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  • MIL-OSI: STMicroelectronics Reports Q4 and FY 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    PR No: C3309C 

    STMicroelectronics Reports Q4 and FY 2024 Financial Results

    • Q4 net revenues $3.32 billion; gross margin 37.7%; operating margin 11.1%; net income $341 million
    • FY net revenues $13.27 billion; gross margin 39.3%; operating margin 12.6%; net income $1.56 billion
    • Business outlook at mid-point: Q1 net revenues of $2.51 billion and gross margin of 33.8%
    • Start of the company-wide program to resize global cost base*

        
    Geneva, January 30, 2025 – STMicroelectronics N.V. (“ST”) (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the fourth quarter ended December 31, 2024. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).

    ST reported fourth quarter net revenues of $3.32 billion, gross margin of 37.7%, operating margin of 11.1%, and net income of $341 million or $0.37 diluted earnings per share.

    Jean-Marc Chery, ST President & CEO, commented:

    • “FY24 revenues decreased 23.2% to $13.27 billion. Operating margin was 12.6% compared to 26.7% in FY23 and net income decreased 63.0% to $1.56 billion. We invested $2.53 billion in Net Capex (non-U.S. GAAP) while delivering free cash flow (non-U.S. GAAP) of $288 million.”
    • “Q4 net revenues were in line with the mid-point of our business outlook range driven by higher revenues in Personal Electronics offset by lower revenues in Industrial, while Automotive and CECP were as expected. Q4 gross margin of 37.7% was broadly in line with the mid-point of our business outlook range.”
    • “Our book-to-bill ratio remained below 1 in Q4 as we continued to face a delayed recovery and inventory correction in Industrial and a slowdown in Automotive, both particularly in Europe.”
    • “Our first quarter business outlook, at the mid-point, is for net revenues of $2.51 billion, decreasing year-over-year by 27.6% and decreasing sequentially by 24.4%; gross margin is expected to be about 33.8%, impacted by about 500 basis points of unused capacity charges.”
    • “For 2025, we plan to invest between $2.0 to $2.3 billion in Net Capex (non-U.S. GAAP).”

    Quarterly Financial Summary (U.S. GAAP)

    (US$ m, except per share data) Q4 2024 Q3 2024 Q4 2023 Q/Q Y/Y
    Net Revenues $3,321 $3,251 $4,282 2.2% -22.4%
    Gross Profit $1,253 $1,228 $1,949 2.1% -35.7%
    Gross Margin 37.7% 37.8% 45.5% -10 bps -780 bps
    Operating Income $369 $381 $1,023 -3.3% -64.0%
    Operating Margin 11.1% 11.7% 23.9% -60 bps -1,280 bps
    Net Income $341 $351 $1,076 -2.6% -68.3%
    Diluted Earnings Per Share $0.37 $0.37 $1.14 0% -67.5%

    * For each of the concerned countries, the start of the program will take place in accordance with applicable regulations. 

    Annual Financial Summary (U.S. GAAP)

    (US$ m, except earnings per share data) FY2024 FY2023 Y/Y
    Net Revenues $13,269 $17,286 -23.2%
    Gross Profit $5,220 $8,287 -37.0%
    Gross Margin 39.3% 47.9% -860 bps
    Operating Income $1,676 $4,611 -63.7%
    Operating Margin 12.6% 26.7% -1,410 bps
    Net Income $1,557 $4,211 -63.0%
    Diluted Earnings Per Share $1.66 $4.46 -62.8%

    Fourth Quarter 2024 Summary Review

    Reminder: On January 10, 2024, ST announced a new organization which implied a change in segment reporting starting Q1 2024. Prior year comparative periods have been adjusted accordingly. See Appendix for more detail.

    Net Revenues by Reportable Segment (US$ m) Q4 2024 Q3 2024 Q4 2023 Q/Q Y/Y
    Analog products, MEMS and Sensors (AM&S) segment 1,198 1,185 1,418 1.1% -15.5%
    Power and discrete products (P&D) segment 752 807 965 -6.8% -22.1%
    Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group 1,950 1,992 2,383 -2.1% -18.2%
    Microcontrollers (MCU) segment 887 829 1,272 7.0% -30.2%
    Digital ICs and RF Products (D&RF) segment 481 426 623 13.0% -22.8%
    Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group 1,368 1,255 1,895 9.0% -27.8%
    Others 3 4 4 – –
    Total Net Revenues $3,321 $3,251 $4,282 2.2% -22.4%

    Net revenues totaled $3.32 billion, representing a year-over-year decrease of 22.4%. Year-over-year net sales to OEMs and Distribution decreased 19.8% and 28.7%, respectively. On a sequential basis, net revenues increased 2.2%, in line with the mid-point of ST’s guidance.

    Gross profit totaled $1.25 billion, representing a year-over-year decrease of 35.7%. Gross margin of 37.7%, 30 basis points below the mid-point of ST’s guidance, decreased 780 basis points year-over-year, mainly due to product mix and, to a lesser extent, to sales price and higher unused capacity charges.

    Operating income decreased 64.0% to $369 million, compared to $1.02 billion in the year-ago quarter. ST’s operating margin decreased 1,280 basis points on a year-over-year basis to 11.1% of net revenues, compared to 23.9% in the fourth quarter of 2023.

    By reportable segment1, compared with the year-ago quarter:

    In Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group:

    Analog products, MEMS and Sensors (AM&S) segment:

    • Revenue decreased 15.5% mainly due to decreases in Analog and in Imaging.   
    • Operating profit decreased by 41.2% to $176 million. Operating margin was 14.7% compared to 21.1%.

    Power and Discrete products (P&D) segment:

    • Revenue decreased 22.1%.
    • Operating profit decreased by 63.7% to $89 million. Operating margin was 11.9% compared to 25.4%.

    In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:

    Microcontrollers (MCU) segment:

    • Revenue decreased 30.2% mainly due to a decrease in GP MCU.
    • Operating profit decreased by 66.4% to $127 million. Operating margin was 14.3% compared to 29.8%.

    Digital ICs and RF products (D&RF) segment:

    • Revenue decreased 22.8% mainly due to a decrease in ADAS (automotive ADAS and infotainment).
    • Operating profit decreased by 33.2% to $149 million. Operating margin was 31.0% compared to 35.7%.

    Net income and diluted Earnings Per Share decreased to $341 million and $0.37 respectively compared to $1.08 billion and $1.14 respectively in the year-ago quarter. As a reminder, the fourth quarter 2023 net income included a one-time non-cash income tax benefit of $191 million.

    Cash Flow and Balance Sheet Highlights

            Trailing 12 Months
    (US$ m) Q4 2024 Q3 2024 Q4 2023 Q4 2024 Q4 2023 TTM Change
    Net cash from operating activities 681 723 1,480 2,965 5,992 -50.5%
    Free cash flow (non-U.S. GAAP)2 128 136 652 288 1,774 -83.8%

    Net cash from operating activities was $681 million in the fourth quarter compared to $1.48 billion in the year-ago quarter. For the full-year 2024, net cash from operating activities decreased 50.5% to $2.97 billion, which represents 22.3% of total revenues.

    Net Capex (non-U.S. GAAP), were $470 million in the fourth quarter and $2.53 billion for the full year 2024. In the respective year-ago periods, net capital expenditures were $798 million and $4.11 billion.

    Free cash flow (non-U.S. GAAP) was $128 million and $288 million in the fourth quarter and full year 2024, respectively, compared to $652 million and $1.77 billion in the year-ago respective periods.

