgage-backed securities with an average book yield of 5.4%, for an estimated earnback of less than three years.
    • Loans increased $166.8 million, or 6.6% annualized, totaling $10.2 billion as of September 30, 2024. Loan originations increased 22% to $657.9 million in the third quarter of 2024, compared to $538.0 million in the second quarter of 2024. The Company continues to exercise a disciplined approach to lending and is benefiting from the investments made in recent years to attract talent from large regional banks across its markets. This talent is onboarding significant new relationships, resulting in increased loan production.
    • Loan pipelines (loans in underwriting and approval or approved and not yet closed) totaled $831.1 million as of September 30, 2024, compared to $834.4 million at June 30, 2024 and $353.0 million at September 30, 2023.
      • Commercial pipelines were $744.5 million as of September 30, 2024, compared to $743.8 million at June 30, 2024, and $259.4 million at September 30, 2023.
      • SBA pipelines were $28.9 million as of September 30, 2024, compared to $29.3 million at June 30, 2024, and $41.4 million at September 30, 2023.
      • Residential saleable pipelines were $11.2 million as of September 30, 2024, compared to $12.1 million at June 30, 2024, and $6.8 million at September 30, 2023. Retained residential pipelines were $21.9 million as of September 30, 2024, compared to $24.7 million at June 30, 2024, and $20.9 million at September 30, 2023.
      • Consumer pipelines were $24.4 million as of September 30, 2024, compared to $24.5 million at both June 30, 2024 and September 30, 2023.
    • Total deposits were $12.2 billion as of September 30, 2024, an increase of $127.5 million, or 4.2% annualized, when compared to June 30, 2024. Excluding brokered balances, total deposits increased $195.9 million, or 6.6% annualized, in the third quarter of 2024.
      • Commercial deposits increased $133.0 million, or 2%, compared to the prior quarter. Of note, commercial noninterest bearing deposits increased $67.2 million, or 3%, from the prior quarter, the result of onboarding new clients.
      • Total noninterest bearing deposits increased $45.5 million, or 5.3% annualized, from the prior quarter.
      • At September 30, 2024, customer transaction account balances represented 49% of total deposits.
      • The Company benefits from a granular deposit franchise, with the top ten depositors representing approximately 3% of total deposits.
      • Average deposits per banking center were $159 million at September 30, 2024, compared to $157 million at June 30, 2024.
      • Uninsured deposits represented only 36% of overall deposit accounts as of September 30, 2024. This includes public funds under the Florida Qualified Public Depository program, which provides loss protection to depositors beyond FDIC insurance limits. Excluding such balances, the uninsured and uncollateralized deposits were 31% of total deposits. The Company has liquidity sources including cash and lines of credit with the Federal Reserve and Federal Home Loan Bank that represent 145% of uninsured deposits, and 167% of uninsured and uncollateralized deposits.
      • Consumer deposits represent 43% of overall deposit funding with an average consumer customer balance of $26 thousand. Commercial deposits represent 57% of overall deposit funding with an average business customer balance of $117 thousand.
    • Federal Home Loan Bank advances totaled $245.0 million at September 30, 2024 with a weighted average interest rate of 4.19%.

    Asset Quality

    • Nonperforming loans were $80.9 million at September 30, 2024, compared to $59.9 million at June 30, 2024, and $41.5 million at September 30, 2023. New nonperforming loans in the third quarter of 2024 have collateral values well in excess of balances outstanding, and therefore, no loss is expected. Nonperforming loans to total loans outstanding were 0.79% at September 30, 2024, 0.60% at June 30, 2024, and 0.41% at September 30, 2023.
    • Accruing past due loans were $50.7 million, or 0.50% of total loans, at September 30, 2024, compared to $39.6 million, or 0.39% of total loans, at June 30, 2024, and $35.5 million, or 0.33% of total loans, at September 30, 2023. A limited number of larger-balance residential mortgage loans, which returned to current status in October, comprise the majority of the increase from the prior quarter.
    • Nonperforming assets to total assets were 0.58% at September 30, 2024, compared to 0.45% at June 30, 2024, and 0.33% at September 30, 2023.
    • The ratio of allowance for credit losses to total loans was 1.38% at September 30, 2024, 1.41% at June 30, 2024, and 1.49% at September 30, 2023.
    • Net charge-offs were $7.4 million in the third quarter of 2024, compared to $9.9 million in the second quarter of 2024 and $12.7 million in the third quarter of 2023. Charge-offs during the quarter primarily reflect specifically identified reserves previously established in the allowance for credit losses.
    • Portfolio diversification, in terms of asset mix, industry, and loan type, has been a critical element of the Company’s lending strategy. Exposure across industries and collateral types is broadly distributed. Seacoast’s average loan size is $360 thousand, and the average commercial loan size is $789 thousand, reflecting an ability to maintain granularity within the overall loan portfolio.
    • Construction and land development and commercial real estate loans remain well below regulatory guidance at 36% and 241% of total bank-level risk-based capital2, respectively, compared to 36% and 235%, respectively, at June 30, 2024. On a consolidated basis, construction and land development and commercial real estate loans represent 34% and 227%, respectively, of total consolidated risk-based capital2.

    Capital and Liquidity

    • The Company continues to operate with a fortress balance sheet with a Tier 1 capital ratio at September 30, 2024 of 14.8%2 compared to 14.8% at June 30, 2024, and 14.0% at September 30, 2023. The Total capital ratio was 16.2%2, the Common Equity Tier 1 capital ratio was 14.1%2, and the Tier 1 leverage ratio was 11.2%2 at September 30, 2024. The Company is considered “well capitalized” based on applicable U.S. regulatory capital ratio requirements.
    • Cash and cash equivalents at September 30, 2024 totaled $637.1 million.
    • The Company’s loan to deposit ratio was 83.4% at September 30, 2024, which should provide liquidity and flexibility moving forward.
    • Tangible common equity to tangible assets was 9.64% at September 30, 2024, compared to 9.30% at June 30, 2024, and 8.68% at September 30, 2023. If all held-to-maturity securities were adjusted to fair value, the tangible common equity ratio would have been 9.11% at September 30, 2024.
    • At September 30, 2024, in addition to $637.1 million in cash, the Company had $5.6 billion in available borrowing capacity, including $4.1 billion in available collateralized lines of credit, $1.2 billion of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $0.3 billion. These liquidity sources as of September 30, 2024, represented 167% of uninsured and uncollateralized deposits.

    Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.
    Estimated.

    FINANCIAL HIGHLIGHTS              
    (Amounts in thousands except per share data) (Unaudited)
      Quarterly Trends
                       
      3Q’24   2Q’24   1Q’24   4Q’23   3Q’23
    Selected balance sheet data:                  
    Gross loans $ 10,205,281     $ 10,038,508     $ 9,978,052     $ 10,062,940     $ 10,011,186  
    Total deposits   12,243,585       12,116,118       12,015,840       11,776,935       12,107,834  
    Total assets   15,168,371       14,952,613       14,830,015       14,580,249       14,823,007  
                       
    Performance measures:                  
    Net income $ 30,651     $ 30,244     $ 26,006     $ 29,543     $ 31,414  
    Net interest margin   3.17 %     3.18 %     3.24 %     3.36 %     3.57 %
    Pre-tax pre-provision earnings1 $ 46,086     $ 44,555     $ 35,674     $ 42,006     $ 43,383  
    Average diluted shares outstanding   85,069       84,816       85,270       85,336       85,666  
    Diluted earnings per share (EPS)   0.36       0.36       0.31       0.35       0.37  
    Return on (annualized):                  
    Average assets (ROA)   0.81 %     0.82 %     0.71 %     0.80 %     0.84 %
    Average tangible assets (ROTA)2   0.99       1.00       0.89       0.99       1.04  
    Average tangible common equity (ROTCE)2   10.31       10.75       9.55       11.22       11.90  
    Tangible common equity to tangible assets2   9.64       9.30       9.25       9.31       8.68  
    Tangible book value per share2 $ 16.20     $ 15.41     $ 15.26     $ 15.08     $ 14.26  
    Efficiency ratio   59.84 %     60.21 %     66.78 %     60.32 %     62.60 %
                       
    Adjusted operating measures1:                  
    Adjusted net income4 $ 30,511     $ 30,277     $ 31,132     $ 31,363     $ 34,170  
    Adjusted pre-tax pre-provision earnings4   46,390       44,490       42,513       45,016       47,349  
    Adjusted diluted EPS4   0.36       0.36       0.37       0.37       0.40  
    Adjusted ROTA2   0.98 %     1.00 %     1.04 %     1.04 %     1.12 %
    Adjusted ROTCE2   10.27       10.76       11.15       11.80       12.79  
    Adjusted efficiency ratio   59.84       60.21       61.13       60.32       60.19  
    Net adjusted noninterest expense as a
    percent of average tangible assets2
      2.19 %     2.19 %     2.23 %     2.25 %     2.34 %
                       
    Other data:                  
    Market capitalization3 $ 2,277,003     $ 2,016,472     $ 2,156,529     $ 2,415,158     $ 1,869,891  
    Full-time equivalent employees   1,493       1,449       1,445       1,541       1,570  
    Number of ATMs   96       95       95       96       97  
    Full-service banking offices   77       77       77       77       77  
    1Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.
    2The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders’ equity less intangible assets.
    3Common shares outstanding multiplied by closing bid price on last day of each period.
    4As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change.

    OTHER INFORMATION

    Conference Call Information

    Seacoast will host a conference call October 25, 2024, at 10:00 a.m. (Eastern Time) to discuss the third quarter of 2024 earnings results and business trends. Investors may call in (toll-free) by dialing (800) 715-9871 (Conference ID: 6787376). Charts will be used during the conference call and may be accessed at Seacoast’s website at www.SeacoastBanking.com by selecting “Presentations” under the heading “News/Events.” Additionally, a recording of the call will be made available to individuals shortly after the conference call and can be accessed via a link at www.SeacoastBanking.com under the heading “Corporate Information.” The recording will be available for one year.

    About Seacoast Banking Corporation of Florida (NASDAQ: SBCF)

    Seacoast Banking Corporation of Florida (NASDAQ: SBCF) is one of the largest community banks headquartered in Florida with approximately $15.2 billion in assets and $12.2 billion in deposits as of September 30, 2024. Seacoast provides integrated financial services including commercial and consumer banking, wealth management, and mortgage services to customers at 77 full-service branches across Florida, and through advanced mobile and online banking solutions. Seacoast National Bank is the wholly-owned subsidiary bank of Seacoast Banking Corporation of Florida. For more information about Seacoast, visit www.SeacoastBanking.com

    Cautionary Notice Regarding Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in the Company’s markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of banks that the Company has acquired, or expects to acquire, as well as statements with respect to Seacoast’s objectives, strategic plans, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.

    Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates and intentions about future performance and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the actual results, performance or achievements of Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) or its wholly-owned banking subsidiary, Seacoast National Bank (“Seacoast Bank”), to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. You should not expect the Company to update any forward-looking statements.

    All statements other than statements of historical fact could be forward-looking statements. You can identify these forward-looking statements through the use of words such as “may”, “will”, “anticipate”, “assume”, “should”, “support”, “indicate”, “would”, “believe”, “contemplate”, “expect”, “estimate”, “continue”, “further”, “plan”, “point to”, “project”, “could”, “intend”, “target” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within Seacoast’s primary market areas, including the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior and credit risk as a result of the foregoing; potential impacts of adverse developments in the banking industry, including those highlighted by high-profile bank failures, and including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto (including increases in the cost of our deposit insurance assessments), the Company’s ability to effectively manage its liquidity risk and any growth plans, and the availability of capital and funding; governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes including proposed overdraft and late fee caps, including those that impact the money supply and inflation; the risks of changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities, and interest rate sensitive assets and liabilities; interest rate risks (including the impacts of interest rates on macroeconomic conditions, customer and client behavior, and on our net interest income), sensitivities and the shape of the yield curve; changes in accounting policies, rules and practices; changes in retail distribution strategies, customer preferences and behavior generally and as a result of economic factors, including heightened inflation; changes in the availability and cost of credit and capital in the financial markets; changes in the prices, values and sales volumes of residential and commercial real estate, especially as they relate to the value of collateral supporting the Company’s loans; the Company’s concentration in commercial real estate loans and in real estate collateral in Florida; Seacoast’s ability to comply with any regulatory requirements and the risk that the regulatory environment may not be conducive to or may prohibit or delay the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit; inaccuracies or other failures from the use of models, including the failure of assumptions and estimates, as well as differences in, and changes to, economic, market and credit conditions; the impact on the valuation of Seacoast’s investments due to market volatility or counterparty payment risk, as well as the effect of a decline in stock market prices on our fee income from our wealth management business; statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; the risks of mergers, acquisitions and divestitures, including Seacoast’s ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; changes in technology or products that may be more difficult, costly, or less effective than anticipated; the Company’s ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties which may be exacerbated by developments in generative artificial intelligence; fraud or misconduct by internal or external parties, which Seacoast may not be able to prevent, detect or mitigate; inability of Seacoast’s risk management framework to manage risks associated with the Company’s business; dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms; reduction in or the termination of Seacoast’s ability to use the online- or mobile-based platform that is critical to the Company’s business growth strategy; the effects of war or other conflicts, acts of terrorism, natural disasters, including hurricanes in the Company’s footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions and/or increase costs, including, but not limited to, property and casualty and other insurance costs; Seacoast’s ability to maintain adequate internal controls over financial reporting; potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the risks that deferred tax assets could be reduced if estimates of future taxable income from the Company’s operations and tax planning strategies are less than currently estimated, the results of tax audit findings, challenges to our tax positions, or adverse changes or interpretations of tax laws; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions; the failure of assumptions underlying the establishment of reserves for expected credit losses; risks related to, and the costs associated with, environmental, social and governance matters, including the scope and pace of related rulemaking activity and disclosure requirements; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the federal budget and economic policy; the risk that balance sheet, revenue growth, and loan growth expectations may differ from actual results; and other factors and risks described under “Risk Factors” herein and in any of the Company’s subsequent reports filed with the SEC and available on its website at www.sec.gov.

    All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in the Company’s annual report on Form 10-K for the year ended December 31, 2023 and in other periodic reports that the Company files with the SEC. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC’s Internet website at www.sec.gov.

    FINANCIAL HIGHLIGHTS         (Unaudited)          
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
              Quarterly Trends           Nine Months Ended
    (Amounts in thousands, except ratios and per share data) 3Q’24   2Q’24   1Q’24   4Q’23   3Q’23   3Q’24   3Q’23
    Summary of Earnings                          
    Net income $ 30,651     $ 30,244     $ 26,006     $ 29,543     $ 31,414     $ 86,901     $ 74,490  
    Adjusted net income1,6   30,511       30,277       31,132       31,363       34,170       91,920       101,878  
    Net interest income2   106,975       104,657       105,298       111,035       119,505       316,930       378,009  
    Net interest margin2,3   3.17 %     3.18 %     3.24 %     3.36 %     3.57 %     3.19 %     3.91 %
    Pre-tax pre-provision earnings1   46,086       44,555       35,674       42,006       43,383       126,315       131,807  
    Adjusted pre-tax pre-provision earnings1,6   46,390       44,490       42,513       45,016       47,349       133,393       168,905  
                               
    Performance Ratios                          
    Return on average assets-GAAP basis3   0.81 %     0.82 %     0.71 %     0.80 %     0.84 %     0.78 %     0.68 %
    Return on average tangible assets-GAAP basis3,4   0.99       1.00       0.89       0.99       1.04       0.96       0.88  
    Adjusted return on average tangible assets1,3,4   0.98       1.00       1.04       1.04       1.12       1.01       1.15  
    Pre-tax pre-provision return on average tangible assets1,3,4,6   1.46       1.45       1.22       1.39       1.43       1.38       1.49  
    Adjusted pre-tax pre-provision return on average tangible assets1,3,4   1.47       1.45       1.42       1.48       1.55       1.44       1.85  
    Net adjusted noninterest expense to average tangible assets1,3,4   2.19       2.19       2.23       2.25       2.34       2.20       2.40  
    Return on average shareholders’ equity-GAAP basis3   5.62       5.74       4.94       5.69       6.01       5.44       4.94  
    Return on average tangible common equity-GAAP basis3,4   10.31       10.75       9.55       11.22       11.90       10.21       10.09  
    Adjusted return on average tangible common equity1,3,4   10.27       10.76       11.15       11.80       12.79       10.72       13.14  
    Efficiency ratio5   59.84       60.21       66.78       60.32       62.60       62.24       65.19  
    Adjusted efficiency ratio1   59.84       60.21       61.13       60.32       60.19       60.39       56.47  
    Noninterest income to total revenue (excluding securities gains/losses)   18.05       17.55       16.17       15.14       13.22       17.27       14.16  
    Tangible common equity to tangible assets4   9.64       9.30       9.25       9.31       8.68       9.64       8.68  
    Average loan-to-deposit ratio   83.79       83.11       84.50       83.38       82.63       83.80       82.86  
    End of period loan-to-deposit ratio   83.44       82.90       83.12       85.48       82.71       83.44       82.71  
                               
    Per Share Data                          
    Net income diluted-GAAP basis $ 0.36     $ 0.36     $ 0.31     $ 0.35     $ 0.37     $ 1.02     $ 0.89  
    Net income basic-GAAP basis   0.36       0.36       0.31       0.35       0.37       1.03       0.89  
    Adjusted earnings1,6   0.36       0.36       0.37       0.37       0.40       1.08       1.21  
                               
    Book value per share common   25.68       24.98       24.93       24.84       24.06       25.68       24.06  
    Tangible book value per share   16.20       15.41       15.26       15.08       14.26       16.20       14.26  
    Cash dividends declared   0.18       0.18       0.18       0.18       0.18       0.54       0.53  
    1Non-GAAP measure – see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP. 2Calculated on a fully taxable equivalent basis using amortized cost. 3These ratios are stated on an annualized basis and are not necessarily indicative of future periods. 4The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders’ equity less intangible assets. 5Defined as noninterest expense less amortization of intangibles and gains, losses, and expenses on foreclosed properties divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses). 6As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Unaudited)          
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
      Quarterly Trends   Nine Months Ended
    (Amounts in thousands, except per share data) 3Q’24   2Q’24   1Q’24   4Q’23   3Q’23   3Q’24   3Q’23
                               
    Interest on securities:                          
    Taxable $ 25,963   $ 24,155     $ 22,393     $ 21,383     $ 21,401     $ 72,511   $ 61,543  
    Nontaxable   34     33       34       55       97       101     299  
    Interest and fees on loans   150,980     147,292       147,095       147,801       149,871       445,367     433,304  
    Interest on interest bearing deposits and other investments   7,138     8,328       6,184       7,616       8,477       21,650     16,974  
    Total Interest Income   184,115     179,808       175,706       176,855       179,846       539,629     512,120  
                               
    Interest on deposits   51,963     51,319       47,534       44,923       38,396       150,816     81,612  
    Interest on time certificates   19,002     17,928       17,121       15,764       16,461       54,051     36,490  
    Interest on borrowed money   6,485     6,137       5,973       5,349       5,683       18,595     16,597  
    Total Interest Expense   77,450     75,384       70,628       66,036       60,540       223,462     134,699  
                               
    Net Interest Income   106,665     104,424       105,078       110,819       119,306       316,167     377,421  
    Provision for credit losses   6,273     4,918       1,368       3,990       2,694       12,559     33,528  
    Net Interest Income After Provision for Credit Losses   100,392     99,506       103,710       106,829       116,612       303,608     343,893  
                               
    Noninterest income:                          
    Service charges on deposit accounts   5,412     5,342       4,960       4,828       4,648       15,714     13,450  
    Interchange income   1,911     1,940       1,888       2,433       1,684       5,739     11,444  
    Wealth management income   3,843     3,766       3,540       3,261       3,138       11,149     9,519  
    Mortgage banking fees   485     582       381       378       410       1,448     1,412  
    Insurance agency income   1,399     1,355       1,291       1,066       1,183       4,045     3,444  
    SBA gains   391     694       739       921       613       1,824     1,184  
    BOLI income   2,578     2,596       2,264       2,220       2,197       7,438     6,181  
    Other   7,473     5,953       5,205       4,668       4,307       18,631     15,636  
        23,492     22,228       20,268       19,775       18,180       65,988     62,270  
    Securities gains (losses), net   187     (44 )     229       (2,437 )     (387 )     372     (456 )
    Total Noninterest Income   23,679     22,184       20,497       17,338       17,793       66,360     61,814  
                               
    Noninterest expense:                          
    Salaries and wages   40,697     38,937       40,304       38,435       46,431       119,938     139,202  
    Employee benefits   6,955     6,861       7,889       6,678       7,206       21,705     23,240  
    Outsourced data processing costs   8,003     8,210       12,118       8,609       8,714       28,331     43,489  
    Occupancy   7,096     7,180       8,037       7,512       7,758       22,313     24,360  
    Furniture and equipment   2,060     1,956       2,011       2,028       2,052       6,027     6,664  
    Marketing   2,729     3,266       2,655       2,995       1,876       8,650     6,161  
    Legal and professional fees   2,708     1,982       2,151       3,294       2,679       6,841     14,220  
    FDIC assessments   1,882     2,131       2,158       2,813       2,258       6,171     5,817  
    Amortization of intangibles   6,002     6,003       6,292       6,888       7,457       18,297     21,838  
    Other real estate owned expense and net loss (gain) on sale   491     (109 )     (26 )     573       274       356     412  
    Provision for credit losses on unfunded commitments   250     251       250                   751     1,239  
    Other   5,945     5,869       6,532       6,542       7,210       18,346     22,613  
    Total Noninterest Expense   84,818     82,537       90,371       86,367       93,915       257,726     309,255  
                               
    Income Before Income Taxes   39,253     39,153       33,836       37,800       40,490       112,242     96,452  
    Provision for income taxes   8,602     8,909       7,830       8,257       9,076       25,341     21,962  
    Net Income $ 30,651   $ 30,244     $ 26,006     $ 29,543     $ 31,414     $ 86,901   $ 74,490  
                               
    Share Data                          
    Net income per share of common stock                          
    Diluted $ 0.36   $ 0.36     $ 0.31     $ 0.35     $ 0.37     $ 1.02   $ 0.89  
    Basic   0.36     0.36       0.31       0.35       0.37       1.03     0.89  
    Cash dividends declared   0.18     0.18       0.18       0.18       0.18       0.54     0.53  
                               
    Average common shares outstanding                          
    Diluted   85,069     84,816       85,270       85,336       85,666       84,915     83,993  
    Basic   84,434     84,341       84,908       84,817       85,142       84,319     83,457  
                               
    CONDENSED CONSOLIDATED BALANCE SHEETS       (Unaudited)        
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                
      September 30,   June 30,   March 31,   December 31,   September 30,
    (Amounts in thousands)  2024     2024     2024     2023     2023 
    Assets                  
    Cash and due from banks $ 182,743     $ 168,738     $ 137,850     $ 167,511     $ 182,036  
    Interest bearing deposits with other banks   454,315       580,787       544,874       279,671       513,946  
    Total cash and cash equivalents   637,058       749,525       682,724       447,182       695,982  
                       
    Time deposits with other banks   5,207       7,856       7,856       5,857       4,357  
                       
    Debt Securities:                  
    Securities available for sale (at fair value)   2,160,055       1,967,204       1,949,463       1,836,020       1,841,845  
    Securities held to maturity (at amortized cost)   646,050       658,055       669,896       680,313       691,404  
    Total debt securities   2,806,105       2,625,259       2,619,359       2,516,333       2,533,249  
                       
    Loans held for sale   11,039       5,975       9,475       4,391       2,979  
                       
    Loans   10,205,281       10,038,508       9,978,052       10,062,940       10,011,186  
    Less: Allowance for credit losses   (140,469 )     (141,641 )     (146,669 )     (148,931 )     (149,661 )
    Loans, net of allowance for credit losses   10,064,812       9,896,867       9,831,383       9,914,009       9,861,525  
                       
    Bank premises and equipment, net   108,776       109,945       110,787       113,304       115,749  
    Other real estate owned   6,421       6,877       7,315       7,560       7,216  
    Goodwill   732,417       732,417       732,417       732,417       731,970  
    Other intangible assets, net   77,431       83,445       89,377       95,645       102,397  
    Bank owned life insurance   306,379       303,816       301,229       298,974       296,763  
    Net deferred tax assets   94,820       108,852       111,539       113,232       131,602  
    Other assets   317,906       321,779       326,554       331,345       339,218  
    Total Assets $ 15,168,371     $ 14,952,613     $ 14,830,015     $ 14,580,249     $ 14,823,007  
                       
    Liabilities                  
    Deposits                  
    Noninterest demand $ 3,443,455     $ 3,397,918     $ 3,555,401     $ 3,544,981     $ 3,868,132  
    Interest-bearing demand   2,487,448       2,821,092       2,711,041       2,790,210       2,800,152  
    Savings   524,474       566,052       608,088       651,454       721,558  
    Money market   4,034,371       3,707,761       3,531,029       3,314,288       3,143,897  
    Time deposits   1,753,837       1,623,295       1,610,281       1,476,002       1,574,095  
    Total Deposits   12,243,585       12,116,118       12,015,840       11,776,935       12,107,834  
                       
    Securities sold under agreements to repurchase   210,176       262,103       326,732       374,573       276,450  
    Federal Home Loan Bank borrowings   245,000       180,000       110,000       50,000       110,000  
    Long-term debt, net   106,800       106,634       106,468       106,302       106,136  
    Other liabilities   168,960       157,377       153,225       164,353       174,193  
    Total Liabilities   12,974,521       12,822,232       12,712,265       12,472,163       12,774,613  
                       
    Shareholders’ Equity                  
    Common stock   8,614       8,530       8,494       8,486       8,515  
    Additional paid in capital   1,821,050       1,815,800       1,811,941       1,808,883       1,813,068  
    Retained earnings   508,036       492,805       478,017       467,305       453,117  
    Less: Treasury stock   (18,680 )     (18,744 )     (16,746 )     (16,710 )     (14,035 )
        2,319,020       2,298,391       2,281,706       2,267,964       2,260,665  
    Accumulated other comprehensive loss, net   (125,170 )     (168,010 )     (163,956 )     (159,878 )     (212,271 )
    Total Shareholders’ Equity   2,193,850       2,130,381       2,117,750       2,108,086       2,048,394  
    Total Liabilities & Shareholders’ Equity $ 15,168,371     $ 14,952,613     $ 14,830,015     $ 14,580,249     $ 14,823,007  
                       
    Common shares outstanding   85,441       85,299       84,935       84,861       85,150  
    CONSOLIDATED QUARTERLY FINANCIAL DATA       (Unaudited)    
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
                         
    (Amounts in thousands)   3Q’24   2Q’24   1Q’24   4Q’23   3Q’23
    Credit Analysis                    
    Net charge-offs   $ 7,445     $ 9,946     $ 3,630     $ 4,720     $ 12,748  
    Net charge-offs to average loans     0.29 %     0.40 %     0.15 %     0.19 %     0.50 %
                         
    Allowance for credit losses   $ 140,469     $ 141,641     $ 146,669     $ 148,931     $ 149,661  
                         
    Non-acquired loans at end of period   $ 7,178,186     $ 6,834,059     $ 6,613,763     $ 6,571,454     $ 6,343,121  
    Acquired loans at end of period     3,027,095       3,204,449       3,364,289       3,491,486       3,668,065  
    Total Loans   $ 10,205,281     $ 10,038,508     $ 9,978,052     $ 10,062,940     $ 10,011,186  
                         
    Total allowance for credit losses to total loans at end of period     1.38 %     1.41 %     1.47 %     1.48 %     1.49 %
    Purchase discount on acquired loans at end of period     4.48       4.51       4.63       4.75       4.86  
                         
    End of Period                    
    Nonperforming loans   $ 80,857     $ 59,927     $ 77,205     $ 65,104     $ 41,508  
    Other real estate owned     933       1,173       309       221       221  
    Properties previously used in bank operations included in other real estate owned     5,488       5,704       7,006       7,339       6,995  
    Total Nonperforming Assets   $ 87,278     $ 66,804     $ 84,520     $ 72,664     $ 48,724  
                         
    Nonperforming Loans to Loans at End of Period     0.79 %     0.60 %     0.77 %     0.65 %     0.41 %
                         
    Nonperforming Assets to Total Assets at End of Period     0.58       0.45       0.57       0.50       0.33  
                         
