Category: Internet

  • MIL-OSI Asia-Pac: Future Ready: India’s Digital Economy to Contribute One-Fifth of National Income by 2029-30

    Source: Government of India

    Posted On: 28 JAN 2025 7:23PM by PIB Delhi

    The Indian economy has been digitalising at a remarkable pace over the last decade. Quantifying and understanding the role of the digital economy in driving economic growth, employment, and sustainable development are essential for both policymakers and the private sector. According to the State of India’s Digital Economy Report 2024, India is the third largest digitalised country in the world in terms of economy-wide digitalization, and 12th among the G20 countries in the level of digitalisation of individual users.

    India’s digital economy is expected to grow almost twice as fast as the overall economy, contributing to nearly one-fifth of national income by 2029-30. This means that, in less than six-years, the share of digital economy will become larger than that of agriculture or manufacturing in the country. In the short run, the highest growth is likely to come from the growth of digital intermediaries and platforms, followed by higher digital diffusion and digitalisation of the rest of the economy. This will eventually lower the share of digitally enabling ICT industries in the digital economy.

    India’s digital economy has emerged as a significant contributor to its economic growth, accounting for 11.74% of the GDP (INR 31.64 lakh crore or USD 402 billion) in 2022-23. Employing 14.67 million workers (2.55% of the workforce), the digital economy is nearly five times more productive than the rest of the economy. The digitally enabling industries such as ICT services and manufacturing of electronic components, computers, and communication equipment, which form the core, contributed 7.83% of GVA (Gross Value Added), while digital platforms and intermediaries added another 2% of GVA. Furthermore, digitalisation in traditional sectors like BFSI, retail, and education added 2% of GVA, showcasing the pervasive impact of digital transformation. Projections indicate the digital economy’s share will grow to 20% of GVA by 2029-30, outpacing agriculture and manufacturing. Key growth drivers include the rapid adoption of AI, cloud services, and the rise of global capability centers (GCCs), with India hosting 55% of the world’s GCCs. GCCs are offshore centres established by multinational corporations to provide a variety of services to their parent organisations, including R&D, IT support, and business process management.

    India’s progress in digital advancements

    Source: ESTIMATION AND MEASUREMENT OF INDIA’S DIGITAL ECONOMY REPORT, January 2025 (Page 15)

    Digitalisation of traditional sectors

    The primary survey and stakeholder discussions highlighted interesting facts about how different sectors are digitalising and their contribution to the revenue generated by firms. Not all aspects of businesses are digitalising uniformly. For example, retail sales are digitalising much more than wholesale sales. Firms are also investing in digital methods for customer acquisition and business development. Chatbots and AI applications are fairly commonplace.

    • In the BFSI sector, over 95% of banking payment transactions are digital, but revenue-generating activities like loans and investments remain largely offline, with financial services less digitalised overall.
    • Retail is shifting to omni-channel models, with e-tailers adding physical stores, while AI chatbots and digital inventory tools enhance efficiency.
    • Education has begun adopting offline, online, and hybrid models, with most institutions favoring hybrid approaches
    • Hospitality and logistics are embracing AI, metaverse, and digital tools, with large firms fully digitalising operations, while smaller players lag behind.

    The Way Forward

    By 2030, India’s digital economy is projected to contribute nearly one-fifth of the country’s overall economy, outpacing the growth of traditional sectors. Over the past decade, digital-enabling industries have grown at 17.3%, significantly higher than the 11.8% growth rate of the economy as a whole. Digital platforms, in particular, have expanded rapidly, with an anticipated growth rate of approximately 30% in the coming years. In 2022-23, the digital economy accounted for 14.67 million workers, or 2.55% of India’s workforce, with the majority of these jobs (58.07%) in the digital-enabling industry. Though the workforce is predominantly male, digital platforms have contributed to increasing job opportunities for women, especially in sectors where mobility and safety concerns were previously barriers.

    India’s digital economy is a key driver of both economic growth and employment, with an increasing role in empowering women in the workforce and creating new opportunities across various sectors. The rapid expansion of digital platforms signals an ongoing transformation that is set to shape the future of work in India.

    References:

    https://pib.gov.in/PressReleasePage.aspx?PRID=2095260

    https://www.meity.gov.in/writereaddata/files/Report_Estimation_Measurement.pdf

    Click here to see in PDF:

    Santosh Kumar/ Sarla Meena/ Kritika Rane

    (Release ID: 2097125) Visitor Counter : 74

    MIL OSI Asia Pacific News

  • MIL-OSI Asia-Pac: Tripura becomes first North East State to sign MoU with Bhashini for Multi-lingual Governance

    Source: Government of India (2)

    Posted On: 28 JAN 2025 4:12PM by PIB Delhi

    The Government of Tripura, has signed a MOU agreement with Digital India Bhashini Division (DIBD) of the Ministry of Electronics and Information Technology (MeitY), Government of India, under the esteem guidance of Hon’ble Chief Minister Prof. Dr. Manik Saha, marking a significant milestone in the state’s efforts to  increase the usage of the rich regional languages of Tripura and to facilitate citizen’s digital participation by using these languages in governance.

    The MOU signing ceremony was held at Pragna Bhavan in Agartala, during a State Level Workshop- ‘Bhashini Rajyam”  which was inaugurated  by Shri Pranajit Singha Roy, Hon’ble IT Minister of Tripura, in presence of  Shri Kiran Gitte, Secretary IT, Government of Tripura,   Shri Amitabh Nag, Chief Executive Officer (CEO), DIBD, MeitY  and  Shri Jeya Ragul Geshan B, Director IT, Government of Tripura. Bhashini is a revolutionary initiative under the Digital India program, to ensure seamless communication and internet accessibility for all Citizens in 22 Indian languages. With Voice as a medium, Bhashini aims to bridge digital as well as the literacy divides.

    The workshop outlined Bhashini’s vision for Digital Inclusivity, showcasing its software capabilities such as real-time translation, speech-to-text, text-to-speech, and voice-to-voice translation between Indian Regional Languages and English. It highlighted the use of Artificial Intelligence (AI) and Natural Language Processing (NLP) for high accuracy translations and emphasized the State’s, DIBD’s roles and responsibilities in the mission. Additionally, strategies for promoting regional languages on digital platforms and software applications for the Government of Tripura were discussed to reduce the digital divide and increase inclusivity for diverse linguistic communities in Tripura.

    Currently many citizens of Tripura face challenges due to language barriers, especially those in rural and tribal areas who struggle with software systems in English or Hindi. Bhashini can integrate with existing systems like the CM Helpline, eVidhan, Kisan Sahayata App and e-Districts to enable multilingual communication. It can enhance local governance through apps like Amar Sarkar and improve education with multilingual technologies. Bhashini can also support the CCTNS Platform by translating FIRs and enabling voice-based data entry. Bhashini would reduce the digital divide by easing access to Internet in regional and local languages of Tripura.

    Tripura proudly stands as the first north-eastern state, the first in eastern India, and the eighth state in the country to sign a Memorandum of Understanding (MOU) with Bhashini. This pioneering step underscores Tripura’s commitment to digital inclusivity and leveraging technology for enhanced citizen centric governance. Tripura’s initiative places it among pro-Citizen states that have conducted focused workshops on Bhashini, with only four other states having taken similar steps before.

    Integrating Bhashini into Tripura’s e-Governance software will bridge the digital divide, providing cost-effective translations, promoting inclusive policy implementation, and enhancing regional identity. This MOU marks a pivotal step in ensuring the seamless integration of Bhashini with Tripura’s governance systems. Supported by the Digital India Bhashini Division (DIBD) of MeitY, this initiative empowers citizens by eliminating language barriers and enabling multilingual access to essential services. Implementing Bhashini will further unify Tripura’s linguistic diversity, fostering a more inclusive and connected society.

    *****

    Dharmendra Tewari/Kshitij Singha

    (Release ID: 2096998) Visitor Counter : 48

    MIL OSI Asia Pacific News

  • MIL-OSI Asia-Pac: Department of Chemicals & petrochemicals conducts 4th training programme on “Chemical and Petrochemical Industrial Safety” at Chennai; motto: “Safety First, Sustainability Always: Protecting People and Planet!”

    Source: Government of India

    Posted On: 28 JAN 2025 3:41PM by PIB Delhi

    As a part of Government of India’s Action Plan for Viksit Bharat@2047, the Department of Chemicals and Petrochemicals conducted 4th training programme on “Chemical and Petrochemical Industrial Safety” at Chennai during 23-24th January 2025 at Institute of Petrochemicals Technology (IPT) – Chennai, a centre of Central Institute of Petrochemicals Engineering & Technology (CIPET), with focus on Major Accident Hazard (MAH) units in Chemical and Petrochemical Sector.

    This program is the part of a series of training programmes that are being organised by the Department on Industrial Chemical Safety covering 2393 Major Accident Hazard units identified across the country. A total of 48 training programmes are planned to cover all these MAH Units over the period of next five years. This training programme witnessed participation of 113 representatives across 65 MAH industries.

    Technical Experts from CLRI, Anna University, Dr. MGR Educational and Research Institute, Thirumalai Chemicals and various consulting firms delivered lectures on various aspects related to safety, Environment & Hazardous waste Management.

    Thematic areas that were covered under the training programme included Safety & Health at work, Process safety Management, Advance Risk Assessment techniques, Toxicology, Hazard Identification techniques, Emergency preparedness, Role of ICT and other technologies in Chemical Safety, Global Harmonized System, Loss statistics and loss Prevention, Environmental Prevention and Spill prevention, Hazardous Waste Management, Labelling of chemicals and Safety data Sheet (SDS) & Fire and Explosion Safety.

    To give the industrial employees a hands on experience, a mock drill was also conducted in coordination with Kothari Petrochemicals at CIPET: IPT Chennai.

    ****

    MV/AKS

    (Release ID: 2096965) Visitor Counter : 49

    MIL OSI Asia Pacific News

  • MIL-OSI USA: Attorney General James Secures $450,000 from Companies Selling Home Security Cameras that Failed to Secure Private Videos

    Source: US State of New York

    NEW YORK – New York Attorney General Letitia James secured $450,000 from three companies that distribute eufy home security video cameras for failing to secure consumers’ private home security videos. The companies, Fantasia Trading LLC, Power Mobile Life LLC, and Smart Innovation, LLC distribute a line of video cameras, video doorbells, and video smart locks under the eufy brand. An investigation by the Office of the Attorney General (OAG) found that video streams from the cameras were not always securely encrypted and could be accessible to anyone with the relevant link without authentication. The settlement requires these companies to take steps to ensure stronger protections for customers’ data and pay $450,000 in penalties and costs.

    “New Yorkers buy home security cameras to protect themselves and their homes,” said Attorney General James. “The eufy cameras’ poor data security allowed anyone to access people’s security camera footage, defeating the purpose of having a home security system. Today my office is taking steps to ensure eufy cameras’ developers improve their data security so that New Yorkers home security footage is private and protected.”

    In November 2022, a security researcher publicly disclosed tests indicating that marketing claims about the eufy products’ security and “end-to-end encryption” of data might not be accurate. The OAG opened an investigation focused on a line of eufy-branded internet-enabled video cameras, video doorbells, and video locks distributed by Fantasia Trading, Power Mobile Life, and Smart Innovation. The marketing for these home security products assured consumers that their data would be kept private and secure.

    The OAG’s investigation revealed that, in certain situations, video sent over the internet from eufy home security products was not protected by end-to-end encryption, and that at least a portion of the connection did not use any type of encryption at all. The investigation also uncovered that an active video stream could be accessed by anyone with the relevant URL, without authentication, and that it may have been possible to deduce the URL without obtaining it from a user. The companies had not previously identified these security vulnerabilities because they did not have the necessary processes in place to test their safeguards or to identify risks to the security and privacy of consumers’ video.

    As a result of this settlement, Fantasia Trading, Power Mobile Life LLC, and Smart Innovation will pay $450,000 in penalties and costs and take steps to ensure the eufy home security products they sell better protect consumers’ private videos. The agreement requires that the companies regularly substantiate that the developer of the eufy home security products:

    • Maintains a comprehensive information security program designed to protect the security, confidentiality, and integrity of consumer information;
    • Uses secure software development processes, including the use of third-party tools for testing software for security vulnerabilities;
    • Maintains a vulnerability management program that includes regular penetration testing and vulnerability testing; and
    • Implements appropriate encryption processes, including the encryption of video in storage and in transit.

    Today’s announcement continues Attorney General James’ efforts to protect New Yorkers’ personal information and hold companies accountable for their poor data security practices. Last month, Attorney General James secured $500,000 from an auto insurance company for failing to protect New Yorkers’ data.  In November 2024, Attorney General James and DFS Superintendent Adrienne Harris secured $11.3 million from GEICO and Travelers for having poor data security. In October 2024, Attorney General James secured $2.25 million from a Capital Region health care provider for failing to protect the private information and medical data of New Yorkers. In August 2024, Attorney General James and a multistate coalition secured $4.5 from a biotech company for failing to protect patient data. In July, Attorney General James launched two privacy guides, a Business Guide to Website Privacy Controls and a Consumer Guide to Tracking on the Web, to help businesses and consumers protect themselves. In April 2023, Attorney General James released a comprehensive data security guide to help companies strengthen their data security practices. In January 2022, Attorney General James released a business guide for credential stuffing attacks that detailed how businesses could protect themselves and consumers.

    This matter was handled by Assistant Attorney General Nathaniel Kosslyn, Senior Enforcement Counsel Jordan Adler, and Deputy Bureau Chief Clark Russell of the Bureau of Internet and Technology, under the supervision of Bureau Chief Kim Berger. The Bureau of Internet and Technology is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy. 

     

    MIL OSI USA News

  • MIL-OSI Russia: Results of the International Festival of the Merry and Inventive: the Scientific and Methodological Center of KVN will open at the State University of Management

    Translartion. Region: Russians Fedetion –

    Source: State University of Management – Official website of the State –

    From January 21 to 25 this year, the fourth All-Russian forum “KVN – School of Leaders” was held in Sochi as part of the International Festival “KiViN-2025”. The event was organized by the Ministry of Science and Higher Education of the Russian Federation, the State University of Management and the Television Creative Association “AMiK”.

    The goal of the Forum is to strengthen and further develop the youth movement of the Club of the Merry and Resourceful among employees of federal and regional executive authorities involved in the implementation of youth policy and educational work, as well as specialists from higher education institutions involved in programs in the same areas.

    The central event of the Forum was the panel discussion “KVN – School of Leaders”. The participants were greeted via videoconference by Deputy Minister of Science and Higher Education Olga Petrova. The speakers of the panel discussion were:

    — Tatyana Omelchuk – representative of the Department for Public Projects of the Presidential Administration; — Vladimir Stroyev – rector of the State University of Management; — Alexander Maslyakov – general director of TTO “AMiK”; — Anton Serikov – general director of the Mashuk Knowledge Center; — Ruben Partevyan – deputy general director of TTO “AMiK”; — Pavel Pavlovsky – vice-rector of the State University of Management.

    The participants discussed the scale of the KVN movement in Russian universities, which involves about 22 thousand activists from all over the country, who played about 650 games at their universities last year. “KiViN-2025” brought together more than 550 teams in Sochi. All of them represent enormous potential for the development of youth policy and creative industry in their regions.

    In order to develop the university movement of the cheerful and resourceful, with the support of the Ministry of Education and Science of Russia, it was decided to create a Scientific and Methodological Center for KVN on the basis of the State University of Management, which will help everyone who wants to organize their games, leagues and cups, teach them how to interact with the management of universities, seek financial support outside of universities, and set the right vector for the development of student KVN in Russia.

    The Forum program was rich and diverse. Key tasks and goals were presented at the introductory session. During the first day, participants also had a unique opportunity to meet with the management of TTO “AMiK”, discuss the prospects for the development of the KVN movement, and exchange their experiences with each other in an informal setting.

    The second day opened with a lecture on the role and importance of the movement of the cheerful and resourceful in achieving the national goal – revealing the potential of each person, developing their talents and nurturing patriotism and social responsibility. Later, the participants had the opportunity to talk with the head of the Safe Internet League Ekaterina Mizulina. During the day, master classes were held on the legal aspects of organizing KVN games, as well as issues of interaction between official children’s leagues and regional branches of the “Movement of the First”.

    The third day of the forum included a workshop on “Creative and motivational aspects of organizing Club games in educational institutions.” A strategic session on new forms of integrating the KVN movement into state youth policy was also held with the participation of representatives of the Department of State Youth Policy and Educational Activities of the Ministry of Education and Science of the Russian Federation.

    The last, fourth day, January 24, gave the participants the opportunity to attend a lecture on the formation of federal standards for organizing KVN games and training teams of various levels. This was followed by a strategic session dedicated to children’s KVN, issues of its development and interaction at the local level.

    The organizers expressed confidence that the Forum will be an important step towards strengthening and further developing the KVN youth movement in Russia, contributing to the formation of a new generation of leaders capable of making a significant contribution to the future of the country.

    At the International Festival “KiViN-2025” the State University of Management was represented by four teams: “Singlplayer”, “Ikhnie”, “Fildepersovye” and “Kontora”. The guys coped with dignity, showing brilliant performances and a high level of training.

    “Singlplayer” once again made it to the second round of the festival and eventually received an invitation to the show “League of Cities” on TNT. “Fildepersovye” made it to the second round for the first time, performed in front of Alexander Maslyakov and got the opportunity to play in the Central Leagues of the International Union of KVN. “Kontora” made a successful debut at the Sochi festival and received an “increased rating”, which is a significant achievement for newcomers and gives the right to perform in the Central Leagues.

    Moreover, these three teams were nominated for the “Break of the Day” after their performances in the first round. The editors only award this nomination to 5 out of 80-90 teams whose performances were the funniest and most memorable.

    The KiViN-2025 festival for the teams of the KVN League of the State University of Management was incredibly successful. We are proud of the guys for their work, creativity and desire to win. Congratulations to everyone and wish them great success in the next season!

    Subscribe to the TG channel “Our GUU” Date of publication: 01/28/2025

    Please note: This information is raw content directly from the source of the information. It is exactly what the source states and does not reflect the position of MIL-OSI or its clients.

    MIL OSI Russia News

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

    Source: GlobeNewswire (MIL-OSI)

    EVERETT, Wash., Jan. 28, 2025 (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 December 31, 2024, including net income of $13.4 million, or $0.94 per diluted common share, compared to $13.5 million, or $0.97 per diluted common share, for the three months ended September 30, 2024 and $45.2 million, or $3.26 per diluted common share, for the year ended December 31, 2024, compared to $44.6 million, or $3.27 per diluted common share for the year ended December 31, 2023.

    Management Discussion of the Quarter and Full-year Results

    “2024 was highlighted by the completion of our $98.0 million capital raise during the fourth quarter, which we will utilize to support growth of the Bank including in our CCBX segment,” said CEO Eric Sprink. “We saw high quality net loan growth of $67.7 million despite selling $845.5 million in loans during the fourth quarter, and our CCBX program fee income continued to increase which was up 56.9% for full-year 2024 relative to the prior year. We continue to invest heavily in CCBX to support future growth, and we are pleased to have three letters of intent (“LOI”) signed going into 2025 with an active pipeline.”

    Key Points for Fourth Quarter and Our Go-Forward Strategy

    • Completed Capital Raise Allows CCBX Growth to Continue. During the fourth quarter of 2024, we completed a $98.0 million common equity raise, which was priced at $71.00/share. Proceeds will be used for general corporate purposes and to support growth of the Bank including in our CCBX segment. As of December 31, 2024 we had three signed LOIs and continue to have an active pipeline for 2025. The growth in common-equity tier 1 and total risk-based capital to 12.04% and 14.67%, respectively, includes the benefit of the capital raise.
    • Strong Annual Growth in CCBX Program Fees. Total BaaS program fee income was $25.6 million for the year ended December 31, 2024, an increase of $9.3 million, or 56.9%, from the year ended December 31, 2023, and is representative of growth in partner transaction activity and expanded product offerings within our CCBX operating segment. Trends in CCBX noninterest income were also positive during the quarter, with total program fees of $8.2 million for the three months ended December 31, 2024, an increase of $1.8 million, or 27.6%, from the three months ended September 30, 2024.
    • Investments for Growth Continues. Total non-interest expense of $64.2 million was down $1.4 million, or 2.1%, as compared to $65.6 million in the third quarter of 2024, mainly driven by lower BaaS loan expense, partially offset by higher salaries and employee benefits, point of sale expense, and legal and professional expenses. As we increase the number of new CCBX partners and programs launching in 2025, we expect that expenses will tend to be front-loaded with a focus on compliance and operational risk before any new program reaches significant revenues.
    • Off Balance Sheet Activity Update. During the fourth quarter of 2024, we sold $845.5 million of loans, the majority of which were credit card receivables, and swept $273.2 million of deposits off balance-sheet. We are able to retain a portion of the fee income on these sold credit card loans. As of December 31, 2024 there were 182,449 credit cards with fee earning potential, an increase of 101,023 compared to the quarter ended September 30, 2024 and an increase of 172,400 from December 31, 2023.
    • Continued Monitoring of CCBX Risk. We remain fully indemnified against fraud and 98.7% indemnified against credit risk with our CCBX partners as of year-end of 2024.

    Fourth 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) December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    Income Statement Data:                  
    Interest and dividend income $ 96,587     $ 105,079     $ 97,487     $ 90,472     $ 88,243  
    Interest expense   30,071       32,892       31,250       29,536       28,586  
    Net interest income   66,516       72,187       66,237       60,936       59,657  
    Provision for credit losses   61,867       70,257       62,325       83,158       60,789  
    Net interest (expense)/ income after provision for credit losses   4,649       1,930       3,912       (22,222 )     (1,132 )
    Noninterest income   76,756       80,068       69,918       86,955       64,694  
    Noninterest expense   64,206       65,616       58,809       56,018       51,703  
    Provision for income tax   3,832       2,926       3,425       1,915       2,847  
    Net income   13,367       13,456       11,596       6,800       9,012  
                       
      As of and for the Three Month Period
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    Balance Sheet Data:                  
    Cash and cash equivalents $ 452,513     $ 484,026     $ 487,245     $ 515,128     $ 483,128  
    Investment securities   47,321       48,620       49,213       50,090       150,364  
    Loans held for sale   20,600       7,565             797        
    Loans receivable   3,486,565       3,418,832       3,326,460       3,199,554       3,026,092  
    Allowance for credit losses   (176,994 )     (170,263 )     (147,914 )     (139,258 )     (116,958 )
    Total assets   4,121,208       4,065,821       3,961,546       3,865,258       3,753,366  
    Interest bearing deposits   3,057,808       3,047,861       2,949,643       2,888,867       2,735,161  
    Noninterest bearing deposits   527,524       579,427       593,789       574,112       625,202  
    Core deposits (1)   3,123,434       3,190,869       3,528,339       3,447,864       3,342,004  
    Total deposits   3,585,332       3,627,288       3,543,432       3,462,979       3,360,363  
    Total borrowings   47,884       47,847       47,810       47,771       47,734  
    Total shareholders’ equity   438,704       331,930       316,693       303,709       294,978  
                       
    Share and Per Share Data (2):                  
    Earnings per share – basic $ 0.97     $ 1.00     $ 0.86     $ 0.51     $ 0.68  
    Earnings per share – diluted $ 0.94     $ 0.97     $ 0.84     $ 0.50     $ 0.66  
    Dividends per share                            
    Book value per share (3) $ 29.37     $ 24.51     $ 23.54     $ 22.65     $ 22.17  
    Tangible book value per share (4) $ 29.37     $ 24.51     $ 23.54     $ 22.65     $ 22.17  
    Weighted avg outstanding shares – basic   13,828,605       13,447,066       13,412,667       13,340,997       13,286,828  
    Weighted avg outstanding shares – diluted   14,268,229       13,822,270       13,736,508       13,676,917       13,676,513  
    Shares outstanding at end of period   14,935,298       13,543,282       13,453,805       13,407,320       13,304,339  
    Stock options outstanding at end of period   186,354       198,370       286,119       309,069       354,969  

    See footnotes that follow the tables below

      As of and for the Three Month Period
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    Credit Quality Data:                  
    Nonperforming assets (5) to total assets   1.52 %     1.63 %     1.34 %     1.42 %     1.43 %
    Nonperforming assets (5) to loans receivable and OREO   1.80 %     1.94 %     1.60 %     1.71 %     1.78 %
    Nonperforming loans (5) to total loans receivable   1.80 %     1.94 %     1.60 %     1.71 %     1.78 %
    Allowance for credit losses to nonperforming loans   282.5 %     256.5 %     278.1 %     253.8 %     217.2 %
    Allowance for credit losses to total loans receivable   5.08 %     4.98 %     4.45 %     4.35 %     3.86 %
    Gross charge-offs $ 61,585     $ 53,305     $ 55,207     $ 58,994     $ 47,652  
    Gross recoveries $ 5,646     $ 4,069     $ 1,973     $ 1,776     $ 2,781  
    Net charge-offs to average loans (6)   6.51 %     5.65 %     6.57 %     7.34 %     5.92 %
                       
    Capital Ratios:                  
    Company                  
    Tier 1 leverage capital   10.78 %     8.40 %     8.31 %     8.24 %     8.10 %
    Common equity Tier 1 risk-based capital   12.04 %     9.24 %     9.03 %     8.98 %     9.10 %
    Tier 1 risk-based capital   12.14 %     9.34 %     9.13 %     9.08 %     9.20 %
    Total risk-based capital   14.67 %     11.89 %     11.70 %     11.70 %     11.87 %
    Bank                  
    Tier 1 leverage capital   10.64 %     9.29 %     9.24 %     9.19 %     9.06 %
    Common equity Tier 1 risk-based capital   11.99 %     10.34 %     10.15 %     10.14 %     10.30 %
    Tier 1 risk-based capital   11.99 %     10.34 %     10.15 %     10.14 %     10.30 %
    Total risk-based capital   13.28 %     11.63 %     11.44 %     11.43 %     11.58 %

    (1) Core deposits are defined as all deposits excluding brokered and 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 1.30% for the quarter ended December 31, 2024 compared to 1.34% and 0.97% for the quarters ended September 30, 2024 and December 31, 2023, respectively.  ROA for the quarter ended December 31, 2024, decreased 0.04% and increased 0.33% compared to September 30, 2024 and December 31, 2023, respectively. Noninterest expenses were lower for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 largely due to a decrease in BaaS loan expense, which is directly related to the amount of interest earned on CCBX loans, and higher than the quarter ended December 31, 2023 largely due to an increase in salaries and employee benefits, data processing and software licenses, legal and professional expenses and point of sale expenses, all of which are related to the growth of Company and investments in technology and risk management.

    Yield on earning assets and yield on loans receivable decreased 1.14% and 0.99%, respectively, for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024. This decrease is due to a combination of factors. We continue to refine our credit approach with partners, widening the scope of loans that we are moving to nonaccrual, which decreased loan interest income in the quarter ended December 31, 2024 as compared to prior quarters. Average loans receivable as of December 31, 2024 decreased $45.4 million compared to September 30, 2024 as we continue to sell CCBX loans as part of our on-going strategy to manage the loan portfolio and credit quality. New loans are being booked with enhanced credit standards, which typically results in a lower interest rate than some of the higher risk loans that have paid off or we have chosen to sell.

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

        Three Months Ended   Twelve Months Ended
    (unaudited)   December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      December 31,
    2024
      December 31,
    2023
                                 
    Return on average assets (1)   1.30%   1.34%   1.21%   0.73%   0.97%   1.15%   1.28%
    Return on average equity (1)   14.90%   16.67%   15.22%   9.21%   12.35%   14.11%   16.41%
    Yield on earnings assets (1)   9.65%   10.79%   10.49%   10.07%   9.77%   10.25%   9.82%
    Yield on loans receivable (1)   10.44%   11.43%   11.23%   10.85%   10.71%   10.99%   10.60%
    Cost of funds (1)   3.24%   3.62%   3.60%   3.52%   3.39%   3.49%   2.91%
    Cost of deposits (1)   3.21%   3.59%   3.58%   3.49%   3.36%   3.46%   2.87%
    Net interest margin (1)   6.65%   7.41%   7.13%   6.78%   6.61%   6.99%   7.10%
    Noninterest expense to average assets (1)   6.23%   6.54%   6.14%   6.04%   5.56%   6.24%   5.90%
    Noninterest income to average assets (1)   7.45%   7.98%   7.30%   9.38%   6.95%   8.00%   5.97%
    Efficiency ratio   44.81%   43.10%   43.19%   37.88%   41.58%   42.21%   45.92%
    Loans receivable to deposits (2)   97.82%   94.46%   93.88%   92.42%   90.05%   97.8%   90.1%

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

    Management Outlook; CEO Eric Sprink

    “As we look forward to 2025, our strategy involves selectively expanding our current base of CCBX partners while continuing to invest in and enhance our technology and risk management infrastructure. This will enable us to support the next phase of growth within CCBX more efficiently. Additionally, we are focused on growing noninterest income through increased transaction activity and new product offerings with our established partners. We plan to continue selling credit card loans while retaining a portion of the fee income for our role in processing transactions, which offers an additional source of noninterest income without adding on-balance-sheet risk. We believe that by increasing noninterest income, we can mitigate the uncertainties associated with fluctuating interest rates and provide a more stable income stream in the future.” said CEO Eric Sprink.

    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 24 relationships, at varying stages, including three signed letters of intent as of December 31, 2024.  We continue to refine the criteria for CCBX partnerships, exploring relationships with larger more established partners, with experienced management teams, existing customer bases and strong financial positions and will continue to exit relationships where it makes sense for us to do so.

    As we explore relationships with new partners we plan to continue expanding product offerings with our existing CCBX partners. As we become more proficient in the BaaS space we aim to cultivate new relationships that align with our long-term goals. We believe that a strategy of adding new partnerships and launching new products with existing partners positions us to reach a wide and established customer base with a modest increase in regulatory risk given that we have already vetted existing partners and have an operational history. Increases in partner activity/transaction counts is positively impacting noninterest income and we expect that trend to continue as products launched earlier in the year gain traction. We plan to continue selling 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, and plan to continue this strategy 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) December 31,
    2024
    September 30,
    2024
    December 31,
    2023
    Active 19 19 19
    Friends and family / testing 1 1 1
    Implementation / onboarding 1 1 1
    Signed letters of intent 3 1 0
    Wind down – active but preparing to exit relationship 0 0 0
    Total CCBX relationships 24 22 21
           

    CCBX loans increased $82.3 million, or 5.4%, to $1.60 billion despite selling $845.5 million loans during the three months ended December 31, 2024. 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 December 31, 2024 the portion of this portfolio for which we are responsible represented $20.6 million in loans.

    The following table details the CCBX loan portfolio:

    CCBX   As of
        December 31, 2024   September 30, 2024   December 31, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Commercial and industrial loans:                        
    Capital call lines   $ 109,017     6.8 %   $ 103,924     6.8 %   $ 87,494     7.3 %
    All other commercial & industrial loans     33,961     2.1       36,494     2.4       54,298     4.5  
    Real estate loans:                        
    Residential real estate loans     267,707     16.7       265,402     17.5       238,035     19.9  
    Consumer and other loans:                        
    Credit cards     528,554     33.0       633,691     41.6       505,837     42.3  
    Other consumer and other loans     664,780     41.4       482,228     31.7       310,574     26.0  
    Gross CCBX loans receivable     1,604,019     100.0 %     1,521,739     100.0 %     1,196,238     100.0 %
    Net deferred origination (fees) costs     (442 )         (447 )         (300 )    
    Loans receivable   $ 1,603,577         $ 1,521,292         $ 1,195,938      
    Loan Yield – CCBX (1)(2)     15.28 %         17.35 %         17.36 %    
                             

    (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 December 31, 2024, includes an increase of $77.4 million or 6.9%, in consumer and other loans, an increase of $5.1 million, or 4.9%, in capital call lines as a result of normal balance fluctuations and business activities, and an increase of $2.3 million, or 0.9%, in residential real estate loans. We continue to monitor and manage the CCBX loan portfolio, and sold $845.5 million in CCBX loans during the quarter ended December 31, 2024 compared to sales of $423.7 million in the quarter ended September 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.

    CCBX loan yield decreased 2.06% for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 as a result of our widening the scope of loans that we are moving to nonaccrual, which decreased loan interest income in the quarter ended December 31, 2024. Also contributing to the decrease are lower interest rates on new CCBX loans, which are replacing higher risk and higher rate loans that have paid off or were sold as part of our strategy to manage the loan portfolio and credit quality. The recent decrease in the Fed funds interest rate further contributed to the change.

    The following chart show the growth in credit card accounts that we are able to generate fee income from. This includes accounts with balances, which are included in our loan totals, and accounts that have been sold and have no corresponding balance in our loan totals, but that we are still able to generate fee income on.

    The following table details the CCBX deposit portfolio:

    CCBX   As of
        December 31, 2024   September 30, 2024   December 31, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Demand, noninterest bearing   $ 55,686     2.7 %   $ 60,655     2.9 %   $ 63,630     3.4 %
    Interest bearing demand and
    money market
        1,958,459     94.9       1,991,858     94.6       1,794,168     96.3  
    Savings     5,710     0.3       5,204     0.3       4,964     0.3  
    Total core deposits     2,019,855     97.9       2,057,717     97.8       1,862,762     100.0  
    Other deposits     44,233     2.1       47,046     2.2            
    Total CCBX deposits   $ 2,064,088     100.0 %   $ 2,104,763     100.0 %   $ 1,862,762     100.0 %
    Cost of deposits (1)     4.19 %         4.82 %         4.90 %    

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

    CCBX deposits decreased $40.7 million, or 1.9%, in the three months ended December 31, 2024 to $2.06 billion as a result of normal balance fluctuations. This excludes the $273.2 million in CCBX deposits that were transferred off balance sheet for increased Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and sweep purposes, compared to $214.5 million for the quarter ended September 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 December 31, 2024, the community bank saw net loans decrease $14.6 million, or 0.8%, to $1.88 billion.

    The following table details the Community Bank loan portfolio:

    Community Bank   As of
        December 31, 2024   September 30, 2024   December 31, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Commercial and industrial loans   $ 150,395     8.0 %   $ 152,161     8.0 %   $ 149,502     8.2 %
    Real estate loans:                        
    Construction, land and land development loans     148,198     7.8       163,051     8.6       157,100     8.5  
    Residential real estate loans     202,064     10.7       212,467     11.2       225,391     12.3  
    Commercial real estate loans     1,374,801     72.8       1,362,452     71.5       1,303,533     70.9  
    Consumer and other loans:                        
    Other consumer and other loans     13,542     0.7       14,173     0.7       1,628     0.1  
    Gross Community Bank loans receivable     1,889,000     100.0 %     1,904,304     100.0 %     1,837,154     100.0 %
    Net deferred origination fees     (6,012 )         (6,764 )         (7,000 )    
    Loans receivable   $ 1,882,988         $ 1,897,540         $ 1,830,154      
    Loan Yield(1)     6.53 %         6.64 %         6.32 %    

    (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 decreased $14.9 million in construction, land and land development loans, decreased $1.8 million in commercial and industrial loans and decreased $631,000 in consumer and other loans, and were partially offset by an increase in commercial real estate loans of $12.3 million during the quarter ended December 31, 2024.