    Inventory at the end of the fourth quarter was $2.79 billion, compared to $2.88 billion in the previous quarter and $2.70 billion in the year-ago quarter. Days sales of inventory at quarter-end was 122 days, compared to 130 days in the previous quarter, and 104 days in the year-ago quarter.

    In the fourth quarter, ST paid cash dividends to its stockholders totaling $88 million and executed a $92 million share buy-back, as part of its current share repurchase program.

    ST’s net financial position (non-U.S. GAAP) was $3.23 billion as of December 31, 2024, compared to $3.18 billion as of September 28, 2024 and reflected total liquidity of $6.18 billion and total financial debt of $2.95 billion. Adjusted net financial position (non-U.S. GAAP), taking into consideration the effect on total liquidity of advances from capital grants for which capital expenditures have not been incurred yet, stood at $2.85 billion as of December 31, 2024.

    Corporate developments

    In Q4, we announced the launch of a new company-wide program to reshape our manufacturing footprint accelerating our wafer fab capacity to 300mm Silicon (Agrate and Crolles) and 200mm Silicon Carbide (Catania) and resizing our global cost base.

    This program should result in strengthening our capability to grow our revenues with an improved operating efficiency resulting in annual cost savings in the high triple-digit million-dollar range exiting 2027. Specifically in terms of operating expenses (SG&A and R&D), ST expects annual cost savings totaling $300 to 360 million, exiting 2027, compared to the cost base of 2024.

    Business Outlook

    ST’s guidance, at the mid-point, for the 2025 first quarter is:

    • Net revenues are expected to be $2.51 billion, a decrease of 24.4% sequentially, plus or minus 350 basis points.
    • Gross margin of 33.8%, plus or minus 200 basis points.
    • This outlook is based on an assumed effective currency exchange rate of approximately $1.06 = €1.00 for the 2025 first quarter and includes the impact of existing hedging contracts.
    • The first quarter will close on March 29, 2025.

    Conference Call and Webcast Information

    ST will conduct a conference call with analysts, investors and reporters to discuss its fourth quarter and full year 2024 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST’s website, https://investors.st.com, and will be available for replay until February 14, 2025.

    Use of Supplemental Non-U.S. GAAP Financial Information

    This press release contains supplemental non-U.S. GAAP financial information.

    Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with ST’s consolidated financial statements prepared in accordance with U.S. GAAP.

    See the Appendix of this press release for a reconciliation of ST’s non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures.

    Forward-looking Information

    Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management’s current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated by such statements due to, among other factors:

    • changes in global trade policies, including the adoption and expansion of tariffs and trade barriers, that could affect the macro-economic environment and adversely impact the demand for our products;
    • uncertain macro-economic and industry trends (such as inflation and fluctuations in supply chains), which may impact production capacity and end-market demand for our products;
    • customer demand that differs from projections which may require us to undertake transformation measures that may not be successful in realizing the expected benefits in full or at all;
    • the ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
    • changes in economic, social, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macroeconomic or regional events, geopolitical and military conflicts, social unrest, labor actions, or terrorist activities;
    • unanticipated events or circumstances, which may impact our ability to execute our plans and/or meet the objectives of our R&D and manufacturing programs, which benefit from public funding;
    • financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
    • the loading, product mix, and manufacturing performance of our production facilities and/or our required volume to fulfill capacity reserved with suppliers or third-party manufacturing providers;
    • availability and costs of equipment, raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations (including increasing costs resulting from inflation);
    • the functionalities and performance of our IT systems, which are subject to cybersecurity threats and which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology;
    • theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of data privacy legislation;
    • the impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
    • changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
    • variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
    • the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
    • product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
    • natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, the effects of climate change, health risks and epidemics or pandemics in locations where we, our customers or our suppliers operate;
    • increased regulation and initiatives in our industry, including those concerning climate change and sustainability matters and our goal to become carbon neutral by 2027 on scope 1 and 2 and partially scope 3;
    • epidemics or pandemics, which may negatively impact the global economy in a significant manner for an extended period of time, and could also materially adversely affect our business and operating results;
    • industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers; and
    • the ability to successfully ramp up new programs that could be impacted by factors beyond our control, including the availability of critical third-party components and performance of subcontractors in line with our expectations.

    Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as “believes”, “expects”, “may”, “are expected to”, “should”, “would be”, “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.

    Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2024. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this press release as anticipated, believed or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.

    Unfavorable changes in the above or other factors listed under “Item 3. Key Information — Risk Factors” from time to time in our Securities and Exchange Commission (“SEC”) filings, could have a material adverse effect on our business and/or financial condition.

    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 cloud-connected autonomous things. 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.

    For further information, please contact:

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

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

    STMicroelectronics N.V.      
    CONSOLIDATED STATEMENTS OF INCOME      
    (in millions of U.S. dollars, except per share data ($))      
           
      Three months ended  
      December 31, December 31,  
      2024 2023  
      (Unaudited) (Unaudited)  
           
    Net sales 3,301 4,262  
    Other revenues 20 20  
    NET REVENUES 3,321 4,282  
    Cost of sales (2,068) (2,333)  
    GROSS PROFIT 1,253 1,949  
    Selling, general and administrative expenses (420) (416)  
    Research and development expenses (523) (521)  
    Other income and expenses, net 59 11  
    Total operating expenses (884) (926)  
    OPERATING INCOME 369 1,023  
    Interest income, net 52 57  
    Other components of pension benefit costs (3) (5)  
    INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST 418 1,075  
    Income tax (expense) benefit (82) 6  
    NET INCOME 336 1,081  
    Net loss (income) attributable to noncontrolling interest 5 (5)  
    NET INCOME ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 341 1,076  
           
    EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 0.38 1.19  
    EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 0.37 1.14  
           
    NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS 935.7 942.9  
           
    STMicroelectronics N.V.      
    CONSOLIDATED STATEMENTS OF INCOME      
    (in millions of U.S. dollars, except per share data ($))      
           
      Twelve months ended
      December 31, December 31,  
      2024 2023  
      (Unaudited) (Audited)  
           
    Net sales 13,217 17,239  
    Other revenues 52 47  
    NET REVENUES 13,269 17,286  
    Cost of sales (8,049) (8,999)  
    GROSS PROFIT 5,220 8,287  
    Selling, general and administrative expenses (1,649) (1,631)  
    Research and development expenses (2,077) (2,100)  
    Other income and expenses, net 182 55  
    Total operating expenses (3,544) (3,676)  
    OPERATING INCOME 1,676 4,611  
    Interest income, net 218 171  
    Other components of pension benefit costs (15) (19)  
    Loss on financial instruments, net (1) –  
    INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST 1,878 4,763  
    Income tax expense (313) (541)  
    NET INCOME 1,565 4,222  
    Net income attributable to noncontrolling interest (8) (11)  
    NET INCOME ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 1,557 4,211  
           
    EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 1.73 4.66  
    EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 1.66 4.46  
           
    NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS 939.3 944.2  
           
           
    STMicroelectronics N.V.      
    CONSOLIDATED BALANCE SHEETS      
    As at December 31, September 28, December 31,
    In millions of U.S. dollars 2024 2024 2023
      (Unaudited) (Unaudited) (Audited)
    ASSETS      
    Current assets:      
    Cash and cash equivalents 2,282 3,077 3,222
    Short-term deposits 1,450 977 1,226
    Marketable securities 2,452 2,242 1,635
    Trade accounts receivable, net 1,749 1,730 1,731
    Inventories 2,794 2,875 2,698
    Other current assets 1,007 1,062 1,295
    Total current assets 11,734 11,963 11,807
    Goodwill 290 303 303
    Other intangible assets, net 346 354 367
    Property, plant and equipment, net 10,877 11,258 10,554
    Non-current deferred tax assets 464 547 592
    Long-term investments 71 20 22
    Other non-current assets 961 1,071 808
      13,009 13,553 12,646
    Total assets 24,743 25,516 24,453
           