        September 30,   June 30,   March 31,   December 31,   September 30,
    Loans    2024     2024     2024     2023     2023 
    Construction and land development   $ 595,753     $ 593,534     $ 623,246     $ 767,622     $ 793,736  
    Commercial real estate – owner occupied     1,676,814       1,656,391       1,656,131       1,670,281       1,675,881  
    Commercial real estate – non-owner occupied     3,573,076       3,423,266       3,368,339       3,319,890       3,285,974  
    Residential real estate     2,564,903       2,555,320       2,521,399       2,445,692       2,418,903  
    Commercial and financial     1,575,228       1,582,290       1,566,198       1,607,888       1,588,152  
    Consumer     219,507       227,707       242,739       251,567       248,540  
    Total Loans   $ 10,205,281     $ 10,038,508     $ 9,978,052     $ 10,062,940     $ 10,011,186  
     
    AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1       (Unaudited)                    
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                                
                                       
                                       
      3Q’24   2Q’24   3Q’23
      Average       Yield/   Average       Yield/   Average       Yield/
    (Amounts in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
                                       
    Assets                                  
    Earning assets:                                  
    Securities:                                  
    Taxable $ 2,756,502     $ 25,963   3.75 %   $ 2,629,716     $ 24,155   3.69 %   $ 2,575,002     $ 21,401   3.32 %
    Nontaxable   5,701       42   2.93       5,423       40   2.97       15,280       119   3.11  
    Total Securities   2,762,203       26,005   3.75       2,635,139       24,195   3.69       2,590,282       21,520   3.32  
                                       
    Federal funds sold   433,423       5,906   5.42       510,401       6,967   5.49       547,576       7,415   5.37  
    Interest bearing deposits with other banks and other investments   102,700       1,232   4.77       98,942       1,361   5.53       90,039       1,062   4.68  
                                       
    Total Loans, net2   10,128,822       151,282   5.94       10,005,122       147,518   5.93       10,043,611       150,048   5.93  
                                       
    Total Earning Assets   13,427,148       184,425   5.46       13,249,604       180,041   5.47       13,271,508       180,045   5.38  
                                       
    Allowance for credit losses   (141,974 )             (146,380 )             (158,440 )        
    Cash and due from banks   167,103               168,439               168,931          
    Bank premises and equipment, net   109,699               110,709               116,704          
    Intangible assets   812,761               818,914               839,787          
    Bank owned life insurance   304,703               302,165               295,272          
    Other assets including deferred tax assets   317,406               336,256               372,241          
                                       
    Total Assets $ 14,996,846             $ 14,839,707             $ 14,906,003          
                                       
    Liabilities and Shareholders’ Equity                                  
    Interest-bearing liabilities:                                  
    Interest-bearing demand $ 2,489,674     $ 12,905   2.06 %   $ 2,670,569     $ 14,946   2.25 %   $ 2,804,243     $ 15,013   2.12 %
    Savings   546,473       601   0.44       584,490       560   0.39       770,503       465   0.24  
    Money market   3,942,357       38,457   3.88       3,665,858       35,813   3.93       2,972,495       22,918   3.06  
    Time deposits   1,716,720       19,002   4.40       1,631,290       17,928   4.42       1,619,572       16,461   4.03  
    Securities sold under agreements to repurchase   241,083       2,044   3.37       293,603       2,683   3.68       327,711       2,876   3.48  
    Federal Home Loan Bank borrowings   237,935       2,549   4.26       149,234       1,592   4.29       111,087       888   3.17  
    Long-term debt, net   106,706       1,892   7.05       106,532       1,862   7.03       106,036       1,919   7.18  
                                       
    Total Interest-Bearing Liabilities   9,280,948       77,450   3.32       9,101,576       75,384   3.33       8,711,647       60,540   2.76  
                                       
    Noninterest demand   3,393,110               3,485,603               3,987,761          
    Other liabilities   154,344               134,900               133,846          
    Total Liabilities   12,828,402               12,722,079               12,833,254          
                                       
    Shareholders’ equity   2,168,444               2,117,628               2,072,747          
                                       
    Total Liabilities & Equity $ 14,996,846             $ 14,839,707             $ 14,906,003          
                                       
    Cost of deposits         2.34 %           2.31 %           1.79 %
    Interest expense as a % of earning assets         2.29 %           2.29 %           1.81 %
    Net interest income as a % of earning assets     $ 106,975   3.17 %       $ 104,657   3.18 %       $ 119,505   3.57 %
                                       
                                       
    On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.              
    Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.              
    AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1       (Unaudited)        
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                    
                           
                           
      Nine Months Ended September 30, 2024   Nine Months Ended September 30, 2023
      Average       Yield/   Average       Yield/
    (Amounts in thousands) Balance   Interest   Rate   Balance   Interest   Rate
                           
    Assets                      
    Earning assets:                      
    Securities:                      
    Taxable $ 2,655,422     $ 72,511   3.65 %   $ 2,649,127     $ 61,543   3.10 %
    Nontaxable   5,677       123   2.89       15,721       370   3.14  
    Total Securities   2,661,099       72,634   3.65       2,664,848       61,913   3.10  
                           
    Federal funds sold   438,089       17,929   5.47       336,022       12,444   4.95  
    Interest bearing deposits with other banks and other investments   102,415       3,721   4.85       90,511       4,530   6.69  
                           
    Total Loans, net2   10,056,466       446,108   5.93       9,840,484       433,821   5.89  
                           
    Total Earning Assets   13,258,069       540,392   5.44       12,931,865       512,708   5.30  
                           
    Allowance for credit losses   (145,579 )             (151,613 )        
    Cash and due from banks   167,424               185,426          
    Bank premises and equipment, net   110,929               116,840          
    Intangible assets   819,046               811,483          
    Bank owned life insurance   302,220               287,756          
    Other assets including deferred tax assets   330,898               402,175          
                           
    Total Assets $ 14,843,007             $ 14,583,932          
                           
    Liabilities and Shareholders’ Equity                      
    Interest-bearing liabilities:                      
    Interest-bearing demand $ 2,626,026     $ 43,117   2.19 %   $ 2,642,180     $ 25,780   1.30 %
    Savings   586,285       1,701   0.39       909,184       1,292   0.19  
    Money market   3,673,493       105,998   3.85       2,831,747       54,540   2.58  
    Time deposits   1,646,285       54,051   4.39       1,288,736       36,490   3.79  
    Securities sold under agreements to repurchase   289,181       7,806   3.61       249,242       5,333   2.86  
    Federal Home Loan Bank borrowings   163,468       5,101   4.17       214,415       5,936   3.70  
    Long-term debt, net   106,538       5,688   7.13       103,469       5,328   6.88  
                           
    Total Interest-Bearing Liabilities   9,091,276       223,462   3.28       8,238,973       134,699   2.19  
                           
    Noninterest demand   3,468,790               4,204,389          
    Other liabilities   148,000               126,487          
    Total Liabilities   12,708,066               12,569,849          
                           
    Shareholders’ equity   2,134,941               2,014,083          
                           
    Total Liabilities & Equity $ 14,843,007             $ 14,583,932          
                           
    Cost of deposits         2.28 %           1.33 %
    Interest expense as a % of earning assets         2.25 %           1.39 %
    Net interest income as a % of earning assets     $ 316,930   3.19 %       $ 378,009   3.91 %
                           
                           
    On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.        
    Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.        
    CONSOLIDATED QUARTERLY FINANCIAL DATA         (Unaudited)        
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                  
    (Amounts in thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Customer Relationship Funding                  
    Noninterest demand                  
    Commercial $ 2,731,564   $ 2,664,353   $ 2,808,151   $ 2,752,644   $ 3,089,488
    Retail   509,527     532,623     553,697     561,569     570,727
    Public funds   139,072     142,846     145,747     173,893     134,649
    Other   63,292     58,096     47,806     56,875     73,268
    Total Noninterest Demand   3,443,455     3,397,918     3,555,401     3,544,981     3,868,132
                       
    Interest-bearing demand                  
    Commercial   1,426,920     1,533,725     1,561,905     1,576,491     1,618,755
    Retail   874,043     892,032     930,178     956,900     994,224
    Brokered       198,337            
    Public funds   186,485     196,998     218,958     256,819     187,173
    Total Interest-Bearing Demand   2,487,448     2,821,092     2,711,041     2,790,210     2,800,152
                       
    Total transaction accounts                  
    Commercial   4,158,484     4,198,078     4,370,056     4,329,135     4,708,243
    Retail   1,383,570     1,424,655     1,483,875     1,518,469     1,564,951
    Brokered       198,337            
    Public funds   325,557     339,844     364,705     430,712     321,822
    Other   63,292     58,096     47,806     56,875     73,268
    Total Transaction Accounts   5,930,903     6,219,010     6,266,442     6,335,191     6,668,284
                       
    Savings                  
    Commercial   44,151     53,523     52,665     58,562     79,731
    Retail   480,323     512,529     555,423     592,892     641,827
    Total Savings   524,474     566,052     608,088     651,454     721,558
                       
    Money market                  
    Commercial   1,953,851     1,771,927     1,709,636     1,655,820     1,625,455
    Retail   1,887,975     1,733,505     1,621,618     1,469,142     1,362,390
    Public funds   192,545     202,329     199,775     189,326     156,052
    Total Money Market   4,034,371     3,707,761     3,531,029     3,314,288     3,143,897
                       
    Brokered time certificates   256,536     126,668     142,717     122,347     307,963
    Time deposits   1,497,301     1,496,627     1,467,564     1,353,655     1,266,132
        1,753,837     1,623,295     1,610,281     1,476,002     1,574,095
    Total Deposits $ 12,243,585   $ 12,116,118   $ 12,015,840   $ 11,776,935   $ 12,107,834
                       
    Securities sold under agreements to repurchase   210,176     262,103     326,732     374,573     276,450
                       
    Total customer funding 1 $ 12,197,225   $ 12,053,216   $ 12,199,855   $ 12,029,161   $ 12,076,321
                       
    1Total deposits and securities sold under agreements to repurchase, excluding brokered deposits. Securities sold under agreements to repurchase consists of customer sweep accounts.

    Explanation of Certain Unaudited Non-GAAP Financial Measures

    This presentation contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.

    GAAP TO NON-GAAP RECONCILIATION         (Unaudited)              
    SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                        
              Quarterly Trends           Nine Months Ended
    (Amounts in thousands, except per share data) 3Q’24   2Q’24   1Q’24   4Q’23   3Q’23   3Q’24 3Q’23
    Net Income $ 30,651     $ 30,244     $ 26,006     $ 29,543     $ 31,414     $ 86,901   $ 74,490  
                             
    Total noninterest income   23,679       22,184       20,497       17,338       17,793       66,360     61,814  
    Securities (gains) losses, net   (187 )     44       (229 )     2,437       387       (372 )   456  
    BOLI benefits on death (included in other income)                                     (2,117 )
    Total Adjustments to Noninterest Income   (187 )     44       (229 )     2,437       387       (372 )   (1,661 )
    Total Adjusted Noninterest Income   23,492       22,228       20,268       19,775       18,180       65,988     60,153  
                             
    Total noninterest expense   84,818       82,537       90,371       86,367       93,915       257,726     309,255  
    Merger-related charges                                     (33,180 )
    Branch reductions and other expense initiatives               (7,094 )           (3,305 )     (7,094 )   (5,167 )
    Adjustments to Noninterest Expense               (7,094 )           (3,305 )     (7,094 )   (38,347 )
    Adjusted Noninterest Expense2   84,818       82,537       83,277       86,367       90,610       250,632     270,908  
                             
    Income Taxes   8,602       8,909       7,830       8,257       9,076       25,341     21,962  
    Tax effect of adjustments   (47 )     11       1,739       617       936       1,703     9,298  
    Adjusted Income Taxes   8,555       8,920       9,569       8,874       10,012       27,044     31,260  
    Adjusted Net Income2 $ 30,511     $ 30,277     $ 31,132     $ 31,363     $ 34,170     $ 91,920   $ 101,878  
                             
    Earnings per diluted share, as reported $ 0.36     $ 0.36     $ 0.31     $ 0.35     $ 0.37     $ 1.02   $ 0.89  
    Adjusted Earnings per Diluted Share   0.36       0.36       0.37       0.37       0.40       1.08     1.21  
    Average diluted shares outstanding   85,069       84,816       85,270       85,336       85,666       84,915     83,993  
                             
    Adjusted Noninterest Expense $ 84,818     $ 82,537     $ 83,277     $ 86,367     $ 90,610     $ 250,632   $ 270,908  
    Provision for credit losses on unfunded commitments   (250 )     (251 )     (250 )                 (751 )   (1,239 )
    Other real estate owned expense and net gain (loss) on sale   (491 )     109       26       (573 )     (274 )     (356 )   (412 )
    Amortization of intangibles   (6,002 )     (6,003 )     (6,292 )     (6,888 )     (7,457 )     (18,297 )   (21,838 )
    Net Adjusted Noninterest Expense $ 78,075     $ 76,392     $ 76,761     $ 78,906     $ 82,879     $ 231,228   $ 247,419  
    Average tangible assets   14,184,085       14,020,793       13,865,245       13,906,005       14,066,216       14,023,961     13,772,449  
    Net Adjusted Noninterest Expense to Average Tangible Assets   2.19 %     2.19 %     2.23 %     2.25 %     2.34 %     2.20 %   2.40 %
                             
    Net Revenue $ 130,344     $ 126,608     $ 125,575     $ 128,157     $ 137,099     $ 382,527   $ 439,235  
    Total Adjustments to Net Revenue   (187 )     44       (229 )     2,437       387       (372 )   (1,661 )
    Impact of FTE adjustment   310       233       220       216       199       763     588  
    Adjusted Net Revenue on a fully taxable equivalent basis $ 130,467     $ 126,885     $ 125,566     $ 130,810     $ 137,685     $ 382,918   $ 438,162  
    Adjusted Efficiency Ratio   59.84 %     60.21 %     61.13 %     60.32 %     60.19 %     60.39 %   56.47 %
                             
    Net Interest Income $ 106,665     $ 104,424     $ 105,078     $ 110,819     $ 119,306     $ 316,167   $ 377,421  
    Impact of FTE adjustment   310       233       220       216       199       763     588  
    Net Interest Income including FTE adjustment $ 106,975     $ 104,657     $ 105,298     $ 111,035     $ 119,505     $ 316,930   $ 378,009  
    Total noninterest income   23,679       22,184       20,497       17,338       17,793       66,360     61,814  
    Total noninterest expense less provision for credit losses on unfunded commitments   84,568       82,286       90,121       86,367       93,915       256,975     308,016  
    Pre-Tax Pre-Provision Earnings $ 46,086     $ 44,555     $ 35,674     $ 42,006     $ 43,383     $ 126,315   $ 131,807  
    Total Adjustments to Noninterest Income   (187 )     44       (229 )     2,437       387       (372 )   (1,661 )
    Total Adjustments to Noninterest Expense including other real estate owned expense and net (gain) loss on sale   491       (109 )     7,068       573       3,579       7,450     38,759  
    Adjusted Pre-Tax Pre-Provision Earnings2 $ 46,390     $ 44,490     $ 42,513     $ 45,016     $ 47,349     $ 133,393   $ 168,905  
                             
    Average Assets $ 14,996,846     $ 14,839,707     $ 14,690,776     $ 14,738,034     $ 14,906,003     $ 14,843,007   $ 14,583,932  
    Less average goodwill and intangible assets   (812,761 )     (818,914 )     (825,531 )     (832,029 )     (839,787 )     (819,046 )   (811,483 )
    Average Tangible Assets $ 14,184,085     $ 14,020,793     $ 13,865,245     $ 13,906,005     $ 14,066,216     $ 14,023,961   $ 13,772,449  
    Return on Average Assets (ROA)   0.81 %     0.82 %     0.71 %     0.80 %     0.84 %     0.78 %   0.68 %
    Impact of removing average intangible assets and related amortization   0.18       0.18       0.18       0.19       0.20       0.18     0.20  
    Return on Average Tangible Assets (ROTA)   0.99       1.00       0.89       0.99       1.04       0.96     0.88  
    Impact of other adjustments for Adjusted Net Income   (0.01 )           0.15       0.05       0.08       0.05     0.27  
    Adjusted Return on Average Tangible Assets   0.98       1.00       1.04       1.04       1.12       1.01     1.15  
                             
    Pre-Tax Pre-Provision return on Average Tangible Assets   1.46       1.45       1.22       1.39       1.43       1.38     1.49  
    Impact of adjustments on Pre-Tax Pre-Provision earnings   0.01             0.20       0.09       0.12       0.06     0.36  
    Adjusted Pre-Tax Pre-Provision Return on Tangible Assets2   1.47 %     1.45 %     1.42 %     1.48 %     1.55 %     1.44 %   1.85 %
                             
    Average Shareholders’ Equity $ 2,168,444     $ 2,117,628     $ 2,118,381     $ 2,058,912     $ 2,072,747     $ 2,134,941   $ 2,014,083  
    Less average goodwill and intangible assets   (812,761 )     (818,914 )     (825,531 )     (832,029 )     (839,787 )     (819,046 )   (811,483 )
    Average Tangible Equity $ 1,355,683     $ 1,298,714     $ 1,292,850     $ 1,226,883     $ 1,232,960     $ 1,315,895   $ 1,202,600  
                             
    Return on Average Shareholders’ Equity   5.62 %     5.74 %     4.94 %     5.69 %     6.01 %     5.44 %   4.94 %
    Impact of removing average intangible assets and related amortization   4.69       5.01       4.61       5.53       5.89       4.77     5.15  
    Return on Average Tangible Common Equity (ROTCE)   10.31       10.75       9.55       11.22       11.90       10.21     10.09  
    Impact of other adjustments for Adjusted Net Income   (0.04 )     0.01       1.60       0.58       0.89       0.51     3.05  
    Adjusted Return on Average Tangible Common Equity   10.27 %     10.76 %     11.15 %     11.80 %     12.79 %     10.72 %   13.14 %
                             
    Loan interest income1 $ 151,282     $ 147,518     $ 147,308     $ 148,004     $ 150,048     $ 446,108   $ 433,821  
    Accretion on acquired loans   (9,182 )     (10,178 )     (10,595 )     (11,324 )     (14,843 )     (29,955 )   (45,365 )
    Loan interest income excluding accretion on acquired loans $ 142,100     $ 137,340     $ 136,713     $ 136,680     $ 135,205     $ 416,153   $ 388,456  
                             
    Yield on loans1   5.94       5.93       5.90       5.85       5.93       5.93     5.89  
    Impact of accretion on acquired loans   (0.36 )     (0.41 )     (0.42 )     (0.45 )     (0.59 )     (0.40 )   (0.61 )
    Yield on loans excluding accretion on acquired loans   5.58 %     5.52 %     5.48 %     5.40 %     5.34 %     5.53 %   5.89 %
                             
    Net Interest Income1 $ 106,975     $ 104,657     $ 105,298     $ 111,035     $ 119,505     $ 316,930   $ 378,009  
    Accretion on acquired loans   (9,182 )     (10,178 )     (10,595 )     (11,324 )     (14,843 )     (29,955 )   (45,365 )
    Net interest income excluding accretion on acquired loans $ 97,793     $ 94,479     $ 94,703     $ 99,711     $ 104,662     $ 286,975   $ 332,644  
                             
    Net Interest Margin   3.17       3.18       3.24       3.36       3.57       3.19     3.91  
    Impact of accretion on acquired loans   (0.27 )     (0.30 )     (0.33 )     (0.34 )     (0.44 )     (0.30 )   (0.47 )
    Net interest margin excluding accretion on acquired loans   2.90 %     2.87 %     2.91 %     3.02 %     3.13 %     2.89 %   3.44 %
                             
    Security interest income1 $ 26,005     $ 24,195     $ 22,434     $ 21,451     $ 21,520     $ 72,634   $ 61,913  
    Tax equivalent adjustment on securities   (8 )     (7 )     (7 )     (13 )     (22 )     (22 )   (71 )
    Security interest income excluding tax equivalent adjustment $ 25,997     $ 24,188     $ 22,427     $ 21,438     $ 21,498     $ 72,612   $ 61,842  
                             
    Loan interest income1 $ 151,282     $ 147,518     $ 147,308     $ 148,004     $ 150,048     $ 446,108   $ 433,821  
    Tax equivalent adjustment on loans   (302 )     (226 )     (213 )     (203 )     (177 )     (741 )   (517 )
    Loan interest income excluding tax equivalent adjustment $ 150,980     $ 147,292     $ 147,095     $ 147,801     $ 149,871     $ 445,367   $ 433,304  
                             
    Net Interest Income1 $ 106,975     $ 104,657     $ 105,298     $ 111,035     $ 119,505     $ 316,930   $ 378,009  
    Tax equivalent adjustment on securities   (8 )     (7 )     (7 )     (13 )     (22 )     (22 )   (71 )
    Tax equivalent adjustment on loans   (302 )     (226 )     (213 )     (203 )     (177 )     (741 )   (517 )
    Net interest income excluding tax equivalent adjustment $ 106,665     $ 104,424     $ 105,078     $ 110,819     $ 119,306     $ 316,167   $ 377,421  
                             
    1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.    
    2As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change.    

    The MIL Network

  • MIL-OSI USA: Two North Idaho Men Arrested for Exploitation of Children

    Source: US State of Idaho

    [BOISE] – Attorney General Raúl Labrador has announced investigators with his Idaho Internet Crimes Against Children (ICAC) Task Force arrested thirty-one-year-old Bryce Berg on Tuesday, October 22nd, 2024, for 10 counts of possession of child sexual exploitation material and 1 count of attempted voyeurism after a search warrant was served at his residence. Agencies that assisted the ICAC Task Force in the arrest of Bryce Berg were the Post Falls Police Department, United States Marshals Service, United States Secret Service, the Kootenai County Sheriff’s Office, and the Kootenai County Prosecutor’s Office.
    On Wednesday October 23rd, 2024, the Idaho ICAC Task Force also arrested fifty-one-year-old Gregg McFarlane for 7 counts of possession of child sexual exploitation material and 3 counts of possession of computer-generated image child sexual exploitation material after a search warrant was served at his residence. Agencies that assisted the ICAC Task Force in the arrest of Gregg McFarlane were the Pinehurst Police Department, the Coeur d’Alene Police Department, the Kellogg Police Department, and the Shoshone County Sheriff’s Office.
    “It’s a difficult job and it takes a toll on the staff who are so dedicated to the safety of Idaho’s kids,” said Attorney General Labrador. “However, everyone on our ICAC Task Force is committed to stopping the cycle of exploitation and removing these abusers from our communities. I’m very grateful for the expanding agency partnerships that make this effort successful across the state.”
    Anyone with information regarding the exploitation of children is encouraged to contact local police, the Attorney General’s ICAC Unit at 208-947-8700, or the National Center for Missing and Exploited Children at 1-800-843-5678.
    The Attorney General’s ICAC Unit works with the Idaho ICAC Task Force, a coalition of federal, state, and local law enforcement agencies, to investigate and prosecute individuals who use the internet to criminally exploit children.
    Parents, educators, and law enforcement officials can find more information and helpful resources at the ICAC website, ICACIdaho.org.

    MIL OSI USA News

  • MIL-OSI China: WIC Wuzhen Summit to open in November

    Source: China State Council Information Office 2

    Tourists visit the water town Wuzhen on rowing boats in Jiaxing City, east China’s Zhejiang Province, April 11, 2024. [Photo/Xinhua]
    The 2024 World Internet Conference (WIC) Wuzhen Summit is scheduled to take place from Nov. 19 to 22 in the water-town of Wuzhen, located in east China’s Zhejiang Province, and will feature four key highlights, according to a press conference held on Thursday.
    During this year’s summit, a distinguished contribution award will be established to recognize individuals and companies who have made outstanding contributions to the field of the global internet.
    Under the WIC framework, the summit will also see the establishment of a special committee on artificial intelligence (AI), the launch of a think tank cooperation program, and the creation of an international digital training institute.
    Themed “Embracing a People-centered and AI-for-good Digital Future — Building a Community with a Shared Future in Cyberspace,” the 2024 edition will feature 24 sub-forums on topics such as Global Development Initiative, digital economy, and data governance, as well as a series of activities.
    Since 2014, the Wuzhen Summit has been successfully held for ten consecutive years. Currently, the WIC includes about 170 institutions, organizations, companies, and individuals from over 30 countries and regions across six continents as its members.

    MIL OSI China News

  • MIL-OSI Europe: Encyclical Letter “Dilexit nos” of the Holy Father Francis on the human and divine love of the heart of Jesus Christ