    The following table details the community bank deposit portfolio:

    Community Bank   As of
        December 31, 2024   September 30, 2024   December 31, 2023
    (dollars in thousands; unaudited)   Balance   % to Total   Balance   % to Total   Balance   % to Total
    Demand, noninterest bearing   $ 471,838     31.0 %   $ 518,772     34.1 %   $ 561,572     37.5 %
    Interest bearing demand and money market     570,625     37.5       552,108     36.3       846,072     56.5  
    Savings     61,116     4.0       62,272     4.1       71,598     4.8  
    Total core deposits     1,103,579     72.5       1,133,152     74.5       1,479,242     98.8  
    Other deposits     400,118     26.3       373,681     24.5       1     0.0  
    Time deposits less than $100,000     5,920     0.4       6,305     0.4       8,109     0.5  
    Time deposits $100,000 and over     11,627     0.8       9,387     0.6       10,249     0.7  
    Total Community Bank deposits   $ 1,521,244     100.0 %   $ 1,522,525     100.0 %   $ 1,497,601     100.0 %
    Cost of deposits(1)     1.86 %         1.92 %         1.57 %    

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

    Community bank deposits decreased $1.3 million, or 0.1%, during the three months ended December 31, 2024 to $1.52 billion as result of normal balance fluctuations. The community bank segment includes noninterest bearing deposits of $471.8 million, or 31.0%, of total community bank deposits, resulting in a cost of deposits of 1.86%, which compared to 1.92% for the quarter ended September 30, 2024, largely due to the decreases in the Fed funds rate late in the third quarter and during the fourth quarter of 2024. The cost of community bank deposits are projected to decline further as the Fed funds rate had a decrease of 0.25%, which occurred in December 2024 and the full quarterly effect of that decrease will not be recognized until the first quarter of 2025.

    Net Interest Income and Margin Discussion

    Net interest income was $66.5 million for the quarter ended December 31, 2024, a decrease of $5.7 million, or 7.9%, from $72.2 million for the quarter ended September 30, 2024, and an increase of $6.9 million, or 11.5%, from $59.7 million for the quarter ended December 31, 2023. The decrease in net interest income compared to September 30, 2024, was a result of a decrease in average loans receivable as a result of selling $845.5 million in CCBX loans during the quarter ended December 31, 2024, the recent decrease in the Fed funds interest rate, and continued enhancements to our partner credit practices that resulted in a reduction of interest income on loans. The increase in net interest income compared to December 31, 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 6.65% for the three months ended December 31, 2024, compared to 7.41% for the three months ended September 30, 2024, largely due to lower loan yield. Net interest margin, net of BaaS loan expense, (A reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release.) was 4.16% for the three months ended December 31, 2024, compared to 4.06% for the three months ended September 30, 2024. Net interest margin was 6.61% for the three months ended December 31, 2023. The increase in net interest margin for the three months ended December 31, 2024 compared to the three months ended December 31, 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 decreased $9.9 million, or 9.9%, to $89.7 million for the three months ended December 31, 2024, compared to $99.6 million for the three months ended September 30, 2024, as a result of loan sales and a decrease in the Fed funds interest rate. Additionally, as we continue to refine our credit approach with partners, we are widening the scope of loans that we are moving to nonaccrual which decreased interest income in the quarter ended December 31, 2024 and lowered loan yield and net interest margin; however this also decreased BaaS loan expense (which is in noninterest expense) resulting in no impact to net income. Interest and fees on loans receivable increased $8.6 million, or 10.5%, compared to $81.2 million for the three months ended December 31, 2023, due to an increase in outstanding balances and higher interest rates. Net interest margin, net of Baas loan expense (A reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release.) increased 0.10% for the three months ended December 31, 2024, compared to the three months ended September 30, 2024 and increased 0.25% compared the three months ended December 31, 2023.

    The following tables illustrate how net interest margin and loan yield is affected by BaaS loan expense:

    Consolidated   As of and for the Three Months Ended As of and for the Twelve
    Months Ended
    (dollars in thousands; unaudited)   December 31
    2024
      September 30
    2024
      December 31
    2023
    December 31
    2024
      December 31
    2023
    Net interest margin, net of BaaS loan expense:              
    Net interest margin (1)     6.65 %     7.41 %     6.61 %   6.99 %     7.10 %
    Earning assets     3,980,078       3,875,911       3,581,772     3,802,275       3,364,406  
    Net interest income (GAAP)     66,516       72,187       59,657     265,876       238,727  
    Less: BaaS loan expense     (24,859 )     (32,612 )     (24,310 )   (111,384 )     (86,900 )
    Net interest income, net of BaaS loan expense(2)   $ 41,657     $ 39,575     $ 35,347   $ 154,492     $ 151,827  
    Net interest margin, net of BaaS loan expense (1)(2)     4.16 %     4.06 %     3.92 %   4.06 %     4.51 %
    Loan income net of BaaS loan expense divided by average loans:         
    Loan yield (GAAP)(1)     10.44 %     11.43 %     10.71 %   10.99 %     10.60 %
    Total average loans receivable   $ 3,419,476     $ 3,464,871     $ 3,007,289   $ 3,320,582     $ 2,936,908  
    Interest and earned fee income on loans (GAAP)     89,714       99,590       81,159     364,869       311,441  
    BaaS loan expense     (24,859 )     (32,612 )     (24,310 )   (111,384 )     (86,900 )
    Net loan income(2)   $ 64,855     $ 66,978     $ 56,849   $ 253,485     $ 224,541  
    Loan income, net of BaaS loan expense, divided by average loans (1)(2)     7.55 %     7.69 %     7.50 %   7.63 %     7.65 %

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

    Average investment securities decreased $820,000 to $48.2 million compared to the three months ended September 30, 2024 and decreased $101.5 million compared to the three months ended December 31, 2023 as a result of principal paydowns and maturing securities.

    Cost of funds was 3.24% for the quarter ended December 31, 2024, a decrease of 38 basis points from the quarter ended September 30, 2024 and a decrease of 16 basis points from the quarter ended December 31, 2023. Cost of deposits for the quarter ended December 31, 2024 was 3.21%, compared to 3.59% for the quarter ended September 30, 2024, and 3.36% for the quarter ended December 31, 2023. The decreased cost of funds and deposits compared to September 30, 2024 and December 31, 2023 was largely due to the recent reductions in the Fed funds rate.

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

      For the Three Months Ended
      December 31, 2024   September 30, 2024   December 31, 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 6.53%   1.86%   6.64%   1.92%   6.32%   1.57%
    CCBX (1) 15.28%   4.19%   17.35%   4.82%   17.36%   4.90%
    Consolidated 10.44%   3.21%   11.43%   3.59%   10.71%   3.36%

    (1) Annualized calculations for periods shown 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 table 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
        December 31, 2024   September 30, 2024   December 31, 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   $ 58,671   15.28%   $ 67,692   17.35 %   $ 52,327   17.36%
    Less: BaaS loan expense     24,859   6.48%     32,612   8.36 %     24,310   8.06%
    Net BaaS loan income (1)   $ 33,812   8.81%   $ 35,080   8.99 %   $ 28,017   9.30%
    Average BaaS Loans(3)   $ 1,527,178       $ 1,552,443       $ 1,196,137    

    (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 $76.8 million for the three months ended December 31, 2024, a decrease of $3.3 million from $80.1 million for the three months ended September 30, 2024, and an increase of $12.1 million from $64.7 million for the three months ended December 31, 2023. The decrease in noninterest income for the quarter ended December 31, 2024 as compared to the quarter ended September 30, 2024 was primarily due to a decrease of $3.3 million in total BaaS income. The $3.3 million decrease in total BaaS income included an $8.0 million decrease in BaaS credit enhancements related to the provision for credit losses, partially offset by a a $3.0 million increase in BaaS fraud enhancements and an increase of $1.8 million in BaaS program income. The $1.8 million increase in BaaS program income is largely due to higher reimbursement of expenses as well as an increase in transaction fees and interchange fees, our primary BaaS source for recurring fee income, as well as higher reimbursement of expenses (see “Appendix B” for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements).

    The $12.1 million increase in noninterest income over the quarter ended December 31, 2023 was primarily due to a $7.9 million increase in BaaS credit and fraud enhancements and an increase of $3.8 million in BaaS program income.

    Noninterest Expense Discussion
    Total noninterest expense decreased $1.4 million to $64.2 million for the three months ended December 31, 2024, compared to $65.6 million for the three months ended September 30, 2024, and increased $12.5 million from $51.7 million for the three months ended December 31, 2023. The decrease in noninterest expense for the quarter ended December 31, 2024, as compared to the quarter ended September 30, 2024, was primarily due to a $4.8 million decrease in BaaS expense from a $7.8 million decrease in BaaS loan expense, partially offset by a $3.0 million increase in BaaS fraud 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. Other variances that partially offset the net decrease in noninterest expense include an increase of $1.4 million in point of sale expenses as a result of increased partner transaction activity, an increase of $893,000 in salaries and employee benefits and an increase of $1.0 million in legal and professional fees as part of our continued investments in technology and risk management.

    The increase in noninterest expenses for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023 was largely due to an increase of $4.8 million in BaaS partner expense primarily from a $4.3 million increase in BaaS fraud expense, a $549,000 increase in BaaS loan expense, a $2.0 million increase in legal and professional expenses, a $1.8 million increase in point of sale expenses, a $1.5 million increase in salary and employee benefits, and a $1.2 million increase in data processing and software licenses due to enhancements in technology.

    Certain noninterest expenses are reimbursed by our CCBX partners. In accordance with GAAP we recognize all expenses in noninterest expense and all reimbursement of expenses from our CCBX partner in noninterest income. The following table reflects the portion of noninterest expenses that are reimbursed by partners to assist the understanding of how the increases in noninterest expense are related to expenses incurred for and reimbursed by CCBX partners:

        Three Months Ended
        December 31,   September 30,   December 31,
    (dollars in thousands; unaudited)   2024   2024   2023
    Total noninterest expense (GAAP)   $ 64,206   $ 65,616   $ 51,703
    Less: BaaS loan expense     24,859     32,612     24,310
    Less: BaaS fraud expense     5,043     2,084     779
    Less: Reimbursement of expenses (Baas)     3,468     1,843     1,076
    Noninterest expense, net of Baas loan expense, BaaS fraud expense and reimbursement of expenses (BaaS) (1)   $ 30,836   $ 29,077   $ 25,538

    (1) A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.

    Provision for Income Taxes

    The provision for income taxes was $3.8 million for the three months ended December 31, 2024, $2.9 million for the three months ended September 30, 2024 and $2.8 million for the fourth quarter of 2023.  The income tax provision was higher for the three months ended December 31, 2024 compared to the quarter ended September 30, 2024 as a result of the deductibility of certain equity awards which reduced tax expense during the quarter ended September 30, 2024 compared to the quarter ended December 31, 2024 despite net income being higher fairly even, and higher than the quarter ended December 31, 2023, primarily due to higher net income compared to that quarter, partially offset by the deductibility of certain equity awards.

    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 2.63% for calculating the provision for state income taxes.

    Financial Condition Overview

    Total assets increased $55.4 million, or 1.4%, to $4.12 billion at December 31, 2024 compared to $4.07 billion at September 30, 2024.  The increase is primarily due to stronger loan growth, partially offset by lower cash balances. Total loans receivable increased $67.7 million to $3.49 billion at December 31, 2024, from $3.42 billion at September 30, 2024.

    As of December 31, 2024, the Company had the capacity to borrow up to a total of $642.1 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, and an additional $50.0 million from a correspondent bank. There were no borrowings outstanding on these lines as of December 31, 2024.

    The Company completed a $98.0 million capital raise during the quarter ended December 31, 2024. After contributing $50.0 million to the Bank, the Company had a cash balance of $47.7 million as of December 31, 2024, which is retained for general operating purposes, including debt repayment, and for funding $480,000 in commitments to bank technology investment funds.  

    Uninsured deposits were $543.0 million as of December 31, 2024, compared to $542.2 million as of September 30, 2024.

    Total shareholders’ equity as of December 31, 2024 increased $106.8 million since September 30, 2024.  The increase in shareholders’ equity was primarily due to an increase of $93.4 million in common stock outstanding as a result of the aforementioned capital raise and, to a lessor extent, equity awards exercised during the three months ended December 31, 2024 combined with $13.4 million in net earnings.

    The Company and the Bank remained well capitalized at December 31, 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)   10.64%   10.78%   5.00%
    Common Equity Tier 1 Capital (to risk-weighted assets)   11.99%   12.04%   6.50%
    Tier 1 Capital (to risk-weighted assets)   11.99%   12.14%   8.00%
    Total Capital (to risk-weighted assets)   13.28%   14.67%   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 $177.0 million and 5.08% of loans receivable at December 31, 2024 compared to $170.3 million and 4.98% at September 30, 2024 and $117.0 million and 3.86% at December 31, 2023. The allowance for credit loss allocated to the CCBX portfolio was $158.1 million and 9.86% of CCBX loans receivable at December 31, 2024, with $18.9 million of allowance for credit loss allocated to the community bank or 1.00% 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 December 31, 2024   As of September 30, 2024   As of December 31, 2023
    (dollars in thousands; unaudited)   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total
    Loans receivable   $ 1,882,988     $ 1,603,577     $ 3,486,565     $ 1,897,540     $ 1,521,292     $ 3,418,832     $ 1,830,154     $ 1,195,938     $ 3,026,092  
    Allowance for credit losses     (18,924 )     (158,070 )     (176,994 )     (20,132 )     (150,131 )     (170,263 )     (21,595 )     (95,363 )     (116,958 )
    Allowance for credit losses to total loans receivable     1.00 %     9.86 %     5.08 %     1.06 %     9.87 %     4.98 %     1.18 %     7.97 %     3.86 %
                                                                             

    Net charge-offs totaled $55.9 million for the quarter ended December 31, 2024, compared to $49.2 million for the quarter ended September 30, 2024 and $44.9 million for the quarter ended December 31, 2023. Net charge-offs as a percent of average loans increased to 6.51% for the quarter ended December 31, 2024 compared to 5.65% for the quarter ended September 30, 2024. 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 $324.6 million loan portfolio. At December 31, 2024, our portion of this portfolio represented $20.6 million in loans. Net charge-offs for this $20.6 million in loans were $1.1 million for the three months ended December 31, 2024, compared to $1.1 million for the three months ended September 30, 2024 and $1.5 million for the three months ended December 31, 2023.

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

        Three Months Ended
        December 31, 2024   September 30, 2024   December 31, 2023
    (dollars in thousands; unaudited)   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total   Community
    Bank
      CCBX   Total
    Gross charge-offs   $ 139     $ 61,446     $ 61,585     $ 398     $ 52,907     $ 53,305     $ 2     $ 47,650     $ 47,652  
    Gross recoveries     (3 )     (5,643 )     (5,646 )     (3 )     (4,066 )     (4,069 )     (4 )     (2,777 )     (2,781 )
    Net charge-offs   $ 136     $ 55,803     $ 55,939     $ 395     $ 48,841     $ 49,236     $ (2 )   $ 44,873     $ 44,871  
    Net charge-offs to average loans (1)     0.03 %     14.54 %     6.51 %     0.08 %     12.52 %     5.65 %     0.00 %     14.88 %     5.92 %

    (1) Annualized calculations shown for periods presented.

    During the quarter ended December 31, 2024, a $63.7 million provision for credit losses was recorded for CCBX partner loans, compared to the $72.1 million provision for credit losses was recorded for CCBX partner loans for the quarter ended September 30, 2024, the provision was based on management’s analysis, bringing the CCBX allowance for credit losses to $158.1 million at December 31, 2024 compared to $150.1 million at September 30, 2024. The increase in the allowance is due to the addition of new loans, partially offset by loan sales. 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 $1.1 million and was needed for the quarter ended December 31, 2024 compared to a provision recapture of $519,000 and provision of $277,000 for the quarters ended September 30, 2024 and December 31, 2023, respectively. The recapture in the current period was due to the decrease in the community bank loan portfolio combined with an improvement in the forward look, which is driven by the future projected unemployment and GDP curves, which flattened since last quarter, lessening the impact of this factor.

    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)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Community bank   $ (1,071 )   $ (519 )   $ 277
    CCBX     63,741       72,104       60,467
    Total provision expense   $ 62,670     $ 71,585     $ 60,744

    A recapture for unfunded commitments of $803,000 was recorded for the quarter ended December 31, 2024 as a result of a decrease in the overall available balance combined with an improvement in the reserve rates.

    At December 31, 2024, our nonperforming assets were $62.7 million, or 1.52%, of total assets, compared to $66.4 million, or 1.63%, of total assets, at September 30, 2024, and $53.8 million, or 1.43%, of total assets, at December 31, 2023. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of December 31, 2024, $60.8 million of the $62.6 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above.

    Nonperforming assets decreased $3.7 million during the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024. This change is due to a decrease in CCBX and community bank nonaccrual loans. Community bank nonperforming loans decreased $1.0 million from September 30, 2024 to $100,000 as of December 31, 2024, and CCBX nonperforming loans decreased $2.7 million to $62.6 million from September 30, 2024. The decrease in CCBX nonperforming loans is due to an decrease of $570,000 in nonaccrual loans from September 30, 2024 to $19.5 million. Some CCBX partners have a collection practice that places certain loans on nonaccrual status to improve collectability. $17.2 million of these loans are less than 90 days past due as of December 31, 2024. Additionally, there was a $2.2 million decrease in CCBX loans that are past due 90 days or more and still accruing interest. 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 December 31, 2024. Our nonperforming loans to loans receivable ratio was 1.80% at December 31, 2024, compared to 1.94% at September 30, 2024, and 1.78% at December 31, 2023.

    For the quarter ended December 31, 2024, there were $136,000 community bank net charge-offs and $55.8 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) December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Nonaccrual loans:          
    Commercial and industrial loans $ 334     $ 531     $  
    Real estate loans:          
    Residential real estate         44       170  
    Commercial real estate         831       7,145  
    Consumer and other loans:          
    Credit cards   10,262       7,987        
    Other consumer and other loans   8,967       11,713        
    Total nonaccrual loans   19,563       21,106       7,315  
    Accruing loans past due 90 days or more:          
    Commercial & industrial loans   1,006       1,566       2,086  
    Real estate loans:          
    Residential real estate loans   2,608       3,025       1,115  
    Consumer and other loans:          
    Credit cards   34,490       34,562       34,835  
    Other consumer and other loans   4,989       6,111       8,488  
    Total accruing loans past due 90 days or more   43,093       45,264       46,524  
    Total nonperforming loans   62,656       66,370       53,839  
    Real estate owned                
    Repossessed assets                
    Total nonperforming assets $ 62,656     $ 66,370     $ 53,839  
    Total nonaccrual loans to loans receivable   0.56 %     0.62 %     0.24 %
    Total nonperforming loans to loans receivable   1.80 %     1.94 %     1.78 %
    Total nonperforming assets to total assets   1.52 %     1.63 %     1.43 %
                           

    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) December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Nonaccrual loans:          
    Commercial and industrial loans:          
    All other commercial & industrial loans $ 234     $ 333     $  
    Consumer and other loans:          
    Credit cards   10,262       7,987        
    Other consumer and other loans   8,967       11,713        
    Total nonaccrual loans   19,463       20,033        
    Accruing loans past due 90 days or more:          
    Commercial & industrial loans   1,006       1,566       2,086  
    Real estate loans:          
    Residential real estate loans   2,608       3,025       1,115  
    Consumer and other loans:          
    Credit cards   34,490       34,562       34,835  
    Other consumer and other loans   4,989       6,111       8,488  
    Total accruing loans past due 90 days or more   43,093       45,264       46,524  
    Total nonperforming loans   62,556       65,297       46,524  
    Other real estate owned                
    Repossessed assets                
    Total nonperforming assets $ 62,556     $ 65,297     $ 46,524  
    Total CCBX nonperforming assets to total consolidated assets   1.52 %     1.61 %     1.24 %
    Community Bank As of
    (dollars in thousands; unaudited) December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Nonaccrual loans:          
    Commercial and industrial loans $ 100   $ 198     $  
    Real estate:          
    Residential real estate       44       170  
    Commercial real estate       831       7,145  
    Total nonaccrual loans   100     1,073       7,315  
    Accruing loans past due 90 days or more:          
    Total accruing loans past due 90 days or more              
    Total nonperforming loans   100     1,073       7,315  
    Other real estate owned              
    Repossessed assets              
    Total nonperforming assets $ 100   $ 1,073     $ 7,315  
    Total community bank nonperforming assets to total consolidated assets < 0.01%     0.03 %     0.19 %
                       

    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 $4.12 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
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    Cash and due from banks $ 36,533     $ 45,327     $ 59,995     $ 32,790     $ 31,345  
    Interest earning deposits with other banks   415,980       438,699       427,250       482,338       451,783  
    Investment securities, available for sale, at fair value   35       38       39       41       99,504  
    Investment securities, held to maturity, at amortized cost   47,286       48,582       49,174       50,049       50,860  
    Other investments   10,800       10,757       10,664       10,583       10,227  
    Loans held for sale   20,600       7,565             797        
    Loans receivable   3,486,565       3,418,832       3,326,460       3,199,554       3,026,092  
    Allowance for credit losses   (176,994 )     (170,263 )     (147,914 )     (139,258 )     (116,958 )
    Total loans receivable, net   3,309,571       3,248,569       3,178,546       3,060,296       2,909,134  
    CCBX credit enhancement asset   181,890       167,251       143,485       137,276       107,921  
    CCBX receivable   14,138       16,060       11,520       10,369       9,088  
    Premises and equipment, net   27,431       25,833       24,526       22,995       22,090  
    Lease right-of-use assets   5,219       5,427       5,635       5,756       5,932  
    Accrued interest receivable   21,104       23,664       23,617       24,681       26,819  
    Bank-owned life insurance, net   13,375       13,255       13,132       12,991       12,870  
    Deferred tax asset, net   3,600       3,083       2,221       2,221       3,806  
    Other assets   13,646       11,711       11,742       12,075       11,987  
    Total assets $ 4,121,208     $ 4,065,821     $ 3,961,546     $ 3,865,258     $ 3,753,366  
                       
    LIABILITIES AND SHAREHOLDERS’ EQUITY
    LIABILITIES                  
    Deposits $ 3,585,332     $ 3,627,288     $ 3,543,432     $ 3,462,979     $ 3,360,363  
    Subordinated debt, net   44,293       44,256       44,219       44,181       44,144  
    Junior subordinated debentures, net   3,591       3,591       3,591       3,590       3,590  
    Deferred compensation   332       369       405       442       479  
    Accrued interest payable   962       1,070       999       1,061       892  
    Lease liabilities   5,398       5,609       5,821       5,946       6,124  
    CCBX payable   29,171       39,188       34,536       33,095       33,651  
    Other liabilities   13,425       12,520       11,850       10,255       9,145  
    Total liabilities   3,682,504       3,733,891       3,644,853       3,561,549       3,458,388  
    SHAREHOLDERS’ EQUITY                  
    Common Stock   228,177       134,769       132,989       131,601       130,136  
    Retained earnings   210,529       197,162       183,706       172,110       165,311  
    Accumulated other comprehensive loss, net of tax   (2 )     (1 )     (2 )     (2 )     (469 )
    Total shareholders’ equity   438,704       331,930       316,693       303,709       294,978  
    Total liabilities and shareholders’ equity $ 4,121,208     $ 4,065,821     $ 3,961,546     $ 3,865,258     $ 3,753,366  

    COASTAL FINANCIAL CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Dollars in thousands, except per share amounts; unaudited)

      Three Months Ended
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    INTEREST AND DIVIDEND INCOME                  
    Interest and fees on loans $ 89,714   $ 99,590   $ 90,944     $ 84,621     $ 81,159  
    Interest on interest earning deposits with other banks   6,021     4,781     5,683       4,780       5,687  
    Interest on investment securities   661     675     686       1,034       1,225  
    Dividends on other investments   191     33     174       37       172  
    Total interest income   96,587     105,079     97,487       90,472       88,243  
    INTEREST EXPENSE                  
    Interest on deposits   29,404     32,083     30,578       28,867       27,916  
    Interest on borrowed funds   667     809     672       669       670  
    Total interest expense   30,071     32,892     31,250       29,536       28,586  
    Net interest income   66,516     72,187     66,237       60,936       59,657  
    PROVISION FOR CREDIT LOSSES   61,867     70,257     62,325       83,158       60,789  
    Net interest income/(expense) after provision for credit losses   4,649     1,930     3,912       (22,222 )     (1,132 )
    NONINTEREST INCOME                  
    Service charges and fees   932     952     946       908       957  
    Loan referral fees                 168        
    Unrealized gain (loss) on equity securities, net   1     2     9       15       80  
    Other income   473     486     257       308       60  
    Noninterest income, excluding BaaS program income and BaaS indemnification income   1,406     1,440     1,212       1,399       1,097  
    Servicing and other BaaS fees   1,043     1,044     1,525       1,131       1,015  
    Transaction fees   1,783     1,696     1,309       1,122       1,006  
    Interchange fees   1,916     1,853     1,625       1,539       1,272  
    Reimbursement of expenses   3,468     1,843     1,637       1,033       1,076  
    BaaS program income   8,210     6,436     6,096       4,825       4,369  
    BaaS credit enhancements   62,097     70,108     60,826       79,808       58,449  
    BaaS fraud enhancements   5,043     2,084     1,784       923       779  
    BaaS indemnification income   67,140     72,192     62,610       80,731       59,228  
    Total noninterest income   76,756     80,068     69,918       86,955       64,694  
    NONINTEREST EXPENSE                  
    Salaries and employee benefits   17,994     17,101     17,005       17,984       16,490  
    Occupancy   958     964     985       1,029       976  
    Data processing and software licenses   4,010     4,297     3,625       3,381       2,781  
    Legal and professional expenses   4,606     3,597     3,631       3,672       2,649  
    Point of sale expense   2,745     1,351     852       869       899  
    Excise taxes   778     762     (706 )     320       449  
    Federal Deposit Insurance Corporation (“FDIC”) assessments   750     740     690       683       665  
    Director and staff expenses   683     559     470       400       478  
    Marketing   28     67     14       53       138  
    Other expense   1,752     1,482     1,383       1,867       1,089  
    Noninterest expense, excluding BaaS loan and BaaS fraud expense   34,304     30,920     27,949       30,258       26,614  
    BaaS loan expense   24,859     32,612     29,076       24,837       24,310  
    BaaS fraud expense   5,043     2,084     1,784       923       779  
    BaaS loan and fraud expense   29,902     34,696     30,860       25,760       25,089  
    Total noninterest expense   64,206     65,616     58,809       56,018       51,703  
    Income before provision for income taxes   17,199     16,382     15,021       8,715       11,859  
    PROVISION FOR INCOME TAXES   3,832     2,926     3,425       1,915       2,847  
    NET INCOME $ 13,367   $ 13,456   $ 11,596     $ 6,800     $ 9,012  
    Basic earnings per common share $ 0.97   $ 1.00   $ 0.86     $ 0.51     $ 0.68  
    Diluted earnings per common share $ 0.94   $ 0.97   $ 0.84     $ 0.50     $ 0.66  
    Weighted average number of common shares outstanding:                  
    Basic   13,828,605     13,447,066     13,412,667       13,340,997       13,286,828  
    Diluted   14,268,229     13,822,270     13,736,508       13,676,917       13,676,513  

    COASTAL FINANCIAL CORPORATION
    AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
    (Dollars in thousands; unaudited)

      For the Three Months Ended
      December 31, 2024   September 30, 2024   December 31, 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 $ 501,654     $ 6,021   4.77 %   $ 350,915     $ 4,781   5.42 %   $ 413,127     $ 5,687   5.46 %
    Investment securities, available for sale (2)   39               40               100,204       546   2.16  
    Investment securities, held to maturity (2)   48,126       661   5.46       48,945       675   5.49       49,469       679   5.45  
    Other investments   10,783       191   7.05       11,140       33   1.18       11,683       172   5.84  
    Loans receivable (3)   3,419,476       89,714   10.44       3,464,871       99,590   11.43       3,007,289       81,159   10.71  
    Total interest earning assets   3,980,078       96,587   9.65       3,875,911       105,079   10.79       3,581,772       88,243   9.77  
    Noninterest earning assets:                                  
    Allowance for credit losses   (156,687 )             (151,292 )             (95,391 )        
    Other noninterest earning assets   277,922               268,903               204,052          
    Total assets $ 4,101,313             $ 3,993,522             $ 3,690,433          
                                       
    Liabilities and Shareholders’ Equity                                  
    Interest bearing liabilities:                                  
    Interest bearing deposits $ 3,068,357     $ 29,404   3.81 %   $ 2,966,527     $ 32,083   4.30 %   $ 2,660,235     $ 27,916   4.16 %
    FHLB advances and other borrowings         1         9,717       140   5.73       3          
    Subordinated debt   44,272       599   5.38       44,234       598   5.38       44,121       598   5.38  
    Junior subordinated debentures   3,591       67   7.42       3,591       71   7.87       3,590       72   7.96  
    Total interest bearing liabilities   3,116,220       30,071   3.84       3,024,069       32,892   4.33       2,707,949       28,586   4.19  
    Noninterest bearing deposits   577,453               588,178               640,424          
    Other liabilities   50,824               60,101               52,450          
    Total shareholders’ equity   356,816               321,174               289,612          
    Total liabilities and shareholders’ equity $ 4,101,313             $ 3,993,522             $ 3,690,435          
    Net interest income     $ 66,516           $ 72,187           $ 59,657    
    Interest rate spread         5.82 %           6.46 %           5.59 %
    Net interest margin (4)         6.65 %           7.41 %           6.61 %

    (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
      December 31, 2024   September 30, 2024   December 31, 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) $ 1,892,298   $ 31,043   6.53 %   $ 1,912,428   $ 31,898   6.64 %   $ 1,811,152   $ 28,832   6.32 %
    Total interest earning assets   1,892,298     31,043   6.53       1,912,428     31,898   6.64       1,811,152     28,832   6.32  
    Liabilities                                  
    Interest bearing liabilities:                                
    Interest bearing deposits   1,029,346     7,161   2.77 %     982,280     7,264   2.94 %     951,148     6,090   2.54 %
    Intrabank liability   357,442     4,290   4.77       406,641     5,540   5.42       275,995     3,799   5.46  
    Total interest bearing liabilities   1,386,788     11,451   3.28       1,388,921     12,804   3.67       1,227,143     9,889   3.20  
    Noninterest bearing deposits   505,510             523,507             584,009        
    Net interest income     $ 19,592           $ 19,094           $ 18,943    
    Net interest margin(3)         4.12 %           3.97 %           4.15 %
                                       
    CCBX                                  
    Assets                                  
    Interest earning assets:                                  
    Loans receivable (2)(4) $ 1,527,178   $ 58,671   15.28 %   $ 1,552,443   $ 67,692   17.35 %   $ 1,196,137   $ 52,327   17.36 %
    Intrabank asset   583,776     7,007   4.78       496,475     6,764   5.42       569,365     7,837   5.46  
    Total interest earning assets   2,110,954     65,678   12.38       2,048,918     74,456   14.46       1,765,502     60,164   13.52  
    Liabilities                                  
    Interest bearing liabilities:                            
    Interest bearing deposits   2,039,011     22,243   4.34 %     1,984,247     24,819   4.98 %     1,709,087     21,826   5.07 %
    Total interest bearing liabilities   2,039,011     22,243   4.34       1,984,247     24,819   4.98       1,709,087     21,826   5.07  
    Noninterest bearing deposits   71,943             64,671             56,415        
    Net interest income     $ 43,435           $ 49,637           $ 38,338    
    Net interest margin(3)         8.19 %           9.64 %           8.62 %
    Net interest margin, net of Baas loan expense (5)         3.50 %           3.31 %           3.15 %
      For the Three Months Ended
      December 31, 2024   September 30, 2024   December 31, 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 $ 501,654   $ 6,021   4.77 %   $ 350,915   $ 4,781   5.42 %   $ 413,127   $ 5,687   5.46 %
    Investment securities, available for sale (6)   39             40             100,204     546   2.16  
    Investment securities, held to maturity (6)   48,126     661   5.46       48,945     675   5.49       49,469     679   5.45  
    Other investments   10,783     191   7.05       11,140     33   1.18       11,683     172   5.84  
    Total interest earning assets   560,602     6,873   4.88 %     411,040   5,489   5.31 %     574,483     7,084   4.89 %
    Liabilities                                  
    Interest bearing liabilities:                                  
    FHLB advances and borrowings $   $ 1   %     9,717     140   5.73 %     3       %
    Subordinated debt   44,272     599   5.38 %     44,234     598   5.38 %     44,121     598   5.38 %
    Junior subordinated debentures   3,591     67   7.42       3,591     71   7.87       3,590     72   7.96  
    Intrabank liability, net (7)   226,334     2,717   4.78       89,834     1,224   5.42       293,370     4,038   5.46  
    Total interest bearing liabilities   274,197     3,384   4.91       147,376     2,033   5.49       341,084     4,708   5.48  
    Net interest income     $ 3,489           $ 3,456           $ 2,376    
    Net interest margin(3)         2.48 %           3.34 %           1.64 %

    (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 loans and CCBX loans and the impact of BaaS loan expense on net interest income and net interest margin.

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

    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.

    CCBX 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 CCBX net interest margin.

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

    CCBX   As of and for the Three Months Ended As of and for the Twelve Months Ended
    (dollars in thousands; unaudited)   December 31
    2024
      September 30
    2024
      December 31
    2023
    December 31
    2024
      December 31
    2023
    Net BaaS loan income divided by average CCBX loans:      
    CCBX loan yield (GAAP)(1)     15.28 %     17.35 %     17.36 %   16.89 %     16.89 %
    Total average CCBX loans receivable   $ 1,527,178     $ 1,552,443     $ 1,196,137   $ 1,427,571     $ 1,210,413  
    Interest and earned fee income on CCBX loans (GAAP)     58,671       67,692       52,327     241,134       204,458  
    BaaS loan expense     (24,859 )     (32,612 )     (24,310 )   (111,384 )     (86,900 )
    Net BaaS loan income   $ 33,812     $ 35,080     $ 28,017   $ 129,750     $ 117,558  
    Net BaaS loan income divided by average CCBX loans (1)     8.81 %     8.99 %     9.30 %   9.09 %     9.71 %
    CCBX net interest margin, net of BaaS loan expense:              
    CCBX net interest margin (1)     8.19 %     9.64 %     8.62 %   8.87 %     9.65 %
    CCBX earning assets     2,110,954       2,048,918       1,765,502     1,999,695       1,574,334  
    Net interest income (GAAP)     43,435       49,637       38,338     177,320       151,883  
    Less: BaaS loan expense     (24,859 )     (32,612 )     (24,310 )   (111,384 )     (86,900 )
    Net interest income, net of BaaS loan expense   $ 18,576     $ 17,025     $ 14,028   $ 65,936     $ 64,983  
    CCBX net interest margin, net of BaaS loan expense (1)     3.50 %     3.31 %     3.15 %   3.30 %     4.13 %
    Consolidated   As of and for the Three Months Ended As of and for the Twelve Months Ended
    (dollars in thousands; unaudited)   December 31
    2024
      September 30
    2024
      December 31
    2023
    December 31
    2024
      December 31
    2023
    Net interest margin, net of BaaS loan expense:              
    Net interest margin (1)     6.65 %     7.41 %     6.61 %   6.99 %     7.10 %
    Earning assets     3,980,078       3,875,911       3,581,772     3,802,275       3,364,406  
    Net interest income (GAAP)     66,516       72,187       59,657     265,876       238,727  
    Less: BaaS loan expense     (24,859 )     (32,612 )     (24,310 )   (111,384 )     (86,900 )
    Net interest income, net of BaaS loan expense   $ 41,657     $ 39,575     $ 35,347   $ 154,492     $ 151,827  
    Net interest margin, net of BaaS loan expense (1)     4.16 %     4.06 %     3.92 %   4.06 %     4.51 %
    Loan income net of BaaS loan expense divided by average loans:          
    Loan yield (GAAP)(1)     10.44 %     11.43 %     10.71 %   10.99 %     10.60 %
    Total average loans receivable   $ 3,419,476     $ 3,464,871     $ 3,007,289   $ 3,320,582     $ 2,936,908  
    Interest and earned fee income on loans (GAAP)     89,714       99,590       81,159     364,869       311,441  
    BaaS loan expense     (24,859 )     (32,612 )     (24,310 )   (111,384 )     (86,900 )
    Net loan income   $ 64,855     $ 66,978     $ 56,849   $ 253,485     $ 224,541  
    Loan income, net of BaaS loan expense, divided by average loans (1)     7.55 %     7.69 %     7.50 %   7.63 %     7.65 %

    (1) Annualized calculations for periods presented.