    LIABILITIES AND EQUITY      
    Current liabilities:      
    Short-term debt 990 1,003 217
    Trade accounts payable 1,323 1,585 1,856
    Other payables and accrued liabilities 1,306 1,327 1,525
    Dividends payable to stockholders 88 177 54
    Accrued income tax 66 116 78
    Total current liabilities 3,773 4,208 3,730
    Long-term debt 1,963 2,112 2,710
    Post-employment benefit obligations 377 397 372
    Long-term deferred tax liabilities 47 60 54
    Other long-term liabilities 904 935 735
      3,291 3,504 3,871
    Total liabilities 7,064 7,712 7,601
    Commitment and contingencies      
    Equity      
    Parent company stockholders’ equity      
    Common stock (preferred stock: 540,000,000 shares authorized, not issued; common stock: Euro 1.04 par value, 1,200,000,000 shares authorized, 911,281,920 shares issued, 898,175,408 shares outstanding as of December 31, 2024) 1,157 1,157 1,157
    Additional Paid-in Capital 3,088 3,032 2,866
    Retained earnings 13,459 13,118 12,470
    Accumulated other comprehensive income 236 657 613
    Treasury stock (491) (400) (377)
    Total parent company stockholders’ equity 17,449 17,564 16,729
    Noncontrolling interest 230 240 123
    Total equity 17,679 17,804 16,852
    Total liabilities and equity 24,743 25,516 24,453
           
           
           
    STMicroelectronics N.V.      
           
    SELECTED CASH FLOW DATA      
           
    Cash Flow Data (in US$ millions) Q4 2024 Q3 2024 Q4 2023
           
    Net Cash from operating activities 681 723 1,480
    Net Cash used in investing activities (1,259) (601) (1,610)
    Net Cash from (used in) financing activities (209) (142) 336
    Net Cash increase (decrease) (795) (15) 211
           
    Selected Cash Flow Data (in US$ millions) Q4 2024 Q3 2024 Q4 2023
           
    Depreciation & amortization 451 440 414
    Net payment for Capital expenditures (501) (601) (798)
    Dividends paid to stockholders (88) (80) (60)
    Change in inventories, net (2) (17) 219
           

    Appendix
    ST
    New organization

    On January 10, 2024, ST announced a new organization to deliver enhanced product development innovation and efficiency, time-to-market as well as customer focus by end market. This new organization implies a change in segment reporting which is applied from January 1, 2024.

    ST moved from three reportable segments (ADG, AMS and MDG) to four reportable segments as follows:

    • In Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group:
      • Analog products, MEMS and Sensors (AM&S) segment, comprised of ST analog products, MEMS sensors and actuators, and optical sensing solutions.
      • Power and Discrete products (P&D) segment comprised of discrete and power transistor products.

    In this Press Release, “Analog” refers to ST analog products, “MEMS” to MEMS sensors and actuators and “Imaging” to optical sensing solutions.

    • In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:
      • Microcontrollers (MCU) segment, comprised of general-purpose and automotive microcontrollers, microprocessors and connected security products (including EEPROM).
      • Digital ICs and RF Products (D&RF) segment, comprised of automotive ADAS, infotainment, RF and communications products.

    In this Press release, “Auto MCU” refers to Automotive microcontrollers and microprocessors, “GP MCU” to general purpose microcontrollers and microprocessors, “Connected Security” to connected security products (including EEPROM), “ADAS” to automotive ADAS and infotainment, “RF Communications” to RF and communications products.

    Prior year quarters comparative information has been adjusted accordingly. 

    (Appendix – continued)
    ST – Supplemental Financial Information

      Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023 FY
    2024    		 FY
    2023
    Net Revenues By Market Channel (%)              
    Total OEM 73% 76% 73% 70% 70% 73% 66%
    Distribution 27% 24% 27% 30% 30% 27% 34%
                   
    €/$ Effective Rate 1.09 1.08 1.08 1.09 1.08 1.08 1.08
                   
    Reportable Segment Data (US$ m)              
    Analog products, MEMS and Sensors (AM&S) segment              
    – Net Revenues 1,198 1,185 1,165 1,217 1,418 4,764 5,478
    – Operating Income 176 175 144 185 300 680 1,191
    Power and Discrete products (P&D) segment              
    – Net Revenues 752 807 747 820 965 3,126 3,852
    – Operating Income 89 121 110 138 245 458 1,006
    Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group              
    – Net Revenues 1,950 1,992 1,912 2,037 2,383 7,890 9,330
    – Operating Income 265 296 254 323 545 1,138 2,197
    Microcontrollers (MCU) segment              
    – Net Revenues 887 829 800 950 1,272 3,466 5,668
    – Operating Income 127 116 72 185 378 499 2,018
    Digital ICs and RF Products (D&RF) segment              
    – Net Revenues 481 426 516 475 623 1,898 2,272
    – Operating Income 149 114 150 150 223 564 810
    Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group              
    – Net Revenues 1,368 1,255 1,316 1,425 1,895 5,364 7,940
    – Operating Income 276 230 222 335 601 1,063 2,828
    Others (a)              
    – Net Revenues 3 4 4 3 4 15 16
    – Operating Income (Loss) (172) (145) (101) (107) (123) (525) (414)
    Total              
    – Net Revenues 3,321 3,251 3,232 3,465 4,282 13,269 17,286
    – Operating Income 369 381 375 551 1,023 1,676 4,611

    (a)   Net revenues of Others include revenues from sales assembly services and other revenues. Operating income (loss) of Others include items such as unused capacity charges, including incidents leading to power outage, impairment and restructuring charges, management reorganization costs, start-up and phase out costs, and other unallocated income (expenses) such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to reportable segments, as well as operating earnings of other products. Others includes:

    (US$ m) Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023 FY 2024 FY 2023
    Unused capacity charges 118 104 84 63 57 370 120

    (Appendix – continued)
    ST
    Supplemental Non-U.S. GAAP Financial Information
    U.S. GAAP – Non-U.S. GAAP Reconciliation

    The supplemental non-U.S. GAAP information presented in this press release is unaudited and subject to inherent limitations. Such non-U.S. GAAP information is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for U.S. GAAP measurements. Also, our supplemental non-U.S. GAAP financial information may not be comparable to similarly titled non-U.S. GAAP measures used by other companies. Further, specific limitations for individual non-U.S. GAAP measures, and the reasons for presenting non-U.S. GAAP financial information, are set forth in the paragraphs below. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

    ST believes that these non-U.S. GAAP financial measures provide useful information for investors and management because they offer, when read in conjunction with ST’s U.S. GAAP financials, (i) the ability to make more meaningful period-to-period comparisons of ST’s on-going operating results, (ii) the ability to better identify trends in ST’s business and perform related trend analysis, and (iii) to facilitate a comparison of ST’s results of operations against investor and analyst financial models and valuations, which may exclude these items.

    Net Financial Position and Adjusted Net Financial Position (non-U.S. GAAP measures)

    Net Financial Position, a non-U.S. GAAP measure, represents the difference between our total liquidity and our total financial debt. Our total liquidity includes cash and cash equivalents, restricted cash, if any, short-term deposits, and marketable securities, and our total financial debt includes short-term debt and long-term debt, as reported in our Consolidated Balance Sheets. Starting Q4 2023, ST also presents adjusted net financial position as a non-U.S. GAAP measure, to take into consideration the effect on total liquidity of advances received on capital grants for which capital expenditures have not been incurred yet. Reporting periods prior to Q4 2023 are not impacted.