    Source: The Holy See

    Encyclical Letter “Dilexit nos” of the Holy Father Francis on the human and divine love of the heart of Jesus Christ, 24.10.2024
    ENCYCLICAL LETTER
    DILEXIT NOS
    OF THE HOLY FATHER
    FRANCIS
    ON THE HUMAN AND DIVINE LOVE
    OF THE HEART OF JESUS CHRIST
    1. HE LOVED US”, Saint Paul says of Christ (cf.Rom8:37), in order to make us realize that nothing can ever “separate us” from that love (Rom8:39).Paul could say this with certainty because Jesus himself had told his disciples, “I have loved you” (Jn15:9, 12).Even now, the Lord says to us, “I have called you friends” (Jn15:15).His open heart has gone before us and waits for us, unconditionally, asking only to offer us his love and friendship.For “he loved us first” (cf.1 Jn4:10).Because of Jesus, “we have come to know and believe in the love that God has for us” (1 Jn4:16).
    CHAPTER ONE
    THE IMPORTANCE OF THE HEART
    2. The symbol of the heart has often been used to express the love of Jesus Christ.Some have questioned whether this symbol is still meaningful today.Yet living as we do in an age of superficiality, rushing frenetically from one thing to another without really knowing why, and ending up as insatiable consumers and slaves to the mechanisms of a market unconcerned about the deeper meaning of our lives, all of us need to rediscover the importance of the heart.[1]
    WHAT DO WE MEAN BY “THE HEART”?
    3. In classical Greek, the wordkardíadenotes the inmost part of human beings, animals and plants.For Homer, it indicates not only the centre of the body, but also the human soul and spirit.In the Iliad, thoughts and feelings proceed from the heart and are closely bound one to another.[2]The heart appears as the locus of desire and the place where important decisions take shape.[3]In Plato, the heart serves, as it were, to unite the rational and instinctive aspects of the person, since the impulses of both the higher faculties and the passions were thought to pass through the veins that converge in the heart.[4]From ancient times, then, there has been an appreciation of the fact that human beings are not simply a sum of different skills, but a unity of body and soul with a coordinating centre that provides a backdrop of meaning and direction to all that a person experiences.
    4. The Bible tells us that, “the Word of God is living and active… it is able to judge the thoughts and intentions of the heart” (Heb4:12).In this way, it speaks to us of the heart as a core that lies hidden bene ath all outward appearances, even beneath the superficial thoughts that can lead us astray.The disciples of Emmaus, on their mysterious journey in the company of the risen Christ, experienced a moment of anguish, confusion, despair and disappointment.Yet, beyond and in spite of this, something was happening deep within them: “Were not our hearts burning within us while he was talking to us on the road?” (Lk 24:32).
    5. The heart is also the locus of sincerity, where deceit and disguise have no place.It usually indicates our true intentions, what we really think, believe and desire, the “secrets” that we tell no one: in a word, the naked truth about ourselves.It is the part of us that is neither appearance or illusion, but is instead authentic, real, entirely “who we are”.That is why Samson, who kept from Delilah the secret of his strength, was asked by her, “How can you say, ‘I love you’, when your heart is not with me?” (Judg16:15).Only when Samson opened his heart to her, did she realize “that he had told her his whole secret” (Judg16:18).
    6. This interior reality of each person is frequently concealed behind a great deal of “foliage”, which makes it difficult for us not only to understand ourselves, but even more to know others: “The heart is devious above all else; it is perverse, who can understand it?” (Jer17:9).We can understand, then, the advice of the Book of Proverbs: “Keep your heart with all vigilance, for from it flow the springs of life; put away from you crooked speech” (4:23-24).Mere appearances, dishonesty and deception harm and pervert the heart.Despite our every attempt to appear as something we are not, our heart is the ultimate judge, not of what we show or hide from others, but of who we truly are.It is the basis for any sound life project; nothing worthwhile can be undertaken apart from the heart.False appearances and untruths ultimately leave us empty-handed.
    7. As an illustration of this, I would repeat a story I have already told on another occasion.“For the carnival, when we were children, my grandmother would make a pastry using a very thin batter.When she dropped the strips of batter into the oil, they would expand, but then, when we bit into them, they were empty inside.In the dialect we spoke, those cookies were called ‘lies’…My grandmother explained why: ‘Like lies, they look big, but are empty inside; they are false, unreal’”.[5]
    8. Instead of running after superficial satisfactions and playing a role for the benefit of others, we would do better to think about the really important questions in life.Who am I, really?What am I looking for?What direction do I want to give to my life, my decisions and my actions?Why and for what purpose am I in this world?How do I want to look back on my life once it ends?What meaning do I want to give to all my experiences?Who do I want to be for others?Who am I for God?All these questions lead us back to the heart.
    RETURNING TO THE HEART
    9. In this “liquid” world of ours, we need to start speaking once more about the heart and thinking about this place where every person, of every class and condition, creates a synthesis, where they encounter the radical source of their strengths, convictions, passions and decisions.Yet, we find ourselves immersed in societies of serial consumers who live from day to day, dominated by the hectic pace and bombarded by technology, lacking in the patience needed to engage in the processes that an interior life by its very nature requires.In contemporary society, people “risk losing their centre, the centre of their very selves”.[6]“Indeed, the men and women of our time often find themselves confused and torn apart, almost bereft of an inner principle that can create unity and harmony in their lives and actions.Models of behaviour that, sadly, are now widespread exaggerate our rational-technological dimension or, on the contrary, that of our instincts”.[7]No room is left for the heart.
    10. The issues raised by today’s liquid society are much discussed, but this depreciation of the deep core of our humanity – the heart – has a much longer history.We find it already present in Hellenic and pre-Christian rationalism, in post-Christian idealism and in materialism in its various guises.The heart has been ignored in anthropology, and the great philosophical tradition finds it a foreign notion, preferring other concepts such as reason, will or freedom.The very meaning of the term is imprecise and hard to situate within our human experience.Perhaps this is due to the difficulty of treating it as a “clear and distinct idea”, or because it entails the question of self-understanding, where the deepest part of us is also that which is least known.Even encountering others does not necessarily prove to be a way of encountering ourselves, inasmuch as our thought patterns are dominated by an unhealthy individualism.Many people feel safer constructing their systems of thought in the more readily controllable domain of intelligence and will.The failure to make room for the heart, as distinct from our human powers and passions viewed in isolation from one another, has resulted in a stunting of the idea of a personal centre, in which love, in the end, is the one reality that can unify all the others.
    11. If we devalue the heart, we also devalue what it means to speak from the heart, to act with the heart, to cultivate and heal the heart.If we fail to appreciate the specificity of the heart, we miss the messages that the mind alone cannot communicate; we miss out on the richness of our encounters with others; we miss out on poetry.We also lose track of history and our own past, since our real personal history is built with the heart.At the end of our lives, that alone will matter.
    12. It must be said, then, that we have a heart, a heart that coexists with other hearts that help to make it a “Thou”.Since we cannot develop this theme at length, we will take a character from one of Dostoevsky’s novels, Nikolai Stavrogin.[8]Romano Guardini argues that Stavrogin is the very embodiment of evil, because his chief trait is his heartlessness: “Stavrogin has no heart, hence his mind is cold and empty and his body sunken in bestial sloth and sensuality.He has no heart, hence he can draw close to no one and no one can ever truly draw close to him.For only the heart creates intimacy, true closeness between two persons.Only the heart is able to welcome and offer hospitality.Intimacy is the proper activity and the domain of the heart.Stavrogin is always infinitely distant, even from himself, because a man can enter into himself only with the heart, not with the mind.It is not in a man’s power to enter into his own interiority with the mind.Hence, if the heart is not alive, man remains a stranger to himself”.[9]
    13. All our actions need to be put under the “political rule” of the heart.In this way, our aggressiveness and obsessive desires will find rest in the greater good that the heart proposes and in the power of the heart to resist evil.The mind and the will are put at the service of the greater good by sensing and savouring truths, rather than seeking to master them as the sciences tend to do.The will desires the greater good that the heart recognizes, while the imagination and emotions are themselves guided by the beating of the heart.
    14. It could be said, then, that I am my heart, for my heart is what sets me apart, shapes my spiritual identity and puts me in communion with other people.The algorithms operating in the digital world show that our thoughts and will are much more “uniform” than we had previously thought.They are easily predictable and thus capable of being manipulated.That is not the case with the heart.
    15. The word “heart” proves its value for philosophy and theology in their efforts to reach an integral synthesis.Nor can its meaning be exhausted by biology, psychology, anthropology or any other science.It is one of those primordial words that “describe realities belonging to man precisely in so far as he is one whole (as a corporeo-spiritual person)”.[10]It follows that biologists are not being more “realistic” when they discuss the heart, since they see only one aspect of it; the whole is not less real, but even more real.Nor can abstract language ever acquire the same concrete and integrative meaning.The word “heart” evokes the inmost core of our person, and thus it enables us to understand ourselves in our integrity and not merely under one isolated aspect.
    16. This unique power of the heart also helps us to understand why, when we grasp a reality with our heart, we know it better and more fully.This inevitably leads us to the love of which the heart is capable, for “the inmost core of reality is love”.[11]For Heidegger, as interpreted by one contemporary thinker, philosophy does not begin with a simple concept or certainty, but with a shock: “Thought must be provoked before it begins to work with concepts or while it works with them.Without deep emotion, thought cannot begin.The first mental image would thus be goose bumps.What first stirs one to think and question is deep emotion.Philosophy always takes place in a basic mood (Stimmung)”.[12]That is where the heart comes in, since it “houses the states of mind and functions as a ‘keeper of the state of mind’.The ‘heart’ listens in a non-metaphoric way to ‘the silent voice’ of being, allowing itself to be tempered and determined by it”.[13]
    THE HEART UNITES THE FRAGMENTS
    17. At the same time, the heart makes all authentic bonding possible, since a relationship not shaped by the heart is incapable of overcoming the fragmentation caused by individualism.Two monads may approach one another, but they will never truly connect.A society dominated by narcissism and self-centredness will increasingly become “heartless”.This will lead in turn to the “loss of desire”, since as other persons disappear from the horizon we find ourselves trapped within walls of our own making, no longer capable of healthy relationships.[14]As a result, we also become incapable of openness to God.As Heidegger puts it, to be open to the divine we need to build a “guest house”.[15]
    18. We see, then, that in the heart of each person there is a mysterious connection between self-knowledge and openness to others, between the encounter with one’s personal uniqueness and the willingness to give oneself to others.We become ourselves only to the extent that we acquire the ability to acknowledge others, while only those who can acknowledge and accept themselves are then able to encounter others.
    19. The heart is also capable of unifying and harmonizing our personal history, which may seem hopelessly fragmented, yet is the place where everything can make sense.The Gospel tells us this in speaking of Our Lady, who saw things with the heart.She was able to dialogue with the things she experienced by pondering them in her heart, treasuring their memory and viewing them in a greater perspective.The best expression of how the heart thinks is found in the two passages in Saint Luke’s Gospel that speak to us of how Mary “treasured (synetérei) all these things and pondered (symbállousa) them in her heart” (cf.Lk2:19 and 51).The Greek verbsymbállein, “ponder”, evokes the image of putting two things together (“symbols”) in one’s mind and reflecting on them, in a dialogue with oneself.In Luke 2:51, the verb used isdietérei, which has the sense of “keep”.What Mary “kept” was not only her memory of what she had seen and heard, but also those aspects of it that she did not yet understand; these nonetheless remained present and alive in her memory, waiting to be “put together” in her heart.
    20. In this age of artificial intelligence, we cannot forget that poetry and love are necessary to save our humanity.No algorithm will ever be able to capture, for example, the nostalgia that all of us feel, whatever our age, and wherever we live, when we recall how we first used a fork to seal the edges of the pies that we helped our mothers or grandmothers to make at home. It was a moment of culinary apprenticeship, somewhere between child-play and adulthood, when we first felt responsible for working and helping one another.Along with the fork, I could also mention thousands of other little things that are a precious part of everyone’s life: a smile we elicited by telling a joke, a picture we sketched in the light of a window, the first game of soccer we played with a rag ball, the worms we collected in a shoebox, a flower we pressed in the pages of a book, our concern for a fledgling bird fallen from its nest, a wish we made in plucking a daisy.All these little things, ordinary in themselves yet extraordinary for us, can never be captured by algorithms.The fork, the joke, the window, the ball, the shoebox, the book, the bird, the flower: all of these live on as precious memories “kept” deep in our heart.
    21. This profound core, present in every man and woman, is not that of the soul, but of the entire person in his or her unique psychosomatic identity.Everything finds its unity in the heart, which can be the dwelling-place of love in all its spiritual, psychic and even physical dimensions.In a word, if love reigns in our heart, we become, in a complete and luminous way, the persons we are meant to be, for every human being is created above all else for love.In the deepest fibre of our being, we were made to love and to be loved.
    22. For this reason, when we witness the outbreak of new wars, with the complicity, tolerance or indifference of other countries, or petty power struggles over partisan interests, we may be tempted to conclude that our world is losing its heart.We need only to see and listen to the elderly women – from both sides – who are at the mercy of these devastating conflicts.It is heart-breaking to see them mourning for their murdered grandchildren, or longing to die themselves after losing the homes where they spent their entire lives.Those women, who were often pillars of strength and resilience amid life’s difficulties and hardships, now, at the end of their days, are experiencing, in place of a well-earned rest, only anguish, fear and outrage.Casting the blame on others does not resolve these shameful and tragic situations.To see these elderly women weep, and not feel that this is something intolerable, is a sign of a world that has grown heartless.
    23. Whenever a person thinks, questions and reflects on his or her true identity, strives to understand the deeper questions of life and to seek God, or experiences the thrill of catching a glimpse of truth, it leads to the realization that our fulfilment as human beings is found in love.In loving, we sense that we come to know the purpose and goal of our existence in this world.Everything comes together in a state of coherence and harmony.It follows that, in contemplating the meaning of our lives, perhaps the most decisive question we can ask is, “Do I have a heart?”
    FIRE
    24. All that we have said has implications for the spiritual life.For example, the theology underlying the Spiritual Exercises of Saint Ignatius Loyola is based on “affection” (affectus).The structure of the Exercises assumes a firm and heartfelt desire to “rearrange” one’s life, a desire that in turn provides the strength and the wherewithal to achieve that goal.The rules and the compositions of place that Ignatius furnishes are in the service of something much more important, namely, the mystery of the human heart.Michel de Certeau shows how the “movements” of which Ignatius speaks are the “inbreaking” of God’s desire and the desire of our own heart amid the orderly progression of the meditations.Something unexpected and hitherto unknown starts to speak in our heart, breaking through our superficial knowledge and calling it into question.This is the start of a new process of “setting our life in order”, beginning with the heart.It is not about intellectual concepts that need to be put into practice in our daily lives, as if affectivity and practice were merely the effects of – and dependent upon – the data of knowledge.[16]
    25. Where the thinking of the philosopher halts, there the heart of the believer presses on in love and adoration, in pleading for forgiveness and in willingness to serve in whatever place the Lord allows us to choose, in order to follow in his footsteps.At that point, we realize that in God’s eyes we are a “Thou”, and for that very reason we can be an “I”.Indeed, only the Lord offers to treat each one of us as a “Thou”, always and forever.Accepting his friendship is a matter of the heart; it is what constitutes us as persons in the fullest sense of that word.
    26. Saint Bonaventure tells us that in the end we should not pray for light, but for “raging fire”.[17]He teaches that, “faith is in the intellect, in such a way as to provoke affection.In this sense, for example, the knowledge that Christ died for us does not remain knowledge, but necessarily becomes affection, love”.[18]Along the same lines, Saint John Henry Newman took as his motto the phraseCor ad cor loquitur, since, beyond all our thoughts and ideas, the Lord saves us by speaking to our hearts from his Sacred Heart.This realization led him, the distinguished intellectual, to recognize that his deepest encounter with himself and with the Lord came not from his reading or reflection, but from his prayerful dialogue, heart to heart, with Christ, alive and present.It was in the Eucharist that Newman encountered the living heart of Jesus, capable of setting us free, giving meaning to each moment of our lives, and bestowing true peace: “O most Sacred, most loving Heart of Jesus, Thou art concealed in the Holy Eucharist, and Thou beatest for us still…I worship Thee then with all my best love and awe, with my fervent affection, with my most subdued, most resolved will.O my God, when Thou dost condescend to suffer me to receive Thee, to eat and drink Thee, and Thou for a while takest up Thy abode within me, O make my heart beat with Thy Heart.Purify it of all that is earthly, all that is proud and sensual, all that is hard and cruel, of all perversity, of all disorder, of all deadness.So fill it with Thee, that neither the events of the day nor the circumstances of the time may have power to ruffle it, but that in Thy love and Thy fear it may have peace”.[19]
    27. Before the heart of Jesus, living and present, our mind, enlightened by the Spirit, grows in the understanding of his words and our will is moved to put them into practice.This could easily remain on the level of a kind of self-reliant moralism.Hearing and tasting the Lord, and paying him due honour, however, is a matter of the heart. Only the heart is capable of setting our other powers and passions, and our entire person, in a stance of reverence and loving obedience before the Lord.
    THE WORLD CAN CHANGE, BEGINNING WITH THE HEART
    28. It is only by starting from the heart that our communities will succeed in uniting and reconciling differing minds and wills, so that the Spirit can guide us in unity as brothers and sisters.Reconciliation and peace are also born of the heart.The heart of Christ is “ecstasy”, openness, gift and encounter.In that heart, we learn to relate to one another in wholesome and happy ways, and to build up in this world God’s kingdom of love and justice.Our hearts, united with the heart of Christ, are capable of working this social miracle.
    29. Taking the heart seriously, then, has consequences for society as a whole.The Second Vatican Council teaches that, “every one of us needs a change of heart; we must set our gaze on the whole world and look to those tasks we can all perform together in order to bring about the betterment of our race”.[20]For “the imbalances affecting the world today are in fact a symptom of a deeper imbalance rooted in the human heart”.[21]In pondering the tragedies afflicting our world, the Council urges us to return to the heart.It explains that human beings “by their interior life, transcend the entire material universe; they experience this deep interiority when they enter into their own heart, where God, who probes the heart, awaits them, and where they decide their own destiny in the sight of God”.[22]
    30. This in no way implies an undue reliance on our own abilities.Let us never forget that our hearts are not self-sufficient, but frail and wounded.They possess an ontological dignity, yet at the same time must seek an ever more dignified life.[23]The Second Vatican Council points out that “the ferment of the Gospel has aroused and continues to arouse in human hearts an unquenchable thirst for human dignity”.[24]Yet to live in accordance with this dignity, it is not enough to know the Gospel or to carry out mechanically its demands.We need the help of God’s love.Let us turn, then, to the heart of Christ, that core of his being, which is a blazing furnace of divine and human love and the most sublime fulfilment to which humanity can aspire.There, in that heart, we truly come at last to know ourselves and we learn how to love.
    31. In the end, that Sacred Heart is the unifying principle of all reality, since “Christ is the heart of the world, and the paschal mystery of his death and resurrection is the centre of history, which, because of him, is a history of salvation”.[25]All creatures “are moving forward with us and through us towards a common point of arrival, which is God, in that transcendent fullness where the risen Christ embraces and illumines all things”.[26]In the presence of the heart of Christ, I once more ask the Lord to have mercy on this suffering world in which he chose to dwell as one of us.May he pour out the treasures of his light and love, so that our world, which presses forward despite wars, socio-economic disparities and uses of technology that threaten our humanity, may regain the most important and necessary thing of all: its heart.
    CHAPTER TWO
    ACTIONS AND WORDS OF LOVE
    32. The heart of Christ, as the symbol of the deepest and most personal source of his love for us, is the very core of the initial preaching of the Gospel.It stands at the origin of our faith, as the wellspring that refreshes and enlivens our Christian beliefs.
    ACTIONS THAT REFLECT THE HEART
    33. Christ showed the depth of his love for us not by lengthy explanations but by concrete actions.By examining his interactions with others, we can come to realize how he treats each one of us, even though at times this may be difficult to see.Let us now turn to the place where our faith can encounter this truth: the word of God.
    34. The Gospel tells us that Jesus “came to his own” (cf.Jn1:11).Those words refer to us, for the Lord does not treat us as strangers but as a possession that he watches over and cherishes.He treats us truly as “his own”.This does not mean that we are his slaves, something that he himself denies: “I do not call you servants” (Jn15:15).Rather, it refers to the sense of mutual belonging typical of friends.Jesus came to meet us, bridging all distances; he became as close to us as the simplest, everyday realities of our lives.Indeed, he has another name, “Emmanuel”, which means “God with us”, God as part of our lives, God as living in our midst.The Son of God became incarnate and “emptied himself, taking the form of a slave” (Phil2:7).
    35. This becomes clear when we see Jesus at work.He seeks people out, approaches them, ever open to an encounter with them.We see it when he stops to converse with the Samaritan woman at the well where she went to draw water (cf.Jn4:5-7).We see it when, in the darkness of night, he meets Nicodemus, who feared to be seen in his presence (cf.Jn3:1-2).We marvel when he allows his feet to be washed by a prostitute (cf.Lk7:36-50), when he says to the woman caught in adultery, “Neither do I condemn you” (Jn8:11), or again when he chides the disciples for their indifference and quietly asks the blind man on the roadside, “What do you want me to do for you?” (Mk10:51).Christ shows that God is closeness, compassion and tender love.
    36. Whenever Jesus healed someone, he preferred to do it, not from a distance but in close proximity: “He stretched out his hand and touched him” (Mt8:3).“He touched her hand” (Mt8:15).“He touched their eyes” (Mt9:29).Once he even stopped to cure a deaf man with his own saliva (cf.Mk7:33), as a mother would do, so that people would not think of him as removed from their lives.“The Lord knows the fine science of the caress.In his compassion, God does not love us with words; he comes forth to meet us and, by his closeness, he shows us the depth of his tender love”.[27]
    37. If we find it hard to trust others because we have been hurt by lies, injuries and disappointments, the Lord whispers in our ear: “Take heart, son!” (Mt9:2), “Take heart, daughter!” (Mt9:22).He encourages us to overcome our fear and to realize that, with him at our side, we have nothing to lose.To Peter, in his fright, “Jesus immediately reached out his hand and caught him”, saying, “You of little faith, why did you doubt?” (Mt14:31).Nor should you be afraid.Let him draw near and sit at your side.There may be many people we distrust, but not him.Do not hesitate because of your sins.Keep in mind that many sinners “came and sat with him” (Mt9:10), yet Jesus was scandalized by none of them.It was the religious élite that complained and treated him as “a glutton and a drunkard, a friend of tax collectors and sinners” (Mt11:19).When the Pharisees criticized him for his closeness to people deemed base or sinful, Jesus replied, “I desire mercy, not sacrifice” (Mt9:13).
    38. That same Jesus is now waiting for you to give him the chance to bring light to your life, to raise you up and to fill you with his strength.Before his death, he assured his disciples, “I will not leave you orphaned; I am coming to you.In a little while the world will no longer see me, but you will see me” (Jn14:18-19).Jesus always finds a way to be present in your life, so that you can encounter him.
    JESUS’ GAZE
    39. The Gospel tells us that a rich man came up to Jesus, full of idealism yet lacking in the strength needed to change his life.Jesus then “looked at him” (Mk10:21).Can you imagine that moment, that encounter between his eyes and those of Jesus?If Jesus calls you and summons you for a mission, he first looks at you, plumbs the depths of your heart and, knowing everything about you, fixes his gaze upon you.So it was when, “as he walked by the Sea of Galilee, he saw two brothers… and as he went from there, he saw two other brothers” (Mt4:18, 21).
    40. Many a page of the Gospel illustrates how attentive Jesus was to individuals and above all to their problems and needs.We are told that, “when he saw the crowds, he had compassion for them, because they were harassed and helpless” (Mt9:36).Whenever we feel that everyone ignores us, that no one cares what becomes of us, that we are of no importance to anyone, he remains concerned for us.To Nathanael, standing apart and busy about his own affairs, he could say, “I saw you under the fig tree before Philip called you” (Jn1:48).
    41. Precisely out of concern for us, Jesus knows every one of our good intentions and small acts of charity.The Gospel tells us that once he “saw a poor widow put in two small copper coins” in the Temple treasury (Lk21:2) and immediately brought it to the attention of his disciples.Jesus thus appreciates the good that he sees in us. When the centurion approached him with complete confidence, “Jesus listened to him and was amazed” (Mt8:10).How reassuring it is to know that, even if others are not aware of our good intentions or actions, Jesus sees them and regards them highly.
    42. In his humanity, Jesus learned this from Mary, his mother.Our Lady carefully pondered the things she had experienced; she “treasured them… in her heart” (Lk2:19, 51) and, with Saint Joseph, she taught Jesus from his earliest years to be attentive in this same way.
    JESUS’ WORDS
    43. Although the Scriptures preserve Jesus’ words, ever alive and timely, there are moments when he speaks to us inwardly, calls us and leads us to a better place.That better place is his heart.There he invites us to find fresh strength and peace: “Come to me, all who are weary and are carrying heavy burdens, and I will give you rest” (Mt11:28).In this sense, he could say to his disciples, “Abide in me” (Jn15:4).
    44. Jesus’ words show that his holiness did not exclude deep emotions.On various occasions, he demonstrated a love that was both passionate and compassionate.He could be deeply moved and grieved, even to the point of shedding tears.It is clear that Jesus was not indifferent to the daily cares and concerns of people, such as their weariness or hunger: “I have compassion for this crowd… they have nothing to eat… they will faint on the way, and some of them have come from a great distance” (Mk8:2-3).
    45. The Gospel makes no secret of Jesus’ love for Jerusalem: “As he came near and saw the city, he wept over it” (Lk19:41).He then voiced the deepest desire of his heart: “If you had only recognized on this day the things that make for peace” (Lk19:42).The evangelists, while at times showing him in his power and glory, also portray his profound emotions in the face of death and the grief felt by his friends.Before recounting how Jesus, standing before the tomb of Lazarus, “began to weep” (Jn11:35), the Gospel observes that, “Jesus loved Martha and her sister and Lazarus” (Jn11:5) and that, seeing Mary and those who were with her weeping, “he was greatly disturbed in spirit and deeply moved” (Jn11:33).The Gospel account leaves no doubt that his tears were genuine, the sign of inner turmoil.Nor do the Gospels attempt to conceal Jesus’ anguish over his impending violent death at the hands of those whom he had loved so greatly: he “began to be distressed and agitated” (Mk14:33), even to the point of crying out, “I am deeply grieved, even to death” (Mk14:34).This inner turmoil finds its most powerful expression in his cry from the cross: “My God, my God, why have you forsaken me?” (Mk15:34).
    46. At first glance, all this may smack of pious sentimentalism.Yet it is supremely serious and of decisive importance, and finds its most sublime expression in Christ crucified.The cross is Jesus’ most eloquent word of love.A word that is not shallow, sentimental or merely edifying.It is love, sheer love.That is why Saint Paul, struggling to find the right words to describe his relationship with Christ, could speak of “the Son of God, who loved me and gave himself for me” (Gal2:20).This was Paul’s deepest conviction: the knowledge that he was loved.Christ’s self-offering on the cross became the driving force in Paul’s life, yet it only made sense to him because he knew that something even greater lay behind it: the fact that “he loved me”.At a time when many were seeking salvation, prosperity or security elsewhere, Paul, moved by the Spirit, was able to see farther and to marvel at the greatest and most essential thing of all: “Christ loved me”.
    47. Now, after considering Christ and seeing how his actions and words grant us insight into his heart, let us turn to the Church’s reflection on the holy mystery of the Lord’s Sacred Heart.
    CHAPTER THREE
    THIS IS THE HEART THAT HAS LOVED SO GREATLY
    48. Devotion to the heart of Christ is not the veneration of a single organ apart from the Person of Jesus.What we contemplate and adore is the whole Jesus Christ, the Son of God made man, represented by an image that accentuates his heart.That heart of flesh is seen as the privileged sign of the inmost being of the incarnate Son and his love, both divine and human.More than any other part of his body, the heart of Jesus is “the natural sign and symbol of his boundless love”.[28]
    WORSHIPING CHRIST
    49. It is essential to realize that our relationship to the Person of Jesus Christ is one of friendship and adoration, drawn by the love represented under the image of his heart.We venerate that image, yet our worship is directed solely to the living Christ, in his divinity and his plenary humanity, so that we may be embraced by his human and divine love.
    50. Whatever the image employed, it is clear that the living heart of Christ – not its representation – is the object of our worship, for it is part of his holy risen body, which is inseparable from the Son of God who assumed that body forever.We worship it because it is “the heart of the Person of the Word, to whom it is inseparably united”.[29]Nor do we worship it for its own sake, but because with this heart the incarnate Son is alive, loves us and receives our love in return.Any act of love or worship of his heart is thus “really and truly given to Christ himself”,[30]since it spontaneously refers back to him and is “a symbol and a tender image of the infinite love of Jesus Christ”.[31]