    The following non-GAAP measure is presented to illustrate the impact of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS) on noninterest expense. The most comparable GAAP measure is noninterest expense.

        As of and for the Three Months Ended
    (dollars in thousands, unaudited)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Noninterest expense, net of reimbursement of expenses (BaaS)
    Noninterest expense (GAAP)   $ 64,206   $ 65,616   $ 51,703
    Less: BaaS loan expense     24,859     32,612     24,310
    Less: BaaS fraud expense     5,043     2,084     779
    Less: Reimbursement of expenses     3,468     1,843     1,076
    Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses   $ 30,836   $ 29,077   $ 25,538


    APPENDIX A –

    As of December 31, 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 $3.49 billion in outstanding loan balances. When combined with $1.96 billion in unused commitments the total of these categories is $5.46 billion.

    Commercial real estate loans represent the largest segment of our loans, comprising 39.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $34.2 million, and the combined total in commercial real estate loans represents $1.41 billion, or 25.8% 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 December 31, 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   $ 405,561   $ 4,953   $ 410,514   7.5 %   $ 3,937   103
    Hotel/Motel     154,691     68     154,759   2.8       6,726   23
    Convenience Store     139,735     575     140,310   2.6       2,329   60
    Office     122,897     7,687     130,584   2.4       1,366   90
    Retail     103,312     414     103,726   1.9       993   104
    Warehouse     103,130         103,130   1.9       1,748   59
    Mixed use     91,607     5,365     96,972   1.8       1,160   79
    Mini Storage     80,837     10,183     91,020   1.7       3,674   22
    Strip Mall     43,894         43,894   0.8       6,271   7
    Manufacturing     37,617     1,200     38,817   0.7       1,297   29
    Groups < 0.70% of total     91,520     3,777     95,297   1.7       1,173   78
    Total   $ 1,374,801   $ 34,222   $ 1,409,023   25.8 %   $ 2,102   654
                                       

    Consumer loans comprise 34.6% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $735.8 million, and the combined total in consumer and other loans represents $1.94 billion, or 35.6% 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 $1,000. 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 December 31, 2024:

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

    (Outstanding
    Balance &

    Available
    Commitment)
      Average Loan
    Balance
      Number of
    Loans
    CCBX consumer loans
    Credit cards   $ 528,554   $ 717,198   $ 1,245,752   22.8 %   $ 1.8   301,799
    Installment loans     656,797     15,806     672,603   12.3       1.0   690,596
    Lines of credit     722     1     723   0.0       1.4   524
    Other loans     7,261         7,261   0.1         163,026
    Community bank consumer loans
    Installment loans     1,917     2     1,919   0.1       68.5   28
    Lines of credit     181     344     525   0.0       5.7   32
    Other loans     11,444     2,400     13,844   0.3       30.6   374
    Total   $ 1,206,876   $ 735,751   $ 1,942,627   35.6 %   $ 1.0   1,156,379

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

    Residential real estate loans comprise 13.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $499.5 million, and the combined total in residential real estate loans represents $969.3 million, or 17.8% 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 December 31, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
    (1)
      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   $ 267,707   $ 453,369   $ 721,076   13.2 %   $ 27   10,092
    Community bank residential real estate loans
    Closed end, secured by first liens     165,433     2,080     167,513   3.1       537   308
    Home equity line of credit     25,506     43,102     68,608   1.3       109   234
    Closed end, second liens     11,125     965     12,090   0.2       371   30
    Total   $ 469,771   $ 499,516   $ 969,287   17.8 %   $ 44   10,664

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

    Commercial and industrial loans comprise 8.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $645.5 million, and the combined total in commercial and industrial loans represents $938.9 million, or 17.2% of our total outstanding loans and loan commitments. Included in commercial and industrial loans is $109.0 million in outstanding capital call lines, with an additional $550.9 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 December 31, 2024:

    (dollars in thousands; unaudited)   Outstanding
    Balance
      Available
    Loan
    Commitments
    (1)
      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   $ 109,017   $ 550,948   $ 659,965   12.1 %   $ 808   135
    Construction/Contractor Services     24,367     36,343     60,710   1.1       121   202
    Financial Institutions     48,648         48,648   0.9       4,054   12
    Retail     28,533     5,664     34,197   0.6       14   2,052
    Manufacturing     5,604     4,581     10,185   0.2       147   38
    Medical / Dental / Other Care     7,074     2,641     9,715   0.2       544   13
    Groups < 0.20% of total     70,130     45,360     115,490   2.1       55   1,275
    Total   $ 293,373   $ 645,537   $ 938,910   17.2 %   $ 79   3,727

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

    Construction, land and land development loans comprise 4.2% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $47.8 million, and the combined total in construction, land and land development loans represents $196.0 million, or 3.6% 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 December 31, 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   $ 83,216   $ 30,500   $ 113,716   2.1 %   $ 6,935   12
    Residential construction     40,940     10,873     51,813   0.9       2,408   17
    Developed land loans     8,305     456     8,761   0.2       489   17
    Undeveloped land loans     8,665     4,816     13,481   0.2       619   14
    Land development     7,072     1,157     8,229   0.2       643   11
    Total   $ 148,198   $ 47,802   $ 196,000   3.6 %   $ 2,087   71
                                       

    Exposure and risk in our construction, land and land development portfolio is declining compared to previous periods as indicated in the following table:

        Outstanding Balance as of
    (dollars in thousands; unaudited)   December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
    Commercial construction   $ 83,216   $ 97,792   $ 110,372   $ 102,099   $ 81,489
    Residential construction     40,940     35,822     34,652     28,751     34,213
    Undeveloped land loans     8,665     8,606     8,372     8,190     7,890
    Developed land loans     8,305     14,863     13,954     14,307     20,515
    Land development     7,072     5,968     5,714     7,515     12,993
    Total   $ 148,198   $ 163,051   $ 173,064   $ 160,862   $ 157,100
                                   

    Commitments to extend credit total $1.96 billion at December 31, 2024,   however we do not anticipate our customers using the $1.96 billion that is showing as available due to CCBX partner and portfolio limits.

    The following table presents outstanding commitments to extend credit as of December 31, 2024:

    Consolidated    
    (dollars in thousands; unaudited)   As of December 31, 2024
    Commitments to extend credit:    
    Commercial and industrial loans   $ 94,589
    Commercial and industrial loans – capital call lines     550,948
    Construction – commercial real estate loans     36,873
    Construction – residential real estate loans     10,929
    Residential real estate loans     499,516
    Commercial real estate loans     34,222
    Credit cards     717,198
    Consumer and other loans     18,553
    Total commitments to extend credit   $ 1,962,828
           

    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 December 31, 2024, capital call lines outstanding balance totaled $109.0 million, and while commitments totaled $550.9 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 have the choice 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   $ 109,017     6.8 % $ 550,948   $ 350,000 $
    All other commercial & industrial loans     33,961     2.1     19,104     480,000   834
    Real estate loans:                
    Home equity lines of credit (3)     267,707     16.7     453,369     375,000   36,241
    Consumer and other loans:            
    Credit cards – cash secured     211              
    Credit cards – unsecured     528,343         717,198       26,742
    Credit cards – total     528,554     33.0     717,198     807,484   26,742
    Installment loans – cash secured     127,014         15,806      
    Installment loans – unsecured     529,783               5,332
    Installment loans – total     656,797     40.9     15,806     1,787,118   5,332
    Other consumer and other loans     7,983     0.5     1     5,398   196
    Gross CCBX loans receivable     1,604,019     100.0 %   1,756,426     3,805,000 $ 69,345
    Net deferred origination fees     (442 )            
    Loans receivable   $ 1,603,577              

    (1) Remaining commitment available, net of outstanding balance.
    (2) Balances are as of January 8, 2025.
    (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 December 31, 2024

    CCBX – BaaS Reporting Information

    During the quarter ended December 31, 2024, $62.1 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)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Yield on loans (1)     15.28 %     17.35 %     17.36 %
    BaaS loan interest income   $ 58,671     $ 67,692     $ 52,327  
    Less: BaaS loan expense     24,859       32,612       24,310  
    Net BaaS loan income (2)   $ 33,812     $ 35,080     $ 28,017  
    Net BaaS loan income divided by average BaaS loans (1)(2)     8.81 %     8.99 %     9.30 %

    (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.

    A decrease in average CCBX loans receivable resulted in decreased interest income on CCBX loans during the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024. The decrease in average CCBX loans receivable was primarily due to loan sales 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. These higher quality loans also have lower stated rates and expected losses. As a result, our yield on loans and our BaaS loan expense decrease by similar amounts. 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. Growth in CCBX loans and deposits has resulted in increases in interest income and expense for the quarter ended December 31, 2024 compared to the quarter ended December 31, 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)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    Loan interest income   $ 58,671   $ 67,692   $ 52,327
    Total BaaS interest income   $ 58,671   $ 67,692   $ 52,327
    Interest expense   Three Months Ended
    (dollars in thousands; unaudited)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    BaaS interest expense   $ 22,243   $ 24,819   $ 21,826
    Total BaaS interest expense   $ 22,243   $ 24,819   $ 21,826
    BaaS income   Three Months Ended
    (dollars in thousands; unaudited)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    BaaS program income:            
    Servicing and other BaaS fees   $ 1,043   $ 1,044   $ 1,015
    Transaction fees     1,783     1,696     1,006
    Interchange fees     1,916     1,853     1,272
    Reimbursement of expenses     3,468     1,843     1,076
    BaaS program income     8,210     6,436     4,369
    BaaS indemnification income:            
    BaaS credit enhancements     62,097     70,108     58,449
    BaaS fraud enhancements     5,043     2,084     779
    BaaS indemnification income     67,140     72,192     59,228
    Total noninterest BaaS income   $ 75,350   $ 78,628   $ 63,597

    Servicing and other BaaS fees decreased $1,000 in the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 while transaction fees and interchange fees increased $87,000 and $63,000, 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. Increases in BaaS reimbursement of fees offsets increases in noninterest expense from BaaS expenses covered by CCBX partners.

    BaaS loan and fraud expense:   Three Months Ended
    (dollars in thousands; unaudited)   December 31,
    2024
      September 30,
    2024
      December 31,
    2023
    BaaS loan expense   $ 24,859   $ 32,612   $ 24,310
    BaaS fraud expense     5,043     2,084     779
    Total BaaS loan and fraud expense   $ 29,902   $ 34,696   $ 25,089

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/20c5a089-a44b-483e-acb5-fccbbe07fc10

    The MIL Network

  • MIL-OSI: Renewable Power: TotalEnergies Will Supply 1.5 TWh to STMicroelectronics in France over 15 Years

    Source: GlobeNewswire (MIL-OSI)

    Renewable Power: TotalEnergies Will Supply 1.5 TWh to STMicroelectronics in France over 15 Years

    • 1stPPA in France for STMicroelectronics, aiming at 100% renewable sourcing by 2027
    • Power comes from 2 recent wind and solar farms of 75 MW operated by TotalEnergies

    Paris, Geneva – January 28, 2025 – TotalEnergies and STMicroelectronics (NYSE:STM), a global semiconductor leader serving customers across the spectrum of electronics applications, have signed a physical1 Power Purchase Agreement to supply renewable electricity to STMicroelectronics sites in France. This 15-year contract, started in January 2025, represents an overall volume of 1.5 TWh.

    TotalEnergies will provide STMicroelectronics with the renewable power (including the guarantee of origin) produced by two recent wind and solar farms of 75 MW operated by TotalEnergies. This power comes with structuration services to transform intermittent production in a constant volume (“baseload”) of green electricity. It’s the first time in France that such a 15-year contract is provided. The positive impact of the wind and solar projects on the environment and on the communities was a key success factor in the signing of the deal.

    “We are delighted to sign this agreement with STMicroelectronics, which demonstrates our ability to provide long-term and innovative clean firm power solutions tailored to our customers’ needs,” said Sophie Chevalier, Senior Vice President Flexible Power & Integration at TotalEnergies. “TotalEnergies aims to be a preferred partner to support tech industry players towards their decarbonization efforts, and this agreement showcases our commitment and capabilities.”

    “This first PPA in France marks yet another important step towards ST’s goal of becoming carbon neutral in its operations (Scope 1 and 2 emissions, and partially scope 3) by 2027, including the sourcing of 100% renewable energy by 2027,” said Geoff West, EVP and Chief Procurement Officer at STMicroelectronics. “PPAs will play a major role in our transition, and we have already signed several to support ST’s operations in Italy and Malaysia. Starting in 2025, this PPA with TotalEnergies will provide a significant level of renewable energy for ST’s operations in France, which includes R&D, design, sales and marketing and large-volume chip manufacturing.”

    About STMicroelectronics
    At ST, we are over 50,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain with state-of-the-art manufacturing facilities. An integrated device manufacturer, we work with more than 200,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. Our technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of the Internet of Things and connectivity. We are committed to achieving our goal to become carbon neutral on scope 1 and 2 and partially scope 3 by 2027. Further information can be found at www.st.com.

    TotalEnergies and electricity
    As part of its ambition to get to net zero by 2050, TotalEnergies is building a world class cost-competitive portfolio combining renewables (solar, onshore and offshore wind) and flexible assets (CCGT, storage) to deliver clean firm power to its customers. By mid-2024, TotalEnergies’ gross renewable electricity generation installed capacity reached 24 GW. TotalEnergies will continue to expand this business to reach 35 GW in 2025 and more than 100 TWh of net electricity production by 2030.

    About TotalEnergies
    TotalEnergies is a global integrated energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to provide as many people as possible with energy that is more reliable, more affordable and more sustainable. Active in about 120 countries, TotalEnergies places sustainability at the heart of its strategy, its projects and its operations.

    For further information, please contact:

    STMicroelectronics

    MEDIA RELATIONS
    Alexis Breton
    Corporate External Communications
    Tel: +33 6 59 16 79 08
    alexis.breton@st.com

    INVESTOR RELATIONS
    Jérôme Ramel
    EVP Corporate Development & Integrated External Communication
    Tel: +41 22 929 59 20
    jerome.ramel@st.com

    TotalEnergies

    MEDIA RELATIONS: +33 (0)1 47 44 46 99 l presse@totalenergies.com l @TotalEnergiesPR

    INVESTOR RELATIONS: +33 (0)1 47 44 46 46 l ir@totalenergies.com


    1 In the case of a “physical” Power Purchase Agreement (PPA), the renewable electricity and the associated guarantees of origin are delivered to the customer, as opposed to the “virtual” PPA, where only the guarantees of origin are delivered to the customer, and the electricity produced is sold to the grid.

    Attachment

    The MIL Network

  • MIL-OSI Europe: Note “Antiqua et nova” on the relationship between Artficial Intelligence and Human Intelligence