    ST believes its Net Financial Position and Adjusted Net Financial Position provide useful information for investors and management because they give evidence of our global position either in terms of net indebtedness or net cash by measuring our capital resources based on cash and cash equivalents, restricted cash, if any, short-term deposits and marketable securities and the total level of our financial debt. Our definitions of Net Financial Position and Adjusted Net Financial Position may differ from definitions used by other companies, and therefore, comparability may be limited.

    (US$ m) Dec 31
    2024    		 Sep 28
    2024    		 June 29
    2024    		 Mar 30
    2024    		 Dec 31 2023
    Cash and cash equivalents 2,282 3,077 3,092 3,133 3,222
    Short term deposits 1,450 977 975 1,226 1,226
    Marketable securities 2,452 2,242 2,218 1,880 1,635
    Total liquidity 6,184 6,296 6,285 6,239 6,083
    Short-term debt (990) (1,003) (236) (238) (217)
    Long-term debt (a) (1,963) (2,112) (2,850) (2,875) (2,710)
    Total financial debt (2,953) (3,115) (3,086) (3,113) (2,927)
    Net Financial Position 3,231 3,181 3,199 3,126 3,156
    Advances received on capital grants (385) (366) (402) (351) (152)
    Adjusted Net Financial Position 2,846 2,815 2,797 2,775 3,004

    (a)  Long-term debt contains standard conditions but does not impose minimum financial ratios. Committed credit facilities for $634 million equivalent, are currently undrawn.

    (Appendix – continued)

    Net Capex and Free Cash Flow (non-U.S. GAAP measures)

    ST presents Net Capex as a non-U.S. GAAP measure, which is reported as part of our Free Cash Flow (non-U.S. GAAP measure), to take into consideration the effect of advances from capital grants received on prior periods allocated to property, plant and equipment in the reporting period.

    Net Capex, a non-U.S. GAAP measure, is defined as (i) Payment for purchase of tangible assets, as reported plus (ii) Proceeds from sale of tangible assets, as reported plus (iii) Proceeds from capital grants and other contributions, as reported plus (iv) Advances from capital grants allocated to property, plant and equipment in the reporting period.

    ST believes Net Capex provides useful information for investors and management because annual capital expenditures budget includes the effect of capital grants. Our definition of Net Capex may differ from definitions used by other companies.

    (US$ m) Q4
    2024    		 Q3
    2024    		 Q2
    2024    		 Q1
    2024    		 Q4
    2023    		 FY 2024 FY 2023
    Payment for purchase of tangible assets, as reported (584) (669) (690) (1,145) (1,076) (3,088) (4,439)
    Proceeds from sale of tangible assets, as reported – 2 1 2 – 5 8
    Proceeds from capital grants and other contributions, as reported 83 66 143 149 278 441 320
    Advances from capital grants allocated to property, plant and equipment 31 36 18 27 – 111 –
    Net Capex (470) (565) (528) (967) (798) (2,531) (4,111)

    Free Cash Flow, which is a non-U.S. GAAP measure, is defined as (i) net cash from operating activities plus (ii) Net Capex plus (iii) payment for purchase (and proceeds from sale) of intangible and financial assets and (iv) net cash paid for business acquisitions, if any.

    ST believes Free Cash Flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operations.

    Free Cash Flow reconciles with the total cash flow and the net cash increase (decrease) by including the payment for purchases of (and proceeds from matured) marketable securities and net investment in (and proceeds from) short-term deposits, the net cash from (used in) financing activities and the effect of changes in exchange rates, and by excluding the advances from capital grants received on prior periods allocated to property, plant and equipment in the reporting period. Our definition of Free Cash Flow may differ from definitions used by other companies.

    (US$ m) Q4
    2024    		 Q3
    2024    		 Q2
    2024    		 Q1
    2024    		 Q4
    2023    		 FY 2024 FY 2023
    Net cash from operating activities 681 723 702 859 1,480 2,965 5,992
    Net Capex (470) (565) (528) (967) (798) (2,531) (4,111)
    Payment for purchase of intangible assets, net of proceeds from sale (32) (20) (15) (26) (28) (93) (97)
    Payment for purchase of financial assets, net of proceeds from sale (51) (2) – – (2) (53) (10)
    Free Cash Flow 128 136 159 (134) 652 288 1,774

    1See Appendix for the definition of reportable segments.

    2Non-U.S. GAAP. See Appendix for reconciliation to U.S. GAAP and information explaining why ST believes these measures are important.

    Attachment

    The MIL Network –

  • MIL-OSI: Nokia Corporation Financial Report for Q4 and full year 2024

    Source: GlobeNewswire (MIL-OSI)

    Nokia Corporation
    Financial Statement Release
    30 January 2025 at 08:00 EET

    Nokia Corporation Financial Report for Q4 and full year 2024

    Strong Q4 growth and profitability as market trends improve

    • Q4 net sales increased 9% y-o-y in constant currency (10% reported). Network Infrastructure net sales grew strongly with all units contributing, Nokia Technologies grew significantly and Cloud and Network Services also grew in Q4.
    • Comparable gross margin in Q4 increased by 250bps y-o-y to 47.2% (reported increased 280bps to 46.1%), with a strong contribution from Nokia Technologies along with smaller contributions from other businesses.
    • Q4 comparable operating margin increased 380bps y-o-y to 19.1% (reported up 540bps to 15.3%), mainly due to higher gross margin, continued cost control and higher contribution from Nokia Technologies.
    • Q4 comparable diluted EPS for the period of EUR 0.18; reported diluted EPS for the period of EUR 0.15.
    • Q4 free cash flow of EUR 0.05 billion, net cash balance of EUR 4.9 billion.
    • Full year 2024 net sales declined 9% in both reported and constant currency, of which 7 percentage points was related to India. Comparable operating profit was EUR 2.6 billion (reported EUR 2.0 billion).
    • Full year comparable diluted EPS of EUR 0.39; reported diluted EPS of 0.23.
    • Board proposes dividend authorization of EUR 0.14 per share.
    • Nokia issues full year 2025 outlook on an organic basis. Nokia expects comparable operating profit of between EUR 1.9 billion and 2.4 billion and free cash flow conversion from comparable operating profit of between 50% and 80%.

    This is a summary of the Nokia Corporation Financial report for Q4 and full year 2024 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group’s financial information as well as on Nokia’s outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. A video interview summarizing the key points of our Q4 results will also be published on the website. Investors should not solely rely on summaries of Nokia’s financial reports and should also review the complete reports with tables.

    PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q4 AND FULL YEAR 2024 RESULTS

    In the following quote, net sales growth rates are on a constant currency basis
    We saw a strong finish to 2024 with 9% net sales growth year-on-year in Q4. I am optimistic that the improving market trends we are now seeing will persist into 2025. Alongside the net sales growth, we saw excellent profitability in Q4 with a comparable operating margin of 19.1%. This meant our full year comparable operating profit was EUR 2.6 billion, at the mid-point of our guidance of EUR 2.3 to 2.9 billion.

    All business groups delivered a strong operational performance in the quarter. Net sales growth in Network Infrastructure accelerated to 17%, with IP Networks growing 24%, Fixed Networks 16% and Optical Networks 7%. This reflected a strong recovery in demand from communication service providers, notably in North America.