    51. For this reason, it should never be imagined that this devotion may distract or separate us from Jesus and his love.In a natural and direct way, it points us to him and to him alone, who calls us to a precious friendship marked by dialogue, affection, trust and adoration.The Christ we see depicted with a pierced and burning heart is the same Christ who, for love of us, was born in Bethlehem, passed through Galilee healing the sick, embracing sinners and showing mercy.The same Christ who loved us to the very end, opening wide his arms on the cross, who then rose from the dead and now lives among us in glory.
    VENERATING HIS IMAGE
    52. While the image of Christ and his heart is not in itself an object of worship, neither is it simply one among many other possible images.It was not devised at a desk or designed by an artist; it is “no imaginary symbol, but a real symbol which represents the centre, the source from which salvation flowed for all humanity”.[32]
    53. Universal human experience has made the image of the heart something unique.Indeed, throughout history and in different parts of the world, it has become a symbol of personal intimacy, affection, emotional attachment and capacity for love.Transcending all scientific explanations, a hand placed on the heart of a friend expresses special affection: when two persons fall in love and draw close to one another, their hearts beat faster; when we are abandoned or deceived by someone we love, our hearts sink.So too, when we want to say something deeply personal, we often say that we are speaking “from the heart”.The language of poetry reflects the power of these experiences.In the course of history, the heart has taken on unique symbolic value that is more than merely conventional.
    54. It is understandable, then, that the Church has chosen the image of the heart to represent the human and divine love of Jesus Christ and the inmost core of his Person.Yet, while the depiction of a heart afire may be an eloquent symbol of the burning love of Jesus Christ, it is important that this heart not be represented apart from him.In this way, his summons to a personal relationship of encounter and dialogue will become all the more meaningful.[33]The venerable image portraying Christ holding out his loving heart also shows him looking directly at us, inviting us to encounter, dialogue and trust; it shows his strong hands capable of supporting us and his lips that speak personally to each of us.
    55. The heart, too, has the advantage of being immediately recognizable as the profound unifying centre of the body, an expression of the totality of the person, unlike other individual organs.As a part that stands for the whole, we could easily misinterpret it, were we to contemplate it apart from the Lord himself.The image of the heart should lead us to contemplate Christ in all the beauty and richness of his humanity and divinity.
    56. Whatever particular aesthetic qualities we may ascribe to various portrayals of Christ’s heart when we pray before them, it is not the case that “something is sought from them or that blind trust is put in images as once was done by the Gentiles”.Rather, “through these images that we kiss, and before which we kneel and uncover our heads, we are adoring Christ”.[34]
    57. Certain of these representations may indeed strike us as tasteless and not particularly conducive to affection or prayer.Yet this is of little importance, since they are only invitations to prayer, and, to cite an Eastern proverb, we should not limit our gaze to the finger that points us to the moon.Whereas the Eucharist is a real presence to be worshiped, sacred images, albeit blessed, point beyond themselves, inviting us to lift up our hearts and to unite them to the heart of the living Christ.The image we venerate thus serves as a summons to make room for an encounter with Christ, and to worship him in whatever way we wish to picture him.Standing before the image, we stand before Christ, and in his presence, “love pauses, contemplates mystery, and enjoys it in silence”.[35]
    58. At the same time, we must never forget that the image of the heart speaks to us of the flesh and of earthly realities.In this way, it points us to the God who wished to become one of us, a part of our history, and a companion on our earthly journey.A more abstract or stylized form of devotion would not necessarily be more faithful to the Gospel, for in this eloquent and tangible sign we see how God willed to reveal himself and to draw close to us.
    A LOVE THAT IS TANGIBLE
    59. On the other hand, love and the human heart do not always go together, since hatred, indifference and selfishness can also reign in our hearts.Yet we cannot attain our fulfilment as human beings unless we open our hearts to others; only through love do we become fully ourselves.The deepest part of us, created for love, will fulfil God’s plan only if we learn to love.And the heart is the symbol of that love.
    60. The eternal Son of God, in his utter transcendence, chose to love each of us with a human heart.His human emotions became the sacrament of that infinite and endless love.His heart, then, is not merely a symbol for some disembodied spiritual truth.In gazing upon the Lord’s heart, we contemplate a physical reality, his human flesh, which enables him to possess genuine human emotions and feelings, like ourselves, albeit fully transformed by his divine love.Our devotion must ascend to the infinite love of the Person of the Son of God, yet we need to keep in mind that his divine love is inseparable from his human love.The image of his heart of flesh helps us to do precisely this.
    61. Since the heart continues to be seen in the popular mind as the affective centre of each human being, it remains the best means of signifying the divine love of Christ, united forever and inseparably to his wholly human love.Pius XII observed that the Gospel, in referring to the love of Christ’s heart, speaks “not only of divine charity but also human affection”.Indeed, “the heart of Jesus Christ, hypostatically united to the divine Person of the Word, beyond doubt throbbed with love and every other tender affection”.[36]
    62. The Fathers of the Church, opposing those who denied or downplayed the true humanity of Christ, insisted on the concrete and tangible reality of the Lord’s human affections.Saint Basil emphasized that the Lord’s incarnation was not something fanciful, and that “the Lord possessed our natural affections”.[37]Saint John Chrysostom pointed to an example: “Had he not possessed our nature, he would not have experienced sadness from time to time”.[38]Saint Ambrose stated that “in taking a soul, he took on the passions of the soul”.[39]For Saint Augustine, our human affections, which Christ assumed, are now open to the life of grace: “The Lord Jesus assumed these affections of our human weakness, as he did the flesh of our human weakness, not out of necessity, but consciously and freely…lest any who feel grief and sorrow amid the trials of life should think themselves separated from his grace”.[40]Finally, Saint John Damascene viewed the genuine affections shown by Christ in his humanity as proof that he assumed our nature in its entirety in order to redeem and transform it in its entirety: Christ, then, assumed all that is part of human nature, so that all might be sanctified.[41]
    63. Here, we can benefit from the thoughts of a theologian who maintains that, “due to the influence of Greek thought, theology long relegated the body and feelings to the world of the pre-human or sub-human or potentially inhuman; yet what theology did not resolve in theory, spirituality resolved in practice.This, together with popular piety, preserved the relationship with the corporal, psychological and historical reality of Jesus.The Stations of the Cross, devotion to Christ’s wounds, his Precious Blood and his Sacred Heart, and a variety of Eucharist devotions… all bridged the gaps in theology by nourishing our hearts and imagination, our tender love for Christ, our hope and memory, our desires and feelings.Reason and logic took other directions”.[42]
    A THREEFOLD LOVE
    64. Nor do we remain only on the level of the Lord’s human feelings, beautiful and moving as they are.In contemplating Christ’s heart we also see how, in his fine and noble sentiments, his kindness and gentleness and his signs of genuine human affection, the deeper truth of his infinite divine love is revealed.In the words of Benedict XVI, “from the infinite horizon of his love, God wished to enter into the limits of human history and the human condition.He took on a body and a heart.Thus, we can contemplate and encounter the infinite in the finite, the invisible and ineffable mystery in the human heart of Jesus the Nazarene”.[43]
    65. The image of the Lord’s heart speaks to us in fact of a threefold love.First, we contemplate his infinite divine love.Then our thoughts turn to the spiritual dimension of his humanity, in which the heart is “the symbol of that most ardent love which, infused into his soul, enriches his human will”.Finally, “it is a symbol also of his sensible love”.[44]
    66. These three loves are not separate, parallel or disconnected, but together act and find expression in a constant and vital unity.For “by faith, through which we believe that the human and divine nature were united in the Person of Christ, we can see the closest bonds between the tender love of the physical heart of Jesus and the twofold spiritual love, namely human and divine”.[45]
    67. Entering into the heart of Christ, we feel loved by a human heart filled with affections and emotions like our own.Jesus’ human will freely chooses to love us, and that spiritual love is flooded with grace and charity.When we plunge into the depths of his heart, we find ourselves overwhelmed by the immense glory of his infinite love as the eternal Son, which we can no longer separate from his human love.It is precisely in his human love, and not apart from it, that we encounter his divine love: we discover “the infinite in the finite”.[46]
    68. It is the constant and unequivocal teaching of the Church that our worship of Christ’s person is undivided, inseparably embracing both his divine and his human natures.From ancient times, the Church has taught that we are to “adore one and the same Christ, the Son of God and of man, consisting of and in two inseparable and undivided natures”.[47]And we do so “with one act of adoration… inasmuch as the Word became flesh”.[48]Christ is in no way “worshipped in two natures, whereby two acts of worship are introduced”; instead, we venerate “by one act of worship God the Word made flesh, together with his own flesh”.[49]
    69. Saint John of the Cross sought to explain that in mystical experience the infinite love of the risen Christ is not perceived as alien to our lives.The infinite in some way “condescends” to enable us, through the open heart of Christ, to experience an encounter of truly reciprocal love, for “it is indeed credible that a bird of lowly flight can capture the royal eagle of the heights, if this eagle descends with the desire of being captured”.[50]He also explains that the Bridegroom, “beholding that the bride is wounded with love for him, because of her moan he too is wounded with love for her.Among lovers, the wound of one is the wound of both”.[51]John of the Cross regards the image of Christ’s pierced side as an invitation to full union with the Lord.Christ is the wounded stag, wounded when we fail to let ourselves be touched by his love, who descends to the streams of water to quench his thirst and is comforted whenever we turn to him:
    “Return, dove!
    The wounded stag
    is in sight on the hill,
    cooled by the breeze of your flight”.[52]
    TRINITARIAN PERSPECTIVES
    70. Devotion to the heart of Jesus, as a direct contemplation of the Lord that draws us into union with him, is clearly Christological in nature.We see this in the Letter to the Hebrews, which urges us to “run with perseverance the race that is set before us, looking to Jesus” (12:2).At the same time, we need to realize that Jesus speaks of himself as the way to the Father: “I am the way…No one comes to the Father except through me” (Jn14:6).Jesus wants to bring us to the Father.That is why, from the very beginning, the Church’s preaching does not end with Jesus, but with the Father.As source and fullness, the Father is ultimately the one to be glorified.[53]
    71. If we turn, for example, to the Letter to the Ephesians, we can see clearly how our worship is directed to the Father: “I bow my knees before the Father” (3:14).There is “one God and Father of all, who is above all and through all and in all” (4:6).“Give thanks to God the Father at all times and for everything” (5:20).It is the Father “for whom we exist” (1 Cor8:6).In this sense, Saint John Paul II could say that, “the whole of the Christian life is like a greatpilgrimage to the house of the Father”.[54]This too was the experience of Saint Ignatius of Antioch on his path to martyrdom: “In me there is left no spark of desire for mundane things, but only a murmur of living water that whispers within me, ‘Come to the Father’”.[55]
    72. The Father is, before all else, the Father of Jesus Christ: “Blessed be the God and Father of our Lord Jesus Christ”(Eph1:3).He is “the God of our Lord Jesus Christ, the Father of glory” (Eph1:17).When the Son became man, all the hopes and aspirations of his human heart were directed towards the Father.If we consider the way Christ spoke of the Father, we can grasp the love and affection that his human heart felt for him, this complete and constant orientation towards him.[56]Jesus’ life among us was a journey of response to the constant call of his human heart to come to the Father.[57]
    73. We know that the Aramaic word Jesus used to address the Father was “Abba”, an intimate and familiar term that some found disconcerting (cf.Jn5:18).It is how he addressed the Father in expressing his anguish at his impending death: “Abba,Father, for you all things are possible; remove this cup from me; yet, not what I want, but what you want” (Mk14:36).Jesus knew well that he had always been loved by the Father: “You loved me before the foundation of the world” (Jn17:24).In his human heart, he had rejoiced at hearing the Father say to him: “You are my Son, the Beloved; with you I am well pleased” (Mk1:11).
    74. The Fourth Gospel tells us that the eternal Son was always “close to the Father’s heart” (Jn1:18).[58]Saint Irenaeus thus declares that “the Son of God was with the Father from the beginning”.[59]Origen, for his part, maintains that the Son perseveres “in uninterrupted contemplation of the depths of the Father”.[60]When the Son took flesh, he spent entire nights conversing with his beloved Father on the mountaintop (cf.Lk6:12).He told us, “I must be in my Father’s house” (Lk2:49).We see too how he expressed his praise: “Jesus rejoiced in the Holy Spirit and said, ‘I thank you, Father, Lord of heaven and earth’ (Lk10:21).His last words, full of trust, were, “Father, into your hands I commend my spirit” (Lk23:46).
    75. Let us now turn to the Holy Spirit, whose fire fills the heart of Christ.As Saint John Paul II once said, Christ’s heart is “the Holy Spirit’s masterpiece”.[61]This is more than simply a past event, for even now “the heart of Christ is alive with the action of the Holy Spirit, to whom Jesus attributed the inspiration of his mission (cf.Lk4:18;Is61:1) and whose sending he had promised at the Last Supper.It is the Spirit who enables us to grasp the richness of the sign of Christ’s pierced side, from which the Church has sprung (cf.Sacrosanctum Concilium, 5)”.[62]In a word, “only the Holy Spirit can open up before us the fullness of the ‘inner man’, which is found in the heart of Christ.He alone can cause our human hearts to draw strength from that fullness, step by step”.[63]
    76. If we seek to delve more deeply into the mysterious working of the Spirit, we learn that he groans within us, saying “Abba!”Indeed,“the proof that you are children is that God has sent the Spirit of his Son into our hearts, crying, ‘Abba! Father!’” (Gal4:6).For “the Spirit bears witness with our spirit that we are children of God” (Rom8:16).The Holy Spirit at work in Christ’s human heart draws him unceasingly to the Father.When the Spirit unites us to the sentiments of Christ through grace, he makes us sharers in the Son’s relationship to the Father, whereby we receive “a spirit of adoption through which we cry out, ‘Abba! Father!’” (Rom8:15).
    77.Our relationship with the heart of Christ is thus changed, thanks to the prompting of the Spirit who guides us to the Father, the source of life and the ultimate wellspring of grace.Christ does not expect us simply to remain in him.His love is “the revelation of the Father’s mercy”,[64]and his desire is that, impelled by the Spirit welling up from his heart, we should ascend to the Father “with him and in him”.We give glory to the Father “through” Christ,[65]“with” Christ,[66]and “in” Christ.[67]Saint John Paul II taught that, “the Saviour’s heart invites us to return to the Father’s love, which is the source of every authentic love”.[68]This is precisely what the Holy Spirit, who comes to us through the heart of Christ, seeks to nurture in our hearts.For this reason, the liturgy, through the enlivening work of the Spirit, always addresses the Father from the risen heart of Christ.
    RECENT TEACHINGS OF THE MAGISTERIUM
    78.In numerous ways, Christ’s heart has always been present in the history of Christian spirituality.In the Scriptures and in the early centuries of the Church’s life, it appeared under the image of the Lord’s wounded side, as a fountain of grace and a summons to a deep and loving encounter.In this same guise, it has reappeared in the writings of numerous saints, past and present.In recent centuries, this spirituality has gradually taken on the specific form of devotion to the Sacred Heart of Jesus.
    79. A number of my Predecessors have spoken in various ways about the heart of Christ and exhorted us to unite ourselves to it.At the end of the nineteenth century, Leo XIII encouraged us to consecrate ourselves to the Sacred Heart, thus uniting our call to union with Christ and our wonder before the magnificence of his infinite love.[69]Some thirty years later, Pius XI presented this devotion as a “summa” of the experience of Christian faith.[70]Pius XII went on to declare that adoration of the Sacred Heart expresses in an outstanding way, as a sublime synthesis, the worship we owe to Jesus Christ.[71]
    80. More recently, Saint John Paul II presented the growth of this devotion in recent centuries as a response to the rise of rigorist and disembodied forms of spirituality that neglected the richness of the Lord’s mercy.At the same time, he saw it as a timely summons to resist attempts to create a world that leaves no room for God.“Devotion to the Sacred Heart, as it developed in Europe two centuries ago, under the impulse of the mystical experiences of Saint Margaret Mary Alacoque, was aresponse to Jansenist rigor, which ended up disregarding God’s infinite mercy…The men and women of the third millennium need the heart of Christin order to know God and to know themselves; they need it to build the civilization of love”.[72]
    81. Benedict XVI asked us to recognize in the heart of Christ an intimate and daily presence in our lives: “Every person needs a ‘centre’ for his or her own life, a source of truth and goodness to draw upon in the events, situations and struggles of daily existence.All of us, when we pause in silence, need to feel not only the beating of our own heart, but deeper still, the beating of a trustworthy presence, perceptible with faith’s senses and yet much more real: the presence of Christ, the heart of the world”.[73]
    FURTHER REFLECTIONS AND RELEVANCE FOR OUR TIMES
    82. The expressive and symbolic image of Christ’s heart is not the only means granted us by the Holy Spirit for encountering the love of Christ, yet it is, as we have seen, an especially privileged one.Even so, it constantly needs to be enriched, deepened and renewed through meditation, the reading of the Gospel and growth in spiritual maturity.Pius XII made it clear that the Church does not claim that, “we must contemplate and adore in the heart of Jesus a ‘formal’ image, that is, a perfect and absolute sign of his divine love, for the essence of this love can in no way be adequately expressed by any created image whatsoever”.[74]
    83. Devotion to Christ’s heart is essential for our Christian life to the extent that it expresses our openness in faith and adoration to the mystery of the Lord’s divine and human love.In this sense, we can once more affirm that the Sacred Heart is a synthesis of the Gospel.[75]We need to remember that the visions or mystical showings related by certain saints who passionately encouraged devotion to Christ’s heart are not something that the faithful are obliged to believe as if they were the word of God.[76]Nonetheless, they are rich sources of encouragement and can prove greatly beneficial, even if no one need feel forced to follow them should they not prove helpful on his or her own spiritual journey.At the same time, however, we should be mindful that, as Pius XII pointed out, this devotion cannot be said “to owe its origin to private revelations”.[77]
    84. The promotion of Eucharistic communion on the first Friday of each month, for example, sent a powerful message at a time when many people had stopped receiving communion because they were no longer confident of God’s mercy and forgiveness and regarded communion as a kind of reward for the perfect.In the context of Jansenism, the spread of this practice proved immensely beneficial, since it led to a clearer realization that in the Eucharist the merciful and ever-present love of the heart of Christ invites us to union with him.It can also be said that this practice can prove similarly beneficial in our own time, for a different reason.Amid the frenetic pace of today’s world and our obsession with free time, consumption and diversion, cell phones and social media, we forget to nourish our lives with the strength of the Eucharist.
    85. While no one should feel obliged to spend an hour in adoration each Thursday, the practice ought surely to be recommended.When we carry it out with devotion, in union with many of our brothers and sisters and discover in the Eucharist the immense love of the heart of Christ, we “adore, together with the Church, the sign and manifestation of the divine love that went so far as to love, through the heart of the incarnate Word, the human race”.[78]
    86. Many Jansenists found this difficult to comprehend, for they looked askance on all that was human, affective and corporeal, and so viewed this devotion as distancing us from pure worship of the Most High God.Pius XII described as “false mysticism”[79]the elitist attitude of those groups that saw God as so sublime, separate and distant that they regarded affective expressions of popular piety as dangerous and in need of ecclesiastical oversight.
    87. It could be argued that today, in place of Jansenism, we find ourselves before a powerful wave of secularization that seeks to build a world free of God.In our societies, we are also seeing a proliferation of varied forms of religiosity that have nothing to do with a personal relationship with the God of love, but are new manifestations of a disembodied spirituality.I must warn that within the Church too, a baneful Jansenist dualism has re-emerged in new forms.This has gained renewed strength in recent decades, but it is a recrudescence of that Gnosticism which proved so great a spiritual threat in the early centuries of Christianity because it refused to acknowledge the reality of “the salvation of the flesh”.For this reason, I turn my gaze to the heart of Christ and I invite all of us to renew our devotion to it.I hope this will also appeal to today’s sensitivities and thus help us to confront the dualisms, old and new, to which this devotion offers an effective response.
    88. I would add that the heart of Christ also frees us from another kind of dualism found in communities and pastors excessively caught up in external activities, structural reforms that have little to do with the Gospel, obsessive reorganization plans, worldly projects, secular ways of thinking and mandatory programmes.The result is often a Christianity stripped of the tender consolations of faith, the joy of serving others, the fervour of personal commitment to mission, the beauty of knowing Christ and the profound gratitude born of the friendship he offers and the ultimate meaning he gives to our lives.This too is the expression of an illusory and disembodied otherworldliness.
    89. Once we succumb to these attitudes, so widespread in our day, we tend to lose all desire to be cured of them.This leads me to propose to the whole Church renewed reflection on the love of Christ represented in his Sacred Heart.For there we find the whole Gospel, a synthesis of the truths of our faith, all that we adore and seek in faith, all that responds to our deepest needs.
    90. As we contemplate the heart of Christ, the incarnate synthesis of the Gospel, we can, following the example of Saint Therese of the Child Jesus, “place heartfelt trust not in ourselves but in the infinite mercy of a God who loves us unconditionally and has already given us everything in the cross of Jesus Christ”.[80]Therese was able to do this because she had discovered in the heart of Christ that God is love: “To me he has granted his infinite mercy, and through it I contemplate and adore the other divine perfections”.[81]That is why a popular prayer, directed like an arrow towards the heart of Christ, says simply: “Jesus, I trust in you”.[82]No other words are needed.
    91. In the following chapters, we will emphasize two essential aspects that contemporary devotion to the Sacred Heart needs to combine, so that it can continue to nourish us and bring us closer to the Gospel: personal spiritual experience and communal missionary commitment.
    CHAPTER FOUR
    A LOVE THAT GIVES ITSELF AS DRINK
    92. Let us now return to the Scriptures, the inspired texts where, above all, we encounter God’s revelation.There, and in the Church’s living Tradition, we hear what the Lord has wished to tell us in the course of history.By reading several texts from the Old and the New Testaments, we will gain insight into the word of God that has guided the great spiritual pilgrimage of his people down the ages.
    A GOD WHO THIRSTS FOR LOVE
    93. The Bible shows that the people that journeyed through the desert and yearned for freedom received the promise of an abundance of life-giving water: “With joy you will draw water from the wells of salvation” (Is12:3).The messianic prophecies gradually coalesced around the imagery of purifying water: “I will sprinkle clean water upon you, and you shall be clean… a new spirit I will put within you” (Ezek36:25-26).This water would bestow on God’s people the fullness of life, like a fountain flowing from the Temple and bringing a wealth of life and salvation in its wake.“I saw on the bank of the river a great many trees on the one side and on the other… and wherever that river goes, every living creature will live… and when that river enters the sea, its waters will become fresh; everything will live where the river goes” (Ezek47:7-9).
    94. The Jewish festival of Booths (Sukkot), which recalls the forty-year sojourn of Israel in the desert, gradually adopted the symbolism of water as a central element.It included a rite of offering water each morning, which became most solemn on the final day of the festival, when a great procession took place towards the Temple, the altar was circled seven times and the water was offered to God amid loud cries of joy.[83]
    95. The dawn of the messianic era was described as a fountain springing up for the people: “I will pour out a spirit of compassion and supplication on the house of David and the inhabitants of Jerusalem, and they shall look on him whom they have pierced…On that day, a fountain shall be opened for the house of David and the inhabitants of Jerusalem, to cleanse them from sin and impurity” (Zech12:10; 13:1).
    96. One who is pierced, a flowing fountain, the outpouring of a spirit of compassion and supplication: the first Christians inevitably considered these promises fulfilled in the pierced side of Christ, the wellspring of new life.In the Gospel of John, we contemplate that fulfilment.From Jesus’ wounded side, the water of the Spirit poured forth: “One of the soldiers pierced his side with a spear, and at once blood and water flowed out” (Jn19:34).The evangelist then recalls the prophecy that had spoken of a fountain opened in Jerusalem and the pierced one (Jn19:37; cf.Zech12:10).The open fountain is the wounded side of Christ.
    97. Earlier, John’s Gospel had spoken of this event, when on “the last day of the festival” (Jn7:37), Jesus cried out to the people celebrating the great procession: “Let anyone who is thirsty come to me and drink… out of his heart shall flow rivers of living water” (Jn7:37-38).For this to be accomplished, however, it was necessary for Jesus’ “hour” to come, for he “was not yet glorified” (Jn7:39).That fulfilment was to come on the cross, in the blood and water that flowed from the Lord’s side.
    98. The Book of Revelation takes up the prophecies of the pierced one and the fountain: “every eye will see him, even those who pierced him” (Rev1:7); “Let everyone who is thirsty come; let anyone who wishes take the water of life as a gift” (Rev22:17).
    99. The pierced side of Jesus is the source of the love that God had shown for his people in countless ways.Let us now recall some of his words:
    “Because you are precious in my sight and honoured, I love you” (Is43:4).
    “Can a woman forget her nursing child, or show no compassion for the child of her womb?Even if these may forget, yet I will not forget you.See, I have inscribed you on the palms of my hands” (Is49:15-16).
    “For the mountains may depart, and the hills be removed, but my steadfast love shall not depart from you, and my covenant of peace shall not be removed” (Is54:10).
    “I have loved you with an everlasting love; therefore I have continued my faithfulness to you” (Jer31:3).
    “The Lord, your God, is in your midst, a warrior who gives you victory; he will rejoice over you with gladness, he will renew you in his love; he will exult over you with loud singing” (Zeph3:17).
    100.The prophet Hosea goes so far as to speak of the heart of God, who “led them with cords of human kindness, with bands of love” (Hos11:4).When that love was spurned, the Lord could say, “My heart is stirred within me; my compassion grows warm and tender (Hos11:8).God’s merciful love always triumphs (cf.Hos11:9), and it was to find its most sublime expression in Christ, his definitive Word of love.
    101.The pierced heart of Christ embodies all God’s declarations of love present in the Scriptures.That love is no mere matter of words; rather, the open side of his Son is a source of life for those whom he loves, the fount that quenches the thirst of his people.As Saint John Paul II pointed out, “the essential elements of devotion [to the Sacred Heart] belong in a permanent fashion to the spirituality of the Church throughout her history; for since the beginning, the Church has looked to the heart of Christ pierced on the Cross”.[84]
    ECHOES OF THE WORD IN HISTORY
    102.Let us consider some of the ways that, in the history of the Christian faith, these prophecies were understood to have been fulfilled.Various Fathers of the Church, especially those in Asia Minor, spoke of the wounded side of Jesus as the source of the water of the Holy Spirit: the word, its grace and the sacraments that communicate it.The courage of the martyrs is born of “the heavenly fount of living waters flowing from the side of Christ”[85]or, in the version of Rufinus, “the heavenly and eternal streams that flow from the heart of Christ”.[86]We believers, reborn in the Spirit, emerge from the cleft in the rock; “we have come forth from the heart of Christ”.[87]His wounded side, understood as his heart, filled with the Holy Spirit, comes to us as a flood of living water. “The fount of the Spirit is entirely in Christ”.[88]Yet the Spirit whom we have received does not distance us from the risen Lord, but fills us with his presence, for by drinking of the Spirit we drink of the same Christ.In the words of Saint Ambrose: “Drink of Christ, for he is the rock that pours forth a flood of water.Drink of Christ, for he is the source of life.Drink of Christ, for he is the river whose streams gladden the city of God.Drink of Christ, for he is our peace.Drink of Christ, for from his side flows living water”.[89]
    103.Saint Augustine opened the way to devotion to the Sacred Heart as the locus of our personal encounter with the Lord.For Augustine, Christ’s wounded side is not only the source of grace and the sacraments, but also the symbol of our intimate union with Christ, the setting of an encounter of love.There we find the source of the most precious wisdom of all, which is knowledge of him.In effect, Augustine writes that John, the beloved disciple, reclining on Jesus’ bosom at the Last Supper, drew near to the secret place of wisdom.[90]Here we have no merely intellectual contemplation of an abstract theological truth.As Saint Jerome explains, a person capable of contemplation “does not delight in the beauty of that stream of water, but drinks of the living water flowing from the side of the Lord”.[91]
    104.Saint Bernard takes up the symbolism of the pierced side of the Lord and understands it explicitly as a revelation and outpouring of all of the love of his heart.Through that wound, Christ opens his heart to us and enables us to appropriate the boundless mystery of his love and mercy: “I take from the bowels of the Lord what is lacking to me, for his bowels overflow with mercy through the holes through which they stream.Those who crucified him pierced his hands and feet, they pierced his side with a lance.And through those holes I can taste wild honey and oil from the rocks of flint, that is, I can taste and see that the Lord is good…A lance passed through his soul even to the region of his heart.No longer is he unable to take pity on my weakness.The wounds inflicted on his body have disclosed to us the secrets of his heart; they enable us to contemplate the great mystery of his compassion”.[92]