    Source: The Holy See

    Note “Antiqua et nova” on the relationship between Artficial Intelligence and Human Intelligence, 28.01.2025
    ANTIQUA ET NOVA:
    Note on the Relationship BetweenArtificial Intelligence and Human Intelligence
    I. Introduction
    1. With wisdom both ancient and new (cf. Mt. 13:52), we are called to reflect on the current challenges and opportunities posed by scientific and technological advancements, particularly by the recent development of Artificial Intelligence (AI). The Christian tradition regards the gift of intelligence as an essential aspect of how humans are created “in the image of God” (Gen. 1:27). Starting from an integral vision of the human person and the biblical calling to “till” and “keep” the earth (Gen. 2:15), the Church emphasizes that this gift of intelligence should be expressed through the responsible use of reason and technical abilities in the stewardship of the created world.
    2. The Church encourages the advancement of science, technology, the arts, and other forms of human endeavor, viewing them as part of the “collaboration of man and woman with God in perfecting the visible creation.”[1] As Sirach affirms, God “gave skill to human beings, that he might be glorified in his marvelous works” (Sir. 38:6). Human abilities and creativity come from God and, when used rightly, glorify God by reflecting his wisdom and goodness. In light of this, when we ask ourselves what it means to “be human,” we cannot exclude a consideration of our scientific and technological abilities.
    3. It is within this perspective that the present Note addresses the anthropological and ethical challenges raised by AI—issues that are particularly significant, as one of the goals of this technology is to imitate the human intelligence that designed it. For instance, unlike many other human creations, AI can be trained on the results of human creativity and then generate new “artifacts” with a level of speed and skill that often rivals or surpasses what humans can do, such as producing text or images indistinguishable from human compositions. This raises critical concerns about AI’s potential role in the growing crisis of truth in the public forum. Moreover, this technology is designed to learn and make certain choices autonomously, adapting to new situations and providing solutions not foreseen by its programmers, and thus, it raises fundamental questions about ethical responsibility and human safety, with broader implications for society as a whole. This new situation has prompted many people to reflect on what it means to be human and the role of humanity in the world.
    4. Taking all this into account, there is broad consensus that AI marks a new and significant phase in humanity’s engagement with technology, placing it at the heart of what Pope Francis has described as an “epochal change.”[2] Its impact is felt globally and in a wide range of areas, including interpersonal relationships, education, work, art, healthcare, law, warfare, and international relations. As AI advances rapidly toward even greater achievements, it is critically important to consider its anthropological and ethical implications. This involves not only mitigating risks and preventing harm but also ensuring that its applications are used to promote human progress and the common good.
    5. To contribute positively to the discernment regarding AI, and in response to Pope Francis’ call for a renewed “wisdom of heart,”[3] the Church offers its experience through the anthropological and ethical reflections contained in this Note. Committed to its active role in the global dialogue on these issues, the Church invites those entrusted with transmitting the faith—including parents, teachers, pastors, and bishops—to dedicate themselves to this critical subject with care and attention. While this document is intended especially for them, it is also meant to be accessible to a broader audience, particularly those who share the conviction that scientific and technological advances should be directed toward serving the human person and the common good.[4]
    6. To this end, the document begins by distinguishing between concepts of intelligence in AI and in human intelligence. It then explores the Christian understanding of human intelligence, providing a framework rooted in the Church’s philosophical and theological tradition. Finally, the document offers guidelines to ensure that the development and use of AI uphold human dignity and promote the integral development of the human person and society.
    II. What is Artificial Intelligence?
    7. The concept of “intelligence” in AI has evolved over time, drawing on a range of ideas from various disciplines. While its origins extend back centuries, a significant milestone occurred in 1956 when the American computer scientist John McCarthy organized a summer workshop at Dartmouth University to explore the problem of “Artificial Intelligence,” which he defined as “that of making a machine behave in ways that would be called intelligent if a human were so behaving.”[5] This workshop launched a research program focused on designing machines capable of performing tasks typically associated with the human intellect and intelligent behavior.
    8. Since then, AI research has advanced rapidly, leading to the development of complex systems capable of performing highly sophisticated tasks.[6] These so-called “narrow AI” systems are typically designed to handle specific and limited functions, such as translating languages, predicting the trajectory of a storm, classifying images, answering questions, or generating visual content at the user’s request. While the definition of “intelligence” in AI research varies, most contemporary AI systems—particularly those using machine learning—rely on statistical inference rather than logical deduction. By analyzing large datasets to identify patterns, AI can “predict”[7] outcomes and propose new approaches, mimicking some cognitive processes typical of human problem-solving. Such achievements have been made possible through advances in computing technology (including neural networks, unsupervised machine learning, and evolutionary algorithms) as well as hardware innovations (such as specialized processors). Together, these technologies enable AI systems to respond to various forms of human input, adapt to new situations, and even suggest novel solutions not anticipated by their original programmers.[8]
    9. Due to these rapid advancements, many tasks once managed exclusively by humans are now entrusted to AI. These systems can augment or even supersede what humans are able to do in many fields, particularly in specialized areas such as data analysis, image recognition, and medical diagnosis. While each “narrow AI” application is designed for a specific task, many researchers aspire to develop what is known as “Artificial General Intelligence” (AGI)—a single system capable of operating across all cognitive domains and performing any task within the scope of human intelligence. Some even argue that AGI could one day achieve the state of “superintelligence,” surpassing human intellectual capacities, or contribute to “super-longevity” through advances in biotechnology. Others, however, fear that these possibilities, even if hypothetical, could one day eclipse the human person, while still others welcome this potential transformation.[9]
    10. Underlying this and many other perspectives on the subject is the implicit assumption that the term “intelligence” can be used in the same way to refer to both human intelligence and AI. Yet, this does not capture the full scope of the concept. In the case of humans, intelligence is a faculty that pertains to the person in his or her entirety, whereas in the context of AI, “intelligence” is understood functionally, often with the presumption that the activities characteristic of the human mind can be broken down into digitized steps that machines can replicate.[10]
    11. This functional perspective is exemplified by the “Turing Test,” which considers a machine “intelligent” if a person cannot distinguish its behavior from that of a human.[11] However, in this context, the term “behavior” refers only to the performance of specific intellectual tasks; it does not account for the full breadth of human experience, which includes abstraction, emotions, creativity, and the aesthetic, moral, and religious sensibilities. Nor does it encompass the full range of expressions characteristic of the human mind. Instead, in the case of AI, the “intelligence” of a system is evaluated methodologically, but also reductively, based on its ability to produce appropriate responses—in this case, those associated with the human intellect—regardless of how those responses are generated.
    12. AI’s advanced features give it sophisticated abilities to perform tasks, but not the ability to think.[12] This distinction is crucially important, as the way “intelligence” is defined inevitably shapes how we understand the relationship between human thought and this technology.[13] To appreciate this, one must recall the richness of the philosophical tradition and Christian theology, which offer a deeper and more comprehensive understanding of intelligence—an understanding that is central to the Church’s teaching on the nature, dignity, and vocation of the human person.[14]
    III. Intelligence in the Philosophical and Theological Tradition
    Rationality
    13. From the dawn of human self-reflection, the mind has played a central role in understanding what it means to be “human.” Aristotle observed that “all people by nature desire to know.”[15] This knowledge, with its capacity for abstraction that grasps the nature and meaning of things, sets humans apart from the animal world.[16] As philosophers, theologians, and psychologists have examined the exact nature of this intellectual faculty, they have also explored how humans understand the world and their unique place within it. Through this exploration, the Christian tradition has come to understand the human person as a being consisting of both body and soul—deeply connected to this world and yet transcending it.[17]
    14. In the classical tradition, the concept of intelligence is often understood through the complementary concepts of “reason” (ratio) and “intellect” (intellectus). These are not separate faculties but, as Saint Thomas Aquinas explains, they are two modes in which the same intelligence operates: “The term intellect is inferred from the inward grasp of the truth, while the name reason is taken from the inquisitive and discursive process.”[18] This concise description highlights the two fundamental and complementary dimensions of human intelligence. Intellectus refers to the intuitive grasp of the truth—that is, apprehending it with the “eyes” of the mind—which precedes and grounds argumentation itself. Ratio pertains to reasoning proper: the discursive, analytical process that leads to judgment. Together, intellect and reason form the two facets of the act of intelligere, “the proper operation of the human being as such.”[19]
    15. Describing the human person as a “rational” being does not reduce the person to a specific mode of thought; rather, it recognizes that the ability for intellectual understanding shapes and permeates all aspects of human activity.[20] Whether exercised well or poorly, this capacity is an intrinsic aspect of human nature. In this sense, the “term ‘rational’ encompasses all the capacities of the human person,” including those related to “knowing and understanding, as well as those of willing, loving, choosing, and desiring; it also includes all corporeal functions closely related to these abilities.”[21] This comprehensive perspective underscores how, in the human person, created in the “image of God,” reason is integrated in a way that elevates, shapes, and transforms both the person’s will and actions.[22]
    Embodiment
    16. Christian thought considers the intellectual faculties of the human person within the framework of an integral anthropology that views the human being as essentially embodied. In the human person, spirit and matter “are not two natures united, but rather their union forms a single nature.”[23] In other words, the soul is not merely the immaterial “part” of the person contained within the body, nor is the body an outer shell housing an intangible “core.” Rather, the entire human person is simultaneously both material and spiritual. This understanding reflects the teaching of Sacred Scripture, which views the human person as a being who lives out relationships with God and others (and thus, an authentically spiritual dimension) within and through this embodied existence.[24] The profound meaning of this condition is further illuminated by the mystery of the Incarnation, through which God himself took on our flesh and “raised it up to a sublime dignity.”[25]
    17. Although deeply rooted in bodily existence, the human person transcends the material world through the soul, which is “almost on the horizon of eternity and time.”[26] The intellect’s capacity for transcendence and the self-possessed freedom of the will belong to the soul, by which the human person “shares in the light of the divine mind.”[27] Nevertheless, the human spirit does not exercise its normal mode of knowledge without the body.[28] In this way, the intellectual faculties of the human person are an integral part of an anthropology that recognizes that the human person is a “unity of body and soul.”[29] Further aspects of this understanding will be developed in what follows.
    Relationality
    18. Human beings are “ordered by their very nature to interpersonal communion,”[30] possessing the capacity to know one another, to give themselves in love, and to enter into communion with others. Accordingly, human intelligence is not an isolated faculty but is exercised in relationships, finding its fullest expression in dialogue, collaboration, and solidarity. We learn with others, and we learn through others.
    19. The relational orientation of the human person is ultimately grounded in the eternal self-giving of the Triune God, whose love is revealed in creation and redemption.[31] The human person is “called to share, by knowledge and love, in God’s own life.”[32]
    20. This vocation to communion with God is necessarily tied to the call to communion with others. Love of God cannot be separated from love for one’s neighbor (cf. 1 Jn. 4:20; Mt. 22:37-39). By the grace of sharing God’s life, Christians are also called to imitate Christ’s outpouring gift (cf. 2 Cor. 9:8-11; Eph. 5:1-2) by following his command to “love one another, as I have loved you” (Jn. 13:34).[33] Love and service, echoing the divine life of self-giving, transcend self-interest to respond more fully to the human vocation (cf. 1 Jn. 2:9). Even more sublime than knowing many things is the commitment to care for one another, for if “I understand all mysteries and all knowledge […] but do not have love, I am nothing” (1 Cor. 13:2).
    Relationship with the Truth
    21. Human intelligence is ultimately “God’s gift fashioned for the assimilation of truth.”[34] In the dual sense of intellectus-ratio, it enables the person to explore realities that surpass mere sensory experience or utility, since “the desire for truth is part of human nature itself. It is an innate property of human reason to ask why things are as they are.”[35] Moving beyond the limits of empirical data, human intelligence can “with genuine certitude attain to reality itself as knowable.”[36] While reality remains only partially known, the desire for truth “spurs reason always to go further; indeed, it is as if reason were overwhelmed to see that it can always go beyond what it has already achieved.”[37] Although Truth in itself transcends the boundaries of human intelligence, it irresistibly attracts it.[38] Drawn by this attraction, the human person is led to seek “truths of a higher order.”[39]
    22. This innate drive toward the pursuit of truth is especially evident in the distinctly human capacities for semantic understanding and creativity,[40] through which this search unfolds in a “manner that is appropriate to the social nature and dignity of the human person.”[41] Likewise, a steadfast orientation to the truth is essential for charity to be both authentic and universal.[42]
    23. The search for truth finds its highest expression in openness to realities that transcend the physical and created world. In God, all truths attain their ultimate and original meaning.[43] Entrusting oneself to God is a “fundamental decision that engages the whole person.”[44] In this way, the human person becomes fully what he or she is called to be: “the intellect and the will display their spiritual nature,” enabling the person “to act in a way that realizes personal freedom to the full.”[45]
    Stewardship of the World
    24. The Christian faith understands creation as the free act of the Triune God, who, as Saint Bonaventure of Bagnoregio explains, creates “not to increase his glory, but to show it forth and to communicate it.”[46] Since God creates according to his Wisdom (cf. Wis. 9:9; Jer. 10:12), creation is imbued with an intrinsic order that reflects God’s plan (cf. Gen. 1; Dan. 2:21-22; Is. 45:18; Ps. 74:12-17; 104),[47] within which God has called human beings to assume a unique role: to cultivate and care for the world.[48]
    25. Shaped by the Divine Craftsman, humans live out their identity as beings made in imago Dei by “keeping” and “tilling” (cf. Gen. 2:15) creation—using their intelligence and skills to care for and develop creation in accord with God’s plan.[49] In this, human intelligence reflects the Divine Intelligence that created all things (cf. Gen. 1-2; Jn. 1),[50] continuously sustains them, and guides them to their ultimate purpose in him.[51] Moreover, human beings are called to develop their abilities in science and technology, for through them, God is glorified (cf. Sir. 38:6). Thus, in a proper relationship with creation, humans, on the one hand, use their intelligence and skill to cooperate with God in guiding creation toward the purpose to which he has called it.[52] On the other hand, creation itself, as Saint Bonaventure observes, helps the human mind to “ascend gradually to the supreme Principle, who is God.”[53]
    An Integral Understanding of Human Intelligence
    26. In this context, human intelligence becomes more clearly understood as a faculty that forms an integral part of how the whole person engages with reality. Authentic engagement requires embracing the full scope of one’s being: spiritual, cognitive, embodied, and relational.
    27. This engagement with reality unfolds in various ways, as each person, in his or her multifaceted individuality[54], seeks to understand the world, relate to others, solve problems, express creativity, and pursue integral well-being through the harmonious interplay of the various dimensions of the person’s intelligence.[55] This involves logical and linguistic abilities but can also encompass other modes of interacting with reality. Consider the work of an artisan, who “must know how to discern, in inert matter, a particular form that others cannot recognize”[56] and bring it forth through insight and practical skill. Indigenous peoples who live close to the earth often possess a profound sense of nature and its cycles.[57] Similarly, a friend who knows the right word to say or a person adept at managing human relationships exemplifies an intelligence that is “the fruit of self-examination, dialogue and generous encounter between persons.”[58] As Pope Francis observes, “in this age of artificial intelligence, we cannot forget that poetry and love are necessary to save our humanity.”[59]
    28. At the heart of the Christian understanding of intelligence is the integration of truth into the moral and spiritual life of the person, guiding his or her actions in light of God’s goodness and truth. According to God’s plan, intelligence, in its fullest sense, also includes the ability to savor what is true, good, and beautiful. As the twentieth-century French poet Paul Claudel expressed, “intelligence is nothing without delight.”[60] Similarly, Dante, upon reaching the highest heaven in Paradiso, testifies that the culmination of this intellectual delight is found in the “light intellectual full of love, love of true good filled with joy, joy which transcends every sweetness.”[61]
    29. A proper understanding of human intelligence, therefore, cannot be reduced to the mere acquisition of facts or the ability to perform specific tasks. Instead, it involves the person’s openness to the ultimate questions of life and reflects an orientation toward the True and the Good. [62] As an expression of the divine image within the person, human intelligence has the ability to access the totality of being, contemplating existence in its fullness, which goes beyond what is measurable, and grasping the meaning of what has been understood. For believers, this capacity includes, in a particular way, the ability to grow in the knowledge of the mysteries of God by using reason to engage ever more profoundly with revealed truths (intellectus fidei).[63] True intelligence is shaped by divine love, which “is poured forth in our hearts by the Holy Spirit” (Rom. 5:5). From this, it follows that human intelligence possesses an essential contemplative dimension, an unselfish openness to the True, the Good, and the Beautiful, beyond any utilitarian purpose.
    The Limits of AI
    30. In light of the foregoing discussion, the differences between human intelligence and current AI systems become evident. While AI is an extraordinary technological achievement capable of imitating certain outputs associated with human intelligence, it operates by performing tasks, achieving goals, or making decisions based on quantitative data and computational logic. For example, with its analytical power, AI excels at integrating data from a variety of fields, modeling complex systems, and fostering interdisciplinary connections. In this way, it can help experts collaborate in solving complex problems that “cannot be dealt with from a single perspective or from a single set of interests.”[64]
    31. However, even as AI processes and simulates certain expressions of intelligence, it remains fundamentally confined to a logical-mathematical framework, which imposes inherent limitations. Human intelligence, in contrast, develops organically throughout the person’s physical and psychological growth, shaped by a myriad of lived experiences in the flesh. Although advanced AI systems can “learn” through processes such as machine learning, this sort of training is fundamentally different from the developmental growth of human intelligence, which is shaped by embodied experiences, including sensory input, emotional responses, social interactions, and the unique context of each moment. These elements shape and form individuals within their personal history. In contrast, AI, lacking a physical body, relies on computational reasoning and learning based on vast datasets that include recorded human experiences and knowledge.
    32. Consequently, although AI can simulate aspects of human reasoning and perform specific tasks with incredible speed and efficiency, its computational abilities represent only a fraction of the broader capacities of the human mind. For instance, AI cannot currently replicate moral discernment or the ability to establish authentic relationships. Moreover, human intelligence is situated within a personally lived history of intellectual and moral formation that fundamentally shapes the individual’s perspective, encompassing the physical, emotional, social, moral, and spiritual dimensions of life. Since AI cannot offer this fullness of understanding, approaches that rely solely on this technology or treat it as the primary means of interpreting the world can lead to “a loss of appreciation for the whole, for the relationships between things, and for the broader horizon.”[65]
    33. Human intelligence is not primarily about completing functional tasks but about understanding and actively engaging with reality in all its dimensions; it is also capable of surprising insights. Since AI lacks the richness of corporeality, relationality, and the openness of the human heart to truth and goodness, its capacities—though seemingly limitless—are incomparable with the human ability to grasp reality. So much can be learned from an illness, an embrace of reconciliation, and even a simple sunset; indeed, many experiences we have as humans open new horizons and offer the possibility of attaining new wisdom. No device, working solely with data, can measure up to these and countless other experiences present in our lives.
    34. Drawing an overly close equivalence between human intelligence and AI risks succumbing to a functionalist perspective, where people are valued based on the work they can perform. However, a person’s worth does not depend on possessing specific skills, cognitive and technological achievements, or individual success, but on the person’s inherent dignity, grounded in being created in the image of God.[66] This dignity remains intact in all circumstances, including for those unable to exercise their abilities, whether it be an unborn child, an unconscious person, or an older person who is suffering.[67] It also underpins the tradition of human rights (and, in particular, what are now called “neuro-rights”), which represent “an important point of convergence in the search for common ground”[68] and can, thus, serve as a fundamental ethical guide in discussions on the responsible development and use of AI.
    35. Considering all these points, as Pope Francis observes, “the very use of the word ‘intelligence’” in connection with AI “can prove misleading”[69] and risks overlooking what is most precious in the human person. In light of this, AI should not be seen as an artificial form of human intelligence but as a product of it.[70]
    IV. The Role of Ethics in Guiding the Development and Use of AI
    36. Given these considerations, one can ask how AI can be understood within God’s plan. To answer this, it is important to recall that techno-scientific activity is not neutral in character but is a human endeavor that engages the humanistic and cultural dimensions of human creativity.[71]
    37. Seen as a fruit of the potential inscribed within human intelligence,[72] scientific inquiry and the development of technical skills are part of the “collaboration of man and woman with God in perfecting the visible creation.”[73] At the same time, all scientific and technological achievements are, ultimately, gifts from God.[74] Therefore, human beings must always use their abilities in view of the higher purpose for which God has granted them.[75]
    38. We can gratefully acknowledge how technology has “remedied countless evils which used to harm and limit human beings,”[76] a fact for which we should rejoice. Nevertheless, not all technological advancements in themselves represent genuine human progress.[77] The Church is particularly opposed to those applications that threaten the sanctity of life or the dignity of the human person.[78] Like any human endeavor, technological development must be directed to serve the human person and contribute to the pursuit of “greater justice, more extensive fraternity, and a more humane order of social relations,” which are “more valuable than advances in the technical field.”[79] Concerns about the ethical implications of technological development are shared not only within the Church but also among many scientists, technologists, and professional associations, who increasingly call for ethical reflection to guide this development in a responsible way.
    39. To address these challenges, it is essential to emphasize the importance of moral responsibility grounded in the dignity and vocation of the human person. This guiding principle also applies to questions concerning AI. In this context, the ethical dimension takes on primary importance because it is people who design systems and determine the purposes for which they are used.[80] Between a machine and a human being, only the latter is truly a moral agent—a subject of moral responsibility who exercises freedom in his or her decisions and accepts their consequences.[81] It is not the machine but the human who is in relationship with truth and goodness, guided by a moral conscience that calls the person “to love and to do what is good and to avoid evil,”[82] bearing witness to “the authority of truth in reference to the supreme Good to which the human person is drawn.”[83] Likewise, between a machine and a human, only the human can be sufficiently self-aware to the point of listening and following the voice of conscience, discerning with prudence, and seeking the good that is possible in every situation.[84] In fact, all of this also belongs to the person’s exercise of intelligence.
    40. Like any product of human creativity, AI can be directed toward positive or negative ends.[85] When used in ways that respect human dignity and promote the well-being of individuals and communities, it can contribute positively to the human vocation. Yet, as in all areas where humans are called to make decisions, the shadow of evil also looms here. Where human freedom allows for the possibility of choosing what is wrong, the moral evaluation of this technology will need to take into account how it is directed and used.
    41. At the same time, it is not only the ends that are ethically significant but also the means employed to achieve them. Additionally, the overall vision and understanding of the human person embedded within these systems are important to consider as well. Technological products reflect the worldview of their developers, owners, users, and regulators,[86] and have the power to “shape the world and engage consciences on the level of values.”[87] On a societal level, some technological developments could also reinforce relationships and power dynamics that are inconsistent with a proper understanding of the human person and society.
    42. Therefore, the ends and the means used in a given application of AI, as well as the overall vision it incorporates, must all be evaluated to ensure they respect human dignity and promote the common good.[88] As Pope Francis has stated, “the intrinsic dignity of every man and every woman” must be “the key criterion in evaluating emerging technologies; these will prove ethically sound to the extent that they help respect that dignity and increase its expression at every level of human life,”[89] including in the social and economic spheres. In this sense, human intelligence plays a crucial role not only in designing and producing technology but also in directing its use in line with the authentic good of the human person.[90] The responsibility for managing this wisely pertains to every level of society, guided by the principle of subsidiarity and other principles of Catholic Social Teaching.
    Helping Human Freedom and Decision-Making
    43. The commitment to ensuring that AI always supports and promotes the supreme value of the dignity of every human being and the fullness of the human vocation serves as a criterion of discernment for developers, owners, operators, and regulators of AI, as well as to its users. It remains valid for every application of the technology at every level of its use.
    44. An evaluation of the implications of this guiding principle could begin by considering the importance of moral responsibility. Since full moral causality belongs only to personal agents, not artificial ones, it is crucial to be able to identify and define who bears responsibility for the processes involved in AI, particularly those capable of learning, correction, and reprogramming. While bottom-up approaches and very deep neural networks enable AI to solve complex problems, they make it difficult to understand the processes that lead to the solutions they adopted. This complicates accountability since if an AI application produces undesired outcomes, determining who is responsible becomes difficult. To address this problem, attention needs to be given to the nature of accountability processes in complex, highly automated settings, where results may only become evident in the medium to long term. For this, it is important that ultimate responsibility for decisions made using AI rests with the human decision-makers and that there is accountability for the use of AI at each stage of the decision-making process.[91]
    45. In addition to determining who is responsible, it is essential to identify the objectives given to AI systems. Although these systems may use unsupervised autonomous learning mechanisms and sometimes follow paths that humans cannot reconstruct, they ultimately pursue goals that humans have assigned to them and are governed by processes established by their designers and programmers. Yet, this presents a challenge because, as AI models become increasingly capable of independent learning, the ability to maintain control over them to ensure that such applications serve human purposes may effectively diminish. This raises the critical question of how to ensure that AI systems are ordered for the good of people and not against them.
    46. While responsibility for the ethical use of AI systems starts with those who develop, produce, manage, and oversee such systems, it is also shared by those who use them. As Pope Francis noted, the machine “makes a technical choice among several possibilities based either on well-defined criteria or on statistical inferences. Human beings, however, not only choose, but in their hearts are capable of deciding.”[92] Those who use AI to accomplish a task and follow its results create a context in which they are ultimately responsible for the power they have delegated. Therefore, insofar as AI can assist humans in making decisions, the algorithms that govern it should be trustworthy, secure, robust enough to handle inconsistencies, and transparent in their operation to mitigate biases and unintended side effects.[93] Regulatory frameworks should ensure that all legal entities remain accountable for the use of AI and all its consequences, with appropriate safeguards for transparency, privacy, and accountability.[94] Moreover, those using AI should be careful not to become overly dependent on it for their decision-making, a trend that increases contemporary society’s already high reliance on technology.
    47. The Church’s moral and social teaching provides resources to help ensure that AI is used in a way that preserves human agency. Considerations about justice, for example, should also address issues such as fostering just social dynamics, upholding international security, and promoting peace. By exercising prudence, individuals and communities can discern ways to use AI to benefit humanity while avoiding applications that could degrade human dignity or harm the environment. In this context, the concept of responsibility should be understood not only in its most limited sense but as a “responsibility for the care for others, which is more than simply accounting for results achieved.”[95]
    48. Therefore, AI, like any technology, can be part of a conscious and responsible answer to humanity’s vocation to the good. However, as previously discussed, AI must be directed by human intelligence to align with this vocation, ensuring it respects the dignity of the human person. Recognizing this “exalted dignity,” the Second Vatican Council affirmed that “the social order and its development must invariably work to the benefit of the human person.”[96] In light of this, the use of AI, as Pope Francis said, must be “accompanied by an ethic inspired by a vision of the common good, an ethic of freedom, responsibility, and fraternity, capable of fostering the full development of people in relation to others and to the whole of creation.”[97]
    V. Specific Questions
    49. Within this general perspective, some observations follow below to illustrate how the preceding arguments can help provide an ethical orientation in practical situations, in line with the “wisdom of heart” that Pope Francis has proposed.[98] While not exhaustive, this discussion is offered in service of the dialogue that considers how AI can be used to uphold the dignity of the human person and promote the common good.[99]
    AI and Society
    50. As Pope Francis observed, “the inherent dignity of each human being and the fraternity that binds us together as members of the one human family must undergird the development of new technologies and serve as indisputable criteria for evaluating them before they are employed.”[100]
    51. Viewed through this lens, AI could “introduce important innovations in agriculture, education and culture, an improved level of life for entire nations and peoples, and the growth of human fraternity and social friendship,” and thus be “used to promote integral human development.”[101] AI could also help organizations identify those in need and counter discrimination and marginalization. These and other similar applications of this technology could contribute to human development and the common good.[102]
    52. However, while AI holds many possibilities for promoting the good, it can also hinder or even counter human development and the common good. Pope Francis has noted that “evidence to date suggests that digital technologies have increased inequality in our world. Not just differences in material wealth, which are also significant, but also differences in access to political and social influence.”[103] In this sense, AI could be used to perpetuate marginalization and discrimination, create new forms of poverty, widen the “digital divide,” and worsen existing social inequalities.[104]
    53. Moreover, the concentration of the power over mainstream AI applications in the hands of a few powerful companies raises significant ethical concerns. Exacerbating this problem is the inherent nature of AI systems, where no single individual can exercise complete oversight over the vast and complex datasets used for computation. This lack of well-defined accountability creates the risk that AI could be manipulated for personal or corporate gain or to direct public opinion for the benefit of a specific industry. Such entities, motivated by their own interests, possess the capacity to exercise “forms of control as subtle as they are invasive, creating mechanisms for the manipulation of consciences and of the democratic process.”[105]
    54. Furthermore, there is the risk of AI being used to promote what Pope Francis has called the “technocratic paradigm,” which perceives all the world’s problems as solvable through technological means alone.[106] In this paradigm, human dignity and fraternity are often set aside in the name of efficiency, “as if reality, goodness, and truth automatically flow from technological and economic power as such.”[107] Yet, human dignity and the common good must never be violated for the sake of efficiency,[108] for “technological developments that do not lead to an improvement in the quality of life of all humanity, but on the contrary, aggravate inequalities and conflicts, can never count as true progress.”[109] Instead, AI should be put “at the service of another type of progress, one which is healthier, more human, more social, more integral.”[110]
    55. Achieving this objective requires a deeper reflection on the relationship between autonomy and responsibility. Greater autonomy heightens each person’s responsibility across various aspects of communal life. For Christians, the foundation of this responsibility lies in the recognition that all human capacities, including the person’s autonomy, come from God and are meant to be used in the service of others.[111] Therefore, rather than merely pursuing economic or technological objectives, AI should serve “the common good of the entire human family,” which is “the sum total of social conditions that allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily.”[112]
    AI and Human Relationships
    56. The Second Vatican Council observed that “by his innermost nature man is a social being; and if he does not enter into relations with others, he can neither live nor develop his gifts.”[113] This conviction underscores that living in society is intrinsic to the nature and vocation of the human person.[114] As social beings, we seek relationships that involve mutual exchange and the pursuit of truth, in the course of which, people “share with each other the truth they have discovered, or think they have discovered, in such a way that they help one another in the search for truth.”[115]
    57. Such a quest, along with other aspects of human communication, presupposes encounters and mutual exchange between individuals shaped by their unique histories, thoughts, convictions, and relationships. Nor can we forget that human intelligence is a diverse, multifaceted, and complex reality: individual and social, rational and affective, conceptual and symbolic. Pope Francis underscores this dynamic, noting that “together, we can seek the truth in dialogue, in relaxed conversation or in passionate debate. To do so calls for perseverance; it entails moments of silence and suffering, yet it can patiently embrace the broader experience of individuals and peoples. […] The process of building fraternity, be it local or universal, can only be undertaken by spirits that are free and open to authentic encounters.”[116]
    58. It is in this context that one can consider the challenges AI poses to human relationships. Like other technological tools, AI has the potential to foster connections within the human family. However, it could also hinder a true encounter with reality and, ultimately, lead people to “a deep and melancholic dissatisfaction with interpersonal relations, or a harmful sense of isolation.”[117] Authentic human relationships require the richness of being with others in their pain, their pleas, and their joy.[118] Since human intelligence is expressed and enriched also in interpersonal and embodied ways, authentic and spontaneous encounters with others are indispensable for engaging with reality in its fullness.
    59. Because “true wisdom demands an encounter with reality,”[119] the rise of AI introduces another challenge. Since AI can effectively imitate the products of human intelligence, the ability to know when one is interacting with a human or a machine can no longer be taken for granted. Generative AI can produce text, speech, images, and other advanced outputs that are usually associated with human beings. Yet, it must be understood for what it is: a tool, not a person.[120] This distinction is often obscured by the language used by practitioners, which tends to anthropomorphize AI and thus blurs the line between human and machine.
    60. Anthropomorphizing AI also poses specific challenges for the development of children, potentially encouraging them to develop patterns of interaction that treat human relationships in a transactional manner, as one would relate to a chatbot. Such habits could lead young people to see teachers as mere dispensers of information rather than as mentors who guide and nurture their intellectual and moral growth. Genuine relationships, rooted in empathy and a steadfast commitment to the good of the other, are essential and irreplaceable in fostering the full development of the human person.
    61. In this context, it is important to clarify that, despite the use of anthropomorphic language, no AI application can genuinely experience empathy. Emotions cannot be reduced to facial expressions or phrases generated in response to prompts; they reflect the way a person, as a whole, relates to the world and to his or her own life, with the body playing a central role. True empathy requires the ability to listen, recognize another’s irreducible uniqueness, welcome their otherness, and grasp the meaning behind even their silences.[121] Unlike the realm of analytical judgment in which AI excels, true empathy belongs to the relational sphere. It involves intuiting and apprehending the lived experiences of another while maintaining the distinction between self and other.[122] While AI can simulate empathetic responses, it cannot replicate the eminently personal and relational nature of authentic empathy.[123]
    62. In light of the above, it is clear why misrepresenting AI as a person should always be avoided; doing so for fraudulent purposes is a grave ethical violation that could erode social trust. Similarly, using AI to deceive in other contexts—such as in education or in human relationships, including the sphere of sexuality—is also to be considered immoral and requires careful oversight to prevent harm, maintain transparency, and ensure the dignity of all people.[124]
    63. In an increasingly isolated world, some people have turned to AI in search of deep human relationships, simple companionship, or even emotional bonds. However, while human beings are meant to experience authentic relationships, AI can only simulate them. Nevertheless, such relationships with others are an integral part of how a person grows to become who he or she is meant to be. If AI is used to help people foster genuine connections between people, it can contribute positively to the full realization of the person. Conversely, if we replace relationships with God and with others with interactions with technology, we risk replacing authentic relationality with a lifeless image (cf. Ps. 106:20; Rom. 1:22-23). Instead of retreating into artificial worlds, we are called to engage in a committed and intentional way with reality, especially by identifying with the poor and suffering, consoling those in sorrow, and forging bonds of communion with all.
    AI, the Economy, and Labor
    64. Due to its interdisciplinary nature, AI is being increasingly integrated into economic and financial systems. Significant investments are currently being made not only in the technology sector but also in energy, finance, and media, particularly in the areas of marketing and sales, logistics, technological innovation, compliance, and risk management. At the same time, AI’s applications in these areas have also highlighted its ambivalent nature, as a source of tremendous opportunities but also profound risks. A first real critical point in this area concerns the possibility that—due to the concentration of AI applications in the hands of a few corporations—only those large companies would benefit from the value created by AI rather than the businesses that use it.
    65. Other broader aspects of AI’s impact on the economic-financial sphere must also be carefully examined, particularly concerning the interaction between concrete reality and the digital world. One important consideration in this regard involves the coexistence of diverse and alternative forms of economic and financial institutions within a given context. This factor should be encouraged, as it can bring benefits in how it supports the real economy by fostering its development and stability, especially during times of crisis. Nevertheless, it should be stressed that digital realities, not restricted by any spatial bonds, tend to be more homogeneous and impersonal than communities rooted in a particular place and a specific history, with a common journey characterized by shared values and hopes, but also by inevitable disagreements and divergences. This diversity is an undeniable asset to a community’s economic life. Turning over the economy and finance entirely to digital technology would reduce this variety and richness. As a result, many solutions to economic problems that can be reached through natural dialogue between the involved parties may no longer be attainable in a world dominated by procedures and only the appearance of nearness.
    66. Another area where AI is already having a profound impact is the world of work. As in many other fields, AI is driving fundamental transformations across many professions, with a range of effects. On the one hand, it has the potential to enhance expertise and productivity, create new jobs, enable workers to focus on more innovative tasks, and open new horizons for creativity and innovation.
    67. However, while AI promises to boost productivity by taking over mundane tasks, it frequently forces workers to adapt to the speed and demands of machines rather than machines being designed to support those who work. As a result, contrary to the advertised benefits of AI, current approaches to the technology can paradoxically deskill workers, subject them to automated surveillance, and relegate them to rigid and repetitive tasks. The need to keep up with the pace of technology can erode workers’ sense of agency and stifle the innovative abilities they are expected to bring to their work.[125]
    68. AI is currently eliminating the need for some jobs that were once performed by humans. If AI is used to replace human workers rather than complement them, there is a “substantial risk of disproportionate benefit for the few at the price of the impoverishment of many.”[126] Additionally, as AI becomes more powerful, there is an associated risk that human labor may lose its value in the economic realm. This is the logical consequence of the technocratic paradigm: a world of humanity enslaved to efficiency, where, ultimately, the cost of humanity must be cut. Yet, human lives are intrinsically valuable, independent of their economic output. Nevertheless, the “current model,” Pope Francis explains, “does not appear to favor an investment in efforts to help the slow, the weak, or the less talented to find opportunities in life.”[127] In light of this, “we cannot allow a tool as powerful and indispensable as Artificial Intelligence to reinforce such a paradigm, but rather, we must make Artificial Intelligence a bulwark against its expansion.”[128]
    69. It is important to remember that “the order of things must be subordinate to the order of persons, and not the other way around.”[129] Human work must not only be at the service of profit but at “the service of the whole human person […] taking into account the person’s material needs and the requirements of his or her intellectual, moral, spiritual, and religious life.”[130] In this context, the Church recognizes that work is “not only a means of earning one’s daily bread” but is also “an essential dimension of social life” and “a means […] of personal growth, the building of healthy relationships, self-expression and the exchange of gifts. Work gives us a sense of shared responsibility for the development of the world, and ultimately, for our life as a people.”[131]
    70. Since work is a “part of the meaning of life on this earth, a path to growth, human development and personal fulfillment,” “the goal should not be that technological progress increasingly replaces human work, for this would be detrimental to humanity”[132]—rather, it should promote human labor. Seen in this light, AI should assist, not replace, human judgment. Similarly, it must never degrade creativity or reduce workers to mere “cogs in a machine.” Therefore, “respect for the dignity of laborers and the importance of employment for the economic well-being of individuals, families, and societies, for job security and just wages, ought to be a high priority for the international community as these forms of technology penetrate more deeply into our workplaces.”[133]
    AI and Healthcare
    71. As participants in God’s healing work, healthcare professionals have the vocation and responsibility to be “guardians and servants of human life.”[134] Because of this, the healthcare profession carries an “intrinsic and undeniable ethical dimension,” recognized by the Hippocratic Oath, which obliges physicians and healthcare professionals to commit themselves to having “absolute respect for human life and its sacredness.”[135] Following the example of the Good Samaritan, this commitment is to be carried out by men and women “who reject the creation of a society of exclusion, and act instead as neighbors, lifting up and rehabilitating the fallen for the sake of the common good.”[136]
    72. Seen in this light, AI seems to hold immense potential in a variety of applications in the medical field, such as assisting the diagnostic work of healthcare providers, facilitating relationships between patients and medical staff, offering new treatments, and expanding access to quality care also for those who are isolated or marginalized. In these ways, the technology could enhance the “compassionate and loving closeness”[137] that healthcare providers are called to extend to the sick and suffering.
    73. However, if AI is used not to enhance but to replace the relationship between patients and healthcare providers—leaving patients to interact with a machine rather than a human being—it would reduce a crucially important human relational structure to a centralized, impersonal, and unequal framework. Instead of encouraging solidarity with the sick and suffering, such applications of AI would risk worsening the loneliness that often accompanies illness, especially in the context of a culture where “persons are no longer seen as a paramount value to be cared for and respected.”[138] This misuse of AI would not align with respect for the dignity of the human person and solidarity with the suffering.
    74. Responsibility for the well-being of patients and the decisions that touch upon their lives are at the heart of the healthcare profession. This accountability requires medical professionals to exercise all their skill and intelligence in making well-reasoned and ethically grounded choices regarding those entrusted to their care, always respecting the inviolable dignity of the patients and the need for informed consent. As a result, decisions regarding patient treatment and the weight of responsibility they entail must always remain with the human person and should never be delegated to AI.[139]
    75. In addition, using AI to determine who should receive treatment based predominantly on economic measures or metrics of efficiency represents a particularly problematic instance of the “technocratic paradigm” that must be rejected.[140] For, “optimizing resources means using them in an ethical and fraternal way, and not penalizing the most fragile.”[141] Additionally, AI tools in healthcare are “exposed to forms of bias and discrimination,” where “systemic errors can easily multiply, producing not only injustices in individual cases but also, due to the domino effect, real forms of social inequality.”[142]
    76. The integration of AI into healthcare also poses the risk of amplifying other existing disparities in access to medical care. As healthcare becomes increasingly oriented toward prevention and lifestyle-based approaches, AI-driven solutions may inadvertently favor more affluent populations who already enjoy better access to medical resources and quality nutrition. This trend risks reinforcing a “medicine for the rich” model, where those with financial means benefit from advanced preventative tools and personalized health information while others struggle to access even basic services. To prevent such inequities, equitable frameworks are needed to ensure that the use of AI in healthcare does not worsen existing healthcare inequalities but rather serves the common good.
    AI and Education
    77. The words of the Second Vatican Council remain fully relevant today: “True education strives to form individuals with a view toward their final end and the good of the society to which they belong.”[143] As such, education is “never a mere process of passing on facts and intellectual skills: rather, its aim is to contribute to the person’s holistic formation in its various aspects (intellectual, cultural, spiritual, etc.), including, for example, community life and relations within the academic community,”[144] in keeping with the nature and dignity of the human person.
    78. This approach involves a commitment to cultivating the mind, but always as a part of the integral development of the person: “We must break that idea of education which holds that educating means filling one’s head with ideas. That is the way we educate automatons, cerebral minds, not people. Educating is taking a risk in the tension between the mind, the heart, and the hands.”[145]
    79. At the center of this work of forming the whole human person is the indispensable relationship between teacher and student. Teachers do more than convey knowledge; they model essential human qualities and inspire the joy of discovery.[146] Their presence motivates students both through the content they teach and the care they demonstrate for their students. This bond fosters trust, mutual understanding, and the capacity to address each person’s unique dignity and potential. On the part of the student, this can generate a genuine desire to grow. The physical presence of a teacher creates a relational dynamic that AI cannot replicate, one that deepens engagement and nurtures the student’s integral development.
    80. In this context, AI presents both opportunities and challenges. If used in a prudent manner, within the context of an existing teacher-student relationship and ordered to the authentic goals of education, AI can become a valuable educational resource by enhancing access to education, offering tailored support, and providing immediate feedback to students. These benefits could enhance the learning experience, especially in cases where individualized attention is needed, or educational resources are otherwise scarce.
    81. Nevertheless, an essential part of education is forming “the intellect to reason well in all matters, to reach out towards truth, and to grasp it,”[147] while helping the “language of the head” to grow harmoniously with the “language of the heart” and the “language of the hands.”[148] This is all the more vital in an age marked by technology, in which “it is no longer merely a question of ‘using’ instruments of communication, but of living in a highly digitalized culture that has had a profound impact on […] our ability to communicate, learn, be informed and enter into relationship with others.”[149] However, instead of fostering “a cultivated intellect,” which “brings with it a power and a grace to every work and occupation that it undertakes,”[150] the extensive use of AI in education could lead to the students’ increased reliance on technology, eroding their ability to perform some skills independently and worsening their dependence on screens.[151]
    82. Additionally, while some AI systems are designed to help people develop their critical thinking abilities and problem-solving skills, many others merely provide answers instead of prompting students to arrive at answers themselves or write text for themselves.[152] Instead of training young people how to amass information and generate quick responses, education should encourage “the responsible use of freedom to face issues with good sense and intelligence.”[153] Building on this, “education in the use of forms of artificial intelligence should aim above all at promoting critical thinking. Users of all ages, but especially the young, need to develop a discerning approach to the use of data and content collected on the web or produced by artificial intelligence systems. Schools, universities, and scientific societies are challenged to help students and professionals to grasp the social and ethical aspects of the development and uses of technology.”[154]
    83. As Saint John Paul II recalled, “in the world today, characterized by such rapid developments in science and technology, the tasks of a Catholic University assume an ever greater importance and urgency.”[155] In a particular way, Catholic universities are urged to be present as great laboratories of hope at this crossroads of history. In an inter-disciplinary and cross-disciplinary key, they are urged to engage “with wisdom and creativity”[156] in careful research on this phenomenon, helping to draw out the salutary potential within the various fields of science and reality, and guiding them always towards ethically sound applications that clearly serve the cohesion of our societies and the common good, reaching new frontiers in the dialogue between faith and reason.
    84. Moreover, it should be noted that current AI programs have been known to provide biased or fabricated information, which can lead students to trust inaccurate content. This problem “not only runs the risk of legitimizing fake news and strengthening a dominant culture’s advantage, but, in short, it also undermines the educational process itself.”[157] With time, clearer distinctions may emerge between proper and improper uses of AI in education and research. Yet, a decisive guideline is that the use of AI should always be transparent and never misrepresented.
    AI, Misinformation, Deepfakes, and Abuse
    85. AI could be used as an aid to human dignity if it helps people understand complex concepts or directs them to sound resources that support their search for the truth.[158]
    86. However, AI also presents a serious risk of generating manipulated content and false information, which can easily mislead people due to its resemblance to the truth. Such misinformation might occur unintentionally, as in the case of AI “hallucination,” where a generative AI system yields results that appear real but are not. Since generating content that mimics human artifacts is central to AI’s functionality, mitigating these risks proves challenging. Yet, the consequences of such aberrations and false information can be quite grave. For this reason, all those involved in producing and using AI systems should be committed to the truthfulness and accuracy of the information processed by such systems and disseminated to the public.
    87. While AI has a latent potential to generate false information, an even more troubling problem lies in the deliberate misuse of AI for manipulation. This can occur when individuals or organizations intentionally generate and spread false content with the aim to deceive or cause harm, such as “deepfake” images, videos, and audio—referring to a false depiction of a person, edited or generated by an AI algorithm. The danger of deepfakes is particularly evident when they are used to target or harm others. While the images or videos themselves may be artificial, the damage they cause is real, leaving “deep scars in the hearts of those who suffer it” and “real wounds in their human dignity.”[159]
    88. On a broader scale, by distorting “our relationship with others and with reality,”[160] AI-generated fake media can gradually undermine the foundations of society. This issue requires careful regulation, as misinformation—especially through AI-controlled or influenced media—can spread unintentionally, fueling political polarization and social unrest. When society becomes indifferent to the truth, various groups construct their own versions of “facts,” weakening the “reciprocal ties and mutual dependencies”[161] that underpin the fabric of social life. As deepfakes cause people to question everything and AI-generated false content erodes trust in what they see and hear, polarization and conflict will only grow. Such widespread deception is no trivial matter; it strikes at the core of humanity, dismantling the foundational trust on which societies are built.[162]
    89. Countering AI-driven falsehoods is not only the work of industry experts—it requires the efforts of all people of goodwill. “If technology is to serve human dignity and not harm it, and if it is to promote peace rather than violence, then the human community must be proactive in addressing these trends with respect to human dignity and the promotion of the good.”[163] Those who produce and share AI-generated content should always exercise diligence in verifying the truth of what they disseminate and, in all cases, should “avoid the sharing of words and images that are degrading of human beings, that promote hatred and intolerance, that debase the goodness and intimacy of human sexuality or that exploit the weak and vulnerable.”[164] This calls for the ongoing prudence and careful discernment of all users regarding their activity online.[165]
    AI, Privacy, and Surveillance
    90. Humans are inherently relational, and the data each person generates in the digital world can be seen as an objectified expression of this relational nature. Data conveys not only information but also personal and relational knowledge, which, in an increasingly digitized context, can amount to power over the individual. Moreover, while some types of data may pertain to public aspects of a person’s life, others may touch upon the individual’s interiority, perhaps even their conscience. Seen in this way, privacy plays an essential role in protecting the boundaries of a person’s inner life, preserving their freedom to relate to others, express themselves, and make decisions without undue control. This protection is also tied to the defense of religious freedom, as surveillance can also be misused to exert control over the lives of believers and how they express their faith.