    Mobile Networks net sales stabilized with continued resilience in gross margin. We also secured many important deals, winning 18 000 additional base station sites, since the start of 2024 on a net basis. This was achieved while maintaining our commercial and pricing discipline to protect our gross margins.

    Cloud and Network Services returned to 7% net sales growth in the quarter, despite a headwind of 4 percentage points from a prior business disposal, and its operating margin improved over the full year. Both Core Networks and Enterprise Campus Edge grew strongly. The fourth quarter saw the acquisition of Rapid’s technology assets. This will bolster our R&D capacity in Network as Code and increase our developer access. Taken together with our autonomous networks application suite, we are accelerating our efforts to help operators fully automate and monetize their networks.

    Nokia Technologies had an extremely active quarter. We signed a deal with Transsion, a previously unlicensed mobile devices vendor, along with multimedia deals with HP and Samsung, as well as many other smaller deals. Our annual net sales run-rate increased to approximately between EUR 1.3 and 1.4 billion in Q4, progressing towards our mid-term EUR 1.4 to 1.5 billion target.

    We delivered a strong cash performance throughout 2024, ending with full year free cash flow of EUR 2.0 billion. This means we continue to have a strong balance sheet supporting our business with net cash of EUR 4.9 billion at the end of the year, even after returning EUR 1.4 billion to shareholders through dividend and share buybacks. The Board is proposing an increase in the dividend to EUR 0.14 per share in respect of the financial year 2024. We also continue to execute against our outstanding share buyback program to offset any dilution from the equity component of our pending Infinera acquisition. Going forward, our target remains to maintain a net cash position of between 10-15% of annual net sales.

    Q4 also saw further progress in efforts to expand our presence in the data center market. We signed important deals with Microsoft and Nscale for our data center switching products, along with announcing partnerships with both Kyndryl and Lenovo. We are now stepping up our investments to broaden our addressable market in data center IP networking. We will invest up to an additional EUR 100 million in annual operating expenses with a view to driving incremental net sales of EUR 1 billion by 2028. In the short-term this will moderate the pace of operating margin expansion in Network Infrastructure, but we anticipate a strong return on investment considering the momentum we already have today in the market.

    Looking further ahead into 2025, we expect the improved trends we have seen in Network Infrastructure in the second half of this year, to sustain and drive strong growth. Cloud and Network Services is also expected to grow with strong 5G Core momentum and growth in our Enterprise Campus Edge business. End markets in Mobile Networks are improving and we currently assume largely stable net sales. Nokia Technologies is expected to deliver approximately EUR 1.1 billion of operating profit.

    At the Nokia level, we currently estimate we will deliver comparable operating profit of between EUR 1.9 and 2.4 billion in 2025. We also target free cash flow conversion from comparable operating profit of between 50% and 80%. Excluding the one-time items that benefited 2024 by over EUR 700 million which were mostly in the first half of the year, this guidance would imply a strong improvement in our comparable operating profit in 2025 despite select increased investments.

    Given the market volatility in 2024, our results demonstrate the responsiveness and capacity of the Nokia team to execute in all market conditions. I thank the whole Nokia team for their commitment, hard work and drive which made these results possible.

    FINANCIAL RESULTS

    EUR million (except for EPS in EUR) Q4’24 Q4’23 YoY change Constant currency YoY change Q1-Q4’24 Q1-Q4’23 YoY change Constant currency YoY change
    Reported results                
    Net sales 5 983 5 416 10% 9% 19 220 21 138 (9)% (9)%
    Gross margin % 46.1% 43.3% 280bps   46.1% 40.4% 570bps  
    Research and development expenses (1 136) (1 080) 5%   (4 512) (4 277) 5%  
    Selling, general and administrative expenses (789) (774) 2%   (2 890) (2 878) 0%  
    Operating profit 917 534 72%   1 999 1 661 20%  
    Operating margin % 15.3% 9.9% 540bps   10.4% 7.9% 250bps  
    Profit/(loss) from continuing operations 746 (51)     1 711 649 164%  
    Profit/(loss) from discontinued operations 67 18 272%   (427) 30    
    Profit/(loss) for the period 813 (33)     1 284 679 89%  
    EPS for the period, diluted 0.15 (0.01)     0.23 0.12 92%  
    Net cash and interest-bearing financial investments 4 854 4 323 12%   4 854 4 323 12%  
    Comparable results                
    Net sales 5 983 5 416 10% 9% 19 220 21 138 (9)% (9)%
    Gross margin % 47.2% 44.7% 250bps   47.1% 41.1% 600bps  
    Research and development expenses (1 129) (1 023) 10%   (4 298) (4 143) 4%  
    Selling, general and administrative expenses (638) (615) 4%   (2 423) (2 448) (1)%  
    Operating profit 1 142 830 38%   2 619 2 337 12%  
    Operating margin % 19.1% 15.3% 380bps   13.6% 11.1% 250bps  
    Profit for the period 977 555 76%   2 175 1 590 37%  
    EPS for the period, diluted 0.18 0.10 80%   0.39 0.28 39%  
    ROIC(1) 13.0% 9.9% 310bps   13.0% 9.9% 310bps  

    1 Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to the Alternative performance measures section in Nokia Corporation Financial Report for Q4 and full year 2024 for details.

    Business group results Network
    Infrastructure    		 Mobile
    Networks    		 Cloud and Network Services Nokia
    Technologies    		 Group Common and Other
    EUR million Q4’24 Q4’23 Q4’24 Q4’23 Q4’24 Q4’23 Q4’24 Q4’23 Q4’24 Q4’23
    Net sales 2 031 1 712 2 431 2 450 1 054 977 463 251 6 25
    YoY change 19%   (1)%   8%   84%   (76)%  
    Constant currency YoY change 17%   (2)%   7%   85%   (76)%  
    Gross margin % 45.4% 44.7% 38.1% 38.3% 48.1% 47.6% 99.8% 100.0%    
    Operating profit/(loss) 398 264 187 281 236 223 356 169 (35) (106)
    Operating margin % 19.6% 15.4% 7.7% 11.5% 22.4% 22.8% 76.9% 67.3%    

    SHAREHOLDER DISTRIBUTION

    Dividend

    The Board of Directors proposes that the Annual General Meeting 2025 authorizes the Board to resolve on the distribution of an aggregate maximum of EUR 0.14 per share to be paid in respect of the financial year 2024. The authorization would be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.

    Under the current authorization by the Annual General Meeting held on 3 April 2024, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.13 per share to be paid in respect of financial year 2023. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.

    On 30 January 2025, the Board resolved to distribute a dividend of EUR 0.03 per share. The dividend record date is 4 February 2025 and the dividend will be paid on 13 February 2025. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.

    Following this announced distribution of the fourth installment and executed payments of the previous installments, the Board has no remaining distribution authorization.

    Share buyback programs

    In January 2024, Nokia’s Board of Directors initiated a share buyback program to repurchase shares to return up to EUR 600 million of cash to shareholders in tranches over a period of two years. The share buyback execution started on 20 March 2024. On 19 July 2024, Nokia’s Board of Directors decided to accelerate the timeframe for the share buyback program with the aim of completing the full EUR 600 million program by the end of the year instead of the initial two year timeframe. The program was completed on 21 November 2024 and the repurchased 157 646 220 shares were canceled on 4 December 2024.

    On 27 June 2024, Nokia announced its intention to acquire Infinera in a transaction that valued Infinera at US$1.7 billion equity value with up to 30% of the consideration to be paid in Nokia American depositary shares (“ADSs”), depending on the elections of Infinera shareholders. To offset the dilution from the transaction to Nokia shareholders, on 22 November 2024 Nokia announced a new share buyback program targeting to repurchase 150 million shares for an aggregate purchase price not exceeding EUR 900 million. Under this share buyback program, by 31 December 2024, Nokia had repurchased 19 186 046 of its own shares at an average price per share of approximately EUR 4.14.