    105.This theme reappears especially in William of Saint-Thierry, who invites us to enter into the heart of Jesus, who feeds us from his own breast.[93]This is not surprising if we recall that for William, “the art of arts is the art of love…Love is awakened by the Creator of nature, and is a power of the soul that leads it, as if by its natural gravity, to its proper place and end”.[94]That proper place, where love reigns in fullness, is the heart of Christ: “Lord, where do you lead those whom you embrace and clasp to your heart?Your heart, Jesus, is the sweet manna of your divinity that you hold within the golden jar of your soul (cf.Heb9:4), and that surpasses all knowledge.Happy those who, having plunged into those depths, have been hidden by you in the recess of your heart”.[95]
    106.Saint Bonaventure unites these two spiritual currents.He presents the heart of Christ as the source of the sacraments and of grace, and urges that our contemplation of that heart become a relationship between friends, a personal encounter of love.
    107.Bonaventure makes us appreciate first the beauty of the grace and the sacraments flowing from the fountain of life that is the wounded side of the Lord.“In order that from the side of Christ sleeping on the cross, the Church might be formed and the Scripture fulfilled that says: ‘They shall look upon him whom they pierced’, one of the soldiers struck him with a lance and opened his side.This was permitted by divine Providence so that, in the blood and water flowing from that wound, the price of our salvation might flow from the hidden wellspring of his heart, enabling the Church’s sacraments to confer the life of grace and thus to be, for those who live in Christ, like a cup filled from the living fount springing up to life eternal”.[96]
    108.Bonaventure then asks us to take another step, in order that our access to grace not be seen as a kind of magic or neo-platonic emanation, but rather as a direct relationship with Christ, a dwelling in his heart, so that whoever drinks from that source becomes a friend of Christ, a loving heart.“Rise up, then, O soul who are a friend of Christ, and be the dove that nests in the cleft in the rock; be the sparrow that finds a home and constantly watches over it; be the turtledove that hides the offspring of its chaste love in that most holy cleft”.[97]
    THE SPREAD OF DEVOTION TO THE HEART OF CHRIST
    109.Gradually, the wounded side of Christ, as the abode of his love and the wellspring of the life of grace, began to be associated with his heart, especially in monastic life.We know that in the course of history, devotion to the heart of Christ was not always expressed in the same way, and that its modern developments, related to a variety of spiritual experiences, cannot be directly derived from the mediaeval forms, much less the biblical forms in which we glimpse the seeds of that devotion.This notwithstanding, the Church today rejects nothing of the good that the Holy Spirit has bestowed on us down the centuries, for she knows that it will always be possible to discern a clearer and deeper meaning in certain aspects of that devotion, and to gain new insights over the course of time.
    110.A number of holy women, in recounting their experiences of encounter with Christ, have spoken of resting in the heart of the Lord as the source of life and interior peace.This was the case with Saints Lutgarde and Mechtilde of Hackeborn, Saint Angela of Foligno and Dame Julian of Norwich, to mention only a few.Saint Gertrude of Helfta, a Cistercian nun, tells of a time in prayer when she reclined her head on the heart of Christ and heard its beating.In a dialogue with Saint John the Evangelist, she asked him why he had not described in his Gospel what he experienced when he did the same.Gertrude concludes that “the sweet sound of those heartbeats has been reserved for modern times, so that, hearing them, our aging and lukewarm world may be renewed in the love of God”.[98]Might we think that this is indeed a message for our own times, a summons to realize how our world has indeed “grown old”, and needs to perceive anew the message of Christ’s love?Saint Gertrude and Saint Mechtilde have been considered among “the most intimate confidants of the Sacred Heart”.[99]
    111.The Carthusians, encouraged above all by Ludolph of Saxony, found in devotion to the Sacred Heart a means of growth in affection and closeness to Christ.All who enter through the wound of his heart are inflamed with love.Saint Catherine of Siena wrote that the Lord’s sufferings are impossible for us to comprehend, but the open heart of Christ enables us to have a lively personal encounter with his boundless love.“I wished to reveal to you the secret of my heart, allowing you to see it open, so that you can understand that I have loved you so much more than I could have proved to you by the suffering that I once endured”.[100]
    112.Devotion to the heart of Christ slowly passed beyond the walls of the monasteries to enrich the spirituality of saintly teachers, preachers and founders of religious congregations, who then spread it to the farthest reaches of the earth.[101]
    113.Particularly significant was the initiative taken by Saint John Eudes, who, “after preaching with his confrères a fervent mission in Rennes, convinced the bishop of that diocese to approve the celebration of the feast of the Adorable Heart of our Lord Jesus Christ.This was the first time that such a feast was officially authorized in the Church.Following this, between the years 1670 and 1671, the bishops of Coutances, Evreux, Bayeux, Lisieux and Rouen authorized the celebration of the feast for their respective dioceses”.[102]
    SAINT FRANCIS DE SALES
    114.In modern times, mention should be made of the important contribution of Saint Francis de Sales.Francis frequently contemplated Christ’s open heart, which invites us to dwell therein, in a personal relationship of love that sheds light on the mysteries of his life.In his writings, the saintly Doctor of the Church opposes a rigorous morality and a legalistic piety by presenting the heart of Jesus as a summons to complete trust in the mysterious working of his grace.We see this expressed in his letter to Saint Jane Francis de Chantal: “I am certain that we will remain no longer in ourselves… but dwell forever in the Lord’s wounded side, for apart from him not only can we do nothing, but even if we were able, we would lack the desire to do anything”.[103]
    115.For Francis de Sales, true devotion had nothing to do with superstition or perfunctory piety, since it entails a personal relationship in which each of us feels uniquely and individually known and loved by Christ.“This most adorable and lovable heart of our Master, burning with the love which he professes to us, [is] a heart on which all our names are written…Surely it is a source of profound consolation to know that we are loved so deeply by our Lord, who constantly carries us in his heart”.[104]With the image of our names written on the heart of Christ, Saint Francis sought to express the extent to which Christ’s love for each of us is not something abstract and generic, but utterly personal, enabling each believer to feel known and respected for who he or she is.“How lovely is this heaven, in which the Lord is its sun and his breast a fountain of love from which the blessed drink to their heart’s content!Each of us can look therein and see our name carved in letters of love, which true love alone can read and true love has written.Dear God!And what too, beloved daughter, of our loved ones?Surely they will be there too; for even if our hearts have no love, they nonetheless possess a desire for love and the beginnings of love”.[105]
    116.Francis saw this experience of Christ’s love as essential to the spiritual life, indeed one of the great truths of faith: “Yes, my beloved daughter, he thinks of you and not only, but even the smallest hair of your head: this is an article of faith and in no way must it be doubted”.[106]It follows that the believer becomes capable of complete abandonment in the heart of Christ, in which he or she finds repose, comfort and strength: “Oh God!What happiness to be thus embraced and to recline in the bosom of the Saviour.Remain thus, beloved daughter, and like another little one, Saint John, while others are tasting different kinds of food at the table of the Lord, lay your head, your soul and your spirit, in a gesture of utter trust, on the loving bosom of this dear Lord”.[107]“I hope that you are resting in the cleft of the turtledove and in the pierced side of our beloved Saviour…How good is this Lord, my beloved daughter!How loving is his Heart!Let us remain here, in this holy abode”.[108]
    117.At the same time, faithful to his teaching on the sanctification of ordinary life, Francis proposes that this experience take place in the midst of the activities, tasks and obligations of our daily existence.“You asked me how souls that are attracted in prayer to this holy simplicity, to this perfect abandonment in God, should conduct themselves in all their actions?I would reply that, not only in prayer, but also in the conduct of everyday life they should advance always in the spirit of simplicity, abandoning and completely surrendering their soul, their actions and their accomplishments to God’s will.And to do so with a love marked by perfect and absolute trust, abandoning themselves to grace and to the care of the eternal love that divine Providence feels for them”.[109]
    118.For this reason, when looking for a symbol to convey his vision of spiritual life, Francis de Sales concluded: “I have thought, dear Mother, if you agree, that we should take as our emblem a single heart pierced by two arrows, the whole enclosed in a crown of thorns”.[110]
    A NEW DECLARATION OF LOVE
    119.Under the salutary influence of this Salesian spirituality, the events of Paray-le-Monial took place at the end of the seventeenth century.Saint Margaret Mary Alacoque reported a remarkable series of apparitions of Christ between the end of December 1673 and June of 1675.Fundamental to these was a declaration of love that stood out in the first apparition.Jesus said: “My divine Heart is so inflamed with love for men, and for you in particular, that, no longer able to contain in itself the flames of its ardent charity, it must pour them out through you and be manifested to them, in order to enrich them with its precious treasures which I now reveal to you”.[111]
    120.Saint Margaret Mary’s account is powerful and deeply moving: “He revealed to me the wonders of his love and the inexplicable secrets of his Sacred Heart which he had hitherto kept hidden from me, until he opened it to me for the first time, in such a striking and sensible manner that he left me no room for doubt”.[112]In subsequent appearances, that consoling message was reiterated: “He revealed to me the ineffable wonders of his pure love and to what extremes it had led him to love mankind”.[113]
    121.This powerful realization of the love of Jesus Christ bequeathed to us by Saint Margaret Mary can spur us to greater union with him.We need not feel obliged to accept or appropriate every detail of her spiritual experience, in which, as often happens, God’s intervention combines with human elements related to the individual’s own desires, concerns and interior images.[114]Such experiences must always be interpreted in the light of the Gospel and the rich spiritual tradition of the Church, even as we acknowledge the good they accomplish in many of our brothers and sisters.In this way, we can recognize the gifts of the Holy Spirit present in those experiences of faith and love.More important than any individual detail is the core of the message handed on to us, which can be summed up in the words heard by Saint Margaret Mary: “This is the heart that so loved human beings that it has spared nothing, even to emptying and consuming itself in order to show them its love”.[115]
    122.This apparition, then, invites us to grow in our encounter with Christ, putting our trust completely in his love, until we attain full and definitive union with him.“It is necessary that the divine heart of Jesus in some way replace our own; that he alone live and work in us and for us; that his will… work absolutely and without any resistance on our part; and finally that its affections, thoughts and desires take the place of our own, especially his love, so that he is loved in himself and for our sakes.And so, this lovable heart being our all in all, we can say with Saint Paul that we no longer live our own lives, but it is he who lives within us”.[116]
    123.In the first message that Saint Margaret Mary received, this invitation was expressed in vivid, fervent and loving terms.“He asked for my heart, which I asked him to take, which he did and then placed myself in his own adorable heart, from which he made me see mine like a little atom consumed in the fiery furnace of his own”.[117]
    124.At another point, we see that the one who gives himself to us is the risen and glorified Christ, full of life and light.If indeed, at different times, he spoke of the suffering that he endured for our sake and of the ingratitude with which it is met, what we see here are not so much his blood and painful wounds, but rather the light and fire of the Lord of life.The wounds of the passion have not disappeared, but are now transfigured.Here we see the paschal mystery in all its splendour: “Once, when the Blessed Sacrament was exposed, Jesus appeared, resplendent in glory, with his five wounds that appeared as so many suns blazing forth from his sacred humanity, but above all from his adorable breast, which seemed a fiery furnace.Opening his robe, he revealed his most loving and lovable heart, which was the living source of those flames.Then it was that I discovered the ineffable wonders of his pure love, with which he loves men to the utmost, yet receives from them only ingratitude and indifference”.[118]
    SAINT CLAUDE DE LA COLOMBIÈRE
    125.When Saint Claude de La Colombière learned of the experiences of Saint Margaret Mary, he immediately undertook her defence and began to spread word of the apparitions.Saint Claude played a special role in developing the understanding of devotion to the Sacred Heart and its meaning in the light of the Gospel.
    126.Some of the language of Saint Margaret Mary, if poorly understood, might suggest undue trust in our personal sacrifices and offerings.Saint Claude insists that contemplation of the heart of Jesus, when authentic, does not provoke self-complacency or a vain confidence in our own experiences or human efforts, but rather an ineffable abandonment in Christ that fills our life with peace, security and decision.He expressed this absolute confidence most eloquently in a celebrated prayer:
    “My God, I am so convinced that you keep watch over those who hope in you, and that we can want for nothing when we look for all in you, that I am resolved in the future to live free from every care and to turn all my anxieties over to you…I shall never lose my hope.I shall keep it to the last moment of my life; and at that moment all the demons in hell will strive to tear it from me…Others may look for happiness from their wealth or their talents; others may rest on the innocence of their life, or the severity of their penance, or the amount of their alms, or the fervour of their prayers.As for me, Lord, all my confidence is confidence itself.This confidence has never deceived anyone…I am sure, therefore, that I shall be eternally happy, since I firmly hope to be, and because it is from you, O God, that I hope for it”.[119]
    127.In a note of January 1677, after mentioning the assurance he felt regarding his mission, Claude continued: “I have come to know that God wanted me to serve him by obtaining the fulfilment of his desires regarding the devotion that he suggested to a person to whom he communicates in confidence, and for whose sake he has desired to make use of my weakness.I have already used it to help several persons”.[120]
    128.It should be recognized that the spirituality of Blessed Claude de La Colombière resulted in a fine synthesis of the profound and moving spiritual experience of Saint Margaret Mary and the vivid and concrete form of contemplation found in the Spiritual Exercises of Saint Ignatius Loyola.At the beginning of the third week of the Exercises, Claude reflected:“Two things have moved me in a striking way.First, the attitude of Christ towards those who sought to arrest him.His heart is full of bitter sorrow; every violent passion is unleashed against him and all nature is in turmoil, yet amid all this confusion, all these temptations, his heart remains firmly directed to God.He does not hesitate to take the part that virtue and the highest virtue suggested to him.Second, the attitude of that same heart towards Judas who betrayed him, the apostles who cravenly abandoned him, the priests and the others responsible for the persecution he suffered; none of these things was able to arouse in him the slightest sentiment of hatred or indignation.I present myself anew to this heart free of anger, free of bitterness, filled instead with genuine compassion towards its enemies”.[121]
    SAINT CHARLES DE FOUCAULD AND SAINT THERESE OF THE CHILD JESUS
    129.Saint Charles de Foucauld and Saint Therese of the Child Jesus, without intending to, reshaped certain aspects of devotion to the heart of Christ and thus helped us understand it in an even more evangelical spirit.Let us now examine how this devotion found expression in their lives.In the following chapter, we will return to them, in order to illustrate the distinctively missionary dimension that each of them brought to the devotion.
    Iesus Caritas
    130.In Louye, Charles de Foucauld was accustomed to visit the Blessed Sacrament with his cousin, Marie de Bondy.One day she showed him an image of the Sacred Heart.[122]His cousin played a fundamental role in Charles’s conversion, as he himself acknowledged: “Since God has made you the first instrument of his mercies towards me, from you everything else began.Had you not converted me, brought me to Jesus and taught me little by little, letter by letter, all that is holy and good, where would I be today?”[123]What Marie awakened in him was an intense awareness of the love of Jesus.That was the essential thing, and centred on devotion to the heart of Jesus, in which he encountered unbounded mercy: “Let us trust in the infinite mercy of the one whose heart you led me to know”.[124]
    131.Later, his spiritual director, Father Henri Huvelin, helped Charles to deepen his understanding of the inestimable mystery of “this blessed heart of which you spoke to me so often”.[125]On 6 June 1889, Charles consecrated himself to the Sacred Heart, in which he found a love without limits.He told Christ, “You have bestowed on me so many benefits, that it would appear ingratitude towards your heart not to believe that it is disposed to bestow on me every good, however great, and that your love and your generosity are boundless”.[126]He was to become a hermit “under the name of the heart of Jesus”.[127]
    132.On 17 May 1906, the same day in which Brother Charles, alone, could no longer celebrate Mass, he wrote of his promise “to let the heart of Jesus live in me, so that it is no longer I who live, but the heart of Jesus that lives in me, as he lived in Nazareth”.[128]His friendship with Jesus, heart to heart, was anything but a privatized piety.It inspired the austere life he led in Nazareth, born of a desire to imitate Christ and to be conformed to him.His loving devotion to the heart of Jesus had a concrete effect on his style of life, and his Nazareth was nourished by his personal relationship with the heart of Christ.
    Saint Therese of the Child Jesus
    133.Like Saint Charles de Foucauld, Saint Therese of the Child Jesus was influenced by the great renewal of devotion that swept nineteenth-century France.Father Almire Pichon, the spiritual director of her family, was seen as a devoted apostle of the Sacred Heart.One of her sisters took as her name in religion “Sister Marie of the Sacred Heart”, and the monastery that Therese entered was dedicated to the Sacred Heart.Her devotion nonetheless took on certain distinctive traits with regard to the customary piety of that age.
    134.When Therese was fifteen, she could speak of Jesus as the one “whose heart beats in unison with my own”.[129]Two years later, speaking of the image of Christ’s heart crowned with thorns, she wrote in a letter: “You know that I myself do not see the Sacred Heart as everyone else.I think that the Heart of my Spouse is mine alone, just as mine is his alone, and I speak to him then in the solitude of this delightful heart to heart, while waiting to contemplate him one day face to face”.[130]
    135.In one of her poems, Therese voiced the meaning of her devotion, which had to do more with friendship and assurance than with trust in her sacrifices:
    “I need a heart burning with tenderness,
    Who will be my support forever,
    Who loves everything in me, even my weakness…
    And who never leaves me day or night…
    I must have a God who takes on my nature,
    And becomes my brother and is able to suffer! …
    Ah! I know well, all our righteousness
    Is worthless in your sight…
    So I, for my purgatory,
    Choose your burning love, O heart of my God!”[131]
    136.Perhaps the most important text for understanding the devotion of Therese to the heart of Christ is a letter that she wrote three months before her death to her friend Maurice Bellière.“When I see Mary Magdalene walking up before the many guests, washing with her tears the feet of her adored Master, whom she is touching for the first time, I feel that her hearthas understood the abysses of love and mercy of the heart of Jesus, and, sinner though she is, this heart of love was disposed not only to pardon her but to lavish on her the blessings of his divine intimacy, to lift her to the highest summits of contemplation.Ah! dear little Brother, ever since I have been given the grace to understand also the love of the heart of Jesus, I admit that it has expelled all fear from my heart.The remembrance of my faults humbles me, draws me never to depend on my strength which is only weakness, but this remembrance speaks to me of mercy and love even more”.[132]
    137.Those moralizers who want to keep a tight rein on God’s mercy and grace might claim that Therese could say this because she was a saint, but a simple person could not say the same.In that way, they excise from the spirituality of Saint Therese its wonderful originality, which reflects the heart of the Gospel.Sadly, in certain Christian circles we often encounter this attempt to fit the Holy Spirit into a certain preconceived pattern in a way that enables them to keep everything under their supervision.Yet this astute Doctor of the Church reduces them to silence and directly contradicts their reductive view in these clear words: “If I had committed all possible crimes, I would always have the same confidence; I feel that this whole multitude of offenses would be like a drop of water thrown into a fiery furnace”.[133]
    138.To Sister Marie, who praised her generous love of God, prepared even to embrace martyrdom, Therese responded at length in a letter that is one of the great milestones in the history of spirituality.This page ought to be read a thousand times over for its depth, clarity and beauty.There, Therese helps her sister, “Marie of the Sacred Heart”, to avoid focusing this devotion on suffering, since some had presented reparation primarily in terms of accumulating sacrifices and good works.Therese, for her part, presents confidence as the greatest and best offering, pleasing to the heart of Christ: “My desires of martyrdom are nothing; they are not what give me the unlimited confidence that I feel in my heart.They are, to tell the truth, the spiritual riches that render one unjust, when one rests in them with complacence and one believes that they are something great…what pleases [Jesus] is that he sees me loving my littleness and my poverty, the blind hope that I have in his mercy…That is my only treasure…If you want to feel joy, to have an attraction for suffering, it is your consolation that you are seeking…Understand that to be his victim of love, the weaker one is, without desires or virtues, the more suited one is for the workings of this consuming and transforming Love…Oh!How I would like to be able to make you understand what I feel! …It is confidence and nothing but confidence that must lead us to Love”.[134]
    139.In many of her writings, Therese speaks of her struggle with forms of spirituality overly focused on human effort, on individual merit, on offering sacrifices and carrying out certain acts in order to “win heaven”.For her, “merit does not consist in doing or in giving much, but rather in receiving”.[135]Let us read once again some of these deeply meaningful texts where she emphasizes this and presents it as a simple and rapid means of taking hold of the Lord “by his heart”.
    140.To her sister Léonie she writes, “I assure you that God is much better than you believe.He is content with a glance, a sigh of love…As for me, I find perfection very easy to practise because I have understood it is a matter of taking hold of Jesus by his heart…Look at a little child who has just annoyed his mother… If he comes to her, holding out his little arms, smiling and saying: ‘Kiss me, I will not do it again’, will his mother be able not to press him to her heart tenderly and forget his childish mischief?However, she knows her dear little one will do it again on the next occasion, but this does not matter; if he takes her again by her heart, he will not be punished”.[136]
    141.So too, in a letter to Father Adolphe Roulland she writes, “[M]y way is all confidence and love.I do not understand souls who fear a friend so tender.At times, when I am reading certain spiritual treatises in which perfection is shown through a thousand obstacles, surrounded by a crowd of illusions, my poor little mind quickly tires; I close the learned book that is breaking my head and drying up my heart, and I take up Holy Scripture.Then all seems luminous to me; a single word uncovers for my soul infinite horizons, perfection seems simple to me.I see that it is sufficient to recognize one’s nothingness and to abandon oneself like a child into God’s arms”.[137]
    142.In yet another letter, she relates this to the love shown by a parent: “I do not believe that the heart of [a] father could resist the filial confidence of his child, whose sincerity and love he knows.He realizes, however, that more than once his son will fall into the same faults, but he is prepared to pardon him always, if his son always takes him by his heart”.[138]
    RESONANCES WITHIN THE SOCIETY OF JESUS
    143.We have seen how Saint Claude de La Colombière combined the spiritual experience of Saint Margaret Mary with the aim of the Spiritual Exercises.I believe that the place of the Sacred Heart in the history of the Society of Jesus merits a few brief words.
    144.The spirituality of the Society of Jesus has always proposed an “interior knowledge of the Lord in order to love and follow him more fully”.[139]Saint Ignatius invites us in his Spiritual Exercises to place ourselves before the Gospel that tells us that, “[Christ’s] side was pierced by the lance and blood and water flowed forth”.[140]When retreatants contemplate the wounded side of the crucified Lord, Ignatius suggests that they enter into the heart of Christ.Thus we have a way to enlarge our own hearts, recommended by one who was a “master of affections”, to use the words of Saint Peter Faber in one of his letters to Saint Ignatius.[141]Father Juan Alfonso de Polanco echoed that same expression in his biography of Saint Ignatius: “He [Cardinal Gasparo Contarini] realized that in Father Ignatius he had encountered a master of affections”.[142]The colloquies that Saint Ignatius proposed are an essential part of this training of the heart, for in them we sense and savour with the heart a Gospel message and converse about it with the Lord.Saint Ignatius tells us that we can share our concerns with the Lord and seek his counsel.Anyone who follows the Exercises can readily see that they involve a dialogue, heart to heart.
    145.Saint Ignatius brings his contemplations to a crescendo at the foot of the cross and invites the retreatant to ask the crucified Lord with great affection, “as one friend to another, as a servant to his master”, what he or she must do for him.[143]The progression of the Exercises culminates in the “Contemplation to Attain Love”, which gives rise to thanksgiving and the offering of one’s “memory, understanding and will” to the heart which is the fount and origin of every good thing.[144]This interior contemplation is not the fruit of our understanding and effort, but is to be implored as a gift.
    146.This same experience inspired the great succession of Jesuit priests who spoke explicitly of the heart of Jesus: Saint Francis Borgia, Saint Peter Faber, Saint Alphonsus Rodriguez, Father Álvarez de Paz, Father Vincent Carafa, Father Kasper Drużbicki and countless others.In 1883, the Jesuits declared that, “the Society of Jesus accepts and receives with an overflowing spirit of joy and gratitude the most agreeable duty entrusted to it by our Lord Jesus Christ to practise, promote and propagate devotion to his divine heart”.[145]In September 1871, Father Pieter Jan Beckx consecrated the Society to the Sacred Heart of Jesus and, as a sign that it remains an outstanding element in the life of the Society, Father Pedro Arrupe renewed that consecration in 1972, with a conviction that he explained in these words: “I therefore wish to say to the Society something about which I feel I cannot remain silent.From my novitiate on, I have always been convinced that what we call devotion to the Sacred Heart contains a symbolic expression of what is most profound in Ignatian spirituality, and of an extraordinary efficacy –ultra quam speraverint– both for its own perfection and for its apostolic fruitfulness.I continue to have this same conviction…In this devotion I encounter one of the deepest sources of my interior life”.[146]
    147.When Saint John Paul II urged “all the members of the Society to be even more zealous in promoting this devotion, which corresponds more than ever to the expectations of our time”, he did so because he recognized the profound connection between devotion to the heart of Christ and Ignatian spirituality.For “the desire to ‘know the Lord intimately’ and to ‘have a conversation’ with him, heart to heart, is characteristic of the Ignatian spiritual and apostolic dynamism, thanks to the Spiritual Exercises, and this dynamism is wholly at the service of the love of the heart of God”.[147]
    A BROAD CURRENT OF THE INTERIOR LIFE
    148.Devotion to the heart of Christ reappears in the spiritual journey of many saints, all quite different from each other; in every one of them, the devotion takes on new hues.Saint Vincent de Paul, for example, used to say that what God desires is the heart: “God asks primarily for our heart – our heart – and that is what counts.How is it that a man who has no wealth will have greater merit than someone who has great possessions that he gives up?Because the one who has nothing does it with greater love; and that is what God especially wants…”[148]This means allowing one’s heart to be united to that of Christ.“What blessing should a Sister not hope for from God if she does her utmost to put her heart in the state of being united with the heart of our Lord!”[149]
    149.At times, we may be tempted to consider this mystery of love as an admirable relic from the past, a fine spirituality suited to other times.Yet we need to remind ourselves constantly that, as a saintly missionary once said, “this divine heart, which let itself be pierced by an enemy’s lance in order to pour forth through that sacred wound the sacraments by which the Church was formed, has never ceased to love”.[150]More recent saints, like Saint Pius of Pietrelcina, Saint Teresa of Calcutta and many others, have spoken with deep devotion of the heart of Christ.Here I would also mention the experiences of Saint Faustina Kowalska, which re-propose devotion to the heart of Christ by greatly emphasizing the glorious life of the risen Lord and his divine mercy.Inspired by her experiences and the spiritual legacy of Saint Józef Sebastian Pelczar (1842-1924),[151]Saint John Paul II intimately linked his reflections on divine mercy with devotion to the heart of Christ: “The Church seems in a singular way to profess the mercy of God and to venerate it when she directs herself to the heart of Christ.In fact, it is precisely this drawing close to Christ in the mystery of his heart which enables us to dwell on this point of the revelation of the merciful love of the Father, a revelation that constituted the central content of the messianic mission of the Son of Man”.[152]Saint John Paul also spoke of the Sacred Heart in very personal terms, acknowledging that, “it has spoken to me ever since my youth”.[153]
    150.The enduring relevance of devotion to the heart of Christ is especially evident in the work of evangelization and education carried out by the numerous male and female religious congregations whose origins were marked by this profoundly Christological devotion.Mentioning all of them by name would be an endless undertaking. Let us simply consider two examples taken at random: “The Founder [Saint Daniel Comboni] discovered in the mystery of the heart of Jesus the source of strength for his missionary commitment”.[154]“Caught up as we are in the desires of the heart of Jesus, we want people to grow in dignity, as human beings and as children of God.Our starting point is the Gospel, with all that it demands from us of love, forgiveness and justice, and of solidarity with those who are poor and rejected by the world”.[155]So too, the many shrines worldwide that are consecrated to the heart of Christ continue to be an impressive source of renewal in prayer and spiritual fervour.To all those who in any way are associated with these spaces of faith and charity I send my paternal blessing.
    THE DEVOTION OF CONSOLATION
    151.The wound in Christ’s side, the wellspring of living water, remains open in the risen body of the Saviour.The deep wound inflicted by the lance and the wounds of the crown of thorns that customarily appear in representations of the Sacred Heart are an inseparable part of this devotion, in which we contemplate the love of Christ who offered himself in sacrifice to the very end.The heart of the risen Lord preserves the signs of that complete self-surrender, which entailed intense sufferings for our sake.It is natural, then, that the faithful should wish to respond not only to this immense outpouring of love, but also to the suffering that the Lord chose to endure for the sake of that love.
    With Jesus on the cross