    91. It is appropriate, therefore, to address the issue of privacy from a concern for the legitimate freedom and inalienable dignity of the human person “in all circumstances.”[166] The Second Vatican Council included the right “to safeguard privacy” among the fundamental rights “necessary for living a genuinely human life,” a right that should be extended to all people on account of their “sublime dignity.”[167] Furthermore, the Church has also affirmed the right to the legitimate respect for a private life in the context of affirming the person’s right to a good reputation, defense of their physical and mental integrity, and freedom from harm or undue intrusion[168]—essential components of the due respect for the intrinsic dignity of the human person.[169]
    92. Advances in AI-powered data processing and analysis now make it possible to infer patterns in a person’s behavior and thinking from even a small amount of information, making the role of data privacy even more imperative as a safeguard for the dignity and relational nature of the human person. As Pope Francis observed, “while closed and intolerant attitudes towards others are on the rise, distances are otherwise shrinking or disappearing to the point that the right to privacy scarcely exists. Everything has become a kind of spectacle to be examined and inspected, and people’s lives are now under constant surveillance.”[170]
    93. While there can be legitimate and proper ways to use AI in keeping with human dignity and the common good, using it for surveillance aimed at exploiting, restricting others’ freedom, or benefitting a few at the expense of the many is unjustifiable. The risk of surveillance overreach must be monitored by appropriate regulators to ensure transparency and public accountability. Those responsible for surveillance should never exceed their authority, which must always favor the dignity and freedom of every person as the essential basis of a just and humane society.
    94. Furthermore, “fundamental respect for human dignity demands that we refuse to allow the uniqueness of the person to be identified with a set of data.”[171] This especially applies when AI is used to evaluate individuals or groups based on their behavior, characteristics, or history—a practice known as “social scoring”: “In social and economic decision-making, we should be cautious about delegating judgments to algorithms that process data, often collected surreptitiously, on an individual’s makeup and prior behavior. Such data can be contaminated by societal prejudices and preconceptions. A person’s past behavior should not be used to deny him or her the opportunity to change, grow, and contribute to society. We cannot allow algorithms to limit or condition respect for human dignity, or to exclude compassion, mercy, forgiveness, and above all, the hope that people are able to change.”[172]
    AI and the Protection of Our Common Home
    95. AI has many promising applications for improving our relationship with our “common home,” such as creating models to forecast extreme climate events, proposing engineering solutions to reduce their impact, managing relief operations, and predicting population shifts.[173] Additionally, AI can support sustainable agriculture, optimize energy usage, and provide early warning systems for public health emergencies. These advancements have the potential to strengthen resilience against climate-related challenges and promote more sustainable development.
    96. At the same time, current AI models and the hardware required to support them consume vast amounts of energy and water, significantly contributing to CO2 emissions and straining resources. This reality is often obscured by the way this technology is presented in the popular imagination, where words such as “the cloud”[174] can give the impression that data is stored and processed in an intangible realm, detached from the physical world. However, “the cloud” is not an ethereal domain separate from the physical world; as with all computing technologies, it relies on physical machines, cables, and energy. The same is true of the technology behind AI. As these systems grow in complexity, especially large language models (LLMs), they require ever-larger datasets, increased computational power, and greater storage infrastructure. Considering the heavy toll these technologies take on the environment, it is vital to develop sustainable solutions that reduce their impact on our common home.
    97. Even then, as Pope Francis teaches, it is essential “that we look for solutions not only in technology but in a change of humanity.”[175] A complete and authentic understanding of creation recognizes that the value of all created things cannot be reduced to their mere utility. Therefore, a fully human approach to the stewardship of the earth rejects the distorted anthropocentrism of the technocratic paradigm, which seeks to “extract everything possible” from the world,[176] and rejects the “myth of progress,” which assumes that “ecological problems will solve themselves simply with the application of new technology and without any need for ethical considerations or deep change.”[177] Such a mindset must give way to a more holistic approach that respects the order of creation and promotes the integral good of the human person while safeguarding our common home.[178]
    AI and Warfare
    98. The Second Vatican Council and the consistent teaching of the Popes since then have insisted that peace is not merely the absence of war and is not limited to maintaining a balance of powers between adversaries. Instead, in the words of Saint Augustine, peace is “the tranquility of order.”[179] Indeed, peace cannot be attained without safeguarding the goods of persons, free communication, respect for the dignity of persons and peoples, and the assiduous practice of fraternity. Peace is the work of justice and the effect of charity and cannot be achieved through force alone; instead, it must be principally built through patient diplomacy, the active promotion of justice, solidarity, integral human development, and respect for the dignity of all people.[180] In this way, the tools used to maintain peace should never be allowed to justify injustice, violence, or oppression. Instead, they should always be governed by a “firm determination to respect other people and nations, along with their dignity, as well as the deliberate practice of fraternity.”[181]
    99. While AI’s analytical abilities could help nations seek peace and ensure security, the “weaponization of Artificial Intelligence” can also be highly problematic. Pope Francis has observed that “the ability to conduct military operations through remote control systems has led to a lessened perception of the devastation caused by those weapon systems and the burden of responsibility for their use, resulting in an even more cold and detached approach to the immense tragedy of war.”[182] Moreover, the ease with which autonomous weapons make war more viable militates against the principle of war as a last resort in legitimate self-defense,[183] potentially increasing the instruments of war well beyond the scope of human oversight and precipitating a destabilizing arms race, with catastrophic consequences for human rights.[184]
    100. In particular, Lethal Autonomous Weapon Systems, which are capable of identifying and striking targets without direct human intervention, are a “cause for grave ethical concern” because they lack the “unique human capacity for moral judgment and ethical decision-making.”[185] For this reason, Pope Francis has urgently called for a reconsideration of the development of these weapons and a prohibition on their use, starting with “an effective and concrete commitment to introduce ever greater and proper human control. No machine should ever choose to take the life of a human being.”[186]
    101. Since it is a small step from machines that can kill autonomously with precision to those capable of large-scale destruction, some AI researchers have expressed concerns that such technology poses an “existential risk” by having the potential to act in ways that could threaten the survival of entire regions or even of humanity itself. This danger demands serious attention, reflecting the long-standing concern about technologies that grant war “an uncontrollable destructive power over great numbers of innocent civilians,”[187] without even sparing children. In this context, the call from Gaudium et Spes to “undertake an evaluation of war with an entirely new attitude”[188] is more urgent than ever.
    102. At the same time, while the theoretical risks of AI deserve attention, the more immediate and pressing concern lies in how individuals with malicious intentions might misuse this technology.[189] Like any tool, AI is an extension of human power, and while its future capabilities are unpredictable, humanity’s past actions provide clear warnings. The atrocities committed throughout history are enough to raise deep concerns about the potential abuses of AI.
    103. Saint John Paul II observed that “humanity now has instruments of unprecedented power: we can turn this world into a garden, or reduce it to a pile of rubble.”[190] Given this fact, the Church reminds us, in the words of Pope Francis, that “we are free to apply our intelligence towards things evolving positively,” or toward “decadence and mutual destruction.”[191] To prevent humanity from spiraling into self-destruction,[192] there must be a clear stand against all applications of technology that inherently threaten human life and dignity. This commitment requires careful discernment about the use of AI, particularly in military defense applications, to ensure that it always respects human dignity and serves the common good. The development and deployment of AI in armaments should be subject to the highest levels of ethical scrutiny, governed by a concern for human dignity and the sanctity of life.[193]
    AI and Our Relationship with God
    104. Technology offers remarkable tools to oversee and develop the world’s resources. However, in some cases, humanity is increasingly ceding control of these resources to machines. Within some circles of scientists and futurists, there is optimism about the potential of artificial general intelligence (AGI), a hypothetical form of AI that would match or surpass human intelligence and bring about unimaginable advancements. Some even speculate that AGI could achieve superhuman capabilities. At the same time, as society drifts away from a connection with the transcendent, some are tempted to turn to AI in search of meaning or fulfillment—longings that can only be truly satisfied in communion with God.[194]
    105. However, the presumption of substituting God for an artifact of human making is idolatry, a practice Scripture explicitly warns against (e.g., Ex. 20:4; 32:1-5; 34:17). Moreover, AI may prove even more seductive than traditional idols for, unlike idols that “have mouths but do not speak; eyes, but do not see; ears, but do not hear” (Ps. 115:5-6), AI can “speak,” or at least gives the illusion of doing so (cf. Rev. 13:15). Yet, it is vital to remember that AI is but a pale reflection of humanity—it is crafted by human minds, trained on human-generated material, responsive to human input, and sustained through human labor. AI cannot possess many of the capabilities specific to human life, and it is also fallible. By turning to AI as a perceived “Other” greater than itself, with which to share existence and responsibilities, humanity risks creating a substitute for God. However, it is not AI that is ultimately deified and worshipped, but humanity itself—which, in this way, becomes enslaved to its own work.[195]
    106. While AI has the potential to serve humanity and contribute to the common good, it remains a creation of human hands, bearing “the imprint of human art and ingenuity” (Acts 17:29). It must never be ascribed undue worth. As the Book of Wisdom affirms: “For a man made them, and one whose spirit is borrowed formed them; for no man can form a god which is like himself. He is mortal, and what he makes with lawless hands is dead, for he is better than the objects he worships since he has life, but they never have” (Wis. 15:16-17).
    107. In contrast, 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.”[196] It is within the heart, as Pope Francis reminds us, that each individual discovers the “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.”[197] Therefore, it is the heart alone that is “capable of setting our other powers and passions, and our entire person, in a stance of reverence and loving obedience before the Lord,”[198] who “offers to treat each one of us as a ‘Thou,’ always and forever.”[199]
    VI. Concluding Reflections
    108. Considering the various challenges posed by advances in technology, Pope Francis emphasized the need for growth in “human responsibility, values, and conscience,” proportionate to the growth in the potential that this technology brings[200]—recognizing that “with an increase in human power comes a broadening of responsibility on the part of individuals and communities.”[201]
    109. At the same time, the “essential and fundamental question” remains “whether in the context of this progress man, as man, is becoming truly better, that is to say, more mature spiritually, more aware of the dignity of his humanity, more responsible, more open to others, especially the neediest and the weakest, and readier to give and to aid all.”[202]
    110. As a result, it is crucial to know how to evaluate individual applications of AI in particular contexts to determine whether its use promotes human dignity, the vocation of the human person, and the common good. As with many technologies, the effects of the various uses of AI may not always be predictable from their inception. As these applications and their social impacts become clearer, appropriate responses should be made at all levels of society, following the principle of subsidiarity. Individual users, families, civil society, corporations, institutions, governments, and international organizations should work at their proper levels to ensure that AI is used for the good of all.
    111. A significant challenge and opportunity for the common good today lies in considering AI within a framework of relational intelligence, which emphasizes the interconnectedness of individuals and communities and highlights our shared responsibility for fostering the integral well-being of others. The twentieth-century philosopher Nicholas Berdyaev observed that people often blame machines for personal and social problems; however, “this only humiliates man and does not correspond to his dignity,” for “it is unworthy to transfer responsibility from man to a machine.”[203] Only the human person can be morally responsible, and the challenges of a technological society are ultimately spiritual in nature. Therefore, facing those challenges “demands an intensification of spirituality.”[204]
    112. A further point to consider is the call, prompted by the appearance of AI on the world stage, for a renewed appreciation of all that is human. Years ago, the French Catholic author Georges Bernanos warned that “the danger is not in the multiplication of machines, but in the ever-increasing number of men accustomed from their childhood to desire only what machines can give.”[205] This challenge is as true today as it was then, as the rapid pace of digitization risks a “digital reductionism,” where non-quantifiable aspects of life are set aside and then forgotten or even deemed irrelevant because they cannot be computed in formal terms. AI should be used only as a tool to complement human intelligence rather than replace its richness.[206] Cultivating those aspects of human life that transcend computation is crucial for preserving “an authentic humanity” that “seems to dwell in the midst of our technological culture, almost unnoticed, like a mist seeping gently beneath a closed door.”[207]
    True Wisdom
    113. The vast expanse of the world’s knowledge is now accessible in ways that would have filled past generations with awe. However, to ensure that advancements in knowledge do not become humanly or spiritually barren, one must go beyond the mere accumulation of data and strive to achieve true wisdom.[208]
    114. This wisdom is the gift that humanity needs most to address the profound questions and ethical challenges posed by AI: “Only by adopting a spiritual way of viewing reality, only by recovering a wisdom of the heart, can we confront and interpret the newness of our time.”[209] Such “wisdom of the heart” is “the virtue that enables us to integrate the whole and its parts, our decisions and their consequences.” It “cannot be sought from machines,” but it “lets itself be found by those who seek it and be seen by those who love it; it anticipates those who desire it, and it goes in search of those who are worthy of it (cf. Wis 6:12-16).”[210]
    115. In a world marked by AI, we need the grace of the Holy Spirit, who “enables us to look at things with God’s eyes, to see connections, situations, events and to uncover their real meaning.”[211]
    116. Since a “person’s perfection is measured not by the information or knowledge they possess, but by the depth of their charity,”[212] how we incorporate AI “to include the least of our brothers and sisters, the vulnerable, and those most in need, will be the true measure of our humanity.”[213] The “wisdom of the heart” can illuminate and guide the human-centered use of this technology to help promote the common good, care for our “common home,” advance the search for the truth, foster integral human development, favor human solidarity and fraternity, and lead humanity to its ultimate goal: happiness and full communion with God.[214]
    117. From this perspective of wisdom, believers will be able to act as moral agents capable of using this technology to promote an authentic vision of the human person and society.[215] This should be done with the understanding that technological progress is part of God’s plan for creation—an activity that we are called to order toward the Paschal Mystery of Jesus Christ, in the continual search for the True and the Good.
    The Supreme Pontiff, Francis, at the Audience granted on 14 January 2025 to the undersigned Prefects and Secretaries of the Dicastery for the Doctrine of the Faith and the Dicastery for Culture and Education, approved this Note and ordered its publication.
    Given in Rome, at the offices of the Dicastery for the Doctrine of the Faith and the Dicastery for Culture and Education, on 28 January 2025, the Liturgical Memorial of Saint Thomas Aquinas, Doctor of the Church.
    Víctor Manuel Card. Fernández                                         José Card. Tolentino de Mendonça
    Prefect                                                                           Prefect
    Msgr. Armando Matteo                                                    Most Rev. Paul Tighe
    Secretary, Doctrinal Section                                             Secretary, Culture Section
    Ex audientia die 14 ianuarii 2025
    Franciscus
    _________________
    [1] Catechism of the Catholic Church, par. 378. See also Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 34: AAS 58 (1966), 1052-1053.
    [2] Francis, Address to the Participants in the Plenary Assembly of the Pontifical Academy for Life (28 February 2020): AAS 112 (2020), 307. Cf. Id., Christmas Greetings to the Roman Curia (21 December 2019): AAS 112 (2020), 43.
    [3] Cf. Francis, Message for the LVIII World Day of Social Communications (24 January 2024): L’Osservatore Romano, 24 January 2024, 8.
    [4] Cf. Catechism of the Catholic Church, par. 2293; Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 35: AAS 58 (1966), 1053.
    [5] J. McCarthy, et al., “A Proposal for the Dartmouth Summer Research Project on Artificial Intelligence” (31 August 1955), http://www-formal.stanford.edu/jmc/history/dartmouth/dartmouth.html (accessed: 21 October 2024).
    [6] Cf. Francis, Message for the LVII World Day of Peace (1 January 2024), pars. 2-3: L’Osservatore Romano, 14 December 2023, 2.
    [7] Terms in this document describing the outputs or processes of AI are used figuratively to explain its operations and are not intended to anthropomorphize the machine.
    [8] Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 3; Id., Message for the LVII World Day of Peace (1 January 2024), par. 2: L’Osservatore Romano, 14 December 2023, 2.
    [9] Here, one can see the primary positions of the “transhumanists” and the “posthumanists.” Transhumanists argue that technological advancements will enable humans to overcome their biological limitations and enhance both their physical and cognitive abilities. Posthumanists, on the other hand, contend that such advances will ultimately alter human identity to the extent that humanity itself may no longer be considered truly “human.” Both views rest on a fundamentally negative perception of human corporality, which treats the body more as an obstacle than as an integral part of the person’s identity and call to full realization. Yet, this negative view of the body is inconsistent with a proper understanding of human dignity. While the Church supports genuine scientific progress, it affirms that human dignity is rooted in “the person as an inseparable unity of body and soul.” Thus, “dignity is also inherent in each person’s body, which participates in its own way in being in imago Dei” (Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita [8 April 2024], par. 18).
    [10] This approach reflects a functionalist perspective, which reduces the human mind to its functions and assumes that its functions can be entirely quantified in physical or mathematical terms. However, even if a future AGI were to appear truly intelligent, it would still remain functional in nature.
    [11] Cf. A.M. Turing, “Computing Machinery and Intelligence,” Mind 59 (1950) 443-460.
    [12] If “thinking” is attributed to machines, it must be clarified that this refers to calculative thinking rather than critical thinking. Similarly, if machines are said to operate using logical thinking, it must be specified that this is limited to computational logic. On the other hand, by its very nature, human thought is a creative process that eludes programming and transcends constraints.
    [13] On the foundational role of language in shaping understanding, cf. M. Heidegger, Über den Humanismus, Klostermann, Frankfurt am Main 1949 (en. tr. “Letter on Humanism,” in Basic Writings: Martin Heidegger, Routledge, London ‒ New York 2010, 141-182).
    [14] For further discussion of these anthropological and theological foundations, see AI Research Group of the Centre for Digital Culture of the Dicastery for Culture and Education, Encountering Artificial Intelligence: Ethical and Anthropological Investigations(Theological Investigations of Artificial Intelligence 1), M.J. Gaudet, N. Herzfeld, P. Scherz, J.J. Wales, eds., Journal of Moral Theology, Pickwick, Eugene 2024, 43-144.
    [15] Aristotle, Metaphysics, I.1, 980 a 21.
    [16] Cf. Augustine, De Genesi ad litteram III, 20, 30: PL 34, 292: “Man is made in the image of God in relation to that [faculty] by which he is superior to the irrational animals. Now, this [faculty] is reason itself, or the ‘mind,’ or ‘intelligence,’ whatever other name it may more suitably be given”; Id., Enarrationes in Psalmos 54, 3: PL 36, 629: “When considering all that they have, humans discover that they are most distinguished from animals precisely by the fact they possess intelligence.” This is also reiterated by Saint Thomas Aquinas, who states that “man is the most perfect of all earthly beings endowed with motion, and his proper and natural operation is intellection,” by which man abstracts from things and “receives in his mind things actually intelligible” (Thomas Aquinas, Summa Contra Gentiles II, 76).
    [17] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 15: AAS 58 (1966), 1036.
    [18] Aquinas, Summa Theologiae, II-II, q. 49, a. 5, ad 3. Cf. ibid., I, q. 79; II-II, q. 47, a. 3; II-II, q. 49, a. 2. For a contemporary perspective that echoes elements of the classical and medieval distinction between these two modes of cognition, cf. D. Kahneman, Thinking, Fast and Slow, New York 2011.
    [19] Aquinas, Summa Theologiae, I, q. 76, a. 1, resp.
    [20] Cf. Irenaeus of Lyon, Adversus Haereses, V, 6, 1: PG 7(2), 1136-1138.
    [21] Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), par. 9. Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 213: AAS 112 (2020), 1045: “The intellect can investigate the reality of things through reflection, experience and dialogue, and come to recognize in that reality, which transcends it, the basis of certain universal moral demands.”
    [22] Cf. Congregation for the Doctrine of the Faith, Doctrinal Note on Some Aspects of Evangelization (3 December 2007), par. 4: AAS 100 (2008), 491-492.
    [23] Catechism of the Catholic Church, par. 365. Cf. Aquinas, Summa Theologiae, I, q. 75, a. 4, resp.
    [24] Indeed, Sacred Scripture “generally considers the human person as a being who exists in the body and is unthinkable outside of it” (Pontifical Biblical Commission, “Che cosa è l’uomo?” (Sal 8,5): Un itinerario di antropologia biblica [30 September 2019], par. 19). Cf. ibid., pars. 20-21, 43-44, 48.
    [25] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 22: AAS 58 (1966), 1042: Cf. Congregation for the Doctrine of the Faith, Instruction Dignitas Personae (8 September 2008), par. 7: AAS 100 (2008), 863: “Christ did not disdain human bodiliness, but instead fully disclosed its meaning and value.”
    [26] Aquinas, Summa Contra Gentiles II, 81.
    [27] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 15: AAS 58 (1966), 1036.
    [28] Cf. Aquinas, Summa Theologiae I, q. 89, a. 1, resp.: “to be separated from the body is not in accordance with [the soul’s] nature […] and hence it is united to the body in order that it may have an existence and an operation suitable to its nature.”
    [29] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 14: AAS 58 (1966), 1035. Cf. Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), par. 18.
    [30] International Theological Commission, Communion and Stewardship: Human Persons Created in the Image of God (2004), par. 56. Cf. Catechism of the Catholic Church, par. 357.
    [31] Cf. Congregation for the Doctrine of the Faith, Instruction Dignitas Personae (8 September 2008), pars. 5, 8; Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), pars. 15, 24, 53-54.
    [32] Catechism of the Catholic Church, par. 356. Cf. ibid., par. 221.
    [33] Cf. Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), pars. 13, 26-27.
    [34] Congregation for the Doctrine of the Faith, Instruction Donum Veritatis (24 May 1990), 6: AAS 82 (1990), 1552. Cf. John Paul II, Encyclical Veritatis Splendor (6 August 1993), par. 109: AAS 85 (1993), 1219. Cf. Pseudo-Dionysius, De divinis nominibus, VII, 2: PG 3, 868B-C: “Human souls also possess reason and with it they circle in discourse around the truth of things. […] [O]n account of the manner in which they are capable of concentrating the many into the one, they too, in their own fashion and as far as they can, are worthy of conceptions like those of the angels” (en. tr. Pseudo-Dionysius: The Complete Works, Paulist Press, New York – Mahwah 1987, 106-107).
    [35] John Paul II, Encyclical Letter Fides et Ratio (14 September 1998), par. 3: AAS 91 (1999), 7.
    [36] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 15: AAS 58 (1966), 1036.
    [37] John Paul II, Encyclical Letter Fides et Ratio (14 September 1998), par. 42: AAS 91 (1999), 38. Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 208: AAS 112 (2020), 1043: “the human mind is capable of transcending immediate concerns and grasping certain truths that are unchanging, as true now as in the past. As it peers into human nature, reason discovers universal values derived from that same nature”; ibid., par. 184: AAS 112 (2020), 1034.
    [38] Cf. B. Pascal, Pensées, no. 267 (ed. Brunschvicg): “The last proceeding of reason is to recognize that there is an infinity of things which are beyond it” (en. tr. Pascal’s Pensées, E.P. Dutton, New York 1958, 77).
    [39] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 15: AAS 58 (1966), 1036. Cf. Congregation for the Doctrine of the Faith, Doctrinal Note on Some Aspects of Evangelization (3 December 2007), par. 4: AAS 100 (2008), 491-492.
    [40] Our semantic capacity allows us to understand messages in any form of communication in a manner that both takes into account and transcends their material or empirical structures (such as computer code). Here, intelligence becomes a wisdom that “enables us to look at things with God’s eyes, to see connections, situations, events and to uncover their real meaning” (Francis, Message for the LVIII World Day of Social Communications [24 January 2024]: L’Osservatore Romano, 24 January 2024, 8). Our creativity enables us to generate new content or ideas, primarily by offering an original viewpoint on reality. Both capacities depend on the existence of a personal subjectivity for their full realization.
    [41] Second Vatican Ecumenical Council, Declaration Dignitatis Humanae (7 December 1965), par. 3: AAS 58 (1966), 931.
    [42] Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 184: AAS 112 (2020), 1034: “Charity, when accompanied by a commitment to the truth, is much more than personal feeling […]. Indeed, its close relation to truth fosters its universality and preserves it from being ‘confined to a narrow field devoid of relationships.’ […] Charity’s openness to truth thus protects it from ‘a fideism that deprives it of its human and universal breadth.’” The internal quotes are from Benedict XVI, Encyclical Letter Caritas in Veritate (29 June 2009), pars. 2-4: AAS 101 (2009), 642-643.
    [43] Cf. International Theological Commission, Communion and Stewardship: Human Persons Created in the Image of God (2004), par. 7.
    [44] John Paul II, Encyclical Letter Fides et Ratio (14 September 1998), par. 13: AAS 91 (1999), 15. Cf. Congregation for the Doctrine of the Faith, Doctrinal Note on Some Aspects of Evangelization (3 December 2007), par. 4: AAS 100 (2008), 491-492.
    [45] John Paul II, Encyclical Letter Fides et Ratio (14 September 1998), par. 13: AAS 91 (1999), 15.
    [46] Bonaventure, In II Librum Sententiarum, d. I, p. 2, a. 2, q. 1; as quoted in Catechism of the Catholic Church, par. 293. Cf. ibid., par. 294.
    [47] Cf. Catechism of the Catholic Church, pars. 295, 299, 302. Bonaventure likens the universe to “a book reflecting, representing, and describing its Maker,” the Triune God who grants existence to all things (Breviloquium 2.12.1). Cf. Alain de Lille, De Incarnatione Christi, PL 210, 579a: “Omnis mundi creatura quasi liber et pictura nobis est et speculum.”
    [48] Cf. Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 67: AAS 107 (2015), 874; John Paul II, Encyclical Letter Laborem Exercens (14 September 1981), par. 6: AAS 73 (1981), 589-592; Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), pars. 33-34: AAS 58 (1966), 1052-1053; International Theological Commission, Communion and Stewardship: Human Persons Created in the Image of God (2004), par. 57: “human beings occupy a unique place in the universe according to the divine plan: they enjoy the privilege of sharing in the divine governance of visible creation. […] Since man’s place as ruler is in fact a participation in the divine governance of creation, we speak of it here as a form of stewardship.”
    [49] Cf. John Paul II, Encyclical Letter Veritatis Splendor (6 August 1993), pars. 38-39: AAS 85 (1993), 1164-1165.
    [50] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), pars. 33-34: AAS 58 (1966), 1052-1053. This idea is also reflected in the creation account, where God brings creatures to Adam “to see what he would call them. And whatever [he] called every living creature, that was its name” (Gen. 2:19), an action that demonstrates the active engagement of human intelligence in the stewardship of God’s creation. Cf. John Chrysostom, Homiliae in Genesim, XIV, 17-21: PG 53, 116-117.
    [51] Cf. Catechism of the Catholic Church, par. 301.
    [52] Cf. Catechism of the Catholic Church, par. 302.
    [53] Bonaventure, Breviloquium 2.12.1. Cf. ibid., 2.11.2.
    [54] Cf. Francis, Apostolic Exhortation Evangelii Gaudium (24 November 2013), par. 236: AAS 105 (2023), 1115; Id., Address to Participants in the Meeting of University Chaplains and Pastoral Workers Promoted by the Dicastery for Culture and Education(24 November 2023): L’Osservatore Romano, 24 November 2023, 7.
    [55] Cf. J.H. Newman, The Idea of a University Defined and Illustrated, Discourse 5.1, Basil Montagu Pickering, London 18733, 99-100; Francis, Address to Rectors, Professors, Students and Staff of the Roman Pontifical Universities and Institutions (25 February 2023): AAS 115 (2023), 316.
    [56] Francis, Address to the Members of the National Confederation of Artisans and Small- and Medium-Sized Enterprises (CNA) (15 November 2024): L’Osservatore Romano, 15 November 2024, 8.
    [57] Cf. Francis, Post-Synodal Apostolic Exhortation Querida Amazonia (2 February 2020), par. 41: AAS 112 (2020), 246; Id., Encyclical Letter Laudato Si’ (24 May 2015), par. 146: AAS 107 (2015), 906.
    [58] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 47: AAS 107 (2015), 864. Cf. Id., Encyclical Letter Dilexit Nos (24 October 2024), pars. 17-24: L’Osservatore Romano, 24 October 2024, 5; Id., Encyclical Letter Fratelli Tutti (3 October 2020), par. 47-50: AAS 112 (2020), 985-987.
    [59] Francis, Encyclical Letter Dilexit Nos (24 October 2024), par. 20: L’Osservatore Romano, 24 October 2024, 5.
    [60] P. Claudel, Conversation sur Jean Racine, Gallimard, Paris 1956, 32: “L’intelligence n’est rien sans la délectation.” Cf. Francis, Encyclical Letter Dilexit Nos (24 October 2024), par. 13: L’Osservatore Romano, 24 October 2024, 5: “The mind and the will are put at the service of the greater good by sensing and savoring truths.”
    [61] Dante, Paradiso, Canto XXX: “luce intellettüal, piena d’amore; / amor di vero ben, pien di letizia; / letizia che trascende ogne dolzore” (en. tr. The Divine Comedy of Dante Alighieri, C.E. Norton, tr., Houghton Mifflin, Boston 1920, 232).
    [62] Cf. Second Vatican Ecumenical Council, Declaration Dignitatis Humanae (7 December 1965), par. 3: AAS 58 (1966), 931: “[T]he highest norm of human life is the divine law itself—eternal, objective and universal, by which God orders, directs and governs the whole world and the ways of the human community according to a plan conceived in his wisdom and love. God has enabled man to participate in this law of his so that, under the gentle disposition of divine providence, many may be able to arrive at a deeper and deeper knowledge of unchangeable truth.” Also cf. Id., Pastoral Constitution Gaudium et Spes (7 December 1965), par. 16: AAS 58 (1966), 1037.
    [63] Cf. First Vatican Council, Dogmatic Constitution Dei Filius (24 April 1870), ch. 4, DH 3016.
    [64] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 110: AAS 107 (2015), 892.
    [65] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 110: AAS 107 (2015), 891. Cf. Id., Encyclical Letter Fratelli Tutti (3 October 2020), par. 204: AAS 112 (2020), 1042.
    [66] Cf. John Paul II, Encyclical Letter Centesimus Annus (1 May 1991), par. 11: AAS 83 (1991), 807: “God has imprinted his own image and likeness on man (cf. Gen 1:26), conferring upon him an incomparable dignity […]. In effect, beyond the rights which man acquires by his own work, there exist rights which do not correspond to any work he performs, but which flow from his essential dignity as a person.” Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 3-4.
    [67] Cf. Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), par. 8. Cf. ibid., par. 9; Congregation for the Doctrine of the Faith, Instruction Dignitas Personae (8 September 2008), par. 22.
    [68] Francis, Address to the Participants in the Plenary Assembly of the Pontifical Academy for Life (28 February 2020): AAS 112 (2024), 310.
    [69] Francis, Message for the LVIII World Day of Social Communications (24 January 2024): L’Osservatore Romano, 24 January 2024, 8.
    [70] In this sense, “Artificial Intelligence” is understood as a technical term to indicate this technology, recalling that the expression is also used to designate the field of study and not only its applications.
    [71] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), pars. 34-35: AAS 58 (1966), 1052-1053; John Paul II, Encyclical Letter Centesimus Annus (1 May 1991), par. 51: AAS 83 (1991), 856-857.
    [72] For example, see the encouragement of scientific exploration in Albertus Magnus (De Mineralibus, II, 2, 1) and the appreciation for the mechanical arts in Hugh of St. Victor (Didascalicon, I, 9). These writers, among a long list of other Catholics engaged in scientific research and technological exploration, illustrate that “faith and science can be united in charity, provided that science is put at the service of the men and woman of our time and not misused to harm or even destroy them” (Francis, Address to Participants in the 2024 Lemaître Conference of the Vatican Observatory [20 June 2024]: L’Osservatore Romano, 20 June 2024, 8). Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 36: AAS 58 (1966), 1053-1054; John Paul II, Encyclical Letter Fides et Ratio (14 September 1998), pars. 2, 106: AAS 91 (1999), 6-7.86-87.
    [73] Catechism of the Catholic Church, par. 378.
    [74] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 34: AAS 58 (1966), 1053.
    [75] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 35: AAS 58 (1966), 1053.
    [76] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 102: AAS 107 (2015), 888.
    [77] Cf. Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 105: AAS 107 (2015), 889; Id., Encyclical Fratelli Tutti (3 October 2020), par. 27: AAS 112 (2020), 978; Benedict XVI, Encyclical Caritas in Veritate (29 June 2009), par. 23: AAS 101 (2009), 657-658.
    [78] Cf. Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), pars. 38-39, 47; Congregation for the Doctrine of the Faith, Instruction Dignitas Personae (8 September 2008), passim.
    [79] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 35: AAS 58 (1966), 1053. Cf. Catechism of the Catholic Church, par 2293.
    [80] Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2-4.
    [81] Cf. Catechism of the Catholic Church, par. 1749: “Freedom makes man a moral subject. When he acts deliberately, man is, so to speak, the father of his acts.”
    [82] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 16: AAS 58 (1966), 1037. Cf. Catechism of the Catholic Church, par. 1776.
    [83] Catechism of the Catholic Church, par. 1777.
    [84] Cf. Catechism of the Catholic Church, pars. 1779-1781; Francis, Address to the Participants in the “Minerva Dialogues” (27 March 2023): AAS 115 (2023), 463, where the Holy Father encouraged efforts “to ensure that technology remains human-centered, ethically grounded and directed toward the good.”
    [85] Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 166: AAS 112 (2020), 1026-1027; Id., Address to the Plenary Assembly of the Pontifical Academy of Sciences (23 September 2024): L’Osservatore Romano, 23 September 2024, 10. On the role of human agency in choosing a wider aim (Ziel) that then informs the particular purpose (Zweck) for which each technological application is created, cf. F. Dessauer, Streit um die Technik, Herder-Bücherei, Freiburg i. Br. 1959, 70-71.
    [86] Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 4: “Technology is born for a purpose and, in its impact on human society, always represents a form of order in social relations and an arrangement of power, thus enabling certain people to perform specific actions while preventing others from performing different ones. In a more or less explicit way, this constitutive power-dimension of technology always includes the worldview of those who invented and developed it.”
    [87] Francis, Address to the Participants in the Plenary Assembly of the Pontifical Academy of Life (28 February 2020): AAS 112 (2020), 309.
    [88] Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 3-4.
    [89] Francis, Address to the Participants in the “Minerva Dialogues” (27 March 2023): AAS 115 (2023), 464. Cf. Id., Encyclical Letter Fratelli Tutti, pars. 212-213: AAS 112 (2020), 1044-1045.
    [90] Cf. John Paul II, Encyclical Letter Laborem Exercens (14 September 1981), par. 5: AAS 73 (1981), 589; Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 3-4.
    [91] Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2: “Faced with the marvels of machines, which seem to know how to choose independently, we should be very clear that decision-making […] must always be left to the human person. We would condemn humanity to a future without hope if we took away people’s ability to make decisions about themselves and their lives, by dooming them to depend on the choices of machines.”
    [92] Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2.
    [93] The term “bias” in this document refers to algorithmic bias (systematic and consistent errors in computer systems that may disproportionately prejudice certain groups in unintended ways) or learning bias (which will result in training on a biased data set) and not the “bias vector” in neural networks (which is a parameter used to adjust the output of “neurons” to adjust more accurately to the data).
    [94] Cf. Francis, Address to the Participants in the “Minerva Dialogues” (27 March 2023): AAS 115 (2023), 464, where the Holy Father affirmed the growth in consensus “on the need for development processes to respect such values as inclusion, transparency, security, equity, privacy and reliability,” and also welcomed “the efforts of international organizations to regulate these technologies so that they promote genuine progress, contributing, that is, to a better world and an integrally higher quality of life.”
    [95] Francis, Greetings to a Delegation of the “Max Planck Society” (23 February 2023): L’Osservatore Romano, 23 February 2023, 8.
    [96] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 26: AAS 58 (1966), 1046-1047.
    [97] Francis, Address to Participants at the Seminar “The Common Good in the Digital Age” (27 September 2019): AAS 111 (2019), 1571.
    [98] Cf. Francis, Message for the LVIII World Day of Social Communications (24 January 2024): L’Osservatore Romano, 24 January 2024, 8. For further discussion of the ethical questions raised by AI from a Catholic perspective, see AI Research Group of the Centre for Digital Culture of the Dicastery for Culture and Education, Encountering Artificial Intelligence: Ethical and Anthropological Investigations (Theological Investigations of Artificial Intelligence 1), M.J. Gaudet, N. Herzfeld, P. Scherz, J.J. Wales, eds., Journal of Moral Theology, Pickwick, Eugene 2024, 147-253.
    [99] On the importance of dialogue in a pluralist society oriented toward a “robust and solid social ethics,” see Francis, Encyclical Letter Fratelli Tutti (3 October 2020), pars. 211-214: AAS 112 (2020), 1044-1045.
    [100] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 2: L’Osservatore Romano, 14 December 2023, 2.
    [101] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 6: L’Osservatore Romano, 14 December 2023, 3. Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 26: AAS 58 (1966), 1046-1047.
    [102] Cf. Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 112: AAS 107 (2015), 892-893.
    [103] Francis, Address to the Participants in the “Minerva Dialogues” (27 March 2023): AAS 115 (2023), 464.
    [104] Cf. Pontifical Council for Social Communications, Ethics in Internet (22 February 2002), par. 10.
    [105] Francis, Post-Synodal Exhortation Christus Vivit (25 March 2019), par. 89: AAS 111 (2019), 413-414; quoting the Final Document of the XV Ordinary General Assembly of the Synod of Bishops (27 October 2018), par. 24: AAS 110 (2018), 1593. Cf. Benedict XVI, Address to the Participants in the International Congress on Natural Moral Law (12 February 2017): AAS 99 (2007), 245.
    [106] Cf. Francis, Encyclical Letter Laudato Si’ (24 May 2015), pars. 105-114: AAS 107 (2015), 889-893; Id., Apostolic Exhortation Laudate Deum (4 October 2023), pars. 20-33: AAS 115 (2023), 1047-1050.
    [107] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 105: AAS 107 (2015), 889. Cf. Id., Apostolic Exhortation Laudate Deum (4 October 2023), pars. 20-21: AAS 115 (2023), 1047.
    [108] Cf. Francis, Address to the Participants in the Plenary Assembly of the Pontifical Academy for Life (28 February 2020): AAS 112 (2020), 308-309.
    [109] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 2: L’Osservatore Romano, 14 December 2023, 2.
    [110] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 112: AAS 107 (2015), 892.
    [111] Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), pars. 101, 103, 111, 115, 167: AAS 112 (2020), 1004-1005, 1007-1009, 1027.
    [112] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 26: AAS 58 (1966), 1046-1047; cf. Leo XIII, Encyclical Letter Rerum Novarum (15 May 1891), par. 35: Acta Leonis XIII, 11 (1892), 123.
    [113] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 12: AAS 58 (1966), 1034.
    [114] Cf. Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church (2004), par. 149.
    [115] Second Vatican Ecumenical Council, Declaration Dignitatis Humanae (7 December 1965), par. 3: AAS 58 (1966), 931. Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 50: AAS 112 (2020), 986-987.
    [116] Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 50: AAS 112 (2020), 986-987.
    [117] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 47: AAS 107 (2015), 865. Cf. Id., Post-Synodal Exhortation Christus Vivit (25 March 2019), pars. 88-89: AAS 111 (2019), 413-414.
    [118] Cf. Francis, Apostolic Exhortation Evangelii Gaudium (24 November 2013), par. 88: AAS 105 (2013), 1057.
    [119] Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 47: AAS 112 (2020), 985.
    [120] Cf. Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2.
    [121] Cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 50: AAS 112 (2020), 986-987.
    [122] Cf. E. Stein, Zum Problem der Einfühlung, Buchdruckerei des Waisenhauses, Halle 1917 (en. tr. On the Problem of Empathy, ICS Publications, Washington D.C. 1989).
    [123] Cf. Francis, Apostolic Exhortation Evangelii Gaudium (24 November 2013), par. 88: AAS 105 (2013), 1057: “[Many people] want their interpersonal relationships provided by sophisticated equipment, by screens and systems which can be turned on and off on command. Meanwhile, the Gospel tells us constantly to run the risk of a face-to-face encounter with others, with their physical presence which challenges us, with their pain and their pleas, with their joy which infects us in our close and continuous interaction. True faith in the incarnate Son of God is inseparable from self-giving, from membership in the community, from service, from reconciliation with others.” Also cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 24: AAS 58 (1966), 1044-1045.
    [124] Cf. Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), par. 1.
    [125] Cf. Francis, Address to Participants at the Seminar “The Common Good in the Digital Age” (27 September 2019): AAS 111 (2019), 1570; Id, Encyclical Letter Laudato Si’ (24 May 2015), pars. 18, 124-129: AAS 107 (2015), 854.897-899.
    [126] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 5: L’Osservatore Romano, 14 December 2023, 3.
    [127] Francis, Apostolic Exhortation Evangelii Gaudium (24 November 2013), par. 209: AAS 105 (2013), 1107.
    [128] Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 4. For Pope Francis’ teaching about AI in relationship to the “technocratic paradigm,” cf. Id., Encyclical Laudato Si’ (24 May 2015), pars. 106-114: AAS 107 (2015), 889-893.
    [129] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 26: AAS 58 (1966), 1046-1047.; as quoted in Catechism of the Catholic Church, par. 1912. Cf. John XXIII, Encyclical Letter Mater et Magistra (15 May 1961), par. 219: AAS 53 (1961), 453.
    [130] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par 64: AAS 58 (1966), 1086.
    [131] Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 162: AAS 112 (2020), 1025. Cf. John Paul II, Encyclical Letter Laborem Exercens (14 September 1981), par. 6: AAS 73 (1981), 591: “work is ‘for man’ and not man ‘for work.’ Through this conclusion one rightly comes to recognize the pre-eminence of the subjective meaning of work over the objective one.”
    [132] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 128: AAS 107 (2015), 898. Cf. Id., Post-Synodal Apostolic Exhortation Amoris Laetitia (19 March 2016), par. 24: AAS 108 (2016), 319-320.
    [133] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 5: L’Osservatore Romano, 14 December 2023, 3.
    [134] John Paul II, Encyclical Letter Evangelium Vitae (25 March 1995), par. 89: AAS 87 (1995), 502.
    [135] Ibid.
    [136] Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 67: AAS 112 (2020), 993; as quoted in Id., Message for the XXXI World Day of the Sick (11 February 2023): L’Osservatore Romano, 10 January 2023, 8.
    [137] Francis, Message for the XXXII World Day of the Sick (11 February 2024): L’Osservatore Romano, 13 January 2024, 12.
    [138] Francis, Address to the Diplomatic Corps Accredited to the Holy See (11 January 2016): AAS 108 (2016), 120. Cf. Id., Encyclical Letter Fratelli Tutti (3 October 2020), par. 18: AAS 112 (2020), 975; Id., Message for the XXXII World Day of the Sick(11 February 2024): L’Osservatore Romano, 13 January 2024, 12.
    [139] Cf. Francis, Address to the Participants in the “Minerva Dialogues” (27 March 2023): AAS 115 (2023), 465; Id., Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2.
    [140] Cf. Francis, Encyclical Letter Laudato Si’ (24 May 2015), pars. 105, 107: AAS 107 (2015), 889-890; Id., Encyclical Letter Fratelli Tutti (3 October 2020), pars. 18-21: AAS 112 (2020), 975-976; Id., Address to the Participants in the “Minerva Dialogues”(27 March 2023): AAS 115 (2023), 465.
    [141] Francis, Address to the Participants at the Meeting Sponsored by the Charity and Health Commission of the Italian Bishops’ Conference (10 February 2017): AAS 109 (2017), 243. Cf. ibid., 242-243: “If there is a sector in which the throwaway culture is manifest, with its painful consequences, it is that of healthcare. When a sick person is not placed in the center or their dignity is not considered, this gives rise to attitudes that can lead even to speculation on the misfortune of others. And this is very grave! […] The application of a business approach to the healthcare sector, if indiscriminate […] may risk discarding human beings.”
    [142] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 5: L’Osservatore Romano, 14 December 2023, 3.
    [143] Second Vatican Ecumenical Council, Declaration Gravissimum Educationis (28 October 1965), par. 1: AAS 58 (1966), 729.
    [144] Congregation for Catholic Education, Instruction on the Use of Distance Learning in Ecclesiastical Universities and Faculties, I. Cf. Second Vatican Ecumenical Council, Declaration Gravissimum Educationis (28 October 1965), par. 1: AAS 58 (1966), 729; Francis, Message for the LXIX World Day of Peace (1 January 2016), 6: AAS 108 (2016), 57-58.
    [145] Francis, Address to Members of the Global Researchers Advancing Catholic Education Project (20 April 2022): AAS 114 (2022), 580.
    [146] Cf. Paul VI, Apostolic Exhortation Evangelii Nuntiandi (8 December 1975), par. 41: AAS 68 (1976), 31, quoting Id., Address to the Members of the “Consilium de Laicis” (2 October 1974): AAS 66 (1974), 568: “if [the contemporary person] does listen to teachers, it is because they are witnesses.”
    [147] J.H. Newman, The Idea of a University Defined and Illustrated, Discourse 6.1, London 18733, 125-126.
    [148] Francis, Meeting with the Students of the Barbarigo College of Padua in the 100th Year of its Foundation (23 March 2019): L’Osservatore Romano, 24 March 2019, 8. Cf. Id., Address to Rectors, Professors, Students and Staff of the Roman Pontifical Universities and Institutions (25 February 2023): AAS 115 (2023), 316.
    [149] Francis, Post-Synodal Apostolic Exhortation Christus Vivit (25 March 2019), par. 86: AAS 111 (2019), 413, quoting the XV Ordinary General Assembly of the Synod of Bishops, Final Document (27 October 2018), par. 21: AAS 110 (2018), 1592.
    [150] J.H. Newman, The Idea of a University Defined and Illustrated, Discourse 7.6, Basil Montagu Pickering, London 18733, 167.
    [151] Cf. Francis, Post-Synodal Apostolic Exhortation Christus Vivit (25 March 2019), par. 88: AAS 111 (2019), 413.
    [152] In a 2023 policy document about the use of generative AI in education and research, UNESCO notes: “One of the key questions [of the use of generative AI (GenAI) in education and research] is whether humans can possibly cede basic levels of thinking and skill-acquisition processes to AI and rather concentrate on higher-order thinking skills based on the outputs provided by AI. Writing, for example, is often associated with the structuring of thinking. With GenAI […], humans can now start with a well-structured outline provided by GenAI. Some experts have characterized the use of GenAI to generate text in this way as ‘writing without thinking’” (UNESCO, Guidance for Generative AI in Education and Research [2023], 37-38). The German-American philosopher Hannah Arendt foresaw such a possibility in her 1959 book, The Human Condition, and cautioned: “If it should turn out to be true that knowledge (in the sense of know-how) and thought have parted company for good, then we would indeed become the helpless slaves, not so much of our machines as of our know-how” (Id., The Human Condition, University of Chicago Press, Chicago 20182, 3).
    [153] Francis, Post-Synodal Apostolic Exhortation Amoris Laetitia (19 March 2016), par. 262: AAS 108 (2016), 417.
    [154] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 7: L’Osservatore Romano, 14 December 2023, 3; cf. Id., Encyclical Letter Laudato Si’ (24 May 2015), par. 167: AAS 107 (2015), 914.
    [155] John Paul II, Apostolic Constitution Ex Corde Ecclesiae (15 August 1990), 7: AAS 82 (1990), 1479.
    [156] Francis, Apostolic Constitution Veritatis Gaudium (29 January 2018), 4c: AAS 110 (2018), 9-10.
    [157] Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 3.
    [158] For example, it might help people access the “array of resources for generating greater knowledge of truth” contained in the works of philosophy (John Paul II, Encyclical Letter Fides et Ratio [14 September 1998], par. 3: AAS 91 [1999], 7). Cf. ibid., par. 4: AAS 91 (1999), 7-8.
    [159] Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), par. 43. Cf. ibid., pars. 61-62.
    [160] Francis, Message for the LVIII World Day of Social Communications (24 January 2024): L’Osservatore Romano, 24 January 2024, 8.
    [161] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par 25: AAS 58 (1966), 1053; cf. Francis, Encyclical Letter Fratelli Tutti (3 October 2020), passim: AAS 112 (2020), 969-1074.
    [162] Cf. Francis., Post-Synodal Exhortation Christus Vivit (25 March 2019), par. 89: AAS 111 (2019), 414; John Paul II, Encyclical Letter Fides et Ratio (14 September 1998), par. 25: AAS 91 (1999), 25-26: “People cannot be genuinely indifferent to the question of whether what they know is true or not. […] It is this that Saint Augustine teaches when he writes: ‘I have met many who wanted to deceive, but none who wanted to be deceived’”; quoting Augustine, Confessiones, X, 23, 33: PL 32, 794.
    [163] Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (4 April 2024), par. 62.
    [164] Benedict XVI, Message for the XLIII World Day of Social Communications (24 May 2009): L’Osservatore Romano, 24 January 2009, 8.
    [165] Cf. Dicastery for Communications, Towards Full Presence: A Pastoral Reflection on Engagement with Social Media (28 May 2023), par. 41; Second Vatican Ecumenical Council, Decree Inter Mirifica (4 December 1963), pars. 4, 8-12: AAS 56 (1964), 146, 148-149.
    [166] Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (4 April 2024), pars. 1, 6, 16, 24.
    [167] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes, (7 December 1965), par. 26: AAS 58 (1966), 1046. Cf. Leo XIII, Encyclical Letter Rerum Novarum (15 May 1891), par. 40: Acta Leonis XIII, 11 (1892), 127: “no man may with impunity violate that human dignity which God himself treats with great reverence”; as quoted in John Paul II, Encyclical Letter Centesimus Annus (1 May 1991), par. 9: AAS 83 (1991), 804.
    [168] Cf. Catechism of the Catholic Church, pars. 2477, 2489; can. 220 CIC; can. 23 CCEO; John Paul II, Address to the Third General Conference of the Latin American Episcopate (28 January 1979), III.1-2: Insegnamenti II/1 (1979), 202-203.
    [169] Cf. Permanent Observer Mission of the Holy See to the United Nations, Holy See Statement to the Thematic Discussion on Other Disarmament Measures and International Security (24 October 2022): “Upholding human dignity in cyberspace obliges States to also respect the right to privacy, by shielding citizens from intrusive surveillance and allowing them to safeguard their personal information from unauthorized access.”
    [170] Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 42: AAS 112 (2020), 984.
    [171] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 5: L’Osservatore Romano, 14 December 2023, 3.
    [172] Francis, Address to the Participants in the “Minerva Dialogues” (27 March 2023): AAS 115 (2023), 465.
    [173] The 2023 Interim Report of the United Nations AI Advisory Body identified a list of “early promises of AI helping to address climate change” (United Nations AI Advisory Body, Interim Report: Governing AI for Humanity [December 2023], 3). The document observed that, “taken together with predictive systems that can transform data into insights and insights into actions, AI-enabled tools may help develop new strategies and investments to reduce emissions, influence new private sector investments in net zero, protect biodiversity, and build broad-based social resilience” (ibid.).
    [174] “The cloud” refers to a network of physical servers throughout the world that enables users to store, process, and manage their data remotely.
    [175] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 9: AAS 107 (2015), 850.
    [176] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 106: AAS 107 (2015), 890.
    [177] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 60: AAS 107 (2015), 870.
    [178] Francis, Encyclical Letter Laudato Si’ (24 May 2015), pars. 3, 13: AAS 107 (2015), 848.852.
    [179] Augustine, De Civitate Dei, XIX, 13, 1: PL 41, 640.
    [180] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), pars. 77-82: AAS 58 (1966), 1100-1107; Francis, Encyclical Letter Fratelli Tutti (3 October 2020), pars. 256-262: AAS 112 (2020), 1060-1063; Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (4 April 2024), pars. 38-39; Catechism of the Catholic Church, pars. 2302-2317.
    [181] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 78: AAS 58 (1966), 1101.
    [182] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 6: L’Osservatore Romano, 14 December 2023, 3.
    [183] Cf. Catechism of the Catholic Church, pars. 2308-2310.
    [184] Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), pars. 80-81: AAS 58 (1966), 1103-1105.
    [185] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 6: L’Osservatore Romano, 14 December 2023, 3. Cf. Id., Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2: “We need to ensure and safeguard a space for proper human control over the choices made by artificial intelligence programs: human dignity itself depends on it.”
    [186] Francis, Address at the G7 Session on Artificial Intelligence in Borgo Egnazia (Puglia) (14 June 2024): L’Osservatore Romano, 14 June 2024, 2. Cf. Permanent Observer Mission of the Holy See to the United Nations, Holy See Statement to Working Group II on Emerging Technologies at the UN Disarmament Commission (3 April 2024): “The development and use of lethal autonomous weapons systems (LAWS) that lack the appropriate human control would pose fundamental ethical concerns, given that LAWS can never be morally responsible subjects capable of complying with international humanitarian law.”
    [187] Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 258: AAS 112 (2020), 1061. Cf. Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 80: AAS 58 (1966), 1103-1104.
    [188] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 80: AAS 58 (1966), 1103-1104.
    [189] Cf. Francis, Message for the LVII World Day of Peace (1 January 2024), par. 6: L’Osservatore Romano, 14 December 2023, 3: “Nor can we ignore the possibility of sophisticated weapons ending up in the wrong hands, facilitating, for instance, terrorist attacks or interventions aimed at destabilizing the institutions of legitimate systems of government. In a word, the world does not need new technologies that contribute to the unjust development of commerce and the weapons trade and consequently end up promoting the folly of war.”
    [190] John Paul II, Act of Entrustment to Mary for the Jubilee of Bishops (8 October 2000), par. 3: Insegnamenti XXIII/2 (200), 565.
    [191] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 79: AAS 107 (2015), 878.
    [192] Cf. Benedict XVI, Encyclical Letter Caritas in Veritate (29 June 2009), par. 51: AAS 101 (2009), 687.
    [193] Cf. Dicastery for the Doctrine of the Faith, Declaration Dignitas Infinita (8 April 2024), pars. 38-39.
    [194] Cf. Augustine, Confessiones, I, 1, 1: PL 32, 661.
    [195] Cf. John Paul II, Encyclical Letter Sollicitudo Rei Socialis (30 December 1987), par. 28: AAS 80 (1988), 548: “[T]here is a better understanding today that the mere accumulation of goods and services […] is not enough for the realization of human happiness. Nor, in consequence, does the availability of the many real benefits provided in recent times by science and technology, including the computer sciences, bring freedom from every form of slavery. On the contrary, […] unless all the considerable body of resources and potential at man’s disposal is guided by a moral understanding and by an orientation towards the true good of the human race, it easily turns against man to oppress him.” Cf. ibid., pars. 29, 37: AAS 80 (1988), 550-551.563-564.
    [196] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 14: AAS 58 (1966), 1036.
    [197] Francis, Encyclical Letter Dilexit Nos (24 October 2024), par. 18: L’Osservatore Romano, 24 October 2024, 5.
    [198] Francis, Encyclical Letter Dilexit Nos (24 October 2024), par. 27: L’Osservatore Romano, 24 October 2024, 6.
    [199] Francis, Encyclical Letter Dilexit Nos (24 October 2024), par. 25: L’Osservatore Romano, 24 October 2024, 5-6.
    [200] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 105: AAS 107 (2015), 889. Cf. R. Guardini, Das Ende der Neuzeit, Würzburg 19659, 87 ff. (en. tr. The End of the Modern World, Wilmington 1998, 82-83).
    [201] Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes (7 December 1965), par. 34: AAS 58 (1966), 1053.
    [202] John Paul II, Encyclical Letter Redemptor Hominis (4 March 1979), par. 15: AAS 71 (1979), 287-288.
    [203] N. Berdyaev, “Man and Machine,” in C. Mitcham – R. Mackey, eds., Philosophy and Technology: Readings in the Philosophical Problems of Technology, New York 19832, 212-213.
    [204] N. Berdyaev, “Man and Machine,” 210.
    [205] G. Bernanos, “La révolution de la liberté” (1944), in Id., Le Chemin de la Croix-des-Âmes, Rocher 1987, 829.
    [206] Cf. Francis, Meeting with the Students of the Barbarigo College of Padua in the 100th Year of its Foundation (23 March 2019): L’Osservatore Romano, 24 March 2019, 8. Cf. Id., Address to Rectors, Professors, Students and Staff of the Roman Pontifical Universities and Institutions (25 February 2023).
    [207] Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 112: AAS 107 (2015), 892-893.
    [208] Cf. Bonaventure, Hex. XIX, 3; Francis, Encyclical Letter Fratelli Tutti (3 October 2020), par. 50: AAS 112 (2020), 986: “The flood of information at our fingertips does not make for greater wisdom. Wisdom is not born of quick searches on the internet nor is it a mass of unverified data. That is not the way to mature in the encounter with truth.”
    [209] Francis, Message for the LVIII World Day of Social Communications (24 January 2024): L’Osservatore Romano, 24 January 2024, 8.
    [210] Ibid.
    [211] Ibid.
    [212] Francis, Apostolic Exhortation Gaudete et Exsultate (19 March 2018), par. 37: AAS 110 (2018), 1121.
    [213] Francis, Message for the LVII World Day of Peace (1 January 2024), par. 6: L’Osservatore Romano, 14 December 2023, 3. Cf. Id., Encyclical Letter Laudato Si’ (24 May 2015), par. 112: AAS 107 (2015), 892-893; Id., Apostolic Exhortation Gaudete et Exsultate (19 March 2018), par. 46: AAS 110 (2018), 1123-1124.
    [214] Cf. Francis, Encyclical Letter Laudato Si’ (24 May 2015), par. 112: AAS 107 (2015), 892-893.
    [215] Cf. Francis, Address to the Participants in the Seminar “The Common Good in the Digital Age” (27 September 2019): AAS 111 (2019), 1570-1571.