    OUTLOOK

      Full Year 2025
    Comparable operating profit(1) EUR 1.9 billion to EUR 2.4 billion (excluding any impact from pending Infinera acquisition)
    Free cash flow(1) 50% to 80% conversion from comparable operating profit (excluding any impact from pending Infinera acquisition)

    1Please refer to Alternative performance measures section in Nokia Corporation Financial Report for Q4 and full year 2024 for a full explanation of how these terms are defined.

    The outlook, long-term targets and all of the underlying outlook assumptions described below are forward-looking statements subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this report. release.

    Along with Nokia’s official outlook targets provided above, Nokia provides the below additional assumptions that support the group level financial outlook. Considering the pending Infinera acquisition along with the transfer of Managed Services from Cloud and Network Services to Mobile Networks (further details of this transfer are included in the Additional Topics section), Nokia is not currently providing assumptions by business group as it did previously.

      Full year 2025
    Group Common and Other operating expenses approximately
    EUR 400 million
    Comparable financial income and expenses Positive EUR 50 to 150 million
    Comparable income tax rate ~25%
    Cash outflows related to income taxes EUR 450 million
    Capital Expenditures EUR 550 million

    2026 TARGETS

    Nokia’s current targets for its existing perimeter of the business for 2026 are outlined below. This does not consider pending acquisitions. Nokia sees further opportunities to increase margins beyond 2026 and believes an operating margin of 14% remains achievable over the longer term.

    Net sales Grow faster than the market
    Comparable operating margin(1) ≥ 13%
    Free cash flow(1) 55% to 85% conversion from comparable operating profit

    1 Please refer to Alternative Performance measures section in Nokia Corporation Financial Report for Q4 and full year 2024 for a full explanation of how these terms are defined.

    The comparable operating margin target for Nokia group is built on the following assumptions by business group for 2026:

    Network Infrastructure 13 – 16% operating margin
    Mobile Networks 6 – 9% operating margin
    Cloud and Network Services 7 – 10% operating margin
    Nokia Technologies Operating profit more than EUR 1.1 billion
    Group common and other Approximately EUR 300 million of operating expenses

    ADDITIONAL TOPICS

    Progress on Infinera acquisition
    On 27 June 2024, Nokia announced a definitive agreement under which Nokia will acquire Infinera, a global supplier of innovative open optical networking solutions and advanced optical semiconductors. The acquisition process continues to proceed as expected. On 13 September 2024, the applicable waiting period under the US pre-merger review expired and the Department of Justice decided not to investigate the planned transaction. On 1 October 2024, Infinera shareholders approved the planned acquisition. On 7 October 2024, Nokia and Infinera received approval from the Committee on Foreign Investment in the United States (CFIUS). During the fourth quarter Nokia received many of the outstanding required approvals for the deal. At this point approval from the European Union and Taiwan, along with contractual closing conditions, are the major items outstanding to proceed to closing. Assuming the current target timelines, Nokia and Infinera now expect the deal to close during the first quarter of 2025.

    Nokia exercised NSB call option to simplify ownership structure in China

    Nokia and its joint venture partner China Huaxin have been together reviewing the future ownership structure of Nokia Shanghai Bell (NSB). Following those discussions, Nokia exercised its call option, outlined in NSB’s shareholders’ agreement, to initiate the process to become the sole shareholder by purchasing China Huaxin’s approximately 50% share in NSB. This will allow Nokia to simplify its ownership structure in China while Nokia remains committed to continue serving the local market.
    Since the creation of the joint venture Nokia has recorded a liability on its balance sheet based on the estimated future cash settlement to acquire China Huaxin’s ownership interest. The execution of the call option is subject to completing required steps under the shareholders’ agreement.

    Managed Services business transferred from Cloud and Network Services into Mobile Networks in 2025
    Nokia has moved its Managed Services business into Mobile Networks (MN), effective 1 January 2025. The Managed Services business provides outsourced network management of multi-vendor RAN networks for operators and since 2021 has been part of our Cloud and Network Services (CNS) business group. Considering CNS is increasingly transitioning towards cloud-native software sales, ‘as-a-service’ product offerings and helping customers to monetize networks through API’s, Nokia believes that this business is more aligned and fits better with its MN business. Based on 2024 results, this change is expected to lead to a transfer of approximately EUR 430 million of net sales and approximately EUR 40 million of comparable operating profit from CNS to MN. Nokia will provide recast financial information for 2024 for MN and CNS reflecting this change prior to Nokia’s Q1 financial results.

    RISK FACTORS

    Nokia and its businesses are exposed to a number of risks and uncertainties which include but are not limited to:

    • Competitive intensity, which is expected to continue at a high level as some competitors seek to take share;
    • Changes in customer network investments related to their ability to monetize the network;
    • Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments;
    • Our ability to procure certain standard components and the costs thereof, such as semiconductors;
    • Disturbance in the global supply chain;
    • Impact of inflation, increased global macro-uncertainty, major currency fluctuations, changes in tariffs and higher interest rates;
    • Potential economic impact and disruption of global pandemics;
    • War or other geopolitical conflicts, disruptions and potential costs thereof;
    • Other macroeconomic, industry and competitive developments;
    • Timing and value of new, renewed and existing patent licensing agreements with licensees;
    • Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; on-going litigation with respect to licensing and regulatory landscape for patent licensing;
    • The outcomes of on-going and potential disputes and litigation;
    • Our ability to execute, complete, successfully integrate and realize the expected benefits from our ongoing transactions;
    • Timing of completions and acceptances of certain projects;
    • Our product and regional mix;
    • Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various countries and OECD initiatives;
    • Our ability to utilize our Finnish deferred tax assets and their recognition on our balance sheet;
    • Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions;

    as well the risk factors specified under Forward-looking statements of this release, and our 2023 annual report on Form 20-F published on 29 February 2024 under Operating and financial review and prospects-Risk factors.

    FORWARD-LOOKING STATEMENTS

    Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia’s current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, projects, programs, product launches, growth management, licenses, sustainability and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of potential global pandemics, geopolitical conflicts and the general or regional macroeconomic conditions on our businesses, our supply chain, the timing of market changes or turning points in demand and our customers’ businesses) and any future dividends and other distributions of profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales, income, margins, cash flows, cost savings, the timing of receivables, operating expenses, provisions, impairments, taxes, currency exchange rates, hedging, investment funds, inflation, product cost reductions, competitiveness, revenue generation in any specific region, and licensing income and payments; D) ability to execute, expectations, plans or benefits related to our ongoing transactions, investments and changes in organizational structure and operating model; E) impact on revenue with respect to litigation/renewal discussions; and F) any statements preceded by or including “anticipate”, “continue”, “believe”, “envisage”, “expect”, “aim”, “will”, “target”, “may”, “would”, “see”, “plan” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.

    ANALYST WEBCAST

    • Nokia’s webcast will begin on 30 January 2025 at 11.30 a.m. Finnish time (EET). The webcast will last approximately 60 minutes.
    • The webcast will be a presentation followed by a Q&A session. Presentation slides will be available for download at www.nokia.com/financials.
    • A link to the webcast will be available at www.nokia.com/financials.
    • Media representatives can listen in via the link, or alternatively call +1-412-317-5619.