    152.It is fitting to recover one particular aspect of the spirituality that has accompanied devotion to the heart of Christ, namely, the interior desire to offer consolation to that heart.Here I will not discuss the practice of “reparation”, which I deem better suited to the social dimension of this devotion to be discussed in the next chapter.I would like instead to concentrate on the desire often felt in the hearts of the faithful who lovingly contemplate the mystery of Christ’s passion and experience it as a mystery which is not only recollected but becomes present to us by grace, or better, allows us to be mystically present at the moment of our redemption.If we truly love the Lord, how could we not desire to console him?
    153.Pope Pius XI wished to ground this particular devotion in the realization that the mystery of our redemption by Christ’s passion transcends, by God’s grace, all boundaries of time and space.On the cross, Jesus offered himself for all sins, including those yet to be committed, including our own sins.In the same way, the acts we now offer for his consolation, also transcending time, touch his wounded heart.“If, because of our sins too, as yet in the future but already foreseen, the soul of Jesus became sorrowful unto death, it cannot be doubted that at the same time he derived some solace from our reparation, likewise foreseen, at the moment when ‘there appeared to him an angel from heaven’ (Lk22:43), in order that his heart, oppressed with weariness and anguish, might find consolation.And so even now, in a wondrous yet true manner, we can and ought to console that Most Sacred Heart, which is continually wounded by the sins of thankless men”.[156]
    Reasons of the heart
    154.It might appear to some that this aspect of devotion to the Sacred Heart lacks a firm theological basis, yet the heart has its reasons.Here thesensus fideliumperceives something mysterious, beyond our human logic, and realizes that the passion of Christ is not merely an event of the past, but one in which we can share through faith.Meditation on Christ’s self-offering on the cross involves, for Christian piety, something much more than mere remembrance.This conviction has a solid theological grounding.[157]We can also add the recognition of our own sins, which Jesus took upon his bruised shoulders, and our inadequacy in the face of that timeless love, which is always infinitely greater.
    155.We may also question how we can pray to the Lord of life, risen from the dead and reigning in glory, while at the same time comforting him in the midst of his sufferings.Here we need to realize that his risen heart preserves its wound as a constant memory, and that the working of grace makes possible an experience that is not restricted to a single moment of the past.In pondering this, we find ourselves invited to take a mystical path that transcends our mental limitations yet remains firmly grounded in the word of God.Pope Pius XI makes this clear: “How can these acts of reparation offer solace now, when Christ is already reigning in the beatitude of heaven?To this question, we may answer in the words of Saint Augustine, which are very apposite here – ‘Give me the one who loves, and he will understand what I say’.Anyone possessed of great love for God, and who looks back to the past, can dwell in meditation on Christ, and see him labouring for man, sorrowing, suffering the greatest hardships, ‘for us men and for our salvation’, well-nigh worn out with sadness, with anguish, nay ‘bruised for our sins’ (Is53:5), and bringing us healing by those very bruises.The more the faithful ponder all these things the more clearly they see that the sins of mankind, whenever they were committed, were the reason why Christ was delivered up to death”.[158]
    156.Those words of Pius XI merit serious consideration.When Scripture states that believers who fail to live in accordance with their faith “are crucifying again the Son of God” (Heb6:6), or when Paul, offering his sufferings for the sake of others, says that, “in my flesh I am completing what is lacking in Christ’s afflictions” (Col1:24), or again, when Christ in his passion prays not only for his disciples at that time, but also for “those who will believe in me through their word” (Jn17:20), all these statements challenge our usual way of thinking.They show us that it is not possible to sever the past completely from the present, however difficult our minds find this to grasp.The Gospel, in all its richness, was written not only for our prayerful meditation, but also to enable us to experience its reality in our works of love and in our interior life.This is certainly the case with regard to the mystery of Christ’s death and resurrection.The temporal distinctions that our minds employ appear incapable of embracing the fullness of this experience of faith, which is the basis both of our union with Christ in his suffering and of the strength, consolation and friendship that we enjoy with him in his risen life.
    157.We see, then, the unity of the paschal mystery in these two inseparable and mutually enriching aspects.The one mystery, present by grace in both these dimensions, ensures that whenever we offer some suffering of our own to Christ for his consolation, that suffering is illuminated and transfigured in the paschal light of his love.We share in this mystery in our own life because Christ himself first chose to share in that life.He wished to experience first, as Head, what he would then experience in his Body, the Church: both our wounds and our consolations.When we live in God’s grace, this mutual sharing becomes for us a spiritual experience.In a word, the risen Lord, by the working of his grace, mysteriously unites us to his passion.The hearts of the faithful, who experience the joy of the resurrection, yet at the same time desire to share in the Lord’s passion, understand this.They desire to share in his sufferings by offering him the sufferings, the struggles, the disappointments and the fears that are part of their own lives.Nor do they experience this as isolated individuals, since their sufferings are also a participation in the suffering of the mystical Body of Christ, the holy pilgrim People of God, which shares in the passion of Christ in every time and place.The devotion of consolation, then, is in no way ahistorical or abstract; it becomes flesh and blood in the Church’s pilgrimage through history.
    Compunction
    158.The natural desire to console Christ, which begins with our sorrow in contemplating what he endured for us, grows with the honest acknowledgment of our bad habits, compulsions, attachments, weak faith, vain goals and, together with our actual sins, the failure of our hearts to respond to the Lord’s love and his plan for our lives.This experience proves purifying, for love needs the purification of tears that, in the end, leave us more desirous of God and less obsessed with ourselves.
    159.In this way, we see that the deeper our desire to console the Lord, the deeper will be our sincere sense of “compunction”.Compunction is “not a feeling of guilt that makes us discouraged or obsessed with our unworthiness, but a beneficial ‘piercing’ that purifies and heals the heart.Once we acknowledge our sin, our hearts can be opened to the working of the Holy Spirit, the source of living water that wells up within us and brings tears to our eyes…This does not mean weeping in self-pity, as we are so often tempted to do…To shed tears of compunction means seriously to repent of grieving God by our sins; recognizing that we always remain in God’s debt…Just as drops of water can wear down a stone, so tears can slowly soften hardened hearts.Here we see the miracle of sorrow, that ‘salutary sorrow’ which brings great peace…Compunction, then, is not our work but a grace and, as such, it must be sought in prayer.”[159]It means, “asking for sorrow in company with Christ in his sorrow, for anguish with Christ in his anguish, for tears and a deep sense of pain at the great pains that Christ endured for my sake”.[160]
    160.I ask, then, that no one make light of the fervent devotion of the holy faithful people of God, which in its popular piety seeks to console Christ.I also encourage everyone to consider whether there might be greater reasonableness, truth and wisdom in certain demonstrations of love that seek to console the Lord than in the cold, distant, calculated and nominal acts of love that are at times practised by those who claim to possess a more reflective, sophisticated and mature faith.
    Consoled ourselves in order to console others
    161.In contemplating the heart of Christ and his self-surrender even to death, we ourselves find great consolation.The grief that we feel in our hearts gives way to complete trust and, in the end, what endures is gratitude, tenderness, peace; what endures is Christ’s love reigning in our lives.Compunction, then, “is not a source of anxiety but of healing for the soul, since it acts as a balm on the wounds of sin, preparing us to receive the caress of the Lord”.[161]Our sufferings are joined to the suffering of Christ on the cross.If we believe that grace can bridge every distance, this means that Christ by his sufferings united himself to the sufferings of his disciples in every time and place.In this way, whenever we endure suffering, we can also experience the interior consolation of knowing that Christ suffers with us.In seeking to console him, we will find ourselves consoled.
    162.At some point, however, in our contemplation, we should likewise hear the urgent plea of the Lord: “Comfort, comfort my people!” (Is40:1).As Saint Paul tells us, God offers us consolation “so that we may be able to console those who are in any affliction, with the consolation by which we ourselves are consoled by God” (2 Cor1:4).
    163.This then challenges us to seek a deeper understanding of the communitarian, social and missionary dimension of all authentic devotion to the heart of Christ.For even as Christ’s heart leads us to the Father, it sends us forth to our brothers and sisters.In the fruits of service, fraternity and mission that the heart of Christ inspires in our lives, the will of the Father is fulfilled.In this way, we come full circle: “My Father is glorified by this, that you bear much fruit” (Jn15:8).
    CHAPTER FIVE
    LOVE FOR LOVE
    164.In the spiritual experiences of Saint Margaret Mary Alacoque, we encounter, along with an ardent declaration of love for Jesus Christ, a profoundly personal and challenging invitation to entrust our lives to the Lord.The knowledge that we are loved, and our complete confidence in that love, in no way lessens our desire to respond generously, despite our frailty and our many shortcomings.
    A LAMENT AND A REQUEST
    165.Beginning with his second great apparition to Saint Margaret Mary, Jesus spoke of the sadness he feels because his great love for humanity receives in exchange “nothing but ingratitude and indifference”, “coldness and contempt”.And this, he added, “is more grievous to me than all that I endured in my Passion”.[162]
    166.Jesus spoke of his thirst for love and revealed that his heart is not indifferent to the way we respond to that thirst.In his words, “I thirst, but with a thirst so ardent to be loved by men in the Most Blessed Sacrament, that this thirst consumes me; and I have not encountered anyone who makes an effort, according to my desire, to quench my thirst, giving back a return for my love”.[163]Jesus asks for love.Once the faithful heart realizes this, its spontaneous response is one of love, not a desire to multiply sacrifices or simply discharge a burdensome duty: “I received from my God excessive graces of his love, and I felt moved by the desire to respond to some of them and to respond with love for love”.[164]As my Predecessor Leo XIII pointed out, through the image of his Sacred Heart, the love of Christ “moves us to return love for love”.[165]
    EXTENDING CHRIST’S LOVE TO OUR BROTHERS AND SISTERS
    167.We need once more to take up the word of God and to realize, in doing so, that our best response to the love of Christ’s heart is to love our brothers and sisters.There is no greater way for us to return love for love.The Scriptures make this patently clear:
    “Just as you did it to one of the least of these my brethren, you did it to me” (Mt25:40).
    “For the whole law is summed up in a single commandment: ‘You shall love your neighbour as yourself’” (Gal5:14).
    “We know that we have passed from death to life because we love one another. Whoever does not love abides in death” (1Jn3:14).
    “Those who do not love a brother or sister whom they have seen, cannot love God whom they have not seen” (1 Jn4:20).
    168.Love for our brothers and sisters is not simply the fruit of our own efforts; it demands the transformation of our selfish hearts.This realization gave rise to the oft-repeated prayer: “Jesus, make our hearts more like your own”.Saint Paul, for his part, urged his hearers to pray not for the strength to do good works, but “to have the same mind among you that was in Christ Jesus” (Phil2:5).
    169.We need to remember that in the Roman Empire many of the poor, foreigners and others who lived on the fringes of society met with respect, affection and care from Christians.This explains why the apostate emperor Julian, in one of his letters, acknowledged that one reason why Christians were respected and imitated was the assistance they gave the poor and strangers, who were ordinarily ignored and treated with contempt.For Julian, it was intolerable that the Christians whom he despised, “in addition to feeding their own, also feed our poor and needy, who receive no help from us”.[166]The emperor thus insisted on the need to create charitable institutions to compete with those of the Christians and thus gain the respect of society: “There should be instituted in each city many accommodations so that the immigrants may enjoy our philanthropy… and make the Greeks accustomed to such works of generosity”.[167]Julian did not achieve his objective, no doubt because underlying those works there was nothing comparable to the Christian charity that respected the unique dignity of each person.
    170.By associating with the lowest ranks of society (cf.Mt25:31-46), “Jesusbrought the great novelty of recognizing the dignity of every person, especially those who were considered ‘unworthy’.This new principle in human history – which emphasizes that individuals are even more ‘worthy’ of our respect and love when they are weak, scorned, or suffering, even to the point of losing the human ‘figure’ – has changed the face of the world.It has given life to institutions that take care of those who find themselves in disadvantaged conditions, such as abandoned infants, orphans, the elderly who are left without assistance, the mentally ill, people with incurable diseases or severe deformities, and those living on the streets”.[168]
    171.In contemplating the pierced heart of the Lord, who “took our infirmities and bore our diseases” (Mt8:17), we too are inspired to be more attentive to the sufferings and needs of others, and confirmed in our efforts to share in his work of liberation as instruments for the spread of his love.[169]As we meditate on Christ’s self-offering for the sake of all, we are naturally led to ask why we too should not be ready to give our lives for others: “We know love by this, that he laid down his life for us – and that we ought to lay down our lives for one another” (1 Jn3:16).
    ECHOES IN THE HISTORY OF SPIRITUALITY
    172.This bond between devotion to the heart of Jesus and commitment to our brothers and sisters has been a constant in the history of Christian spirituality.Let us consider a few examples.
    Being a fountain from which others can drink
    173.Starting with Origen, various Fathers of the Church reflected on the words of John 7:38 – “out of his heart shall flow rivers of living water” – which refer to those who, having drunk of Christ, put their faith in him.Our union with Christ is meant not only to satisfy our own thirst, but also to make us springs of living water for others.Origen wrote that Christ fulfils his promise by making fountains of fresh water well up within us: “The human soul, made in the image of God, can itself contain and pour forth wells, fountains and rivers”.[170]
    174.Saint Ambrose recommended drinking deeply of Christ, “in order that the spring of water welling up to eternal life may overflow in you”.[171]Marius Victorinus was convinced that the Holy Spirit has given of himself in such abundance that, “whoever receives him becomes a heart that pours forth rivers of living water”.[172]Saint Augustine saw this stream flowing from the believer as benevolence.[173]Saint Thomas Aquinas thus maintained that whenever someone “hastens to share various gifts of grace received from God, living water flows from his heart”.[174]
    175.Although “the sacrifice offered on the cross in loving obedience renders most abundant and infinite satisfaction for the sins of mankind”,[175]the Church, born of the heart of Christ, prolongs and bestows, in every time and place, the fruits of that one redemptive passion, which lead men and women to direct union with the Lord.
    176.In the heart of the Church, the mediation of Mary, as our intercessor and mother, can only be understood as “a sharing in the one source, which is the mediation of Christ himself”,[176]the sole Redeemer.For this reason, “the Church does not hesitate to profess the subordinate role of Mary”.[177]Devotion to the heart of Mary in no way detracts from the sole worship due the heart of Christ, but rather increases it: “Mary’s function as mother of humanity in no way obscures or diminishes this unique mediation of Christ, but rather shows its power”.[178]Thanks to the abundant graces streaming from the open side of Christ, in different ways the Church, the Virgin Mary and all believers become themselves streams of living water.In this way, Christ displays his glory in and through our littleness.
    Fraternity and mysticism
    177.Saint Bernard, in exhorting us to union with the heart of Christ, draws upon the richness of this devotion to call for a conversion grounded in love.Bernard believed that our affections, enslaved by pleasures, may nonetheless be transformed and set free, not by blind obedience to a commandment but rather in response to the delectable love of Christ.Evil is overcome by good, conquered by the flowering of love: “Love the Lord your God with the full and deep affection of all your heart; love him with your mind wholly alert and intent; love him with all your strength, so much so that you would not even fear to die for love of him…Your affection for the Lord Jesus should be both sweet and intimate, to oppose the sweet enticements of the sensual life.Sweetness conquers sweetness, as one nail drives out another”.[179]
    178.Saint Francis de Sales was particularly taken by Jesus’ words, “Learn from me; for I am gentle and humble in heart” (Mt11:29).Even in the most simple and ordinary things, he said, we can “steal” the Lord’s heart.“Those who would serve him acceptably must give heed not only to lofty and important matters, but to things mean and little, since by both alike we may win his heart and love…I mean the acts of daily forbearance, the headache, the toothache, the heavy cold; the tiresome peculiarities of a husband or wife, the broken glass, the loss of a ring, a handkerchief, a glove; the sneer of a neighbour; the effort of going to bed early in order to rise early for prayer or communion, the little shyness some people feel in openly performing religious duties… Be sure that all these sufferings, small as they are, if accepted lovingly, are most pleasing to God’s goodness”.[180]Ultimately, however, our response to the love of the heart of Christ is manifested in love of our neighbour: “a love that is firm, constant, steady, unconcerned with trivial matters or people’s station in life, not subject to changes or animosity…Our Lord loves us unceasingly, puts up with so many of our defects and our flaws.Precisely because of this, we must do the same with our brothers and sisters, never tiring of putting up with them”.[181]
    179.Saint Charles de Foucauld sought to imitate Jesus by living and acting as he did, in a constant effort to do what Jesus would have done in his place.Only by being conformed to the sentiments of the heart of Christ could he fully achieve this goal.Here too we find the idea of “love for love”.In his words, “I desire sufferings in order to return love for love, to imitate him… to enter into his work, to offer myself with him, the nothingness that I am, as a sacrifice, as a victim, for the sanctification of men”.[182]The desire to bring the love of Jesus to others, his missionary outreach to the poorest and most forgotten of our world, led him to take as his emblem the words, “Iesus-Caritas”, with the symbol of the heart of Christ surmounted by a cross.[183]Nor was this a light decision: “With all my strength I try to show and prove to these poor lost brethren that our religion is all charity, all fraternity, and that its emblem is a heart”.[184]He wanted to settle with other brothers “in Morocco, in the name of the heart of Jesus”.[185]In this way, their evangelizing work could radiate outwards: “Charity has to radiate from our fraternities, as it radiates from the heart of Jesus”.[186]This desire gradually made him a “universal brother”.Allowing himself to be shaped by the heart of Christ, he sought to shelter the whole of suffering humanity in his fraternal heart: “Our heart, like that of Jesus, must embrace all men and women”.[187]“The love of the heart of Jesus for men and women, the love that he demonstrated in his passion, this is what we need to have for all human beings”.[188]
    180.Father Henri Huvelin, the spiritual director of Saint Charles de Foucauld, observed that, “when our Lord dwells in a heart, he gives it such sentiments, and this heart reaches out to the least of our brothers and sisters.Such was the heart of Saint Vincent de Paul…When our Lord lives in the soul of a priest, he makes him reach out to the poor”.[189]It is important to realize that the apostolic zeal of Saint Vincent, as Father Huvelin describes it, was also nurtured by devotion to the heart of Christ.Saint Vincent urged his confreres to “find in the heart of our Lord a word of consolation for the poor sick person”.[190]If that word is to be convincing, our own heart must first have been changed by the love and tenderness of the heart of Christ.Saint Vincent often reiterated this conviction in his homilies and counsels, and it became a notable feature of the Constitutions of his Congregation: “We should make a great effort to learn the following lesson, also taught by Christ: ‘Learn from me, for I am gentle and humble of heart’.We should remember that he himself said that by gentleness we inherit the earth.If we act on this, we will win people over so that they will turn to the Lord.That will not happen if we treat people harshly or sharply”.[191]
    REPARATION: BUILDING ON THE RUINS
    181.All that has been said thus far enables us to understand in the light of God’s word the proper meaning of the “reparation” to the heart of Christ that the Lord expects us, with the help of his grace, to “offer”.The question has been much discussed, but Saint John Paul II has given us a clear response that can guide Christians today towards a spirit of reparation more closely attuned to the Gospels.
    The social significance of reparation to the heart of Christ
    182.Saint John Paul explained that by entrusting ourselves together to the heart of Christ, “over the ruins accumulated by hatred and violence, the greatly desired civilization of love, the Kingdom of the heart of Christ, can be built”.This clearly requires that we “unite filial love for God and love of neighbour”, and indeed this is “the true reparation asked by the heart of the Saviour”.[192]In union with Christ, amid the ruins we have left in this world by our sins, we are called to build a new civilization of love.That is what it means to make reparation as the heart of Christ would have us do.Amid the devastation wrought by evil, the heart of Christ desires that we cooperate with him in restoring goodness and beauty to our world.
    183.All sin harms the Church and society; as a result, “every sin can undoubtedly be considered as a social sin” and this is especially true for those sins that “by their very matter constitute a direct attack on one’s neighbour”.[193]Saint John Paul II explained that the repetition of these sins against others often consolidates a “structure of sin” that has an effect on the development of peoples.[194]Frequently, this is part of a dominant mind-set that considers normal or reasonable what is merely selfishness and indifference.This then gives rise to social alienation: “A society is alienated if its forms of social organization, production and consumption make it more difficult to offer the gift of self and to establish solidarity between people”.[195]It is not only a moral norm that leads us to expose and resist these alienated social structures and to support efforts within society to restore and consolidate the common good.Rather, it is our “conversion of heart” that “imposes the obligation”[196]to repair these structures.It is our response to the love of the heart of Jesus, which teaches us to love in turn.
    184.Precisely because evangelical reparation possesses this vital social dimension, our acts of love, service and reconciliation, in order to be truly reparative, need to be inspired, motivated and empowered by Christ.Saint John Paul II also observed that “to build the civilization of love”,[197]our world today needs the heart of Christ.Christian reparation cannot be understood simply as a congeries of external works, however indispensable and at times admirable they may be.These need a “mystique”, a soul, a meaning that grants them strength, drive and tireless creativity.They need the life, the fire and the light that radiate from the heart of Christ.
    Mending wounded hearts
    185.Nor is a merely outward reparation sufficient, either for our world or for the heart of Christ.If each of us considers his or her own sins and their effect on others, we will realize that repairing the harm done to this world also calls for a desire to mend wounded hearts where the deepest harm was done, and the hurt is most painful.
    186.A spirit of reparation thus “leads us to hope that every wound can be healed, however deep it may be.Complete reparation may at times seem impossible, such as when goods or loved ones are definitively lost, or when certain situations have become irremediable.Yet the intention to make amends, and to do so in a concrete way, is essential for the process of reconciliation and a return to peace of heart”.[198]
    The beauty of asking forgiveness
    187.Good intentions are not enough.There has to be an inward desire that finds expression in our outward actions.“Reparation, if it is to be Christian, to touch the offended person’s heart and not be a simple act of commutative justice, presupposes two demanding things:acknowledging our guiltandasking forgiveness…It is from the honest acknowledgment of the wrong done to our brother or sister, and from the profound and sincere realization that love has been compromised, that the desire to make amends arises”.[199]
    188.We should never think that acknowledging our sins before others is somehow demeaning or offensive to our human dignity.On the contrary, it demands that we stop deceiving ourselves and acknowledge our past for what it is, marred by sin, especially in those cases when we caused hurt to our brothers and sisters.“Self-accusation is part of Christian wisdom…It is pleasing to the Lord, because the Lord accepts a contrite heart”.[200]
    189.Part of this spirit of reparation is the custom of asking forgiveness from our brothers and sisters, which demonstrates great nobility amid our human weakness.Asking forgiveness is a means of healing relationships, for it “re-opens dialogue and manifests the will to re-establish the bond of fraternal charity…It touches the heart of our brother or sister, brings consolation and inspires acceptance of the forgiveness requested. Even if the irreparable cannot be completely repaired, love can always be reborn, making the hurt bearable”.[201]
    190.A heart capable of compunction will grow in fraternity and solidarity.Otherwise, “we regress and grow old within”, whereas when “our prayer becomes simpler and deeper, grounded in adoration and wonder in the presence of God, we grow and mature.We become less attached to ourselves and more attached to Christ.Made poor in spirit, we draw closer to the poor, those who are dearest to God”.[202]This leads to a true spirit of reparation, for “those who feel compunction of heart increasingly feel themselves brothers and sisters to all the sinners of the world; renouncing their airs of superiority and harsh judgments, they are filled with a burning desire to show love and make reparation”.[203]The sense of solidarity born of compunction also enables reconciliation to take place.The person who is capable of compunction, “rather than feeling anger and scandal at the failings of our brothers and sisters, weeps for their sins.There occurs a sort of reversal, where the natural tendency to be indulgent with ourselves and inflexible with others is overturned and, by God’s grace, we become strict with ourselves and merciful towards others”.[204]
    REPARATION: AN EXTENSION OF THE HEART OF CHRIST
    191.There is another, complementary, approach to reparation, which allows us to set it in an even more direct relationship with the heart of Christ, without excluding the aspect of concrete commitment to our brothers and sisters.
    192.Elsewhere I have suggested that, “God has in some way sought to limit himself in such a way that many of the things we think of as evils, dangers or sources of suffering, are in reality part of the pains of childbirth which he uses to draw us into the act of cooperation with the Creator”.[205]This cooperation on our part can allow the power and the love of God to expand in our lives and in the world, whereas our refusal or indifference can prevent it.Several passages of the Bible express this metaphorically, as when the Lord cries out, “If only you would return to me, O Israel!” (cf.Jer4:1).Or when, confronted with rejection by his people, he says, “My heart recoils within me; my compassion grows warm and tender” (Hos11:8).
    193.Even though it is not possible to speak of new suffering on the part of the glorified Lord,“the paschal mystery of Christ… and all that Christ is – all that he did and suffered for all men – participates in the divine eternity, and so transcends all times while being made present in them all”.[206]We can say that he has allowed the expansive glory of his resurrection to be limited and the diffusion of his immense and burning love to be contained, in order to leave room for our free cooperation with his heart.Our rejection of his love erects a barrier to that gracious gift, whereas our trusting acceptance of it opens a space, a channel enabling it to pour into our hearts.Our rejection or indifference limits the effects of his power and the fruitfulness of his love in us.If he does not encounter openness and confidence in me, his love is deprived – because he himself has willed it – of its extension, unique and unrepeatable, in my life and in this world, where he calls me to make him present.Again, this does not stem from any weakness on his part but rather from his infinite freedom, his mysterious power and his perfect love for each of us.When God’s power is revealed in the weakness of our human freedom, “only faith can discern it”.[207]
    194.Saint Margaret Mary recounted that, in one of Christ’s appearances, he spoke of his heart’s passionate love for us, telling her that, “unable to contain the flames of his burning charity, he must spread them abroad”.[208]Since the Lord, who can do all things, desired in his divine freedom to require our cooperation, reparation can be understood as our removal of the obstacles we place before the expansion of Christ’s love in the world by our lack of trust, gratitude and self-sacrifice.
    An Oblation to Love
    195.To help us reflect more deeply on this mystery, we can turn once more to the luminous spirituality of Saint Therese of the Child Jesus.Therese was aware that in certain quarters an extreme form of reparation had developed, based on a willingness to offer oneself in sacrifice for others, and to become in some sense a “lightning rod” for the chastisements of divine justice.In her words, “I thought about the souls who offer themselves as victims of God’s justice in order to turn away the punishments reserved to sinners, drawing them upon themselves”.[209]However, as great and generous as such an offering might appear, she did not find it overly appealing: “I was far from feeling attracted to making it”.[210]So great an emphasis on God’s justice might eventually lead to the notion that Christ’s sacrifice was somehow incomplete or only partly efficacious, or that his mercy was not sufficiently powerful.
    196.With her great spiritual insight, Saint Therese discovered that we can offer ourselves in another way, without the need to satisfy divine justice but by allowing the Lord’s infinite love to spread freely: “O my God!Is your disdained love going to remain closed up within your heart?It seems to me that if you were to find souls offering themselves as victims of holocaust to your love, you would consume them rapidly; it seems to me, too, that you would be happy not to hold back the waves of infinite tenderness within you”.[211]
    197.While nothing need be added to the one redemptive sacrifice of Christ, it remains true that our free refusal can prevent the heart of Christ from spreading the “waves of his infinite tenderness” in this world.Again, this is because the Lord wishes to respect our freedom.More than divine justice, it was the fact that Christ’s love might be refused that troubled the heart of Saint Therese, because for her, God’s justice is understood only in the light of his love.As we have seen, she contemplated all God’s perfections through his mercy, and thus saw them transfigured and resplendent with love.In her words, “even his justice (and perhaps this even more so than the others) seems to me clothed in love”.[212]
    198.This was the origin of her Act of Oblation, not to God’s justice but to his merciful love.“I offer myself as a victim of holocaust to your merciful love, asking you to consume me incessantly, allowing the waves of infinite tenderness shut up within you to overflow into my soul, and that thus I may become a martyr of your love”.[213]It is important to realize that, for Therese, this was not only about allowing the heart of Christ to fill her heart, through her complete trust, with the beauty of his love, but also about letting that love, through her life, spread to others and thus transform the world.Again, in her words, “In the heart of the Church, my Mother, I shall be love… and thus my dream will be realized”.[214]The two aspects were inseparably united.