    MIL OSI Europe News

  • MIL-OSI: MEXC Leads Q4 2024 Meme Trading Wave: 140% QoQ Volume Growth & 240 New Projects Added

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Jan. 28, 2025 (GLOBE NEWSWIRE) — MEXC, the world-leading digital asset trading platform, saw significant growth in memecoin trading during Q4 2024. Data shows that the overall trading volume of memecoins on the platform, including Spot and Futures, surged by 140% quarter-over-quarter. The proportion of daily active users trading memecoins climbed to 35.8%, while the proportion of daily average trading volume more than doubled to 18.8%.

    MEXC took strategic steps to enhance its memecoin trading services by launching the Meme+ zone on December 24, 2024. The dedicated zone proved highly successful, with approximately 124 popular memecoins listed within its first month of operation. This initiative generated significant momentum, leading to continued growth in memecoin trading activity on MEXC in January 2025. User engagement reached new heights, with the percentage of daily trading users increasing to 37.1%, while memecoins came to represent 25.9% of the platform’s average daily trading volume.

    MEXC demonstrated strong market leadership in Q4 2024 by strategically focusing on the memecoin sector, successfully introducing more than 240 high-quality meme projects to its platform. The exchange’s careful project selection proved highly successful, with the top 5 newly listed memecoins in 2024 achieving remarkable results – their prices recorded an average peak gain of over 8,700%, while standout performers KEKIUS and FWOG surpassed 10,000% gains. Market capitalization metrics were equally impressive, with the top 5 memecoins averaging peak gains of over 3,500%, notably led by PNUT which achieved an exceptional maximum gain of more than 7,000%.

    To enhance its asset offerings, MEXC recently introduced a new feature allowing users to search for trading pairs using contract addresses. This aims to help users identify target trading pairs more quickly and accurately, providing a more efficient trading experience and enhancing their overall journey.

    In a move to enhance platform functionality, MEXC has introduced a new contract address search feature for trading pairs, enabling users to locate specific trading pairs with greater precision and speed. This enhancement streamlines the trading process, making it more efficient for users to find and access their desired trading pairs. The feature allows users to input token contract addresses into MEXC’s global search or Spot trading search bar to accurately locate tokens. This is particularly valuable in the active memecoin market, where similar token names can cause confusion and bring investment risk. By utilizing contract addresses—the unique identifier for tokens on the blockchain—this search mechanism ensures precision and provides users with enhanced security.

    About MEXC

    Founded in 2018, MEXC is committed to being “Your Easiest Way to Crypto”. Serving over 30 million users across 170+ countries, MEXC is known for its broad selection of trending tokens, frequent airdrop opportunities, and low trading fees. Our user-friendly platform is designed to support both new traders and experienced investors, offering secure and efficient access to digital assets. MEXC prioritizes simplicity and innovation, making crypto trading more accessible and rewarding.
    MEXC Official WebsiteXTelegramHow to Sign Up on MEXC

    Contact:
    Lucia Hu
    PR Manager
    lucia.hu@mexc.com

    Disclaimer: This content is provided by MEXC. 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/41b61707-d16e-4558-81e7-3fcb6f1ee432

    https://www.globenewswire.com/NewsRoom/AttachmentNg/d1ad05ee-72ca-4d42-8c5e-e5c0b906ca4e

    https://www.globenewswire.com/NewsRoom/AttachmentNg/2a8cc556-be4d-4be2-afba-59f2c832ce2d

    https://www.globenewswire.com/NewsRoom/AttachmentNg/be981b72-e7d5-473a-969d-3cfde42d4159

    https://www.globenewswire.com/NewsRoom/AttachmentNg/e07c632a-ff90-4ff9-9437-174c4e8e53f6

    The MIL Network

  • MIL-OSI: MEXC Launches Venice Token (VVV) in Innovation Zone and Futures Trading with Leverage Up to 50x

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Jan. 28, 2025 (GLOBE NEWSWIRE) — MEXC, the world’s leading cryptocurrency trading platform, announces the listing of Venice Token (VVV) in its Innovation Zone, offering users access to the latest advancements in the AI sector. Starting from 02:00 UTC on January 28, MEXC will also introduce VVV/USDT Perpetual Futures trading, providing users with leverage options of up to 50x.

    Unlocking the Future with Venice Token (VVV)
    Venice Token (VVV) is at the forefront of the artificial intelligence revolution, serving as the world’s leading platform for private and uncensored AI solutions. Through the Venice App or API, users can access a range of cutting-edge open-source models for generative text, images, and code, empowering creators and developers across various sectors. With a total supply of 100,000,506 VVV, the token is poised to play a significant role in shaping the future of digital intelligence and privacy.

    Join the Future of AI with Venice Token
    As MEXC launches VVV USDT-M Perpetual Futures, traders will have the opportunity to leverage their positions with adjustable leverage, making it easier than ever to capitalize on market movements. This listing not only highlights MEXC’s dedication to supporting innovative projects but also presents a unique opportunity for users to engage with a token that is revolutionizing the AI landscape.

    MEXC aims to become the go-to platform offering the widest range of valuable crypto assets. The platform has grown its user base to 30 million by providing a diverse selection of tokens, high-frequency airdrops, and simple participation processes. In 2024, MEXC launched a total of 2,376 new tokens, including 1,716 initial listings and over 600 memecoins, with total airdrop rewards exceeding $136 million.

    About MEXC
    Founded in 2018, MEXC is committed to being “Your Easiest Way to Crypto”. Serving over 30 million users across 170+ countries, MEXC is known for its broad selection of trending tokens, frequent airdrop opportunities, and low trading fees. Our user-friendly platform is designed to support both new traders and experienced investors, offering secure and efficient access to digital assets. MEXC prioritizes simplicity and innovation, making crypto trading more accessible and rewarding.
    MEXC Official WebsiteXTelegramHow to Sign Up on MEXC

    Contact:
    Lucia Hu
    PR Manager
    lucia.hu@mexc.com

    Disclaimer: This content is provided by MEXC. 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.

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/886317ab-f8fa-4164-8cd6-c99cd40384a4

    The MIL Network

  • MIL-OSI Video: Victims of the Holocaust, Sudan & other topics – Daily Press Briefing | United Nations

    Source: United Nations (Video News)

    Noon Briefing by Stéphane Dujarric, Spokesperson for the Secretary-General.

    – Victims of the Holocaust
    – Sudan
    – US Foreign Assistance
    – Deputy Secretary-General
    – Occupied Palestinian Territory
    – Lebanon
    – Syria
    – Secretary-General/Democratic Republic of Congo
    – Democratic Republic of Congo/Humanitarian
    – Senior Personnel Appintment
    – Briefings Tomorrow
    – Honour Roll

    VICTIMS OF HOLOCAUST
    This morning, the Secretary-General spoke at the General Assembly on the Observance of the International Day of Commemoration in Memory of the Victims of the Holocaust.
    The Secretary-General said the ceasefire and hostage release deal between Israel and Hamas offers hope, as well as much needed relief. He added that the United Nations will do its utmost to ensure it leads to the release of all hostages and a permanent ceasefire in Gaza.
    The Secretary-General also said that today we mourn the six million Jews murdered by the Nazis and their collaborators, as they sought to destroy an entire people.
    We grieve the Roma and Sinti also targeted for genocide, the people with disabilities, LGBTIQ+ people, and all those enslaved, persecuted, tortured, and killed.
    And we renew our resolve never to forget the atrocities that so “outraged the conscience” of humankind.
    The Secretary-General also underscored that remembrance is not only a moral act. Remembrance is a call to action. He added that it is our duty to speak up against hate, to stand up for the human rights for all, and to make all those rights a reality.

    SUDAN
    In a statement issued today, the Secretary-General strongly condemned the attack that hit the Saudi Teaching Hospital in El Fasher in Sudan’s North Darfur state on 24 January, in which at least 70 patients and their relatives were reportedly killed, with dozens more wounded.
    This appalling attack which affected the only functioning hospital in Darfur’s largest city comes after more than 21 months of war have left much of Sudan’s health care system in tatters.
    The Secretary-General reiterated that, under international humanitarian law, the wounded and the sick, as well as medical personnel and medical facilities, must be respected and protected at all times. He further recalled that perpetrators of serious violations of international humanitarian law must be held accountable, and that the deliberate targeting of health care facilities may constitute a war crime.
    The Secretary-General renewed his appeal to the parties to immediately cease the fighting and take steps towards the lasting peace that the people of Sudan demand.
    And on Friday night, another statement was issued on the recent escalation of fighting in Sudan, in particular around the al-Jili oil refinery north of Khartoum, as well as in El Fasher.
    The Secretary-General renewed his call for urgent and genuine dialogue between the parties to the conflict, reiterating that a sustainable resolution to the conflict can only be achieved through an inclusive political process. He added that his Personal Envoy, Ramtane Lamamra, continues to engage the parties and all relevant stakeholders to de-escalate the conflict and promote a Sudanese-led inclusive dialogue that will bring a sustained end to the war.

    US FOREIGN ASSISTANCE
    In a statement issued today, the Secretary-General noted with concern the announcement of a pause in U.S. foreign assistance. He called for additional exemptions to be considered to ensure the continued delivery of critical development and humanitarian activities for the most vulnerable communities around the world, whose lives and livelihoods depend on this support.
    The Secretary-General said that he looks forward to engaging with the new United States administration on the provision of much needed development support to people grappling with the most difficult challenges confronting the developing world. The United States is one of the largest aid providers and it is vital that we work constructively to jointly shape a strategic path forward.

    Full Highlights: https://www.un.org/sg/en/content/noon-briefing-highlight?date%5Bvalue%5D%5Bdate%5D=27%20January%202025

    https://www.youtube.com/watch?v=WGdTq2LU_To

    MIL OSI Video

  • MIL-OSI Video: Democratic Republic of the Congo: Situation is volatile and dangerous – Presser | United Nations

    Source: United Nations (Video News)

    Press Conference by Mr. Jean-Pierre Lacroix, Under-Secretary-General for Peace Operations and Mr. Bruno Lemarquis, Deputy Special Representative of the Secretary-General, Resident Coordinator and Humanitarian Coordinator for the Democratic Republic of the Congo (DRC).

    ———————-

    Under-Secretary-General for Peace Operations Jean-Pierre Lacroix said the situation on the ground in DRC “remains volatile and dangerous.”

    During a press briefing at the United Nations headquarters today (27 Jan) Lacroix said, “The civilian population in a region that is already massively affected, and where the humanitarian challenges are daunting, certainly the risks of a broader humanitarian disaster are very high. And of course, we also want to avoid the risk of a broader war.”
    To ensure the safety of UN personnel, the mission has begun evacuating staff from Goma “by air and road.”
    Lacroix noted that the safety and security of the UN personnel “is and must be paramount.”

    Despite the challenging environment, MONUSCO continues its efforts to protect civilians and stabilize the region, “and that includes disarming combatants in conformity with international humanitarian law. There are significant numbers of civilians and also disarmed combatants that are currently in various MONUSCO premises,” Lacroix noted.

    Bruno Lemarquis, Deputy Special Representative of the Secretary-General said, “With close to 6.5 million displaced people in the country, including close to 3 million displaced people in North Kivu, over one-third of the population of North Kivu is already displaced,” in addition to the new Goma crisis unfolding.

    Lemarquis described the dire conditions faced by civilians as fighting spreads across Goma. “The humanitarian situation in and around Goma is extremely, extremely worrying, with new thresholds of violence and suffering reached today, as active zones of combat have spread to all quarters of the city—all the neighborhoods of the city. Civilians are bearing the brunt of the escalating hostilities. This morning, heavy artillery fire was directed at the city center,” he reported.

    Hospitals in Goma are struggling to cope. “Hospitals in Goma are overwhelmed in spite of the support provided, for example, by MSF and ICRC. They are struggling to manage the influx of wounded people,” Lemarquis said, highlighting that the General Hospital, with a capacity of 146 beds, was treating 259 patients, including 90 civilians, just three days ago.

    Basic services have also been severely disrupted, with water and electricity compromised and Internet service cut as of 1 p.m. Monday. “Phone networks remain operational, but it’s patchy and not helping the humanitarian response and coordination,” Lemarquis explained.

    Amid these challenges, the UN is relocating personnel and their families to safety. “We have taken both our international personnel and national personnel and their dependents to two locations—one in-country, Kinshasa, and the other one in Entebbe, where we have a large UN base,” Lemarquis said.

    Lacroix emphasized the importance of regional cooperation to resolve the crisis. “The recent announcement of an upcoming meeting of the AU Peace and Security Council is very important. We look forward to further engagement by the African Union in the efforts that are currently being made with a view to bringing about the cessation of hostilities. We count on the AU’s involvement in those efforts,” he said.

    https://www.youtube.com/watch?v=NL91oDWbUqc

    MIL OSI Video

  • MIL-OSI: NBPE Announces December Monthly NAV Estimate

    Source: GlobeNewswire (MIL-OSI)

    THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO AUSTRALIA, CANADA, ITALY, DENMARK, JAPAN, THE UNITED STATES, OR TO ANY NATIONAL OF SUCH JURISDICTIONS

    St Peter Port, Guernsey        28 January 2025

    NB Private Equity Partners (NBPE), the $1.2bn1, FTSE 250, listed private equity investment company managed by Neuberger Berman, today announces its 31 December 2024 monthly NAV estimate.

    NAV Highlights (31 December 2024)

    • NAV per share was $26.91 (£21.49), a total return of (2.2%) in the month
    • Year to date NAV TR of (0.8%) (based on 31 December 2023 final numbers and 31 December 2024 monthly estimate)
    • NBPE expects to receive additional updated Q4 2024 financial information which will be incorporated in the monthly NAV updates in the coming weeks
    • $283 million of available liquidity at 31 December 2024
    As of 31 December 2024 2024 3 years 5 years 10 years
    NAV TR (USD)*
    Annualised
    (0.8%) (6.1%)
    (2.1%)
    65.0%
    10.5%
    160.2%
    10.0%
    MSCI World TR (USD)*
    Annualised
    19.2% 22.0%
    6.9%
    73.9%
    11.7%
    171.9%
    10.5%
    Share price TR (GBP)*
    Annualised
    (1.1%) (2.3%)
    (0.8%)
    62.1%
    10.1%
    231.2%
    12.7%
    FTSE All-Share TR (GBP)*
    Annualised
    9.5% 18.5%
    5.8%
    26.5%
    4.8%
    81.9%
    6.2%

    * All NBPE performance figures assume re-investment of dividends on the ex-dividend date and reflect cumulative returns over the relevant time periods shown, measured against the 31 December audited results at the beginning of the period. Three-year, five-year and ten-year annualised returns are presented for USD NAV, MSCI World (USD), GBP Share Price and FTSE All-Share (GBP) Total Returns.

    Portfolio Update to 31 December 2024

    NAV performance during the month driven by:

    • 0.8% NAV decrease ($10 million) from the receipt of private company valuation information
    • 0.5% NAV decrease ($6 million) from negative FX movements
    • 0.7% NAV decrease ($9 million) from the value of quoted holdings (which now constitute 6% of portfolio fair value)
    • 0.2% NAV decrease ($3 million) attributable to expense accruals

    Realisations from the portfolio

    • $179 million of realisations received in 2024. Driven by full exits of Cotiviti, Safefleet, Melissa & Doug, FV Hospital and Syniti, partial realisations of Action and Qpark as well as full and partial realisations of quoted holdings and income investments

    $283 million of total liquidity at 31 December 2024

    • $73 million of cash and liquid investments with $210 million of undrawn credit line available

    Four new investments completed in 2024; $104 million invested in 2024 in new and follow-on investments

    • $25 million invested in FDH Aero, a leading parts distributor to the aerospace and defense industry
    • $38 million invested into two U.S. healthcare businesses, Benecon and Zeus
    • $30 million investment in Mariner Wealth Advisors, a financial services firm
    • $11 million of additional new and follow on investments

    Portfolio Valuation

    The fair value of NBPE’s portfolio as of 31 December 2024 was based on the following information:

    • 7% of the portfolio was valued as of 31 December 2024
      • 6% in public securities
      • 1% in private direct investments
    • 1% of the portfolio was valued as of 30 November 2024
      • 1% in private direct investments
    • 92% of the portfolio was valued as of 30 September 2024
      • 91% in private direct investments
      • 1% in private funds

    For further information, please contact:

    NBPE Investor Relations        +44 (0) 20 3214 9002
    Luke Mason        NBPrivateMarketsIR@nb.com  

    Kaso Legg Communications        +44 (0)20 3882 6644

    Charles Gorman        nbpe@kl-communications.com
    Luke Dampier
    Charlotte Francis

    Supplementary Information (as at 31 December 2024)

    Company Name Vintage Lead Sponsor Sector Fair Value ($m) % of FV
    Action 2020 3i Consumer 65.6 5.2%
    Osaic 2019 Reverence Capital Financial Services 62.7 4.9%
    Solenis 2021 Platinum Equity Industrials 61.3 4.8%
    BeyondTrust 2018 Francisco Partners Technology / IT 45.6 3.6%
    Branded Cities Network 2017 Shamrock Capital Communications / Media 38.3 3.0%
    Monroe Engineering 2021 AEA Investors Industrials 38.2 3.0%
    Business Services Company* 2017 Not Disclosed Business Services 38.1 3.0%
    GFL (NYSE: GFL) 2018 BC Partners Business Services 35.5 2.8%
    True Potential 2022 Cinven Financial Services 32.1 2.5%
    Staples 2017 Sycamore Partners Business Services 31.6 2.5%
    Kroll 2020 Further Global / Stone Point Financial Services 31.4 2.5%
    Marquee Brands 2014 Neuberger Berman Consumer 31.2 2.5%
    Mariner 2024 Leonard Green & Partners Financial Services 30.0 2.4%
    FDH Aero 2024 Audax Group Industrials 29.1 2.3%
    Fortna 2017 THL Industrials 28.7 2.3%
    Viant 2018 JLL Partners Healthcare 27.2 2.1%
    Stubhub 2020 Neuberger Berman Consumer 26.5 2.1%
    Agiliti 2019 THL Healthcare 25.3 2.0%
    Benecon 2024 TA Associates Healthcare 25.1 2.0%
    Solace Systems 2016 Bridge Growth Partners Technology / IT 24.4 1.9%
    Engineering 2020 NB Renaissance / Bain Capital Technology / IT 24.0 1.9%
    Addison Group 2021 Trilantic Capital Partners Business Services 23.8 1.9%
    USI 2017 KKR Financial Services 22.2 1.8%
    Auctane 2021 Thoma Bravo Technology / IT 21.9 1.7%
    Excelitas 2022 AEA Investors Industrials 21.9 1.7%
    Qpark 2017 KKR Transportation 21.3 1.7%
    AutoStore (OB.AUTO) 2019 THL Industrials 20.4 1.6%
    CH Guenther 2021 Pritzker Private Capital Consumer 20.2 1.6%
    Renaissance Learning 2018 Francisco Partners Technology / IT 19.7 1.6%
    Bylight 2017 Sagewind Partners Technology / IT 19.5 1.5%
    Total Top 30 Investments                             $942.7 74.4%

    *Undisclosed company due to confidentiality provisions.

    Geography % of Portfolio
    North America 79%
    Europe 20%
    Asia / Rest of World 1%
    Total Portfolio 100%
       
    Industry % of Portfolio
    Tech, Media & Telecom 22%
    Consumer / E-commerce 20%
    Industrials / Industrial Technology 17%
    Financial Services 16%
    Business Services 12%
    Healthcare 8%
    Other 4%
    Energy 1%
    Total Portfolio 100%
       
    Vintage Year % of Portfolio
    2016 & Earlier 10%
    2017 19%
    2018 15%
    2019 12%
    2020 12%
    2021 17%
    2022 5%
    2023 2%
    2024 8%
    Total Portfolio 100%

    About NB Private Equity Partners Limited
    NBPE invests in direct private equity investments alongside market leading private equity firms globally. NB Alternatives Advisers LLC (the “Investment Manager”), an indirect wholly owned subsidiary of Neuberger Berman Group LLC, is responsible for sourcing, execution and management of NBPE. The vast majority of direct investments are made with no management fee / no carried interest payable to third-party GPs, offering greater fee efficiency than other listed private equity companies. NBPE seeks capital appreciation through growth in net asset value over time while paying a bi-annual dividend.

    LEI number: 213800UJH93NH8IOFQ77

    About Neuberger Berman
    Neuberger Berman is an employee-owned, private, independent investment manager founded in 1939 with over 2,800 employees in 26 countries. The firm manages $508 billion of equities, fixed income, private equity, real estate and hedge fund portfolios for global institutions, advisors and individuals. Neuberger Berman’s investment philosophy is founded on active management, fundamental research and engaged ownership. The firm’s leadership in stewardship and sustainable investing is recognized by the PRI based on its consecutive above median reporting assessment results. Neuberger Berman has been named by Pensions & Investments as the #1 or #2 Best Place to Work in Money Management for each of the last eleven years (firms with more than 1,000 employees). Visit www.nb.com for more information. Data as of 31 December 2024, unless otherwise noted.


    1Based on net asset value.

    This press release appears as a matter of record only and does not constitute an offer to sell or a solicitation of an offer to purchase any security.

    NBPE is established as a closed-end investment company domiciled in Guernsey. NBPE has received the necessary consent of the Guernsey Financial Services Commission. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results. This document is not intended to constitute legal, tax or accounting advice or investment recommendations. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of NBPE’s investment manager. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Additionally, this document contains “forward-looking statements.” Actual events or results or the actual performance of NBPE may differ materially from those reflected or contemplated in such targets or forward-looking statements.

    Attachment

    The MIL Network

  • MIL-OSI China: Shawo radish industry fuels rural revitalization in N. China

    Source: China State Council Information Office

    Hao Lihong, general manager of Guli farm, an agricultural supply chain cooperative in north China’s Tianjin Municipality, shows the growth of Shawo radishes in Tianjin, north China, Jan. 3, 2025. (Xinhua/Song Rui)

    Rows of green Shawo radishes are growing well in a technology demonstration base covering an area of around 50 mu (about 3.33 hectares) in the suburb of north China’s Tianjin Municipality.

    It is currently the peak sales season for Shawo radishes, and most of the radishes in the greenhouses at the base are in cold storage, waiting to be distributed nationwide.

    “Via the Internet of Things and sensors in the greenhouses, the amount of watering, the temperature, humidity and light can be managed intelligently, increasing the quality of the radishes. The process of growing the radishes including seed selection, planting and maintenance is recorded in the smart system,” said Hao Lihong, general manager of Guli farm, an agricultural supply chain cooperative in Tianjin.

    Hao said that the smart planting technology would soon be introduced to more than 10 greenhouses in the area — allowing local farmers to plant in an automated way by using mobile phones.

    The Shawo radish is named after its growth localities in Xiaoshawo Village and Dashawo Village in Xinkou Town, Tianjin’s Xiqing District. Local Shawo radish growing dates back more than 300 years. The soil in these areas is sandy near the surface and sticky deeper down — making radishes grown there both crisp and sweet.

    In 2024, in order to promote the development of the Shawo radish industry, the district government made a plan and cooperated with towns, villages and enterprises to produce a well-known Shawo radish brand.

    “In the past, the radish planting here lacked both scale and standardization. The production facilities were old, while seeds were not standard. The taste of radishes grown by different people was different, which restricted the brand-inheritance potential of the Shawo radish,” Hao said.

    Notably, Guli farm and Dashawo Village have strengthened their cooperation efforts since last year. More than 300 contracted farmers have enjoyed technical training and guidance from experts with Tianjin Academy of Agriculture Sciences. They also did not need to find the sales channels by themselves, but instead sold radishes directly to Guli farm.