    FINANCIAL CALENDAR

    • Nokia plans to publish its “Nokia in 2024” annual report, which includes the review by the Board of Directors and the audited annual accounts, during the week starting on 10 March 2025.
    • Nokia plans to publish its first quarter 2025 results on 24 April 2025.
    • Nokia’s Annual General Meeting 2025 is planned to be held on 29 April 2025.
    • Nokia plans to publish its second quarter and half year 2025 results on 24 July 2025.
    • Nokia plans to publish its third quarter and January-September 2025 results on 23 October 2025.

    About Nokia

    At Nokia, we create technology that helps the world act together.

    As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs.

    With truly open architectures that seamlessly integrate into any ecosystem, our high-performance networks create new opportunities for monetization and scale. Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.

    Inquiries:

    Nokia
    Communications
    Phone: +358 10 448 4900
    Email: press.services@nokia.com
    Maria Vaismaa, Global Head of External Communications

    Nokia
    Investor Relations
    Phone: +358 931 580 507
    Email: investor.relations@nokia.com

    Attachment

    The MIL Network –

  • MIL-Evening Report: Will new $10,000 apprentice payments help solve job shortages in construction? Not anytime soon

    Source: The Conversation (Au and NZ) – By Pi-Shen Seet, Professor of Entrepreneurship and Innovation, Edith Cowan University

    In an election pitch last week, Prime Minister Anthony Albanese announced new incentive payments of $10,000 for eligible apprentices in residential construction.

    The federal government has committed to an ambitious target of building 1.2 million new homes over the next five years through the National Housing Accord. That means it urgently needs to boost Australia’s construction workforce.

    But a recent strategic review into incentives for Australian apprentices and trainees found cost-of-living pressures were a major barrier to apprenticeship entry and completion.

    Only about half of apprentices currently finish their apprenticeships.

    The new program has been touted as the federal government’s initial response. It will target 62,690 apprentices and cost $627 million.

    But previous attempts to attract new apprentices with cash payments have had mixed results. A similar 2023 scheme to get more tradies into “green jobs” only attracted about 2,200 sign-ups in the first year.

    There are also concerns the new scheme may have unintended consequences, such as diverting talent from important sectors of the new economy – including the previous “green jobs” scheme.



    Read more:
    There may not be enough skilled workers in Australia’s pipeline for a post-COVID-19 recovery

    How will it work?

    From July 1, eligible apprentices in the new Housing Construction Apprenticeship Program will receive five payments of $2,000 each: after six, 12, 24 and 36 months, and upon completion. The payments are staged to encourage apprentices to complete their training.

    Cash payments won’t be the only new financial incentive. There’ll also be a boost to the Living Away From Home Allowance to help cover the costs of relocating, while an increase in the Disability Australian Apprentice Wage Support payment provides financial support to employers who hire apprentices with disability.



    Read more:
    Albanese to promise $10,000 for apprentices in housing construction

    Will the scheme succeed?

    The government’s previous attempts to address chronic labour shortages through cash incentives have had mixed results.

    Introduced in 2023, the New Energy Apprenticeships Program also offers $10,000 in staged payments to apprentices in priority green roles, such as electric vehicle technicians.

    Despite 2,200 apprentices joining in the first year, the program was deemed too restrictive by the industry. That was despite employers themselves receiving $15,000 per apprentice (which is also what is proposed for the construction scheme).



    Read more:
    Yes, we know there is a ‘skills shortage’. Here are 3 jobs summit ideas to start fixing it right away

    As part of the strategic review, the Centre for International Economics was commissioned to conduct an international literature review. It found that financial incentives such as wage or training subsidies and incentives were only “somewhat relevant” to the Australian context, and there was mixed support, at best, for their effectiveness.

    A major factor behind the mixed results may be the crowding-out effect in economic theory.

    This suggests that increasing public spending (by giving financial incentives) could undermine the intended effect by reducing or even eliminating private-sector investment. And it does not address apprehension among employers, especially small and medium-sized enterprises, about taking on more apprentices.

    More than six months after the government expanded eligibility for clean energy work, the green energy sector continues to face significant skills shortages.

    While these payments may help in the long run, their staggered nature over three years won’t provide immediate relief.

    The plan will likely only contribute to the government’s home-building targets by 2029, if and when more Australians enrol and complete their apprenticeships in the construction sector.

    Will this have effects outside the construction industry?

    More strategically, by shifting the focus from “new economy” industries outlined in the Future Made in Australia policy, this scheme risks weakening efforts to transform Australia’s economy.



    Read more:
    Australia has a new National Skills Agreement. What does this mean for vocational education?

    The cash incentive for apprentices in home-building comes at a time when there is intense global competition for skills in “new industries”.

    However, despite the many state and federal government initiatives for fee-free TAFE courses since the COVID pandemic, recently released data indicates a continued trend of long-term decline in Vocational Education and Training (VET) enrolments.

    Albanese was asked about the government’s commitment to technology and digital innovation, with increasing global competition in artificial intelligence.

    He responded by discussing the government’s commitment to the “new economy”.

    However, the construction sector has until now not been identified as an essential part of the new economy’s priority industries by the government.

    Instead, expanding incentives to construction apprentices marks a shift away from the priorities on green energy and new industries, and towards more traditional trades.

    The cash incentives could divert school leavers from considering apprenticeships in key future industries. That is something that schemes such as the new energy program were specifically designed to do in response to multiple skills and training reviews over the past two decades.

    So, despite the lack of evidence that cash incentives work, and the fact they may cause unintended effects, the proposed incentive payments appear to be a pitch addressing cost-of-living/cost-of-building concerns for the upcoming election.

    The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

    – ref. Will new $10,000 apprentice payments help solve job shortages in construction? Not anytime soon – https://theconversation.com/will-new-10-000-apprentice-payments-help-solve-job-shortages-in-construction-not-anytime-soon-248446

    MIL OSI Analysis – EveningReport.nz –

  • MIL-Evening Report: ‘Digital doppelgangers’ are helping scientists tackle everyday problems – and showing what makes us human

    Source: The Conversation (Au and NZ) – By Alicia (Lucy) Cameron, Principal Research Consultant & Team Leader, Data61, CSIRO

    cybermagician/Shutterstock

    As rising seas lap at its shore, Tuvalu faces an existential threat. In an effort to preserve the tiny island nation in the middle of the Pacific Ocean, its government has been building a “digital twin” of the entire country.

    Digital twins are exactly what they sound like – a virtual double or replica of a physical, real-world entity. Scientists have been creating digital twins of everything from molecules, to infrastructure, and even entire planets.

    It’s also now possible to construct a digital twin of an individual person. In other words, a “digital doppelganger”.

    A doppelganger is someone who looks spookily like you but isn’t. The word originated in German, and literally means a “double walker”. A number of industries are now using digital doppelgangers for a range of reasons. These include enhancing athletic performance, offering more personalised healthcare and improving workplace safety.

    But although there are benefits to this technology, there are significant risks associated with its development. Having digital doppelgangers also forces us to reflect on which of our human attributes can’t be digitally replicated.

    Modelling complex systems

    The development of digital twins has been enabled by advances in environmental sensors, camera vision, augmented reality and virtual reality, as well as machine learning and artificial intelligence (AI).

    A digital twin allows us to build and test things in cyberspace – cheaply and without risk – before deploying in the real world.

    For example, we can build and stress-test infrastructure such as bridges or water supply pipes under a variety of conditions. Once built, we can use digital models to maintain the infrastructure proactively and prevent disastrous and costly structural breakdowns. This technology is a game-changer for planning and engineering, not only saving billions of dollars, but also supporting sustainability efforts.