    199.The Lord accepted her oblation.We see that shortly thereafter she stated that she felt an intense love for others and maintained that it came from the heart of Christ, prolonged through her.So she told her sister Léonie: “I love you a thousand times more tenderly than ordinary sisters love each other, for I can love you with the heart of our celestial spouse”.[215]Later, to Maurice Bellière she wrote, “How I would like to make you understand the tenderness of the heart of Jesus, what he expects from you!”[216]
    Integrity and Harmony
    200.Sisters and brothers, I propose that we develop this means of reparation, which is, in a word, to offer the heart of Christ a new possibility of spreading in this world the flames of his ardent and gracious love.While it remains true that reparation entails the desire to “render compensation for the injuries inflicted on uncreated Love, whether by negligence or grave offense”,[217]the most fitting way to do this is for our love to offer the Lord a possibility of spreading, in amends for all those occasions when his love has been rejected or refused.This involves more than simply the “consolation” of Christ of which we spoke in the previous chapter; it finds expression in acts of fraternal love by which we heal the wounds of the Church and of the world.In this way, we offer the healing power of the heart of Christ new ways of expressing itself.
    201.The sacrifices and sufferings required by these acts of love of neighbour unite us to the passion of Christ.In this way, “by that mystic crucifixion of which the Apostle speaks, we shall receive the abundant fruits of its propitiation and expiation, for ourselves and for others”.[218]Christ alone saves us by his offering on the cross; he alone redeems us, for “there is one God; there is also one mediator between God and men, the man Christ Jesus, who gave himself as a ransom for all” (1Tim2:5-6).The reparation that we offer is a freely accepted participation in his redeeming love and his one sacrifice.We thus complete in our flesh “what is lacking in Christ’s afflictions for the sake of his body, that is, the Church” (Col1:24); and Christ himself prolongs through us the effects of his complete and loving self-oblation.
    202.Often, our sufferings have to do with our own wounded ego.The humility of the heart of Christ points us towards the path of abasement.God chose to come to us in condescension and littleness.The Old Testament had already shown us, with a variety of metaphors, a God who enters into the heart of history and allows himself to be rejected by his people.Christ’s love was shown amid the daily life of his people, begging, as it were, for a response, as if asking permission to manifest his glory.Yet “perhaps only once did the Lord Jesus refer to his own heart, in his own words.And he stresses this sole feature: ‘gentleness and lowliness’, as if to say that only in this way does he wish to win us to himself”.[219]When he said, “Learn from me, for I am gentle and humble in heart” (Mt11:29), he showed us that “to make himself known, he needs our littleness, our self-abasement”.[220]
    203.In what we have said, it is important to note several inseparable aspects.Acts of love of neighbour, with the renunciation, self-denial, suffering and effort that they entail, can only be such when they are nourished by Christ’s own love.He enables us to love as he loved, and in this way he loves and serves others through us.He humbles himself to show his love through our actions, yet even in our slightest works of mercy, his heart is glorified and displays all its grandeur.Once our hearts welcome the love of Christ in complete trust, and enable its fire to spread in our lives, we become capable of loving others as Christ did, in humility and closeness to all.In this way, Christ satisfies his thirst and gloriously spreads the flames of his ardent and gracious love in us and through us.How can we fail to see the magnificent harmony present in all this?
    204.Finally, in order to appreciate this devotion in all of its richness, it is necessary to add, in the light of what we have said about its Trinitarian dimension, that the reparation made by Christ in his humanity is offered to the Father through the working of the Holy Spirit in each of us.Consequently, the reparation we offer to the heart of Christ is directed ultimately to the Father, who is pleased to see us united to Christ whenever we offer ourselves through him, with him and in him.
    BRINGING LOVE TO THE WORLD
    205.The Christian message is attractive when experienced and expressed in its totality: not simply as a refuge for pious thoughts or an occasion for impressive ceremonies.What kind of worship would we give to Christ if we were to rest content with an individual relationship with him and show no interest in relieving the sufferings of others or helping them to live a better life?Would it please the heart that so loved us, if we were to bask in a private religious experience while ignoring its implications for the society in which we live?Let us be honest and accept the word of God in its fullness.On the other hand, our work as Christians for the betterment of society should not obscure its religious inspiration, for that, in the end, would be to seek less for our brothers and sisters than what God desires to give them.For this reason, we should conclude this chapter by recalling the missionary dimension of our love for the heart of Christ.
    206.Saint John Paul II spoke of the social dimension of devotion to the heart of Christ, but also about “reparation, which is apostolic cooperation in the salvation of the world”.[221]Consecration to the heart of Christ is thus “to be seen in relation to the Church’s missionary activity, since it responds to the desire of Jesus’ heart to spread throughout the world, through the members of his Body, his complete commitment to the Kingdom”.[222]As a result, “through the witness of Christians, love will be poured into human hearts, to build up the body of Christ which is the Church, and to build a society of justice, peace and fraternity”.[223]
    207.The flames of love of the Sacred Heart of Jesus also expand through the Church’s missionary outreach, which proclaims the message of God’s love revealed in Christ.Saint Vincent de Paul put this nicely when he invited his disciples to pray to the Lord for “this spirit, this heart that causes us to go everywhere, this heart of the Son of God, the heart of our Lord, that disposes us to go as he went…he sends us, like [the apostles], to bring fire everywhere”.[224]
    208.Saint Paul VI, addressing religious Congregations dedicated to the spread of devotion to the Sacred Heart, made the following observation.“There can be no doubt that pastoral commitment and missionary zeal will fan into flame, if priests and laity alike, in their desire to spread the glory of God, contemplate the example of eternal love that Christ has shown us, and direct their efforts to make all men and women sharers in the unfathomable riches of Christ”.[225]As we contemplate the Sacred Heart, mission becomes a matter of love.For the greatest danger in mission is that, amid all the things we say and do, we fail to bring about a joyful encounter with the love of Christ who embraces us and saves us.
    209.Mission, as a radiation of the love of the heart of Christ, requires missionaries who are themselves in love and who, enthralled by Christ, feel bound to share this love that has changed their lives.They are impatient when time is wasted discussing secondary questions or concentrating on truths and rules, because their greatest concern is to share what they have experienced.They want others to perceive the goodness and beauty of the Beloved through their efforts, however inadequate they may be.Is that not the case with any lover?We can take as an example the words with which Dante Alighieri sought to express this logic of love:
    “Io dico che, pensando al suo valore
    amor si dolce si mi si fa sentire,
    che s’io allora non perdessi ardire
    farei parlando innamorar la gente”.[226]
    210.To be able to speak of Christ, by witness or by word, in such a way that others seek to love him, is the greatest desire of every missionary of souls.This dynamism of love has nothing to do with proselytism; the words of a lover do not disturb others, they do not make demands or oblige, they only lead others to marvel at such love.With immense respect for their freedom and dignity, the lover simply waits for them to inquire about the love that has filled his or her life with such great joy.
    211.Christ asks you never to be ashamed to tell others, with all due discretion and respect, about your friendship with him.He asks that you dare to tell others how good and beautiful it is that you found him.“Everyone who acknowledges me before others, I also will acknowledge before my Father in heaven” (Mt10:32).For a heart that loves, this is not a duty but an irrepressible need: “Woe to me if I do not proclaim the Gospel!” (1 Cor9:16).“Within me there is something like a burning fire shut up in my bones; I am weary with holding it in, and I cannot” (Jer20:9).
    In communion of service
    212.We should not think of this mission of sharing Christ as something only between Jesus and me.Mission is experienced in fellowship with our communities and with the whole Church.If we turn aside from the community, we will be turning aside from Jesus.If we turn our back on the community, our friendship with Jesus will grow cold.This is a fact, and we must never forget it.Love for the brothers and sisters of our communities – religious, parochial, diocesan and others – is a kind of fuel that feeds our friendship with Jesus.Our acts of love for our brothers and sisters in community may well be the best and, at times, the only way that we can witness to others our love for Jesus Christ.He himself said, “By this everyone will know that you are my disciples, if you have love for one another” (Jn13:35).
    213.This love then becomes service within the community.I never tire of repeating that Jesus told us this in the clearest terms possible: “Just as you did it to one of the least of these my brethren, you did it to me” (Mt25:40).He now asks you to meet him there, in every one of our brothers and sisters, and especially in the poor, the despised and the abandoned members of society.What a beautiful encounter that can be!
    214.If we are concerned with helping others, this in no way means that we are turning away from Jesus.Rather, we are encountering him in another way.Whenever we try to help and care for another person, Jesus is at our side.We should never forget that, when he sent his disciples on mission, “the Lord worked with them” (Mk16:20).He is always there, always at work, sharing our efforts to do good.In a mysterious way, his love becomes present through our service.He speaks to the world in a language that at times has no need of words.
    215.Jesus is calling you and sending you forth to spread goodness in our world.His call is one of service, a summons to do good, perhaps as a physician, a mother, a teacher or a priest.Wherever you may be, you can hear his call and realize that he is sending you forth to carry out that mission.He himself told us, “I am sending you out” (Lk10:3).It is part of our being friends with him.For this friendship to mature, however, it is up to you to let him send you forth on a mission in this world, and to carry it out confidently, generously, freely and fearlessly.If you stay trapped in your own comfort zone, you will never really find security; doubts and fears, sorrow and anxiety will always loom on the horizon.Those who do not carry out their mission on this earth will find not happiness, but disappointment.Never forget that Jesus is at your side at every step of the way.He will not cast you into the abyss, or leave you to your own devices.He will always be there to encourage and accompany you.He has promised, and he will do it: “For I am with you always, to the end of the age” (Mt28:20).
    216.In your own way, you too must be a missionary, like the apostles and the first disciples of Jesus, who went forth to proclaim the love of God, to tell others that Christ is alive and worth knowing.Saint Therese experienced this as an essential part of her oblation to merciful Love: “I wanted to give my Beloved to drink and I felt myself consumed with a thirst for souls”.[227]That is your mission as well.Each of us must carry it out in his or her own way; you will come to see how you can be a missionary.Jesus deserves no less.If you accept the challenge, he will enlighten you, accompany you and strengthen you, and you will have an enriching experience that will bring you much happiness.It is not important whether you see immediate results; leave that to the Lord who works in the secret of our hearts.Keep experiencing the joy born of our efforts to share the love of Christ with others.
    CONCLUSION
    217.The present document can help us see that the teaching of the social EncyclicalsLaudato Si’andFratelli Tuttiis not unrelated to our encounter with the love of Jesus Christ.For it is by drinking of that same love that we become capable of forging bonds of fraternity, of recognizing the dignity of each human being, and of working together to care for our common home.
    218.In a world where everything is bought and sold, people’s sense of their worth appears increasingly to depend on what they can accumulate with the power of money.We are constantly being pushed to keep buying, consuming and distracting ourselves, held captive to a demeaning system that prevents us from looking beyond our immediate and petty needs.The love of Christ has no place in this perverse mechanism, yet only that love can set us free from a mad pursuit that no longer has room for a gratuitous love.Christ’s love can give a heart to our world and revive love wherever we think that the ability to love has been definitively lost.
    219.The Church also needs that love, lest the love of Christ be replaced with outdated structures and concerns, excessive attachment to our own ideas and opinions, and fanaticism in any number of forms, which end up taking the place of the gratuitous love of God that liberates, enlivens, brings joy to the heart and builds communities.The wounded side of Christ continues to pour forth that stream which is never exhausted, never passes away, but offers itself time and time again to all those who wish to love as he did.For his love alone can bring about a new humanity.
    220.I ask our Lord Jesus Christ to grant that his Sacred Heart may continue to pour forth the streams of living water that can heal the hurt we have caused, strengthen our ability to love and serve others, and inspire us to journey together towards a just, solidary and fraternal world.Until that day when we will rejoice in celebrating together the banquet of the heavenly kingdom in the presence of the risen Lord, who harmonizes all our differences in the light that radiates perpetually from his open heart.May he be blessed forever.
    Given in Rome, at Saint Peter’s, on 24 October of the year 2024, the twelfth of my Pontificate.
    FRANCIS
    ______________________________
    [1]Many of the reflections in this first chapter were inspired by the unpublished writings of the late Father Diego Fares, S.J.May the Lord grant him eternal rest.
    [2]Cf. HOMER,Iliad, XXI, 441.
    [3]Cf.Iliad, X, 244.
    [4]Cf. PLATO,Timaeus, 65 c-d; 70.
    [5]Homily at Morning Mass in Domus Sanctae Marthae, 14 October 2016:L’Osservatore Romano, 15 October 2016, p. 8.
    [6]SAINT JOHN PAUL II,Angelus, 2 July 2000:L’Osservatore Romano, 3-4 July 2000, p. 4.
    [7]ID.,Catechesis, 8 June 1994:L’Osservatore Romano, 9 June 1994, p. 5.
    [8]The Demons(1873).
    [9]ROMANO GUARDINI,Religiöse Gestalten in Dostojewskijs Werk, Mainz/Paderborn, 1989, pp. 236ff.
    [10]KARL RAHNER,“Some Theses for a Theology of Devotion to the Sacred Heart”, inTheological Investigations, vol. III, Baltimore-London, 1967, p. 332.
    [11]Ibid., p. 333.
    [12]BYUNG-CHUL HAN,Heideggers Herz.Zum Begriff der Stimmung bei Martin Heidegger, München, 1996, p. 39.
    [13]Ibid., p. 60; cf. p. 176.
    [14]Cf. ID.,Agonie des Eros, Berlin, 2012.
    [15]Cf. MARTIN HEIDEGGER,Erläuterungen zu Hölderlins Dichtung, Frankfürt a. M., 1981, p. 120.
    [16]Cf. MICHEL DE CERTEAU,L’espace du désir ou le «fondement» des Exercises Spirituels:Christus77 (1973), pp. 118-128.
    [17]Itinerarium Mentis in Deum, VII, 6.
    [18]ID.,Proemium in I Sent.,q. 3.
    [19]SAINT JOHN HENRY NEWMAN,Meditations and Devotions, London, 1912, Part III [XVI], par. 3, pp. 573-574.
    [20]Pastoral ConstitutionGaudium et Spes, 82.
    [21]Ibid., 10.
    [22]Ibid., 14.
    [23]Cf.DICASTERY FOR THE DOCTRINE OF THE FAITH, DeclarationDignitas Infinita(2 April 2024), 8.Cf.L’Osservatore Romano, 8 April 2024.
    [24]Pastoral ConstitutionGaudium et Spes, 26.
    [25]SAINT JOHN PAUL II,Angelus, 28 June 1998:L’Osservatore Romano, 30 June-1 July 1998, p. 7.
    [26]Encyclical LetterLaudato Si’(24 May 2015),83: AAS 107 (2015), 880.
    [27]Homily at Morning Mass in Domus Sanctae Marthae, 7 June 2013:L’Osservatore Romano, 8 June 2013, p. 8.
    [28]PIUS XII, Encyclical LetterHaurietis Aquas(15 May 1956), I: AAS 48 (1956), 316.
    [29]PIUS VI, ConstitutionAuctorem Fidei(28 August 1794), 63: DH 2663.
    [30]LEO XIII,Encyclical LetterAnnum Sacrum(25 May 1899): ASS 31 (1898-1899), 649.
    [31]Ibid:“Inest in Sacro Corde symbolum et expressa imago infinitæ Iesu Christi caritatis”.
    [32]Angelus, 9 June 2013:L’Osservatore Romano, 10-11 June 2013, p. 8.
    [33]We canthus understand why the Church has forbidden placing on the altar representations of the heart of Jesus or Mary alone (cf. Response of the Congregation of Sacred Rites to the Reverend Charles Lecoq, P.S.S., 5 April 1879:Decreta Authentica Congregationis Sacrorum Rituum ex Actis ejusdem Collecta, vol. III, 107-108, n. 3492).Outside the liturgy, “for private devotion” (ibid.), the symbolism of a heart can be used as a teaching aid, an aesthetic figure or an emblem that invites one to meditate on the love of Christ, but this risks taking the heart as an object of adoration or spiritual dialogue apart from the Person of Christ.On 31 March 1887, the Congregation gave another, similar response (ibid., 187, n. 3673).
    [34]ECUMENICAL COUNCIL OF TRENT, Session XXV, DecreeMandat Sancta Synodus(3 December 1563): DH 1823.
    [35]FIFTH GENERAL CONFERENCE OF THE LATIN AMERICAN AND CARIBBEAN BISHOPS,Aparecida Document(29 June 2007), n. 259.
    [36]Encyclical LetterHaurietis Aquas(15 May 1956), I: AAS 48 (1956), 323-324.
    [37]Ep. 261, 3: PG 32, 972.
    [38]In Io. homil.63, 2: PG 59, 350.
    [39]De fide ad Gratianum, II, 7, 56: PL 16, 594 (ed. 1880).
    [40]Enarr. in Ps. 87, 3: PL 37, 1111.
    [41]Cf.De fide orth. 3, 6, 20: PG 94, 1006, 1081.
    [42]OLEGARIO GONZÁLEZ DE CARDEDAL,La entraña del cristianismo, Salamanca, 2010, 70-71.
    [43]Angelus, 1 June 2008:L’Osservatore Romano, 2-3 June 2008, p. 1.
    [44]PIUS XII, Encyclical LetterHaurietis Aquas(15 May 1956), II: AAS 48 (1956), 327-328.
    [45]Ibid.: AAS 48 (1956), 343-344.
    [46]BENEDICT XVI,Angelus, 1 June 2008:L’Osservatore Romano, 2-3 June 2008, p. 1.
    [47]VIGILIUS,ConstitutionInter Innumeras Sollicitudines(14 May 553):DH 420.
    [48]ECUMENICAL COUNCIL OF EPHESUS,Anathemas of Cyril of Alexandria, 8: DH 259.
    [49]SECOND ECUMENICAL COUNCIL OF CONSTANTINOPLE, Session VIII (2 June 553), Canon 9: DH 431.
    [50]SAINT JOHN OF THE CROSS,Spiritual Canticle, red.A, Stanza 22, 4.
    [51]Ibid., Stanza 12, 8.
    [52]Ibid., Stanza 12, 1.
    [53]“There is one God, the Father, from whom are all things and for whom we exist” (1 Cor8:6).“To our God and Father be glory forever and ever. Amen”(Phil4:20).“Blessed be the God and Father of our Lord Jesus Christ, the Father of mercies and the God of all consolation”(2 Cor1:3).
    [54]Apostolic LetterTertio Millennio Adveniente(10 November 1994), 49: AAS 87 (1995), 35.
    [55]Ad Rom., 7: PG 5, 694.
    [56]“That the world may know that I love the Father” (Jn14:31); “The Father and I are one” (Jn10:30); “I am in the Father and the Father is in me” (Jn14:10).
    [57]“Iam going to the Father” (pros ton Patéra:Jn16:28).“I am coming to you” (pros se:Jn17:11).
    [58]“eis ton kolpon tou Patrós”.
    [59]Adv. Haer., III, 18, 1: PG 7, 932.
    [60]In Joh.II, 2: PG 14, 110.
    [61]Angelus, 23 June 2002:L’Osservatore Romano, 24-25 June 2002, p. 1.
    [62]SAINT JOHN PAUL II,Message on the Hundredth Anniversary of the Consecration of the Human Race to the Divine Heart of Jesus, Warsaw, 11 June 1999, Solemnity of the Sacred Heart of Jesus, 3:L’Osservatore Romano, 12 June 1999, p. 5.
    [63]ID.,Angelus, 8 June 1986:L’Osservatore Romano, 9-10 June 1986, p. 5
    [64]Homily, Visit to the Gemelli Hospital and to the Faculty of Medicine of the Catholic University of the Sacred Heart, 27 June 2014:L’Osservatore Romano, 29 June 2014, p. 7.
    [65]Eph1:5, 7; 2:18; 3:12.
    [66]Eph2:5, 6; 4:15.
    [67]Eph1:3, 4, 6, 7, 11, 13, 15; 2:10, 13, 21, 22; 3:6, 11, 21.
    [68]Message on the Hundredth Anniversary of the Consecration of the Human Race to the Divine Heart of Jesus, Warsaw, 11 June 1999, Solemnity of the Sacred Heart of Jesus, 2:L’Osservatore Romano, 12 June 1999, p. 5.
    [69]“Since there is in the Sacred Heart a symbol and the express image of the infinite love of Jesus Christ that moves us to love one another, it is fit and proper that we should consecrate ourselves to his most Sacred Heart – an act that is nothing else than an offering and a binding of oneself to Jesus Christ, for whatever honour, veneration and love is given to this divine Heart is really and truly given to Christ himself…And now, today, behold another blessed and heavenly token is offered to our sight – the most Sacred Heart of Jesus, with a cross rising from it and shining forth with dazzling splendour amidst flames of love.In that Sacred Heart all our hopes should be placed, and from it the salvation of men is to be confidently besought” (Encyclical LetterAnnum Sacrum[25 May 1899]: ASS 31 [1898-1899], 649, 651).
    [70]“For is not the sum of all religion and therefore the pattern of more perfect life, contained in that most auspicious sign and in the form of piety that follows from it inasmuch as it more readily leads the minds of men to an intimate knowledge of Christ our Lord, and more efficaciously moves their hearts to love him more vehemently and to imitate him more closely?”(Encyclical LetterMiserentissimus Redemptor[8 May 1928]: AAS 20 [1928], 167).
    [71]“For it is perfectly clear that this devotion, if we examine its proper nature, is a most excellent act of religion, inasmuch as it demands the full and absolute determination of surrendering and consecrating oneself to the love of the divine Redeemer whose wounded heart is the living sign and symbol of that love…In it, we can contemplate not only the symbol, but also, as it were, the synthesis of the whole mystery of our redemption…Christ expressly and repeatedly pointed to his heart as the symbol by which men are drawn to recognize and acknowledge his love, and at the same time constituted it as the sign and pledge of his mercy and his grace for the needs of the Church in our time” (Encyclical LetterHaurietis Aquas[15 May 1956], Proemium, III, IV: AAS 48 [1956], 311, 336, 340).
    [72]Catechesis, 8 June 1994, 2:L’Osservatore Romano, 9 June 1994, p. 5.
    [73]Angelus, 1 June 2008:L’Osservatore Romano, 2-3 June 2008, p. 1.
    [74]Encyclical LetterHaurietis Aquas(15 May 1956), IV: AAS 48 (1956), 344.
    [75]Cf.ibid.: AAS 48 (1956), 336.
    [76]“The value of private revelations is essentially different from that of the one public revelation: the latter demands faith…A private revelation… is a help which is proffered, but its use is not obligatory” (BENEDICT XVI, Apostolic ExhortationVerbum Domini[30 September 2010], 14: AAS 102 [2010]), 696).
    [77]Encyclical LetterHaurietis Aquas(15 May 1956), IV: AAS 48 (1956), 340.
    [78]Ibid.: AAS 48 (1956), 344.
    [79]Ibid.
    [80]Apostolic ExhortationC’est la Confiance(15 October 2023), 20:L’Osservatore Romano, 16 October 2023.
    [81]SAINT THERESE OF THE CHILD JESUS,Autobiography, Ms A, 83v°.
    [82]SAINT MARIA FAUSTINA KOWALSKA,Diary, 47 (22 February 1931),Marian Press, Stockbridge, 2011, p. 46.
    [83]Mishnah Sukkah, IV, 5, 9.
    [84]Letter to the Superior General of the Society of Jesus, Paray-le-Monial (France), 5 October 1986:L’Osservatore Romano, 7 October 1986, p. IX.
    [85]Acta Martyrum Lugdunensium, in EUSEBIUS OF CAESARIA,Historia Ecclesiastica, V, 1: PG 20, 418.
    [86]RUFINUS, V, 1, 22, in GCS,EusebiusII, 1, p. 411, 13ff.
    [87]SAINT JUSTIN,Dial.135,3: PG 6, 787
    [88]NOVATIAN,De Trinitate, 29: PL 3, 994; cf. SAINT GREGORY OF ELVIRA,Tractatus Origenis de libris Sanctarum Scripturarum, XX, 12: CSSL 69, 144.
    [89]Expl. Ps.1:33: PL 14, 983-984.
    [90]Cf.Tract. in Ioannem61, 6: PL 35, 1801.
    [91]Ep. ad Rufinum, 3, 4.3: PL 22, 334.
    [92]Sermones in Cant.61, 4: PL 183, 1072.
    [93]Expositio altera super Cantica Canticorum, c. 1: PL 180, 487.
    [94]WILLIAM OF SAINT-THIERRY,De natura et dignitate amoris, 1: PL 184, 379.
    [95]ID.,Meditivae Orationes, 8, 6: PL 180, 230.
    [96]SAINT BONAVENTURE,Lignum Vitae.De mysterio passionis, 30.
    [97]Ibid., 47.
    [98]Legatus divinae pietatis, IV, 4, 4: SCh 255, 66.
    [99]LÉON DEHON,Directoire spirituel des prêtres su Sacré Cœur de Jésus, Turnhout, 1936, II, ch. VII, n. 141.
    [100]Dialogue on Divine Providence, LXXV: FIORILLI M.-CARAMELLA S., eds., Bari, 1928, 144.
    [101]Cf., for example, ANGELUS WALZ,De veneratione divini cordis Iesu in Ordine Praedicatorum, Pontificium Institutum Angelicum, Rome, 1937.
    [102]RAFAEL GARCÍA HERREROS, Vida de San Juan Eudes, Bogotá, 1943, 42.
    [103]SAINT FRANCIS DE SALES,Letter to Jane Frances de Chantal, 24 April 1610.
    [104]Sermon forthe Second Sunday of Lent, 20 February 1622.
    [105]Letter to Jane Frances de Chantal, Solemnity of the Ascension, 1612.
    [106]Letter to Marie Aimée de Blonay, 18 February 1618.
    [107]Letter to Jane Frances de Chantal, late November 1609.
    [108]Letter to Jane Frances de Chantal, ca. 25 February 1610.
    [109]Entretien XIV, on religious simplicity and prudence.
    [110]Letter to Jane Frances de Chantal,10 June 1611.
    [111]SAINT MARGARET MARY ALACOQUE,Autobiography, n. 53.
    [112]Ibid.
    [113]Ibid., n. 55.
    [114]Cf. DICASTERY FOR THE DOCTRINE OF THE FAITH,Norms for Proceeding in the Discernment of Alleged Supernatural Phenomena, 17 May 2024, I, A, 12.
    [115]SAINT MARGARET MARY ALACOQUE,Autobiography, n. 92.
    [116]Letter to Sœur de la Barge, 22 October 1689.
    [117]Autobiography, n. 53.
    [118]Ibid., n. 55.
    [119]Sermon on Trust in God, inŒuvres du R.P de La Colombière, t. 5, Perisse, Lyon, 1854, p. 100.
    [120]Spiritual Exercises in London, 1-8 February 1677, inŒuvres du R.P de La Colombière, t. 7, Seguin, Avignon, 1832, p. 93.
    [121]Spiritual Exercises in Lyon, October-November 1674, ibid., p. 45.
    [122]SAINT CHARLES DE FOUCAULD,Letter to Madame de Bondy, 27 April 1897.
    [123]Letter to Madame de Bondy, 28 April 1901.Cf.Letter to Madame de Bondy, 5 April 1909: “Through you I came to know the adoration of the Blessed Sacrament, the benedictions and the Sacred Heart”.
    [124]Letter to Madame de Bondy, 7 April 1890.
    [125]Letter to l’Abbé Huvelin, 27 June 1892.
    [126]SAINT CHARLES DE FOUCAULD,Méditations sur l’Ancien Testament (1896-1897), XXX, 1-21.
    [127]ID.,Letter to l’Abbé Huvelin, 16 May 1900.
    [128]ID.,Diary, 17 May 1906.
    [129]Letter 67 to Mme. Guérin, 18 November 1888.
    [130]Letter 122 to Céline, 14 October 1890.
    [131]Poem 23, “To the Sacred Heart of Jesus”, June or October 1895.
    [132]Letter 247 to l’Abbé Maurice Bellière, 21 June 1897.
    [133]Last Conversations. Yellow Notebook, 11 July 1897, 6.
    [134]Letter 197 to Sister Marie of the Sacred Heart, 17 September 1896.This does not mean that Therese did not offer sacrifices, sorrows and troubles as a way of associating herself with the suffering of Christ, but that, in the end, she was concerned not to give these offerings an importance they did not have.
    [135]Letter 142 to Céline, 6 July 1893.
    [136]Letter 191 to Léonie, 12 July 1896.
    [137]Letter 226 to Father Roulland, 9 May 1897.
    [138]Letter 258 to l’Abbé Maurice Bellière, 18 July 1897.
    [139]Cf. SAINT IGNATIUS LOYOLA,Spiritual Exercises, 104.
    [140]Ibid., 297.
    [141]Cf.Letter to Ignatius Loyola, 23 January 1541.
    [142]De Vita P. Ignatii et Societatis Iesu initiis, ch. 8.96.
    [143]Spiritual Exercises, 54.
    [144]Ibid., 230ff.
    [145]THIRTY-THIRD GENERAL CONGREGATION OF THE SOCIETY OF JESUS, Decree 46, 1:Institutum Societatis Iesu, 2, Florence, 1893, 511.
    [146]In Him Alone is Our Hope. Texts on the Heart of Christ, St. Louis, 1984.
    [147]Letter to the Superior General of the Society of Jesus, Paray-le-Monial, 5 October 1986:L’Osservatore Romano, 6 October 1986, p. 7.
    [148]Conference to Priests, “Poverty”, 13 August 1655.
    [149]Conference to the Daughters of Charity, “Mortification, Correspondence, Meals and Journeys (Common Rules,art. 24-27), 9 December 1657.
    [150]SAINT DANIELE COMBONI,Gli scritti,Bologna, 1991, 998 (n. 3324).
    [151]Homily at the Mass of Canonization, 18 May 2003:L’Osservatore Romano, 19-20 May 2003, p. 6.
    [152]SAINT JOHN PAUL II, Encyclical LetterDives in Misericordia(30 November 1980), 1: AAS 72 (1980), 1219.
    [153]ID.,Catechesis, 20 June 1979:L’Osservatore Romano, 22 June 1979, 1.
    [154]COMBONIAN MISSIONARIES OF THE HEART OF JESUS,Rule of Life, 3.
    [155]SOCIETY OF THE SACRED HEART,Constitutions of 1982, 7.
    [156]Encyclical LetterMiserentissimus Redemptor(8 May 1928): AAS 20 (1928), 174.
    [157]The believer’s act of faith has as its object not simply the doctrine proposed, but also union with Christ himself in the reality of his divine life (cf. SAINT THOMAS AQUINAS,Summa Theologiae, II-II, q. 1, a. 2, ad 2; q. 4, a. 1).
    [158]PIUS XI, Encyclical LetterMiserentissimus Redemptor(8 May 1928): AAS 20 (1928), 174.
    [159]Homily at the Chrism Mass, 28 March 2024:L’Osservatore Romano, 28 March 2024, p. 2.
    [160]SAINT IGNATIUS LOYOLA,Spiritual Exercises, 203.
    [161]Homily at the Chrism Mass, 28 March 2024:L’Osservatore Romano, 28 March 2024, p. 2.
    [162]SAINT MARGARET MARY ALACOQUE,Autobiography, n. 55.
    [163]Letter 133 to Father Croiset.
    [164]Autobiography, n. 92.
    [165]Encyclical LetterAnnum Sacrum(25 May 1899): ASS 31 (1898-1899), 649.
    [166]IULIANUS IMP.,Ep. XLIX ad Arsacium Pontificem Galatiae, Mainz, 1828, 90-91.
    [167]Ibid.
    [168]DICASTERY FOR THE DOCTRINE OF THE FAITH, DeclarationDignitas Infinita(2 April 2024), 19:L’Osservatore Romano, 8 April 2024.
    [169]Cf. BENEDICT XVI,Letter to the Superior General of the Society of Jesus on the Fiftieth Anniversary of the Encyclical“Haurietis Aquas”(15 May 2006): AAS 98 (2006), 461.
    [170]In Num. homil.12, 1: PG 12, 657.
    [171]Epist. 29, 24: PL 16, 1060.
    [172]Adv.Arium1, 8: PL 8, 1044.
    [173]Tract. in Joannem32, 4: PL 35, 1643.
    [174]Expos. in Ev. S. Joannis, cap. VII, lectio 5.
    [175]PIUS XII, Encyclical LetterHaurietis Aquas, 15 May 1956: AAS 48 (1956), 321.
    [176]SAINT JOHN PAUL II, Encyclical LetterRedemptoris Mater(25 March 1987), 38: AAS 79 (1987), 411.
    [177]SECOND VATICAN ECUMENICAL COUNCIL, Dogmatic ConstitutionLumen Gentium, 62.
    [178]Ibid., 60.
    [179]Sermones super Cant.,XX, 4: PL 183, 869.
    [180]Introduction to the Devout Life, Part III, xxxv.
    [181]Sermon for the XVII Sunday after Pentecost.
    [182]Écrits spirituels, Paris 1947, 67.
    [183]After 19 March 1902, all his letters begin with the wordsJesus Caritasseparated by a heart surmounted by the cross.
    [184]Letter to l’Abbé Huvelin, 15 July 1904.
    [185]Letter to Dom Martin, 25 January 1903.
    [186]Cited in RENÉVOILLAUME, Les fraternités du Père de Foucauld, Paris, 1946, 173.
    [187]Méditations des saints Évangiles sur les passages relatifs à quinze vertus, Nazareth, 1897-1898,Charité(Mt13:3), 60.
    [188]Ibid.,Charité(Mt22:1), 90.
    [189]H. HUVELIN,Quelques directeurs d’âmes au XVII siècle, Paris, 1911, 97.
    [190]Conference, “Service of the Sick and Care of One’s own Health”, 11 November 1657.
    [191]Common Rules of the Congregation of the Mission, 17 May 1658, c. 2, 6.
    [192]Letter to the Superior General of the Society of Jesus, Paray-le-Monial, 5 October 1986:L’Osservatore Romano, 6 October 1986, p. 7.
    [193]SAINT JOHN PAUL II, Post-Synodal Apostolic ExhortationReconciliatio et Paenitentia(2 December 1984), 16: AAS 77 (1985), 215.
    [194]Cf. Encyclical LetterSollicitudo Rei Socialis(30 December 1987), 36: AAS 80 (1988), 561-562.
    [195]Encyclical LetterCentesimus Annus(1 May 1991), 41: AAS 83 (1991), 844-845.
    [196]Catechism of the Catholic Church, 1888.
    [197]Catechesis, 8 June 1994, 2:L’Osservatore Romano, 4 May 1994, p. 5.
    [198]Address to the Participants in the International Colloquium “Réparer L’Irréparable”, on the 350thAnniversary of the Apparitions of Jesus in Paray-le-Monial, 4 May 2024:L’Osservatore Romano, 4 May 2024, p. 12.
    [199]Ibid.
    [200]Homily at Morning Mass in Domus Sanctae Marthae, 6 March 2018:L’Osservatore Romano, 5-6 March 2018, p. 8.
    [201]Address to the Participants in the International Colloquium “Réparer L’Irréparable”, on the 350thAnniversary of the Apparitions of Jesus in Paray-le-Monial, 4 May 2024:L’Osservatore Romano, 4 May 2024, p. 12.
    [202]Homily at the Chrism Mass, 28 March 2024:L’Osservatore Romano, 28 March 2024, p. 2.
    [203]Ibid.
    [204]Ibid.
    [205]Encyclical LetterLaudato Si’(24 May 2015), 80: AAS 107 (2015), 879.
    [206]Catechism of the Catholic Church, No. 1085.
    [207]Ibid., No. 268.
    [208]Autobiography, n. 53.
    [209]Ms A, 84r.
    [210]Ibid.
    [211]Ibid.
    [212]Ms A, 83v.; cf.Letter 226 to Father Roulland, 9 May 1897.
    [213]Act of Oblation to Merciful Love, 9 June 1895, 2r-2v.
    [214]Ms B, 3v.
    [215]Letter 186 to Léonie,11 April 1896.
    [216]Letter 258 to l’Abbé Bellière, 18 July 1897.
    [217]Cf. PIUS XI, Encyclical LetterMiserentissimus Redemptor, 8 May 1928: AAS 20 (1928), 169.
    [218]Ibid.: AAS 20 (1928), 172.
    [219]SAINT JOHN PAUL II, Catechesis, 20 June 1979:L’Osservatore Romano, 22 June 1979, p. 1.
    [220]Homily at Mass in Domus Sanctae Marthae, 27 June 2014:L’Osservatore Romano, 28 June 2014, p. 8.
    [221]Message for the Centenary of the Consecration of the Human Race to the Divine Heart of Jesus, Warsaw, 11 June 1999, Solemnity of the Sacred Heart of Jesus.L’Osservatore Romano, 12 June 1999, p. 5.
    [222]Ibid.
    [223]Letter to the Archbishop of Lyon on the occasion of the Pilgrimage of Paray-le-Monial for the Centenary of the Consecration of the Human Race to the Divine Heart of Jesus, 4 June 1999:L’Osservatore Romano, 12 June 1999, p. 4.
    [224]Conference,“Repetition of Prayer”, 22 August 1655.
    [225]LetterDiserti interpretes(25 May 1965), 4:Enchiridion della Vita Consacrata, Bologna-Milano, 2001, n. 3809.
    [226]Vita NuovaXIX, 5-6: “I declare that, in thinking of its worth, love so sweet makes me feel that, if my courage did not fail me, I would speak out and make everyone else fall in love”.
    [227] Ms A, 45v.