    Thanks to this cooperation model, Sun Guoqiang, a 62-year-old living in Dashawo Village, has benefited a lot. “The peak sales season for Shawo radishes is from December to February of the following year. By the end of 2024, all 25,000 kilograms of Shawo radishes in my five greenhouses had been purchased by Guli farm, earning me roughly 100,000 yuan (about 13,638 U.S. dollars),” Sun said.

    The price of the radishes has more than doubled compared with 2023, and Sun plans to expand his planting area this year to make even more money.

    In recent years, marketing activities to promote the Shawo radish brand have been implemented, boosting sales. In addition, a special promotion meeting focused on the Shawo radish was held in Beijing, while many Chinese cities including Changsha, Hangzhou and Guangzhou hosted exhibitions, where visitors could get a closer look at this special radish variety. Online and offline sales channels for this brand have been expanded recently, serving as another boost for the Shawo radish industry.

    “In 2024, we made a lot of efforts to expand the sales chain of Shawo radishes, and enhance their popularity and reputation through brand building and cultural tourism activities,” Hao said.

    This year, the company will cooperate with enterprises in the Guangdong-Hong Kong-Macao Greater Bay Area to help farmers sell Shawo radishes to buyers in Hong Kong and Macao, Hao added.

    The Shawo radish industry has had a significant impact on Xinkou Town, boosting rural revitalization there.

    At present, the town has planted Shawo radishes across an area of about 7,000 mu — which is expected to yield an estimated output of around 32.5 million kilograms and an estimated sales value of 250 million yuan.

    According to Zhao Jun, the town’s Party secretary, the town plans to expand the cultivation scale of Shawo radishes and strengthen the development of both deep processing of agricultural products and tourism, adding that they would also try to make the Shawo radish industry a good model of rural revitalization by continuously extending the industry chain and strengthening the Shawo radish brand.

    MIL OSI China News

  • MIL-OSI USA: Senators Marshall, Johnson Introduce Legislation To Require Federal Agencies to Make Regulatory Guidance Publicly Accessible

    US Senate News:

    Source: United States Senator for Kansas Roger Marshall

    Washington, D.C. –  U.S. Senators Roger Marshall, M.D., Ron Johnson (R-WI) and 14 of their Senate colleagues introduced the Guidance Out Of Darkness (GOOD) Act. The GOOD Act requires federal agencies to publish their regulatory guidance on the Internet in an easily accessible location. This bill will help impacted entities — including small businesses, workers and households — be fully informed of regulatory requirements in order to take any necessary actions for compliance.
    “There must be full transparency between government bureaucrats and the American taxpayers who pay their salaries. Requiring federal agencies to publish their regulatory guidance on the internet in an easily accessible location should be a no brainer,” said Senator Marshall. “I’m shocked we’ve come far without this basic step being taken, I am proud to join Senator Johnson in introducing the GOOD Act, which would introduce common-sense reforms to our governing system to improve transparency and efficiency.”
    Senators Marshall and Johnson were joined by Senators Kevin Cramer (R-ND), Joni Ernst (R-IA), James Lankford (R-OK), Mike Lee (R-UT), Cynthia Lummis (R-WY), Rick Scott (R-FL), Thom Tillis (R-NC), Marsha Blackburn (R-TN), John Hoeven (R-ND), Ted Budd (R-NC), Eric Schmitt (R-MO), Tim Sheehy (R-MT), and James Risch (R-ID). 
    The full text of the legislation can be found here.

    MIL OSI USA News

  • MIL-OSI Security: Fort Pierce man sentenced to 20 years for production of child sexual abuse material

    Source: Office of United States Attorneys

    MIAMI – On Jan. 23, U.S. District Judge Robin L. Rosenberg sentenced Blaine Korbin Hulten, to 20 years imprisonment, followed by 25 years of supervised release for production of child sexual abuse material (CSAM).

    According to court record, Hulten, 24, of Fort Pierce, Fla., admitted to having sex with a 13-year-old minor and a 16-year-old minor, and to recording the sex act with the 16-year-old victim.  Corroborating his confession, his social media records contained conversations with both minor victims, as well as evidence that Hulten was aware both victims were under the age of 18.  Social media records also showed that Hulten distributed the recording of his 16-year-old victim using the social media platform.

    Acting U.S. Attorney Michael S. Davis for the Southern District of Florida, Acting Special Agent in Charge José R. Figueroa Homeland Security Investigations (HSI) Miami Field Office, and John Budensiek, Martin County Sheriff, made the announcement.

    HSI Fort Pierce and Martin County Sheriff’s Office investigated the case. Assistant United States Attorney Christopher Hudock prosecuted this case.

    This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.

    Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 22-cr-14027.

    ###

    MIL Security OSI

  • MIL-OSI Security: Missouri Man Admits Transporting Minor for Sex

    Source: Office of United States Attorneys

    ST. LOUIS – A Missouri man has pleaded guilty and admitted transporting a minor across state lines for sex.

    Scott M. Arnold-Micke, 48, pleaded guilty to one count of transportation of a minor to engage in a criminal sex act. He admitted in his plea agreement that in 2021, he took the 17-year-old victim to Chicago, where they used drugs and engaged in sexual acts. Arnold-Micke met the victim that summer and began engaging in drug usage with the victim on an almost daily basis after Arnold-Micke moved from Sullivan, Missouri to Rolla, Missouri.

    Arnold-Micke is scheduled to be sentenced April 30. Both the U.S. Attorney’s office and Arnold-Micke’s lawyers have agreed to recommend 230 months in prison.

    The case was investigated by the FBI, the Rolla Police Department, and the Phelps County Sheriff’s Department.  Assistant U.S. Attorney Dianna Edwards is prosecuting the case.

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

    MIL Security OSI

  • MIL-Evening Report: PNG media policy ‘new era journalism’ draft law ready, says Masiu

    NBC News in Port Moresby

    Papua New Guinea’s cabinet has officially given the green light to the PNG media policy, which will soon be presented to Parliament for formal enactment.

    Minister for Information and Communication Technology (ICT) Timothy Masiu believes this policy will address ongoing concerns about sensationalism, ethical standards, and the portrayal of violence in the media.

    In an interview with NBC News in Port Moresby, Masiu outlined the urgent need for a shift in the nation’s media practices.

    PNG’s Information and Communication Technology Minister Timothy Masiu . . . “It’s time for Papua New Guinea’s media to evolve and reflect the values that truly define us.” Image: NBC News

    “We must be more responsible in how we report and portray the issues that matter most to our country. It’s time for Papua New Guinea’s media to evolve and reflect the values that truly define us,” he said.

    “Sensational headlines, graphic images of violence, and depictions of suffering do nothing to build our national identity. They only hurt our reputation globally.”

    Minister Masiu said the policy aimed to regulate sensitive contents and shift towards “more constructive and informative” coverage.

    According to Masiu, the policy’s long-term goal was to protect the public from harmful content while empowering journalists to play a positive role in nation-building.

    “This policy isn’t about stifling press freedom. It’s about ensuring that media in Papua New Guinea serves the public good by upholding the highest standards of integrity and professionalism,” Masiu said.

    Meanwhile, the policy also acknowledged the media’s significant influence on public opinion and its role in national development.

    Masiu added that once the policy was passed into law, it would become a guiding framework for media institutions across the nation, laying the foundation for a new era of journalism in Papua New Guinea.

    Republished from NBC News.

    Persistent criticism
    Pacific Media Watch reports that the draft media policy law and consultation process have been controversial and faced persistent criticisms from journalists, the PNG Media Council (MCPNG) and Transparency international PNG.

    Version 5 of the policy is here, but it is not clear whether that is the version Masiu says is ready.

    PNG dropped 32 places to 91st out of 180 countries in the 2024 RSF World Press Freedom Index and the Paris-based world press freedom watchdog RSF called on the Marape government to withdraw the draft law in February 2023.

    Civicus references an incident last August when a PNG journalist was barred from a press briefing by the visiting Indonesian president-elect Prabowo Subianto and said this came “amid growing concern about the government’s plan to regulate the press under its so-called media development policy”.

    MIL OSI AnalysisEveningReport.nz

  • MIL-OSI: HZJL Cayman Limited Announces Entering into a Merger Agreement with Rising Dragon Acquisition Corporation

    Source: GlobeNewswire (MIL-OSI)

    HANGZHOU, CHINA, Jan. 27, 2025 (GLOBE NEWSWIRE) — HZJL Cayman Limited (“HZJL”), a comprehensive solution provider empowering local businesses with innovative branding, software, and supply chain services, announced the execution of an Agreement and Plan of Merger (the “Merger Agreement”) for a business combination with Rising Dragon Acquisition Corporation (Nasdaq: RDACU, RDAC, RDACR) (“RDAC”), a publicly traded special purpose acquisition company.

    Upon consummation of the transaction contemplated by the Merger Agreement, (i) RDAC will reincorporate by merging with and into Xpand Boom Technology Inc., a Cayman Islands exempted company and wholly owned subsidiary of RDAC (“Xpand Boom Technology”), and (ii) concurrently with the reincorporation merger, Xpand Boom Solution Inc., a Cayman Islands exempted company and wholly owned subsidiary of Xpand Boom Technology, will be merged with and into HZJL, resulting in HZJL being a wholly owned subsidiary of Xpand Boom Technology (the “Business Combination” and the transactions in connection with the Business Combination collectively, the “Transaction”). Upon the closing of the Transaction, the parties plan to remain Nasdaq-listed under a new ticker symbol.

    HZJL Overview

    HZJL is a dynamic solution provider dedicated to empowering local lifestyle businesses such as restaurants, coffee shops, beauty salons, convenience stores, and massage centers, through innovative online social branding, software application, and supply chain services.

    HZJL’s core service offering is its online branding service, which leverages the power of social media to promote compelling success stories for both businesses and their founders. This service helps businesses build strong, authentic identities that resonate with their target audience, and enhance brand visibility and customer loyalty. In addition, HZJL offers a sophisticated online application designed to streamline operations and optimize customer relationship management. HZJL also provides comprehensive supply chain solutions, with a special focus on supporting local restaurants.

    With a mission to fuel scalable growth for business owners, HZJL combines these three key service areas that work together to drive operational excellence, customer engagement, and efficient growth strategies.

    Key Transaction Terms

    Under the terms of the Merger Agreement, RDAC’s wholly owned subsidiary, Xpand Boom Technology, will acquire HZJL, resulting in Xpand Boom Technology being a listed company on the Nasdaq Capital Market. At the effective time of the Transaction, HZJL’s shareholders and management will receive 35 million ordinary shares of Xpand Boom Technology. In addition, certain HZJL shareholders will be entitled to receive earn-out consideration of up to an additional 20 million ordinary shares of Xpand Boom Technology, subject to HZJL meeting certain revenue targets in the two subsequent years as set forth in the Merger Agreement. The shares held by certain HZJL’s shareholders will be subject to lock-up agreements for a period of six months following the closing of the Transaction, subject to certain exceptions.

    The Transaction, which has been unanimously approved by the boards of directors of both RDAC and HZJL, is subject to regulatory approvals, the approvals by the shareholders of RDAC and HZJL, respectively, and the satisfaction of certain other customary closing conditions, including, among others, a registration statement, of which the proxy statement/prospectus forms a part, being declared effective by the U.S. Securities and Exchange Commission (the “SEC”), and the approval by Nasdaq of the listing application of the combined company.

    The description of the Business Combination contained herein is only a summary and is qualified in its entirety by reference to the Merger Agreement relating to the Business Combination. A more detailed description of the Transaction and a copy of the Merger Agreement will be included in a Current Report on Form 8-K to be filed by RDAC with the SEC and will be available on the SEC’s website at www.sec.gov.

    Comments on HZJL

    “We are excited for the proposed Business Combination with HZJL and admire the company that Mr. Xiong Bin and the HZJL management team have built,” said Xing Lulu, Chief Executive Officer of RDAC. “I look forward to working with HZJL’s first-class management team to help them thrive as a public company while they continue to grow.”

    Xiong Bin, founder of HZJL, stated: “For several years, HZJL has been evolving with the local lifestyle business services market. Our motto, ‘Scalable Growth-Engine Empowering Local Business,’ underlines our ongoing commitment to delivering innovative solutions that foster substantial local business growth and scalability. We have garnered valuable industrial experience and know-how from assisting our customers from various industries in achieving their goals, including with respect to brand building, business operations and supply chain optimization. Our solutions specifically address the challenges faced by small and medium-sized enterprises, providing them critical assistance in overcoming marketing and management hurdles. We are excited to collaborate with RDAC, with which we share similar market visions and business strategies. We are confident that the RDAC team will play a key role in helping us achieve our aspirations and long-term success.”

    Advisors

    Loeb & Loeb LLP, Joint-Win Partners, and Maples and Calder (Hong Kong) LLP serve as legal counsel to RDAC. Han Kun Law Offices, Han Kun Law Offices LLP, and Harney Westwood & Riegels serve as legal counsel to HZJL. Chain Stone Capital Limited (CTM) serves as the financial advisor to HZJL.

    About Rising Dragon Acquisition Corporation

    Rising Dragon Acquisition Corp. is a blank check company incorporated as a Cayman Islands exempted company with limited liability for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. The company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic region.

    About HZJL Cayman Limited

    HZJL is a comprehensive solution provider empowering local businesses with innovative branding, software, and supply chain services. The company is dedicated to fuel the scalable growth of business owners by combining technology, customer service, and operational excellence to unlock new levels of success. The company’s innovative solutions can help small and medium-sized enterprises better leverage social platforms to build their own stories in the rapidly changing Internet era, use online applications to improve efficiency and engage new customers, and use optimized supply chain services to produce better products and services, helping these companies grow bigger and faster.

    Participants in the Solicitation

    Xpand Boom Technology Inc., Rising Dragon Acquisition Corp., and their respective directors, executive officers and employees and other persons may be deemed to be participants in the solicitation of proxies from the holders of RDAC ordinary shares in respect of the proposed Transaction. Information about RDAC’s directors and executive officers and their ownership of RDAC’s ordinary shares is currently set forth in RDAC’s prospectus related to its initial public offering dated October 11, 2024, as modified or supplemented by any Form 10-K, Form 3 or Form 4 filed with the SEC since the date of such filing. Other information regarding the interests of the participants in the proxy solicitation will be included in a registration statement on Form F-4 (as may be amended from time to time) that will include a proxy statement and a registration statement/preliminary prospectus (the “Registration Statement”) pertaining to the proposed Transaction when it becomes available. These documents can be obtained free of charge from the sources indicated below.

    No Offer or Solicitation

    This press release is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Transaction and does not constitute an offer to sell or the solicitation of an offer to buy any securities of RDAC or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.

    Important Information about the Proposed Business Combination and Where to Find It

    In connection with the Transaction, Xpand Boom Technology will file relevant materials with the SEC, including the Registration Statement. Promptly after the Registration Statement is declared effective, the proxy statement/prospectus will be sent to all RDAC shareholders entitled to vote at the special meeting relating to the Transaction. Before making any voting decision, securities holders of RDAC are urged to read the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the Transaction as they become available because they will contain important information about the Transaction and the parties to the Transaction.

    Stockholders will also be able to obtain copies of the preliminary proxy statement/prospectus, the definitive proxy statement/prospectus, and other documents filed or that will be filed with the SEC through RDAC through the website maintained by the SEC at www.sec.gov, or by directing a request to the contacts mentioned below.

    Wenyi Shen
    Chief Financial Officer
    Rising Dragon Acquisition Corp.
    Email: woody.shen@hywincapital.cn

    Zhiguo Sun
    HZJL Cayman Limited
    Investor Relations Officer
    Email: ir@xpandboom.com

    Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. RDAC’s and HZJL’s actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “might” and “continues,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, RDAC’s and HZJL’s expectations with respect to future performance and anticipated financial impacts of the Business Combination, the satisfaction of the closing conditions to the Business Combination and the timing of the completion of the Business Combination. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Most of these factors are outside the control of RDAC or HZJL and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement relating to the proposed Business Combination; (2) the outcome of any legal proceedings that may be instituted against RDAC or HZJL following the announcement of the Merger Agreement and the transactions contemplated therein; (3) the inability to complete the Business Combination, including due to failure to obtain approval of the shareholders of RDAC or other conditions to closing in the Merger Agreement; (4) delays in obtaining or the inability to obtain necessary regulatory approvals (including approval from PRC regulators) required to complete the transactions contemplated by the Merger Agreement; (5) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the transaction to fail to close; (6) the inability to obtain or maintain the listing of the post-acquisition company’s ordinary shares on Nasdaq following the Business Combination; (7) the risk that the Business Combination disrupts current plans and operations as a result of the announcement and consummation of the Business Combination; (8) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably and retain its key employees; (9) costs related to the Business Combination; (10) changes in applicable laws or regulations; (11) the possibility that HZJL or the combined company may be adversely affected by other economic, business, and/or competitive factors; and (12) other risks and uncertainties to be identified in the Registration Statement filed by RDAC and Xpand Boom Technology (when available) relating to the Business Combination, including those under “Risk Factors” therein, and in other filings with the SEC made by RDAC and HZJL. RDAC and HZJL caution that the foregoing list of factors is not exclusive. RDAC and HZJL caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Neither RDAC or HZJL undertakes or accepts any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, subject to applicable law. The information contained in any website referenced herein is not, and shall not be deemed to be, part of or incorporated into this press release.

    The MIL Network

  • MIL-OSI Security: Nigerian Man Extradited to the U.S. After Being Indicted for Sextortion Scheme that Caused Death of S.C. Teen

    Source: Office of United States Attorneys

    COLUMBIA, S.C. — Hassanbunhussein Abolore Lawal (luh-wall), 24, of Osun State, Nigeria, has been extradited to the United States from Nigeria to face prosecution in a partially unsealed indictment for the sextortion of a South Carolina minor, which led to the victim’s death.

    This investigation was launched after Gavin Guffey, a 17-year-old from Rock Hill, died by suicide in July 2022 after being victimized by Lawal’s scheme. Lawal allegedly posed as a young woman on social media and coerced the teen into sending compromising photos. He then extorted and sent harassing messages to the teen threatening to leak the photos and ruin his reputation unless the teen sent him money. Lawal later did the same to members of his family.

    The five-count federal indictment charges Lawal with child exploitation resulting in death, the production and distribution of child sexual abuse material, coercion and enticement of a minor, cyberstalking resulting in death, interstate threats with intent to extort, and aiding/abetting. In addition to victimizing the teen in every count, the indictment alleges Lawal targeted the minor victim’s family in the stalking and extortion charges.

    Lawal faces up to life in prison, and mandatory minimum prison sentences on multiple counts. The child exploitation resulting in death count carries a mandatory 30-year sentence. He also faces mandatory restitution, where the court may order Lawal to pay for losses incurred by the family as a result of his scheme.

    The indictment was returned by a federal Grand Jury in South Carolina in October 2023. On Jan. 24, following extradition proceedings in Nigeria, agents with the FBI Columbia Field Office took custody of Lawal in Lagos, Nigeria and executed the removal with assistance from Nigerian law enforcement.

    “We will not allow predators who target our children to hide behind a keyboard or across the ocean. Today we honor Gavin’s life and continue our fight against sextortion by holding this defendant accountable,” said U.S. Attorney Adair Ford Boroughs for the District of Columbia. “This investigation and extradition are the result of tremendous law enforcement coordination both in the United State and Nigeria. We’re grateful to the many agencies who helped make this day possible.”

    “This indictment represents the culmination of countless hours of dedicated work done by our investigators both here and abroad,” said Steve Jensen, Special Agent in Charge of the FBI Columbia Field Office. “The defendant’s alleged actions are reprehensible resulting in the tragic loss of a young man’s life. We remain steadfast in our commitment to holding criminals accountable, especially those who target our children and endanger their lives, no matter where they are.”

    U.S. Attorney Boroughs and SAC Jensen thanked the U.S. Department of Justice’s Office of International Affairs (OIA), and U.S State Department for their help in facilitating the arrest and extradition of Lawal.

    Nigerian law enforcement provided critical assistance in the identification, investigation, arrest, and extradition of Lawal. U.S. Attorney Boroughs and SAC Jensen extend their appreciation and thanks to the Economic and Financial Crimes Commission (EFCC), the Nigerian Attorney General’s Office – Ministry of Justice, and all other involved Nigerian authorities for their important partnership in this case.

    This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney’s Office, county prosecutor’s offices, the Internet Crimes Against Children task force (ICAC), federal, state, tribal, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following website: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.

    If someone you know is being victimized by sextortion, please report to local law enforcement and to the FBI. Learn more about sextortion and find resources for parents, caregivers, and teachers.

    The case was investigated by the FBI Columbia Field Office, the FBI’s Violent Crimes Against Children Section and International Operations Division, the South Carolina Law Enforcement Division, and the York County Sheriff’s Office. 

    Assistant U.S. Attorneys Elliott B. Daniels, Lothrop Morris, and Michael Shedd are prosecuting the case. 

    All charges in the indictment are merely accusations and that defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

    ###

    MIL Security OSI

  • MIL-OSI Security: Harford County Man Sentenced for Aggravated Identity Theft and Bank Fraud Scheme

    Source: Office of United States Attorneys

    Defendant also participated in scheme to illegally obtain $28,350 in unemployment insurance benefits from the State of California during COVID-19 Pandemic.

    Baltimore, Maryland – U.S. District Judge Julie R. Rubin sentenced Victor Ojo, 30, of Belcamp, Maryland, to 72 months in federal prison, followed by three years of supervised release.

    Victor Ojo received the sentence for aggravated identity theft and his role in an attempted bank-fraud scheme that had an intended loss amount of $1.5 million. Additionally, Victor Ojo admitted to participating in a fraudulent scheme to obtain $28,350 in unemployment insurance benefits. So, Judge Rubin ordered Victor Ojo to forfeit $20,014.03 and to pay $78,350 in restitution.

    Erek L. Barron, U.S. Attorney for the District of Maryland, announced the sentence with Andrew McKay, Special Agent in Charge of the Treasury Inspector General for Tax Administration’s (TIGTA) Mid-Atlantic Field Division, and Scott Moffit, Special Agent in Charge of TIGTA’s Cybercrime Investigations Division.

    According to his guilty plea, from April 2016 through at least August 2019, Victor Ojo conspired with Damilola Ojo, Jamelia Thompson, Raissa Kaossele, and others, to commit bank fraud using the Internal Revenue Service’s (IRS) Modernized Internet Employer Identification Number (MODIEIN) system. The MODIEIN is the IRS system that allows users to register for a unique Employer Identification Number (EIN). It requires users to enter the valid name and Social Security Number of a real living person to obtain an EIN for a business.

    The defendant and his co-conspirators created and used various EINs to carry out the scheme. They obtained many of the EINs from the IRS using stolen Personally Identifiable Information. These EINs, in conjunction with fraudulently obtained state business certificates, allowed the co-conspirators to open bank accounts at various financial institutions to deposit stolen and/or altered checks and to receive fraudulently obtained wire transfers and other funds. Many of the wire transfers were the result of Business Email Compromises. Once obtained, the co-conspirators rapidly withdrew the proceeds, transferring them to other bank accounts.

    Victor Ojo and his co-conspirators victimized individuals through identity theft, businesses through financial account compromise, and banks through misdirecting wire transfers and making fraudulent transactions. After Victor Ojo’s arrest, law enforcement discovered evidence linking him to fraudulent activity. Law enforcement found numerous financial documents; a jacket, shirt, and hat that they saw Victor Ojo wearing in bank-surveillance footage while interacting with the fraudulent accounts; and a $14,000 check with someone else’s name on it. They also found passports in other people’s names and a Colorado ID with authentication features in someone else’s name.

    In the plea agreement, Victor Ojo admitted that he engaged in additional fraudulent activities prior to his arrest for bank-fraud conspiracy. Specifically, Victor Ojo and co-conspirators fraudulently obtained $28,350 in unemployment insurance benefits from the State of California using a victim’s identification.

    Around August 1, 2021, the California Employment Development Department (EDD) issued a Bank of America debit card in that victim’s name to an address in Lanham, Maryland. The card was linked to a Bank of America account that the EDD deposited a total of $28,350 in unemployment insurance benefits into. 
     

    The EDD made the first deposit on August 8, 2021. On August 10, 11, 24, and 25, Victor Ojo used the card to withdraw thousands of dollars from various ATMs in Harford County, Maryland. Victor Ojo was also captured on surveillance cameras making the withdrawals on August 10, 11, and 25.

    U.S. Attorney Barron commended the TIGTA for its work in the investigation.  Mr. Barron also thanked Assistant U.S. Attorneys Joseph L. Wenner, Paul Riley, and John D’Amico who prosecuted the federal case. He also recognized Joanna B.N. Huber, Maryland COVID-19 Strike Force Paralegal Specialist, for her assistance.

    The District of Maryland Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  The CARES Act was designed to provide emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic.  The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors.  The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.

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

    For more information about the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

    ###

    MIL Security OSI

  • MIL-OSI Security: Cedar Rapids Man Sentenced to over 24 Years in Federal Prison for Attempted Sex Trafficking of a Child and Destruction of Evidence

    Source: Office of United States Attorneys

    A man who attempted to solicit a minor to engage in prostitution was sentenced on January 24, 2025, to 292 months in federal prison.

    Joshua Johnson, age 50, of Cedar Rapids, Iowa, received the sentence after an August 7, 2024, jury verdict finding him guilty of attempted sex trafficking of a child and destruction of evidence.  The evidence at trial showed that, in December 2023, Johnson responded to an ad on a website for prostitution.  He exchanged text messages with a person who stated that she was 13 years old; she actually was an undercover law enforcement officer.  Johnson sent messages describing sex acts he could perform with the minor, and he traveled to Hiawatha, Iowa, to meet with her.  After meeting with officers, Johnson wiped his cell phone.

    Johnson was sentenced in Cedar Rapids by United States District Court Chief Judge C.J. Williams.  Johnson was sentenced to 292 months’ imprisonment.  He must also serve a five-year term of supervised release after the prison term.  There is no parole in the federal system.   

    This case was prosecuted by Assistant United States Attorney Mark Tremmel and was investigated by the Federal Bureau of Investigation, Homeland Security Investigations, the Iowa Division of Criminal Investigation, and the Hiawatha Police Department.

    This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 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.usdoj.gov/psc.  For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”

    Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.  The case file number is CR 24-38.

    Follow us on X @USAO_NDIA.

    MIL Security OSI

  • MIL-OSI: Xunlei to Acquire Hupu

    Source: GlobeNewswire (MIL-OSI)

    SHENZHEN, China, Jan. 27, 2025 (GLOBE NEWSWIRE) — Xunlei Limited (“Xunlei” or the “Company”) (Nasdaq: XNET), a leading technology company providing distributed cloud services in China, today announced that it has entered into a definitive agreement to acquire Shanghai Kuanghui Internet Technology Co., Ltd., which operates Hupu, for a total cash consideration of RMB500 million, subject to certain adjustments. Hupu is China’s leading sports media and data platform. The closing of the transaction is subject to certain conditions and is currently expected to occur in the first half of 2025.

    “Acquiring Hupu is expected to create a powerful synergy with Xunlei,” said Mr. Jinbo Li, Chairman and CEO of Xunlei. “This strategic move will leverage Xunlei’s extensive user base and technological expertise in the internet content transmission sector, combined with Hupu’s high-quality sports content and vibrant community, to foster content downloads, community interaction, and sports consumption in a niche market with high user loyalty. Additionally, the acquisition will strengthen Xunlei’s community operations by enriching its content ecosystem with Hupu’s premium sports content and active user base, while enhancing the user experience through Xunlei’s technological and brand advantages.”

    About Xunlei

    Founded in 2003, Xunlei Limited (Nasdaq: XNET) is a leading technology company providing distributed cloud services in China. Xunlei provides a wide range of products and services across cloud acceleration, shared cloud computing and digital entertainment to deliver an efficient, smart and safe internet experience.

    Safe Harbor Statement

    This press release contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “believes,” “anticipates,” “future,” “intends,” “plans,” “estimates” and similar statements. Among other things, the management’s quotes in this press release, as well as the Company’s strategic, operational and acquisition plans, contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. Forward-looking statements involve inherent risks and uncertainties, including but not limited to: the Company’s ability to continue to innovate and provide attractive products and services to retain and grow its user base; the Company’s ability to keep up with technological developments and users’ changing demands in the internet industry; the Company’s ability to convert its users into subscribers of its premium services; the Company’s ability to deal with existing and potential copyright infringement claims and other related claims; the Company’s ability to react to the governmental actions for its scrutiny of internet content in China and the Company’s ability to compete effectively. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by the Company is included in the Company’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law.

    Investor Relations
    Xunlei Limited
    Email: ir@xunlei.com 
    Tel: +86 755 6111 1571
    Website: http://ir.xunlei.com

    The MIL Network

  • MIL-OSI: Finding the Best Wireless Modem for Rural America: Results are in, and Nomad Air 2 is 10X faster than Local DSL

    Source: GlobeNewswire (MIL-OSI)

    NEW BRAUNFELS, Texas, Jan. 27, 2025 (GLOBE NEWSWIRE) — Nomad Internet, a leader in providing high-speed internet solutions for rural America, has announced breakthrough results from a rigorous modem testing initiative led by Jaden Garza, CINO at Nomad Internet & Jessica Garza, Chief Operating Officer of Nomad Internet. The company’s new Nomad Air 2 Wireless Modem outperformed local DSL networks by over 10 times, achieving blazing-fast download speeds of 513 Mbps compared to the local DSL average of 39.6 Mbps in real-world rural environments.

    The tests, conducted in areas with zero traditional cell service, were designed to evaluate the performance of over a dozen wireless modems from leading manufacturers under real-world rural conditions. The results proved that the Nomad Air 2 is the best option for rural communities and a significant step forward in closing the digital divide.

    “This is game-changing for rural America,” said Jaden Garza, CINO at Nomad Internet. “We pushed these modems to their limits in places with no urban network advantages, and the Nomad Air 2 consistently delivered speeds faster than even some fiber networks. It’s a testament to our commitment to bringing high-speed, reliable internet to the last mile.”

    Real-World Results, Real Impact

    The testing process included hours of rigorous analysis and optimization by Garza and his team, with the Nomad Air 2 achieving a download speed of 513 Mbps—outshining all other modems tested.
    “This modem is a game-changer for rural or underserved people. It levels the playing field, providing access to affordable, high-speed internet for people who traditional providers have left behind,” added Jessica Garza.

    Partnerships Driving Innovation

    Nomad Internet credited partners like Inseego Corp, whose modem technology played a pivotal role in delivering these speeds, and Ookla, which provided the tools to measure this breakthrough.
    “We are grateful for the incredible work of Inseego Corp and partners like Ookla, whose technology makes advancements like this possible,” Mr. Garza said.

    Closing the Digital Divide

    The Nomad Air 2 represents Nomad Internet’s mission to close the digital divide, empowering rural communities with faster, more reliable, and more affordable connectivity than ever before. Whether it’s for work, education, or entertainment, this modem ensures no one is left behind.

    A Look Back at All the New Launches by Nomad Internet in 2025

    While the record-breaking modem speeds have taken center stage, Nomad Internet is also introducing new products and initiatives to enhance connectivity and customer engagement further.

    Nomad Omni Data

    One of the company’s most anticipated launches, Nomad Omni Data, redefines rural internet connectivity by offering simultaneous access to two of America’s largest networks.

    Key Features of Nomad Omni Data:

    • Dual-Network Access: The modem transitions to the most rapid and robust network signal.
    • Unlimited Data: Users experience limitless browsing, streaming, and gaming without concerns about data limits or throttling.
    • Blazing Speeds: Boasting download speeds reaching 1 Gbps, users enjoy smooth streaming, swift downloads, and gaming without interruptions.
    • Affordable Upgrade: For only $19.95/month, users can access the complete capabilities of dual-network power.

    This feature is ideal for rural families, digital nomads, and gamers who demand reliable, high-speed internet regardless of location.

    Unlimited Power Plan

    The Unlimited Power Plan has been designed by Nomad Internet for customers seeking unparalleled connectivity at an unbeatable value. This plan caters to modern, mobile lifestyles priced at $119.95 per month with a lifetime discount of $30.

    Features of the Unlimited Power Plan:

    • 500 Mbps Speeds: Say goodbye to buffering and enjoy ultra-fast connections for video calls, streaming, and more.
    • 8K Streaming: Experience unparalleled clarity for entertainment and content creation.
    • Low Latency: Competitive gamers can enjoy smooth, lag-free gameplay.

    The Unlimited Power Plan highlights Nomad Internet’s dedication to providing affordable, flexible solutions that enable users to remain connected regardless of location.

    #NomadSpeedChallenge

    Nomad Internet has introduced the #NomadSpeedChallenge to commemorate its progress, encouraging customers to post their internet speed results to win a year of complimentary Nomad Internet service.

    How to Participate:

    1. Test the Speed: Run a speed test using tools like Ookla or Fast.com.
    2. Capture the Results: Take a screenshot or record the speed test.
    3. Share the Experience: Post the results on social media platforms like X, Facebook, Instagram, or TikTok using the hashtags #NomadSpeedChallenge and #NomadInternet, and tag @NomadInternet.
    4. Submit the Entry: Upload the speed test and social media link to the official contest page.

    This initiative celebrates Nomad Internet’s achievements and builds a sense of community among users who rely on its services to power their digital lives.

    Empowering Connectivity in the Digital Age

    The industry leader in rural connectivity, Nomad Internet, released the Nomad Air 2 gadget and additional products, starting with the Unlimited Power Plan and Nomad Omni Data. Nomad Internet is dedicated to breaking down digital connectivity barriers and empowering individuals in rural and remote areas to enjoy the high-speed internet they need to succeed in today’s digital landscape.

    Jessica Garza emphasized that Nomad Internet delivers high-speed internet to the communities that need it most. “We are transforming possibilities for rural and nomadic populations through unprecedented modem speeds, creative data plans, or customer initiatives such as the #NomadSpeedChallenge.”

    About Nomad Internet

    Nomad Internet is America’s leading wireless internet provider for rural communities, delivering high-speed, reliable, and affordable connectivity to those in areas where traditional services fall short.

    For more information, visit www.nomadinternet.com.

    Media Contact

    Company Name: Nomad Internet

    Contact Person: Manish Roshan

    Email: manish@nomadinternet.com

    Website: https://nomadinternet.com

    Phone: +1 281 800 1000

    Disclaimer: This content is provided by the Nomad Internet. The statements, views, and opinions expressed in this column are solely those of the content provider. The information shared in this press release is not a solicitation for investment, nor is it intended as investment, financial, or trading advice. It is strongly recommended that you conduct thorough research and consult with a professional financial advisor before making any investment or trading decisions. Please conduct your own research and invest at your own risk.

    Photos accompanying this announcement are available at:

    https://www.globenewswire.com/NewsRoom/AttachmentNg/b9f5723c-5676-4c59-9960-f213d8175c52

    https://www.globenewswire.com/NewsRoom/AttachmentNg/738a6ea2-75fe-4998-8d85-0eb2ad6e1e7b

    https://www.globenewswire.com/NewsRoom/AttachmentNg/3d225766-a42d-4881-9678-5cb04c297ea1

    The MIL Network

  • MIL-OSI: MEXC’s Insurance Fund Account Provides $414M+ to Mitigate Traders’ Bankruptcy Losses

    Source: GlobeNewswire (MIL-OSI)

     

    VICTORIA, Seychelles, Jan. 27, 2025 (GLOBE NEWSWIRE) — MEXC, a leading global cryptocurrency exchange, has provided over $414 million through its Insurance Fund Account to cover deficits that occur when users’ losses during liquidation exceed their available margin as of January 23, 2025. This impressive figure underscores MEXC’s commitment to asset security and risk mitigation. Combined with Proof of Reserve, MEXC offers traders robust protection against extreme market fluctuations.

     

    How MEXC’s Insurance Fund Account Mitigates Risk for Traders
    The MEXC Insurance Fund Account, launched in November 2024, is specifically designed to protect traders from extreme market fluctuations, such as those experienced during a bull run, where rapid price swings can lead to a user’s account value to dip below the required margin level, triggering a liquidation. Should the liquidation price be worse than expected, resulting in losses that exceed than the available margin (a scenario known as bankruptcy), the Insurance Fund steps in to cover these excess losses, thus facilitating a smoother liquidation process.