    MIL OSI Europe News

  • MIL-OSI China: World Internet Conference Wuzhen Summit to open in November

    Source: China State Council Information Office 2

    The 2024 World Internet Conference (WIC) Wuzhen Summit is scheduled to take place from Nov. 19 to 22 in the water-town of Wuzhen, located in east China’s Zhejiang Province, and will feature four key highlights, according to a press conference held on Thursday.
    During this year’s summit, a distinguished contribution award will be established to recognize individuals and companies who have made outstanding contributions to the field of the global internet.
    Under the WIC framework, the summit will also see the establishment of a special committee on artificial intelligence (AI), the launch of a think tank cooperation program, and the creation of an international digital training institute.
    Themed “Embracing a People-centered and AI-for-good Digital Future — Building a Community with a Shared Future in Cyberspace,” the 2024 edition will feature 24 sub-forums on topics such as Global Development Initiative, digital economy, and data governance, as well as a series of activities.
    Since 2014, the Wuzhen Summit has been successfully held for ten consecutive years. Currently, the WIC includes about 170 institutions, organizations, companies, and individuals from over 30 countries and regions across six continents as its members.

    MIL OSI China News

  • 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 expenses1,2               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 expenses1,2               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

  • MIL-OSI: Franklin Access Announces Updates to JEXtream MDM Platform

    Source: GlobeNewswire (MIL-OSI)

    SAN DIEGO, Oct. 24, 2024 (GLOBE NEWSWIRE) — Franklin Access unveils significant enhancements to its JEXtream Mobile Device Management (MDM) platform, reinforcing its commitment to providing versatile solutions for enterprise clients and educational institutions.

    Key Updates

    1.  Internet Suspension Feature

    a.  Enables efficient management of internet functionality across individual or multiple devices
    b.  Particularly valuable for corporate clients managing large device fleets

    2.  Single Sign-On (SSO) Integration

    a.  Streamlines access for existing JEXtream customers
    b.  Users can now access additional MDM features directly with their JEXtream login credentials

    3.  Enhanced User Interface

    a.  Improved Device Detail screen for clearer information display
    b.  Advanced Filter and Column selection options for easier customization
    c.  Upgraded Group Assignment feature for more efficient device management

    4. New Dashboard for individual accounts, offering quick insights at a glance

    OC Kim, CEO of Franklin Access, states, “These enhancements to JEXtream MDM demonstrate our commitment to evolving our platform to meet diverse needs. We’re providing our clients with advanced tools for efficient and secure device management in today’s dynamic digital landscape whether it be for enterprise or educational purposes.”

    JEXtream MDM is designed to cater to the distinct needs of various sectors, offering a unified solution with flexible branding to address specific market requirements. This update underscores Franklin Access’s position as a versatile provider of cloud-based MDM solutions, capable of meeting the demands of modern organizations across different industries.

    For more information about JEXtream MDM and its latest features, please visit https://www.jextream.net/mdm

    About Franklin Access
    Franklin Access (FKWL) specializes in integrated solutions, leveraging 4G LTE and 5G technologies. From mobile device management to network management solutions, we design connectivity solutions for the digital age. You will be able to explore more at https://franklinaccess.com/

    For media inquiries, please contact: marketing@franklinaccess.com

    Safe Harbor Statement

    Certain statements in this press release constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Actual results may differ materially from those expressed or implied due to various factors.

    The MIL Network

  • MIL-OSI: Drones Driven by A.I. Are Taking Over Major Industries Including Agriculture, Construction, Military & More

    Source: GlobeNewswire (MIL-OSI)

    PALM BEACH, Fla., Oct. 24, 2024 (GLOBE NEWSWIRE) — FN Media Group News Commentary – Artificial intelligence (AI) and drones are a formidable combo that has the potential to transform a variety of industries. When coupled, they build intelligent and autonomous airborne systems capable of completing complicated tasks in a variety of conditions. Because of this, the combination of artificial intelligence and drone technology offers new aerial technological developments for various industries, including agriculture, construction, energy, and security, as well as a solution to many aerial imagery demands. Factors such as technological advancements, growing need for automation and efficiency, and the increasing adoption of drones in the Logistics and Delivery, Agriculture and Precision Farming, Disaster Management and Search & Rescue, Environmental Monitoring and Industrial sectors are boosting the adoption of AI solutions in the UAV landscape. A report from Knowledge Sourcing Intelligence projected that the Artificial Intelligence in drone market size is projected to show steady growth during the forecast period (2024-2029). The report said: “Booming drone adoption in the sector boosts AI in drone market growth. Drones driven by AI are taking over major sectors such as agriculture, serving as industrious field workers. They minimize human effort while monitoring crop health, accurately locating pests, and applying irrigation to maximize production and optimize resource use. The movement known as “precision agriculture” is revolutionizing the way of raising food. According to the January 2022 Press Release Bureau, the government is extending financial support under the “Sub-Mission on Agriculture Mechanization” to encourage the use of drones in agriculture. The Agriculture Ministry will give agricultural institutions grants of up to Rs. 10 lakhs so the farmers can buy drones. When it comes to drone demonstrations on farmer fields Farmer’s Producers Organizations (FPOs) can receive funds for up to 75% of the total cost of the drone. The initiatives and factors supporting agriculture enhance the drone market.” Active Tech Companies in the markets today include ZenaTech, Inc. (NASDAQ: ZENA), Palantir Technologies Inc. (NYSE: PLTR), QUALCOMM Incorporated (NASDAQ: QCOM), AgEagle Aerial Systems Inc. (NYSE: UAVS), Draganfly Inc. (NASDAQ: DPRO).

    “The growing need for automation in logistics propels AI in drone market. Industries these days need effective and automated ways to handle logistics jobs. Drones and AI together present an attractive alternative for companies looking to increase productivity and accuracy as they save labor expenses and increase productivity by automating operations that were previously done by hand. By the end of 2024, Prime Air plans to expand internationally into Italy and the UK, in addition to starting drone deliveries in the United States. Similarly, in October 2023, Amazon Pharmacy launched drone delivery of pharmaceuticals. Eligible consumers in College Station, Texas, can now have their drugs delivered to their homes via drone within 60 minutes of placing their purchase with Amazon Pharmacy.”

    ZenaTech Inc. (NASDAQ:ZENA) Issues Big Development News Today on Adding Patent Assets to the Company – Get the full details by visiting: https://www.financialnewsmedia.com/news-zena/

    Additional Groundbreaking ZenaTech Inc. Developments this week include:

    ZenaTech Announced a Software Company Acquisition Adding Significant Capabilities to Building AI Drones – ZenaTech also announced that it has entered into an agreement to acquire ZooOffice Inc., the holding company for software companies Jadian and DeskFlex, from ZenaTech’s former parent company. The acquisition of these two software companies will provide important compliance and inspection software as well as scheduling and mapping software that will be incorporated into ZenaTech’s ZenaDrone AI drone solutions. This transaction further expands ZenaTech’s portfolio of SaaS software solutions and customer base and is expected to add to recurring revenue in the government sector among others. The acquisition is subject to shareholder and regulatory approvals that may be required.

    “Adding Jadian and DeskFlex software capabilities to the ZenaTech portfolio is part of our strategy to offer full stack, integrated AI drone solutions targeted to multiple sectors such as Agriculture. Jadian’s compliance software will be integrated with ZenaDrone drone hardware and sensors to help farmers track and manage regulatory and environmental requirements such as crop traceability, fertilizer and pesticide use, water conservation, and greenhouse gas emissions. Deskflex scheduling and mapping software will add value integrated into our property management sector solutions,” said CEO Shaun Passley, Ph.D. Read this full release at: https://finance.yahoo.com/news/zenatech-announces-software-company-acquisition-113000656.html

    Other recent developments in the technology industry include:

    Edgescale AI Inc. and Palantir Technologies Inc. (NYSE: PLTR) recently announced a strategic partnership to deliver Live Edge, a groundbreaking combination of Palantir Edge AI and Edgescale AI distributed infrastructure technology, designed to operationalize artificial intelligence (AI) in manufacturing, utilities, and other complex industrial environments.

    AI is reshaping the world and transforming our relationship with technology, yet applying AI to operational technology in industries and critical infrastructure remains a challenge. So long as the complexity and operational burden of activating machines, equipment, vehicles, and sensors in physical systems remains high, we only achieve a fraction of AI’s true potential for automating our technology and improving our lives.

    QUALCOMM Incorporated (NASDAQ: QCOM) recently announced that, through its subsidiary Qualcomm Technologies, Inc., Aramco, and Saudi Arabia’s Research, Development and Innovation Authority (RDIA) are planning to launch Design in Saudi Arabia (DISA). DISA is envisaged to be an incubator program for Saudi Arabia that aims to support startups that are adopting AI, Internet of Things (IoT), and wireless technologies for industrial use cases.

    This initiative aims to support early-stage startups in the high-tech sector by guiding them from product design and development to commercialization. It aims to provide a comprehensive suite of support that includes technical assistance, business coaching, and intellectual property (IP) training, all aimed at enhancing the Kingdom’s technology ecosystem. Should this initiative materialize, startups would gain access to resources such as Qualcomm Technologies and Aramco’s industrial experience and RDIA’s strategic guidance.

    AgEagle Aerial Systems Inc. (NYSE: UAVS) a leading provider of best-in-class unmanned aerial systems (UAS), sensors and software solutions for customers worldwide in the commercial and government verticals, recently issued a Letter to Stockholders from Company CEO Bill Irby.

    Dear Stockholders: First, I want to extend my appreciation for the trust and confidence you have placed in AgEagle. Upon taking over as CEO from Grant Begley (former interim CEO and current Board Chairman), we have been evolving and advancing AgEagle toward the creation of maximum long-term shareholder value.

    To fund our aggressive growth plans, we recently completed a $6.5M capital raise. The market’s reaction was a continued decline in our stock price. It became necessary to plan and execute a 50:1 reverse stock split. Our trading was halted October 4th but has since resumed, and I am truly optimistic regarding the path ahead as I believe that the company is currently under-valued… In conclusion, through a combination of our key initiatives, growing demand, and demonstrated progress in our newest market, I believe AgEagle is on the correct path to increase long-term shareholder value. We appreciate your continued support. Sincerely, Bill Irby, CEO

    Draganfly Inc. (NASDAQ: DPRO), an award-winning, industry-leading developer of drone solutions and systems, recently announced its participation in the upcoming Wings of Saskatchewan event in Regina, from October 30 to October 31, 2024. Draganfly will showcase its latest drone technology advancements, contributing to discussions on industry trends, safety, and regulatory considerations alongside key stakeholders in the aviation sector.

    The Wings of Saskatchewan Conference, hosted by the Saskatchewan Aerial Applicators Association and the Saskatchewan Aviation Council, serves as a vital gathering for the aviation community. This year’s event will bring together leaders from both civil and commercial aviation sectors to discuss technological advancements, regulatory updates, and future trends within the industry.

    About FN Media Group:
    At FN Media Group, via our top-rated online news portal at www.financialnewsmedia.com, we are one of the very few select firms providing top tier one syndicated news distribution, targeted ticker tag press releases and stock market news coverage for today’s emerging companies. #tickertagpressreleases #pressreleases

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    DISCLAIMER: FN Media Group LLC (FNM), which owns and operates FinancialNewsMedia.com and MarketNewsUpdates.com, is a third party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated in any manner with any company mentioned herein. FNM and its affiliated companies are a news dissemination solutions provider and are NOT a registered broker/dealer/analyst/adviser, holds no investment licenses and may NOT sell, offer to sell or offer to buy any security.  FNM’s market updates, news alerts and corporate profiles are NOT a solicitation or recommendation to buy, sell or hold securities. The material in this release is intended to be strictly informational and is NEVER to be construed or interpreted as research material. All readers are strongly urged to perform research and due diligence on their own and consult a licensed financial professional before considering any level of investing in stocks. All material included herein is republished content and details which were previously disseminated by the companies mentioned in this release.  FNM is not liable for any investment decisions by its readers or subscribers. Investors are cautioned that they may lose all or a portion of their investment when investing in stocks. For current services performed FNM has been compensated forty nine hundred dollars for news coverage of the current press releases issued by ZenaTech, Inc. by the Company. FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.

    This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future expectations, plans, results, or strategies and are generally preceded by words such as “may”, “future”, “plan” or “planned”, “will” or “should”, “expected”, “anticipates”, “draft”, “eventually”, or “projected”. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company’s annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and FNM undertakes no obligation to update such statements.

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    SOURCE: FN Media Group

    The MIL Network

  • MIL-OSI Economics: Siemens and Microsoft scale industrial AI

    Source: Microsoft

    Headline: Siemens and Microsoft scale industrial AI

    • Siemens and Microsoft have taken the Siemens Industrial Copilot to the next level, to handle demanding environments at scale
    • Over 100 customers in Europe and the US are using the Siemens Industrial Copilot to improve efficiency, cut downtime, and address labor shortages
    • thyssenkrupp Automation Engineering is planning a global rollout of Copilot beginning 2025
    • More than 120,000 engineers can now leverage the Copilot, upskilling experts and workers in programming with Gen AI

    BERLIN — Oct. 24, 2024 — Siemens is revolutionizing industrial automation with Microsoft. Through their collaboration, they have taken the Siemens Industrial Copilot to the next level, enabling it to handle the most demanding environments at scale. Combining Siemens’ unique domain know-how across industries with Microsoft Azure OpenAI Service, the Copilot further improves handling of rigorous requirements in manufacturing and automation.

    Over 100 companies, including Schaeffler and thyssenkrupp Automation Engineering, are currently using the Siemens Industrial Copilot to streamline processes, address labor shortages, and drive innovation. With 120,000 users already leveraging the Siemens engineering software, they now have the opportunity to enhance their work with the Gen AI-powered assistant.

    Co-creation partner thyssenkrupp Automation Engineering is now the first to plan to use the Copilot globally. Beginning in early 2025, their machines will be engineered with the assistant, fully unleashing its potential across their entire product range. The rollout will take place globally. Siemens is pioneering the offering of Gen AI for automation engineering in the industry and has made this capability easily accessible on the Siemens Xcelerator open digital business platform.

    “The collaboration between Siemens and Microsoft marks a pivotal moment in the industrial sector; one where AI Transformation becomes a cornerstone for innovation and operational efficiency,” said Judson Althoff, executive vice president and chief commercial officer at Microsoft. “By integrating Microsoft Azure OpenAI Service into Siemens’ industrial solutions, we are equipping companies with cloud-based AI tools to simplify complex challenges, drive productivity, and help them stay competitive in an increasingly dynamic environment.”

    “Together with Microsoft we scale industrial AI, empowering our customers throughout the industry to become more resilient, competitive and sustainable. thyssenkrupp Automation Engineering shows how customers can use Siemens Industrial Copilot even in highly demanding environments as a major efficiency boost,” said Cedrik Neike, Member of the Managing Board of Siemens AG and CEO of Digital Industries.

    Since the product’s availability in July 2024, customers across various sectors have started using Siemens Industrial Copilot for Engineering to boost efficiency. Engineers can now create panel visualizations in 30 seconds and generate code that requires only 20% adaptation.

    This streamlines workflows, reducing manual effort and addressing the skilled labor shortage. The chat function also provides instant, precise answers, eliminating the need for lengthy searches. By leveraging the Copilot, companies are driving productivity and innovation.

    Transforming battery quality assurance with Siemens Industrial Copilot

    thyssenkrupp Automation Engineering exemplifies the Siemens Industrial Copilot’s transformative potential at scale, particularly in complex control, such as development of automated systems for the production of battery and hydrogen assembly lines. One of their machines helps ensure quality of batteries for electric cars, a crucial factor in the sustainable energy transition and the industry’s reliance on 100% reliable batteries. Sensors, cameras, and measurement systems are integrated to monitor battery cell quality across multiple stages, conducting complex evaluations to detect discharges beyond set thresholds.

    The Siemens Industrial Copilot supercharges the development and operation of this battery machine by automating repetitive tasks like data management, sensor configuration, and the crucial reporting of each step necessary to meet strict battery inspection requirements. Generally, the Copilot supports engineering by handling both routine and essential documentation tasks. This allows the engineers to focus on complex, value-added work, while its real-time problem-solving capabilities minimize downtime and ensure smooth production.

    “Siemens Industrial Copilot will prospectively ease our workload and address the pressing challenges of labor shortages and increasing complexity in battery testing. This AI-powered solution will be a game-changer for our industry, and we will actively roll it out across our machines,” said Dr. Volkmar Dinstuhl, Member of the Executive Board of thyssenkrupp AG and CEO of thyssenkrupp Automotive Technology.

    Siemens will share more details on Siemens Industrial Copilot at the SPS expo in Nuremberg, Germany, in November 2024.

    This press release along with press photos and other materials can be found at:

    https://sie.ag/2s6zEA

    Contacts for journalists 

    Siemens AG

    Jil Huber

    Phone: +49 162 3474144; email: [email protected]

    Microsoft 

    WE Communications for Microsoft

    Phone: (425) 638-7777; email: [email protected]

    thyssenkrupp AG 

    Sarah Grassmann

    Phone: +49 152 28277427; email: [email protected]

    Follow us at www.x.com/siemens_press

    For further information: www.siemens.com/industrial-copilot and siemens.com/sps-fair

    Siemens AG (Berlin and Munich) is a leading technology company focused on industry, infrastructure, mobility, and healthcare. The company’s purpose is to create technology to transform the everyday, for everyone. By combining the real and the digital worlds, Siemens empowers customers to accelerate their digital and sustainability transformations, making factories more efficient, cities more livable, and transportation more sustainable. Siemens also owns a majority stake in the publicly listed company, Siemens Healthineers, a leading global medical technology provider shaping the future of healthcare.

    In fiscal 2023, which ended on September 30, 2023, the Siemens Group generated revenue of €74.9 billion and net income of €8.5 billion. As of September 30, 2023, the company employed around 305,000 people worldwide on the basis of continuing operations. Further information is available on the Internet at www.siemens.com.

    About Microsoft

    Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

    About thyssenkrupp Automotive Technology   

    thyssenkrupp Automotive Technology is a leading supplier and development partner to the international automotive industry. Its range of products and services includes high-tech components and systems as well as automation solutions for vehicle production. The product range includes chassis technologies such as steering and damping systems and the assembly of axle systems as well as drive train components for conventional and alternative drives. thyssenkrupp Automotive Technology also develops assembly lines for body-in-white construction and produces lightweight body parts in series. The business area generated sales of 7.9 billion euros in fiscal year 2022/23. We also specialize in the production of springs and stabilizers for various vehicle types, as well as components and systems for tracked vehicles. Automotive Technology has a global production network with more than 90 locations in Europe, Asia, and North and South America.

    MIL OSI Economics

  • MIL-OSI: Tomarket Hits 40M Users, Gearing Up For $TOMA Token Launch

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Oct. 24, 2024 (GLOBE NEWSWIRE) — Tomarket, the leading mini-app in the TON ecosystem, has hit a major milestone with 40 million users just four months after launch. This explosive growth comes alongside the announcement of its new token, $TOMA, set to debut during its Token Generation Event (TGE) on October 31. This rapid growth reflects the platform’s appeal and effectiveness in engaging users within the dynamic Web3 space.

    Tomarket is preparing to host its Token Generation Event (TGE) for the new token, $TOMA, on October 31 at 23:59 (GMT+8). To qualify for tokens during the TGE, users must add the tomato emoji and achieve at least bronze level in the Tomarket Level System. This event represents a significant milestone in Tomarket’s ongoing evolution and expansion of its offerings. For more details about the TGE, please refer to Tomarket’s Telegram announcement.

    Since its launch in July, Tomarket has rapidly grown, leveraging the popularity of its tomato drop game to attract a large user base on Telegram. The game offers an engaging way for users to join the TON ecosystem by collecting Tomato points through activities like drops, farming, and referrals. In just five days, Tomarket amassed over 1 million users and has since surged past 40 million, with more than 10 million wallet connections within four months.

    Key to this remarkable growth is Tomarket’s community of over 200 dedicated ambassadors worldwide, who passionately promote the platform while nurturing local connections. Additionally, Tomarket has partnered with Bitget Wallet to drive innovation within the TON ecosystem, providing rewards and gas subsidies to users exploring new features, further fueling its rapid expansion.

    Miles, Core Contributor of Tomarket team, commented, “The TGE is just the beginning. With $TOMA, we’re not just launching a token; we’re creating an integrated ecosystem that puts users first. Our mission is to deliver long-term value through innovative solutions. Backed by Foresight X and Bitget Wallet, we’re ready to experiment and lead the next wave of innovation in the TON ecosystem.”

    About Tomarket

    Tomarket is your all-in-one platform for gaming, earning, and trading on Telegram & TON. No more jumping between different platforms—play games, earn tokens, and trade them all in one place. Tomarket is backed by Foresight X and Bitget Wallet. 

    For more information: Website |  Twitter |  Telegram

    For media inquiries, users can contact media@tomarket.ai

    Contact

    PR team
    media@tomarket.ai

    The MIL Network

  • MIL-OSI: Bitget lists Piggy Piggy Coin (PGC) on Pre-market for Advance Trading Orders

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Oct. 24, 2024 (GLOBE NEWSWIRE) —

    Bitget, the leading cryptocurrency exchange and Web3 company, has announced the listing of PiggyPiggy Coin (PGC) in its Pre-market allowing users to place buy and sell orders prior to its launch. The pre-market period started on October 22nd, 2024, 10:00 (UTC), with spot trading beginning shortly after. This early trading option is designed to give users an opportunity to participate in the PCG market prior to its full availability.

    Bitget’s pre-market trading platform allows users to engage in over-the-counter transactions of new tokens before their official listing. This feature offers a peer-to-peer marketplace where buyers and sellers can negotiate prices, facilitating advanced liquidity and strategic investment opportunities. Participants can secure coins at favorable prices, allowing for optimized investments without the immediate need for sellers to possess the coins.

    PiggyPiggy Coin (PGC), produced by FunKing Studio, is launching its first token, $PPT, through a highly developed TG Bot-based mini-game that offers 100% token airdrops. Players can earn a daily minimum salary of $2, with higher earnings available by inviting friends. The project has significant traffic, with over 57K Twitter followers and strong engagement across Telegram channels. FunKing Studio has reportedly secured $3 million in equity investment from prominent firms like IDG Capital, KuCoin Ventures, Opta, and Sportsbet.

    Bitget’s introduction of PGC through its pre-market mechanism shows the platform’s strategy to provide users early access to emerging blockchain projects. This early engagement benefits both the token’s market exposure and user participation, making it an integral part of Bitget’s expanding crypto ecosystem.

    Bitget has established itself as one of the leading crypto spot trading platforms, offering a diverse selection of over 800 coins and more than 900 trading pairs across various ecosystems, including Ethereum, Solana, Base, and recently, TON. The pre-market platform, launched in April 2024, has facilitated early access to over 150 high-profile projects such as EigenLayer (EIGEN), Zerolend (ZERO), Notcoin (NOT), and ZkSync (ZKSYNC), providing a unique opportunity for investors to engage with emerging tokens at an early stage. The addition of PGC to this lineup further enhances Bitget’s commitment to offering users access to promising Web3 projects.

    PGC’s introduction on Bitget’s platform signifies a growing interest in Telegram-based projects that incorporate both gaming mechanics and financial elements, creating a symbiotic relationship between entertainment and decentralized finance. This listing is expected to attract a diverse range of participants, from avid gamers to crypto enthusiasts, who are eager to explore and invest in the evolving landscape of blockchain.

    For more information on PGC, please visit here.

    About Bitget

    Established in 2018, Bitget is the world’s leading cryptocurrency exchange and Web3 company. Serving over 45 million users in 150+ countries and regions, the Bitget exchange is committed to helping users trade smarter with its pioneering copy trading, AI bot and other trading solutions. Bitget Wallet is a world-class multi-chain crypto wallet that offers an array of comprehensive Web3 solutions and features including wallet functionality, swap, NFT Marketplace, DApp browser, and more. Bitget inspires individuals to embrace crypto through collaborations with credible partners, including being the Official Crypto Partner of the World’s Top Professional Football League, LALIGA, in EASTERN, SEA and LATAM, as well as a global partner of Olympic Athletes Buse Tosun Çavuşoğlu (Wrestling world champion), Samet Gümüş (Boxing gold medalist) and İlkin Aydın (Volleyball national team).

    For more information, users can visit: Website | Twitter | Telegram | LinkedIn | Discord | Bitget Wallet

    For media inquiries, users can contact: media@bitget.com

    Risk Warning: Digital asset prices may fluctuate and experience price volatility. Only invest what you can afford to lose. The value of your investment may be impacted and it is possible that you may not achieve your financial goals or be able to recover your principal investment. You should always seek independent financial advice and consider your own financial experience and financial standing. Past performance is not a reliable measure of future performance. Bitget shall not be liable for any losses you may incur. Nothing here shall be construed as financial advice.

    Contact

    Public Relations
    Simran A
    Bitget
    media@bitget.com

    The MIL Network

  • 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.

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