    The fund is continually replenished by surpluses generated from liquidation orders executed at better-than-expected prices, ensuring its stability and ongoing protection during periods of high volatility.

    In line with its commitment to transparency, MEXC provides users with direct access to both current and historical insurance fund amounts for various cryptocurrencies on the platform.

    In addition, MEXC provides Proof of Reserve to ensure asset safety and maintain transparency for its users. This allows users to trade with confidence, free from concerns about withdrawal runs. The reserve rates are updated every two months. As of Dec 1, 2024, the latest reserve rates for various cryptocurrencies are as follows:

    • USDT: 104.52%
    • USDC: 116.52%
    • BTC: 105.88%
    • ETH: 105.65%

     

    By offering high leverage alongside an Insurance Fund Account and Reserve Rate exceeding 100%, MEXC ensures multiple layers of protection to safeguard traders’ positions and ensure asset security.

    The Go-To Platform for Seamless Crypto Trading
    In addition to implementing robust safety measures to ensure a secure trading environment, the platform offers a variety of features and services designed to enhance the user experience. These features help traders minimize costs and maximize returns. MEXC is committed to empowering traders by enabling investments across the widest range of assets, ensuring safe and seamless transactions regardless of market conditions.

    • M – Most Trending Tokens: MEXC is known for its rapid token listings and diverse selection of popular tokens, helping users capitalize on emerging opportunities. To date, over 3,000 tokens have been listed on the platform.
    • E – Everyday Airdrops: MEXC makes it easy for users to engage in daily airdrop events and receive substantial rewards without complex procedures. In 2024, the platform completed 2,293 airdrop events, distributing over $136 million in rewards.
    • X – Xtremely Low Fees: MEXC offers highly competitive trading fees, helping users reduce costs and maximize their growth potential.
    • C – Comprehensive Liquidity: Backed by strong liquidity and market depth, MEXC ensures the efficient and seamless execution of every transaction, minimizing slippage even during volatile conditions.

    These features have helped MEXC attract over 30 million users across over 170 countries, establishing it as the platform of choice for an increasing number of traders around the world.

    Learn more about the MEXC Insurance Fund Account.

    About MEXC
    Founded in 2018, MEXC is committed to being “Your Easiest Way to Crypto”. Serving over 30 million users across 170+ countries, MEXC is known for its broad selection of trending tokens, frequent airdrop opportunities, and low trading fees. Our user-friendly platform is designed to support both new traders and experienced investors, offering secure and efficient access to digital assets. MEXC prioritizes simplicity and innovation, making crypto trading more accessible and rewarding.

    MEXC Official WebsiteXTelegramHow to Sign Up on MEXC

    Risk Disclaimer:
    The information provided in this article about cryptocurrencies does not represent MEXC’s official stance or investment advice. Given the highly volatile nature of the cryptocurrency market, investors are encouraged to carefully evaluate market fluctuations, project fundamentals, and potential financial risks before making any trading decisions.

    Photos accompanying this announcement are available at:
    https://www.globenewswire.com/NewsRoom/AttachmentNg/e38abd1a-038c-4b15-9bd1-930ea95076bd
    https://www.globenewswire.com/NewsRoom/AttachmentNg/7973d05e-acf0-4aee-95b0-a1fb0e6c4a71
    https://www.globenewswire.com/NewsRoom/AttachmentNg/78296b51-e6d1-48cd-a47f-a0fbd90dd493

    The MIL Network

  • MIL-OSI China: Memorial service held for car-ramming victims at German Christmas market

    Source: China State Council Information Office

    Policemen stand guard at a Christmas market where a car rammed into a crowd in Magdeburg, Germany, Dec. 21, 2024. At least five people were killed and over 200 others injured after a car rammed into a large crowd at a German Christmas market in the central German city of Magdeburg Friday evening, German news agency dpa reported Saturday, citing State Premier Reiner Haseloff. (Xinhua/Du Zheyu)

    Approximately 200 people sustained injuries, many of them serious. Authorities warned that the death toll could rise.

    A memorial service was held Saturday evening in the German city of Magdeburg to mourn the victims of a tragic attack at a Christmas market on Friday night, where a car rammed into a crowd, killing at least five people and injuring 200 others.

    The service took place at the city’s cathedral and was intended primarily for the victims’ relatives, emergency responders, and invited guests, including Federal President Frank-Walter Steinmeier. Outside the cathedral, mourners gathered to lay flowers and light candles in remembrance of the victims.

    To mark the tragedy, church bells tolled across Magdeburg at 7:04 p.m. (1804 GMT) — the exact time the attack occurred.

    This photo taken on Dec. 21, 2024 shows a Christmas market where a car rammed into a crowd in Magdeburg, Germany. (Xinhua/Du Zheyu)

    VICTIMS INCLUDE 9-YEAR-OLD CHILD

    A nine-year-old child is among the five people killed, confirmed Horst Walter Nopens, head of the local public prosecutor’s office, without disclosing further details about the other four adult victims.

    He said approximately 200 people sustained injuries, many of them serious. Authorities warned that the death toll could rise.

    According to German media, the attack lasted roughly three minutes. The emergency route used by the perpetrator was not secured with barriers, raising concerns about safety measures.

    Condemning the act, German Chancellor Olaf Scholz described the incident as “a terrible tragedy to harm and kill so many people with such brutality.”

    German Chancellor Olaf Scholz speaks to the press during a memorial ceremony in Magdeburg, Germany, Dec. 21, 2024. (Xinhua/Du Zheyu)

    DOCTOR FROM SAUDI ARABIA UNDER INVESTIGATION

    A 50-year-old doctor originated from Saudi Arabia was arrested at the site and taken into custody for questioning. Police searched his home overnight, and authorities assume he acted alone. He has lived in Germany since 2006 and worked in a nearby town.

    Authorities noted earlier that the suspect was not previously known to law enforcement as an Islamist.

    His motive remained unclear and police have not yet named the suspect. Nopens said one possible factor could be the suspect’s frustration with Germany’s handling of Saudi refugees.

    According to the German news agency dpa, authorities had been alerted about the man approximately a year ago.

    Scholz and other top officials, including Federal Minister of the Interior Nancy Faeser, arrived in Magdeburg on Saturday. Faeser ordered Saturday morning that all flags at all federal buildings be flown at half-mast nationwide.

    This photo shows police vehicles near a Christmas market where a car rammed into a crowd in Magdeburg, Germany, Dec. 21, 2024. (Xinhua/Du Zheyu)

    Magdeburg, a city of approximately 237,000 residents, is located in the state of Saxony-Anhalt, about 150 km west of Berlin.

    The incident echoes a tragic attack on Dec. 19, 2016, when a terrorist drove a truck into a Berlin Christmas market, killing 12 and injuring over 70 others. The perpetrator fled to Italy, where he was eventually shot dead by police.

    MIL OSI China News

  • MIL-OSI Asia-Pac: BharatNet: Bridging the Digital Divide

    Source: Government of India

    BharatNet: Bridging the Digital Divide

    From Remote Villages to Smart Communities

    Posted On: 21 DEC 2024 9:55AM by PIB Delhi

    Introduction to BharatNet

     

    In a world increasingly driven by digital innovation, internet connectivity has become a cornerstone for economic growth, education, healthcare, and governance. Digital divide was significant challenge, especially in rural India, and to address this, the government of India launched BharatNet in October 2011, an ambitious project aimed at providing affordable high-speed internet access to every Gram Panchayat in the country. This initiative, under the Ministry of Communications, seeks to empower rural India, fostering inclusive growth and bridging the gap between urban and rural communities. BharatNet is not merely an infrastructure project; it is the backbone of India’s journey towards a truly digital nation.

    Amended BharatNet 2023

     

    In August 2023, the government approved the Amended BharatNet Program (ABP). The program provides for internet access by Optical Fibre (OF) connectivity to 2.64 lakh GPs in ring topology and also to provide OF connectivity to the remaining non-GP villages (approx. 3.8 lakhs) on demand basis. The design improvement, at a cost of Rs. 1,39,579 crores, in ABP is aiming at:

    • Optical fiber connectivity from Block to GP in Ring topology
    • IP- MPLS network with Routers at Blocks and GPs
    • Provision of optical fiber connectivity to non-GP villages on demand basis
    • Provision for Operation and maintenance for 10 years, including monitoring of network uptime through Centralized Network Operating Centre (CNOC) and payment to Project Implementation Agency (PIA) as per Service Level Agreement (SLA)
    • Provision of Power backup of adequate level at GPs and Blocks
    • Provision of Remote Fibre Monitoring System (RFMS) at Block for fibre monitoring

     

    Digital Bharat Nidhi: Funding BharatNet

     

    Digital Bharat Nidhi (DBN) is a fund that aims to improve the quality and accessibility of telecommunications services in India. It was established by the government of India as a replacement for the Universal Service Obligation Fund (USOF). The DBN’s goals are to:

    • Provide affordable and high-quality mobile and digital services in rural and remote areas
    • Ensure equitable access to knowledge and information
    • Promote economic growth by increasing digital connectivity and services
    • Narrow the digital divide and remove barriers to access

    Working of BharatNet

     

    BharatNet operates as the world’s largest rural broadband connectivity program. The project is being executed by a Special Purpose Vehicle (SPV) namely Bharat Broadband Network Limited (BBNL), which has been incorporated on 25.02.2012. On 30.04.2016, the Telecom Commission approved to implement the project in three phases:

    1. Phase I: Focused on laying optical fiber cables to connect 1 lakh Gram Panchayats by utilizing existing infrastructure. Completed in December 2017, this phase established the foundational network.
    2. Phase II: Expanded the coverage to an additional 1.5 lakh Gram Panchayats using optical fiber, radio, and satellite technologies. This phase incorporated collaborative efforts with state governments and private entities.
    3. Phase III: Aims at future-proofing the network by integrating 5G technologies, increasing bandwidth capacity, and ensuring robust last-mile connectivity. This phase is ongoing, with a focus on improving accessibility and reliability.

    The network’s core relies on optical fiber cables, satellite links for remote regions, and wireless technologies for last-mile connectivity. Implemented under the Universal Service Obligation Fund (USOF), BharatNet adopts a Public-Private Partnership (PPP) model to ensure efficient execution and maintenance.

     

    Impact of BharatNet

     

    BharatNet has had a transformative impact on rural India, contributing to socioeconomic development in multiple ways:

    1. Digital Inclusion: The project has connected remote villages to high-speed internet, enabling access to e-governance services, online education, and telemedicine. Initiatives like the Digital India program thrive on BharatNet’s infrastructure.
    2. Economic Opportunities: With internet access, rural communities can participate in digital commerce, access financial services, and explore entrepreneurial opportunities. This has significantly boosted income generation in underserved areas.
    3. Education and Healthcare: BharatNet has enabled digital classrooms and telehealth services, bridging the resource gap in rural areas. Students and patients now have access to quality education and medical expertise from urban centers.
    4. Empowering Local Governance: Gram Panchayats use BharatNet to implement e-governance projects, improving transparency, efficiency, and citizen engagement in public services.

     

    Key Achievements and Milestones

    Internet Inclusivity in India

    Internet access is available in the country including rural areas through the Telecom Service Providers (TSPs) through wireless mobile and fixed wireline broadband. Government has taken numerous initiatives to enhance internet connectivity in India through mobile connectivity and optical fiber rollout. As a result, as of October, 2024:

    • Number of 4G Base Transceiver Station (BTS) have reached 24,96,644, spread across 783 districts.
    • India has seen the fastest rollout of 5G services in the world with 4,62,084 BTS deployed across 779 districts.
    • The cost of data has reduced drastically from Rs 269 per GB (in March 2014) to Rs. 9.08 per GB.
    • The Median mobile broadband speed has increased from 1.30 Mbps in March 2014 to 95.67 Mbps.
    • The average wireless usage of data per subscriber has increased to 22.24 GB per subscriber per month.
    • Out of 6,44,131 villages, 6,15,836 number of villages are having 4G mobile connectivity in the country.

     

    Conclusion

     

    BharatNet holds the promise of transforming rural India into a digitally empowered society. By addressing these challenges and maintaining its momentum, the initiative can pave the way for a more inclusive and connected future. BharatNet is more than an infrastructure project; it is a lifeline for millions of rural Indians aspiring to connect with opportunities beyond their immediate surroundings. With robust execution and sustained efforts, BharatNet will continue to bridge the digital divide and empower every corner of India with the transformative power of the internet.

     

    References

    https://sansad.in/getFile/loksabhaquestions/annex/183/AS329_R1XIRX.pdf?source=pqals

    https://usof.gov.in/en/usof-dashboard

    https://usof.gov.in/en/home

    https://pib.gov.in/PressNoteDetails.aspx?NoteId=151993&ModuleId=3&reg=3&lang=1

    https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2077908

    https://usof.gov.in/en/bharatnet-project

    https://bbnl.nic.in/

    BharatNet: Bridging the Digital Divide

    *******

    Santosh Kumar/ Sarla Meena/ Rishita Aggarwal

    (Release ID: 2086701) Visitor Counter : 129

    MIL OSI Asia Pacific News

  • MIL-OSI Economics: Enterprise ICT market revenue in Vietnam to witness 16% CAGR over 2023-2028, forecasts GlobalData

    Source: GlobalData

    Enterprise ICT market revenue in Vietnam to witness 16% CAGR over 2023-2028, forecasts GlobalData

    Posted in Technology

    The enterprise ICT revenue opportunity in Vietnam is projected to increase at a compound annual growth rate (CAGR) of 16%, driven by the acceleration in enterprise digital transformation efforts, especially in banking, financial services and insurance (BFSI) segment – the largest end-use market for ICT in the country, according to GlobalData, a leading data and analytics company.

    GlobalData’s Vietnam Enterprise ICT Country Intelligence Report shows that the ICT market size in Vietnam will increase from $15.7 billion in 2023 to $33 billion in 2028, in line with the positive ICT investment sentiment seen among the enterprises.

    This is put to perspective by findings from the GlobalData’s 2024 ICT customer insight survey*, which reveals that 91.2% of respondents, who are the key ICT decision makers in their respective enterprises, have confirmed that there has been an increase in their enterprise ICT budgets in 2024 as compared to previous year.

    Of the three IT infrastructure segments: hardware, software, and services, the services segment is expected to experience the highest cumulative revenue growth over the forecast period. This growth will be largely driven by the widespread enterprise adoption of cloud computing services, revenue for which is projected to increase at a CAGR of 24.8% during the forecast period.

    Samrat Volam, Technology Analyst at GlobalData, says: “The growth of cloud computing services in the country is driven by the enterprises’ push for digital transformation and the growing demand for scalable, cost-effective IT solutions. Additionally, the need for reliable data storage and processing capabilities plays a significant role. The continuing shift towards flexible and remote working solutions further accelerates this growth.”

    BFSI is the largest end-use vertical

    GlobalData forecasts the BFSI sector represents the largest revenue contributor for Vietnam’s ICT market and will remain so through the forecast period, generating an average 10% of the total cumulative revenue for ICT market between 2023 and 2028.

    Volam adds: “The BFSI sector in Vietnam is growing rapidly due to the modernization of financial services and the expansion of digital banking, driven by increased internet and smartphone penetration. Fintech innovations have introduced a variety of financial products, making them more accessible to consumers and businesses. Government initiatives, such as the “National Digital Transformation Program” and the 2021-2025 cashless payment project, are creating a supportive environment for digital transformation in the sector.

    Volam concludes: “The government-owned National Innovation Center (NIC) plays a key role in advancing Vietnam’s ICT market by fostering an open ecosystem, encouraging the adoption of cutting-edge technologies, and driving digital transformation across various industries. By supporting local startups and attracting international investments, the NIC creates a dynamic environment conducive to growth. Additionally, the rapid growth of Vietnam’s IT sector and the rising need for robust cybersecurity measures are accelerating the adoption of advanced security solutions thereby driving the overall ICT market in the country.”

    *GlobalData’s ICT Customer Insight Survey carried out during H1 2024 highlights survey responses related to ICT investment priorities and budget allocations by enterprises in Vietnam.

    MIL OSI Economics

  • MIL-OSI Economics: Cloud Atlas seen using a new tool in its attacks

    Source: Securelist – Kaspersky

    Headline: Cloud Atlas seen using a new tool in its attacks

    Introduction

    Known since 2014, Cloud Atlas targets Eastern Europe and Central Asia. We’re shedding light on a previously undocumented toolset, which the group used heavily in 2024. Victims get infected via phishing emails containing a malicious document that exploits a vulnerability in the formula editor (CVE-2018-0802) to download and execute malware code. See below for the infection pattern.

    Typical Cloud Atlas infection pattern

    When opened, the document downloads a malicious template formatted as an RTF file from a remote server controlled by the attackers. It contains a formula editor exploit that downloads and runs an HTML Application (HTA) file hosted on the same C2 server. The RTF and HTA downloads are restricted to certain time slots and victim IP addresses: requests are only allowed from target regions.

    The malicious HTA file extracts and writes several files to disk that are parts of the VBShower backdoor. VBShower then downloads and installs another backdoor: PowerShower. This infection scheme was originally described back in 2019 and has changed only slightly from year to year.

    Previously, Cloud Atlas employed PowerShower to download and run an executable file: a DLL library. This DLL would then fetch additional executable modules (plug-ins) from the C2 server and execute these in memory. Among these plug-ins was one specifically designed to exfiltrate files with extensions of interest to the attackers: DOC, DOCX, XLS, XLSX, PDF, RTF, JPG and JPEG. The plugins were downloaded and their output was uploaded via the WebDAV protocol over public cloud services. Interestingly, after a plug-in was successfully downloaded, the DLL would delete the file from the cloud.

    The VBCloud backdoor now replicates the executable file’s original capabilities, such as downloading and executing malicious plug-ins, communicating with a cloud server, and performing other tasks. We first detected attacks using this implant in August of last year. Since then, we’ve observed numerous variations of the backdoor which have helped it to stay under the radar. This new campaign loads VBCloud via VBShower, which also downloads the PowerShower module. PowerShower probes the local network and facilitates further infiltration, while VBCloud collects information about the system and steals files. Below, we use a sample seen in September 2024 as a case study to examine each stage of a Cloud Atlas attack that employs the new toolkit.

    Technical details

    HTA

    The exploit downloads the HTA file via the RTF template and runs it. It leverages the alternate data streams (NTFS ADS) feature to extract and create several files at %APPDATA%RoamingMicrosoftWindows. These files make up the VBShower backdoor.

    Sample HTA content

    Below are the VBShower components loaded by the HTA dropper.

    File name Description
    AppCache028732611605321388.log:AppCache02873261160532138892.vbs VBShower Launcher (copy)
    AppCache028732611605321388.log:AppCache028732611605321388.vbs VBShower Launcher
    AppCache028732611605321388.log:AppCache028732611605321388.dat Encrypted VBShower backdoor
    AppCache028732611605321388.log:AppCache0287326116053213889292.vbs VBShower Cleaner

    After the download is complete, the malware adds a registry key to auto-run the VBShower Launcher script.

    The backdoor also launches further scripts: VBShower Launcher (copy) and VBShower Cleaner.

    The attackers create custom HTA files for each victim, so the names of the scripts and registry keys are mostly unique. For example, we have seen intertwine used as a name template, while the file names themselves looked as follows.

    • “intertwine.ini:intertwineing.vbs”;
    • “intertwine.ini:intertwineinit.vbs”;
    • “intertwine.ini:intertwine.vbs”;
    • “intertwine.ini:intertwine.con”.

    VBShower

    VBShower::Launcher

    This script acts as a loader, responsible for reading and decrypting the contents of AppCache028732611605321388.log:AppCache028732611605321388.dat, before using the Execute() function to pass control to that file.

    Sample VBShower Launcher content

    VBShower::Cleaner

    This script is designed to clear the contents of all files inside the LocalMicrosoftWindowsTemporary Internet FilesContent.Word folder by opening each in write mode. While the files persist, their contents are erased. This is how the Trojan covers its tracks, removing malicious documents and templates it downloaded from the web during the attack.

    The script uses the same method to erase both its own contents and the contents of the VBShower Launcher copy, which is used solely for the malware’s first run.

    Sample VBShower Cleaner content

    VBShower::Backdoor

    The backdoor’s payload is contained encrypted within a DAT file.

    Encrypted VBShower backdoor

    VBShower::Launcher goes through several stages to decrypt the backdoor.

    First decrypted layer of VBShower Backdoor

    Fully decrypted and deobfuscated VBShower Backdoor content

    The VBShower backdoor then runs in memory, subsequently performing several operations in a loop.

    • Check for the autorun registry key and restore it if missing.
    • Attempt to download additional encrypted VB scripts from the C2 server and run these. If the downloaded data is larger than 1 MB, the module saves the script to disk inside alternate data streams (NTFS ADS) and runs it with the help of the “wscript” utility. Otherwise, it runs the script in the current context.
    • If an alternate data stream contains a TMP file, the backdoor sends it to the C2 server with a POST request. The additional scripts downloaded from the C2 use the TMP file to store their output.

    VBShower::Payload

    We were able to detect and analyze a number of scripts downloaded and executed by the VBShower backdoor.

    VBShower::Payload (1)

    The first script we found does the following.

    • Gets the domain, username and computer.
    • Gets the names and values of the registry keys in the SOFTWAREMicrosoftWindowsCurrentVersionRun branch.
    • Gets information about the file names and sizes in the following folders:
      • %AppData%;
      • %AllUsersProfile%;
      • %AllUsersProfile%Canon;
      • %AllUsersProfile%Intel;
      • %AllUsersProfile%Control;
      • %AllUsersProfile%libs;
      • %AllUsersProfile%Adobe;
      • %AllUsersProfile%Yandex;
      • %AllUsersProfile%Firefox;
      • %AllUsersProfile%Edge;
      • %AllUsersProfile%Chrome;
      • %AllUsersProfile%avp.
    • Gets the names of running processes, their start dates and the commands that started them.
    • Gets a list of scheduler tasks by running cmd.exe /c schtasks /query /v /fo LIST.

    All data collected this way is saved in a TMP alternate data stream and forwarded to the C2 server by the VBShower::Backdoor component.

    The paths listed above (%AllUsersProfile%) are used for installing the VBCloud backdoor. The steps performed by the script are most likely needed to check if the backdoor is present and installed correctly.

    Decrypted and deobfuscated contents of script 1

    VBShower::Payload (2)

    The second script reboots the system.

    Decrypted and deobfuscated contents of script 2

    VBShower::Payload (3)

    A further script downloads a ZIP archive, extracts it into the %TMP% directory, and collects the names and sizes of downloaded files to then send an extraction report to the C2. This is done to verify that the files were received and unpacked.

    Decrypted and deobfuscated contents of script 3

    VBShower::Payload (4) and (5)

    VBShower downloads two similar scripts that are designed for installing the VBCloud and PowerShower backdoors. These scripts first download an archive from a hardcoded link and then unpack it into the %ALLUSERSPROFILE% folder. In the case of VBCloud, the script changes the extension of the unpacked file from TXT to VBS and creates a scheduler task to run VBCloud. In the case of PowerShower, the extension of the unpacked file is changed from TXT to PS1, whereupon the script adds the file to the Run registry branch.

    Unlike VBShower’s own scripts, downloadable scripts with a payload are present on disk as files, rather than hidden inside alternate data streams.

    Besides installing backdoors, these scripts build a report that consists of the names of running processes, their start dates and the commands that started them, registry keys and values in the Run branch, and a list of files and directories at the path where the archive was unpacked. This report is then sent to the C2 server.

    Decrypted and deobfuscated contents of the scripts for downloading and installing VBCloud and PowerShower

    PowerShower

    PowerShower is nearly identical to VBShower in terms of functionality.

    Sample PowerShower script installed with VBShower

    PowerShower downloads additional PowerShell scripts from the C2 and executes these. If the downloaded data begins with the character “P”, PowerShower interprets the data as a ZIP archive, rather than a PowerShell script, and saves the archive to disk as “%TMP%Firefox.zip”. PowerShower does not unpack the archive, serving as a downloader only.

    Decoded PowerShower script

    The downloaded PowerShell scripts run in memory, without being saved to disk. Most of the scripts save their output to sapp.xtx, which PowerShower then sends as a report to the C2.

    The PowerShower scripts use the same C2 domains as VBShower.

    PowerShower::Payload (1)

    The script gets a list of local groups and their members on remote computers via Active Directory Service Interfaces (ADSI). The script is most often used on domain controllers.

    Sample script to get a local groups and members list, downloaded and executed by PowerShower

    PowerShower::Payload (2)

    Script for dictionary attacks on user accounts.

    Sample password bruteforcing script, downloaded and executed by PowerShower

    PowerShower::Payload (3)

    The script unpacks the Firefox.zip archive previously downloaded by the PowerShower backdoor, and executes the keb.ps1 script contained in the archive as a separate PowerShell process with a hidden window. The keb.ps1 script belongs to the popular PowerSploit framework for penetration testing and kicks off a Kerberoasting attack.

    Sample script that launches a Kerberoasting attack, downloaded and executed by PowerShower

    PowerShower::Payload (4)

    This script gets a list of administrator groups.

    Sample script to get a list of administrator groups, downloaded and executed by PowerShower

    PowerShower::Payload (5)

    This script gets a list of domain controllers.

    Sample script to get a list of domain controllers, downloaded and executed by PowerShower

    PowerShower::Payload (6)

    This script gets information about files inside the ProgramData directory.

    Sample script to get information about files inside the ProgramData directory, downloaded and executed by PowerShower

    PowerShower::Payload (7)

    This script gets the account policy and password policy settings on the local computer.

    Sample script to get policy settings, downloaded and executed by PowerShower

    PowerShower::Payload:: Inveigh

    We also observed the use of PowerShell Inveigh, a machine-in-the-middle attack utility used in penetration testing. Inveigh is used for data packet spoofing attacks, and collecting hashes and credentials both by intercepting packets and by using protocol-specific sockets.

    The Inveigh script is extracted from the ZIP archive downloaded by PowerShower and runs as described under PowerShower::Payload (3).

    Sample Inveigh script, downloaded and executed by PowerShower

    VBCloud

    As described above, VBCloud is installed via VBShower. We found the following module installation paths.

    Sample VBCloud main module paths

    The core functionality of the VBCloud module duplicates that of VBShower: both download and run PowerShell scripts with a payload, and then send the output to the C2. Unlike VBShower, however, VBCloud uses public cloud storage as the C2.

    Sample VBCloud script

    The VBCloud script does not contain any loops, and it is designed to execute only once. However, it gets triggered by a scheduled task every time the user logs into the system, which means it will run frequently. We’ve also seen variants of the backdoor that executed their core functionality in a loop with a thirty-minute delay between repetitions. These variants ran the script once via the Run registry branch when the system booted up for the first time after being infected.

    Decrypted and deobfuscated VBCloud script

    VBCloud does the following:

    • Check the availability of the kim.nl.tab.digital WebDav server by sending an HTTP MKCOL request to create the directories named “kmsobuqjquut” and “rwqdmpaohxns” with the credentials hardcoded in the script. If the server is unavailable, the script switches to the backup address “webdav.mydrive.ch”.
    • If the WebDav server is available, create a file in the “kmsobuqjquut” directory on that server via an HTTP PUT The file name follows the pattern ddmmyy_HHMMSS, and the extension is randomly selected from among TXT, RTF, DOC, PPT, MDS, PNG and JPEG. We have seen files named “070824_001919.txt” and “250724_002919.doc”. Files like these contain the username and MAC addresses of network adapters, effectively confirming that the script is active on the infected system.
    • The Trojan then attempts to download one of three files from the “rwqdmpaohxns” directory: “criclyqnduv.txt”, “jhflenoqelp.txt” or “avnwiabihik.txt”. If VBCloud successfully downloads the file, it immediately deletes it from the cloud with an HTTP DELETE request, and then executes it in the current process via the Execute() function after decrypting the contents. As in the case of PowerShower, the payload can be made up of various scripts.

    VBCloud::Payload (1)

    This script is designed to send information about disks to the C2.

    VBCloud::Payload (2)

    This script is designed to exfiltrate files and documents. It iterates through local drives and removable media in search of files with the extensions DOC, DOCX, XLS, XLSX, PDF, TXT, RTF and RAR. The script checks the size of any files it finds to match this condition and collects those between 1000 and 3,000,000 bytes to exfiltrate. The files must have been modified no more than 72 hours before the current date. The script then copies matching files to a ZIP archive it creates, named “mapping.zip”. It also adds a file with metadata such as the created time, modified time, last opened time, and full path to the file. Upon exceeding 4,000,000 bytes, an archive is uploaded to cloud storage and deleted from the system. It is replaced with a new one, and the file harvesting process continues. The archive is uploaded in RC4-encrypted form, with a name that follows the template “%d_13134” and one of the following extensions chosen at random: MP3, AAC, MP2, FLAC, WAV, ALAC, MQA, OGG, DSD, WMA, and MP4.

    Part of the file exfiltration script

    VBCloud::Payload (3)

    This script gets various system information such as the OS version, RAM size, manufacturer, computer name, username and domain name.

    VBCloud::Payload (4)

    Script to exfiltrate Telegram files:

    • The file D877F783D5D3EF8Cs contains the user ID and encryption key used for interaction between the desktop client and Telegram servers.
    • The file key_datas contains local encryption keys.

    Part of the file exfiltration script

    Geography of attacked users

    Several dozen users were attacked in 2024, 82% of these in Russia. Isolated attacks were recorded in Belarus, Canada, Moldova, Israel, Kyrgyzstan, Vietnam and Turkey.

    Conclusion

    We continue to monitor activity linked to Cloud Atlas. In a new campaign that began in August 2023, the attackers made changes to their familiar toolkit. This time, instead of an executable library to load malware modules, the group relied on the VBShower backdoor as the loader. Besides, they are now using a new module in their attacks: VBCloud. This collects and uploads system information and other data. These actions employ a variety of PowerShell scripts that enable the attackers to perform a range of tasks on the victim’s system. VBCloud uses public cloud storage as a C2 server.

    The infection chain consists of several stages and ultimately aims to steal data from victims’ devices. We’ve observed that, similar to past Cloud Atlas campaigns, phishing emails continue to be the initial access point. This underscores the still-pressing need for organizations to strengthen their infrastructure defenses and improve employee awareness to ward off these kinds of attacks.

    Indicators of compromise

    HTA file download domains
    content-protect[.]net
    control-issue[.]net
    office-confirm[.]com
    onesoftware[.]info
    serverop-parametrs[.]com
    web-privacy[.]net
    net-plugin[.]org
    triger-working[.]com

    VBShower C2
    yandesks[.]net
    yandisk[.]info
    mirconnect[.]info
    sber-cloud[.]info
    gosportal[.]net
    riamir[.]net
    web-wathapp[.]com

    PowerShower C2
    yandisk[.]info
    yandesktop[.]com
    web-wathapp[.]com

    Cloud repositories used ​by VBCloud
    webdav.opendrive.com
    webdav.mydrive.ch
    webdav.yandex.ru
    kim.nl.tab.digital

    HTA MD5
    9D3557CC5C444FE5D73E4C7FE1872414
    CBA05E11CB9D1D71F0FA70ECD1AF2480
    CBFB691E95EE34A324F94ED1FF91BC23
    2D24044C0A5B9EBE4E01DED2BFC2B3A4
    88BE01F8C4A9F335D33FA7C384CA4666
    A30319545FDA9E2DA0532746C09130EB

    PowerShower MD5
    15FD46AC775A30B1963281A037A771B1
    31B01387CA60A1771349653A3C6AD8CA
    389BC3B9417D893F3324221141EDEA00

    VBShower::Launcher MD5
    AA8DA99D5623FAFED356A14E59ACBB90
    016B6A035B44C1AD10D070ABCDFE2F66
    160A65E830EB97AAE6E1305019213558
    184CF8660AF7538CD1CD2559A10B6622
    1AF1F9434E4623B7046CF6360E0A520E
    1BFB9CBA8AA23A401925D356B2F6E7ED
    21585D5881CC11ED1F615FDB2D7ACC11
    242E86E658FE6AB6E4C81B68162B3001
    2FE7E75BC599B1C68B87CF2A3E7AA51F
    36DD0FBD19899F0B23ADE5A1DE3C2FEC
    389F6E6FD9DCC84C6E944DC387087A56
    3A54ACD967DD104522BA7D66F4D86544
    3F12BF4A8D82654861B5B5993C012BFA
    49F8ED13A8A13799A34CC999B195BF16
    4B96DC735B622A94D3C74C0BE9858853
    F45008BF1889A8655D32A0EB93B8ACDD

    VBCloud MD5
    0139F32A523D453BC338A67CA45C224D
    01DB58A1D0EC85ADC13290A6290AD9D6
    0F37E1298E4C82098DC9318C7E65F9D2
    6FCEE9878216019C8DFA887075C5E68E
    D445D443ACE329FB244EDC3E5146313B
    F3F28018FB5108B516D802A038F90BDE

    MIL OSI Economics

  • MIL-OSI: Bitget Ranks Among Top 3 Crypto Exchanges for Futures Trading in November Report

    Source: GlobeNewswire (MIL-OSI)

    VICTORIA, Seychelles, Dec. 23, 2024 (GLOBE NEWSWIRE) — Bitget, the leading cryptocurrency exchange and Web3 company, has shared its monthly transparency report highlighting the ecosystem’s strong performance in November 2024. The cryptomarket saw a sharp increase, with Bitcoin surging past $106,000. At Bitget, this ATH trend was replicated, with Bitget Token (BGB) rising from approximately $1.44 to $1.70, marking an increase of around 18%. This upward trend was driven by Bitget’s global expansion and significant growth in trading volumes, user engagement, and platform security, especially achieving the third position worldwide in global futures trading.

    Bitget retained over 45 million users with a daily trading volume of $10 billion, while USDT-M futures trading volume surged to $16 billion, and daily spot trading volume doubled, reaching $400 million. Its Protection Fund, growing impressively from $400 million+ to over $600 million, supports strong security and user trust on the platform.

    In November, Bitget’s top-performing spot tokens saw impressive growth, led by UNICE at 2666.71%. Additionally, 13 tokens were listed on Poolx, and 5 tokens among these were also featured in Pre-market listings, showcasing strong interest and dual exposure for these assets.

    Bitget hosted “Pitch n’ Slay” event in Bangkok. Under Bitget’s Blockchain4Her program, the competition provided exposure, capital and guidance for female entrepreneurs in the blockchain space and offered a chance to secure up to $100,000 in funding by Foresight Ventures. Pitch n’ Slay showcased the power of collaboration in creating inclusive pathways for women in blockchain, aligning with Bitget’s commitment to fostering a diverse and thriving blockchain ecosystem.

    Bitget introduced VND Bank Transfer in Vietnam. It enables users to deposit VND through VietQR and withdraw funds via bank transfers to purchase popular crypto such as BTC, ETH, USDT, SOL, and BGB through Bitget’s cash conversion feature.

    Bitget Wallet introduced a comprehensive memecoin trading toolkit, enabling users to discover high-potential tokens, analyze critical data, and trade seamlessly across multiple chains. Additionally, it launched the Refer2Earn Program, encouraging user growth through passive income, and a $20M Telegram Mini-App Support Program to empower developers and drive innovation in the Telegram ecosystem.

    Bitget’s strong performance shows it shines again as the top global players in the crypto industry. The company will keep focusing on innovation, user engagement, and market expansion in the rapidly evolving crypto sector, ongoingly bridging CeFi and DeFi, and expanding access to decentralized finance.

    For more information, please visit the monthly report 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 feature and other trading solutions, while offering real-time access to Bitcoin priceEthereum 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: WebsiteTwitterTelegramLinkedInDiscordBitget Wallet
    For media inquiries, please contact: media@bitget.com

    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/44eb3496-f2b3-4044-a147-b66820609d72

    The MIL Network