    Of course, replicating individual humans requires much more complex modelling than when building digital twins of bridges or buildings.

    For a start, humans don’t live in a structured world, but rather inhabit complex social and physical environments. We are variable, moody and motivated by any number of factors, from hunger to tiredness, love to anger. We can change our past patterns with conscious thought, as well as act spontaneously and with creativity, challenging the status quo if needed.

    Because of this, creating perfect digital twins of humans is incredibly challenging – if not impossible. Nevertheless, digital doppelgangers are still useful for a number of purposes.

    The digital patient

    Clinicians increasingly use scans to create virtual models of the human body, with which to plan operations or create artificial body parts.

    By adding extra biometric information (for example, blood chemistry, biomechanics and physiological responses), digital models can also mirror real-world bodies, live and in real time.

    Creating digital patients can optimise treatment responses in a move away from one-size-treats-all healthcare. This means drugs, dosages and rehabilitation plans can be personalised, as well as being thoroughly tested before being applied to real people.

    Digital patients can also increase the accessibility of medical expertise to people living in remote locations. And what’s more, using multiple digital humans means some clinical trials can now be performed virtually.

    Scaled up further, this technology allows for societal-level simulations with which to better manage public health events, such as air pollution, pandemics or tsunamis.

    The digital athlete

    Imagine being able to train against a digital replica of an upcoming opponent.

    Sports scientists are increasingly working with digital athletes to trial and optimise strength and conditioning regimes, as well as test competitive play. This helps to increase the chances of winning as well as prevent injuries.

    Researchers at Griffith University have been pioneers in this space, creating models of real athletes. They have also trialled wearable sensors in patches or smart clothing that can measure a range of biomarkers: blood pressure and chemistry, temperature, and sweat composition.

    CSIRO and the Australian Sports Commission have also used digital humans to improve the performance of divers, swimmers and rowers.

    The digital worker

    As well as building virtual replicas of sports people, scientists at CSIRO have also being building virtual simulations of employees in various workplaces, including offices and construction sites.

    This is helping them analyse movements, workflows and productivity – with the broader aim of preventing workplace injuries. For example, scientists can use a model of a digital worker to assess how heavy items are lifted in order to better understand how this puts strain on different parts of the body.

    With 6.1 million Australians impacted by musculoskeletal conditions, preventing workplace injuries can not only improve lives, but save the economy billions of dollars.

    Digital dopplegangers can help prevent workplace injuries.
    Rose Marinelli/Shutterstock

    Responsible development of digital doppelgangers

    Building a digital doppelgangers requires a lot of very personal data. This can include scans, voice and video recordings, or performance and health data.

    Personal data can also be harvested from an array of other sources. These include as cars, mobile phones, and internet-connected smart devices.

    The creation of data-hungry digital replicas is forcing us to redefine legal rights. Think copyright, deepfakes and identity theft or online scams.

    The power of this technology is inspiring. But ensuring a future in which we live happily alongside our digital doppelgangers will require governments, technology developers and end-users to think hard about issues of consent, ethical data management and the potential for misuse of this technology.

    The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

    – ref. ‘Digital doppelgangers’ are helping scientists tackle everyday problems – and showing what makes us human – https://theconversation.com/digital-doppelgangers-are-helping-scientists-tackle-everyday-problems-and-showing-what-makes-us-human-247574

    MIL OSI Analysis – EveningReport.nz –

  • MIL-OSI Canada: Province pays tribute to Lieutenant Governor Janet Austin

    Premier David Eby praised Lieutenant Governor Janet Austin, OBC, for her service to the people and the Province of British Columbia over the past six years and nine months.

    “I thank Her Honour for her hard work on all our behalf,” said Premier David Eby. “She has been a steady and trusted hand through turbulent times, including a global pandemic and the passing of a beloved monarch. All British Columbians have benefited from her dedication.”

    Her Honour’s legacy includes the introduction of the Lieutenant Governor’s British Columbia Journalism Fellowship, which promotes democracy through a thriving journalism community.

    As well as fulfilling her essential constitutional role as vice-regal representative, she has also granted patronage and supported more than 100 worthy organizations. Such patronage reflects the Crown’s role as the source of the highest honours and awards granted by our society.

    Her Honour named reconciliation as one of the key priorities of her mandate. Her commitment included promoting awareness of this ongoing process. She took lessons in SENĆOŦEN, the language of the W̱SÁNEĆ people of southern Vancouver Island. She did so as a sign of respect and as a way to champion the revitalization of Indigenous language and culture, which her colonial predecessors had once sought to extinguish.

    In a ceremony in the Hall of Honour in the Parliament Buildings, Premier Eby announced the Province is making a $5,000 donation to the Lieutenant Governor’s B.C. Journalism Fellowship in gratitude for her service. Her Honour was also presented a pair of binoculars and two birdwatching books. The Vice-Regal Consort, His Honour Ashley Chester, also received gifts.

    Premier Eby also bestowed a certificate declaring Jan. 29 to be Vice-Regal Canine Consort Day in honour of MacDuff. Their Honours received a leash and collar featuring the official British Columbia tartan, a gift for their beloved, 14-year-old West Highland white terrier. The colourful patterned cloth includes green for the forests, blue for the ocean, red for the maple leaf, white for the Pacific dogwood, which is the province’s official flower, as well as gold to represent the sun and the Crown.

    “Arf,” said the amiable Westie.

    MIL OSI Canada News –

  • MIL-OSI USA: PSI Chairman Johnson Subpoenas HHS for Records on COVID-19 Vaccine Safety; Dr. Fauci’s Communications

    US Senate News:

    Source: United States Senator for Wisconsin Ron Johnson
    WASHINGTON – Today, U.S. Sen. Ron Johnson (R-Wis.) announced that on Jan. 28, 2025 he issued his first subpoena as chairman of the Permanent Subcommittee on Investigations to the Department of Health and Human Services (HHS) for records relating to COVID-19 vaccine safety data and communications about the COVID-19 pandemic, including a subset of Dr. Anthony Fauci’s emails. The announcement came during Robert F. Kennedy, Jr.’s confirmation hearing before the Senate Finance Committee.
    Sen. Johnson’s subpoena to HHS is a culmination of a multi-year fight to overcome the obstruction of the Biden administration to get unredacted records and data about the COVID-19 pandemic and the safety and efficacy of the COVID-19 vaccines. For years, Biden officials at HHS and its subcomponent agencies withheld crucial health information from Sen. Johnson and the public. Many of Sen. Johnson’s more than 70 oversight letters to the Biden administration were either completely ignored or inadequately addressed. Now, having recently been named chairman of PSI, Sen. Johnson has the authority to issue subpoenas.
    Sen. Johnson stated, “In the waning days of the Biden administration and after years of obstructing my oversight efforts, I warned HHS officials that when I become chairman of the Permanent Subcommittee on Investigations, I will subpoena records and data on the COVID-19 pandemic that have been inappropriately withheld from Congress and the American people for far too long. 
    “Just days after being named chairman of the Subcommittee, I have kept my word.  
    “Yesterday, I subpoenaed HHS for documents on the government’s response to the COVID-19 pandemic—including a subset of Dr. Fauci’s emails—and the development and safety of the COVID-19 vaccines. Many of these records should have been turned over to me years ago, but the Biden administration opted to keep Congress and the public in the dark.
    “I look forward to HHS’s full compliance with the subpoena.” 

    Sen. Johnson signing the Jan. 28th subpoena to HHS
    Sen. Johnson’s subpoena requires HHS to produce:
    Previously withheld or heavily redacted communications about the pandemic, including Dr. Anthony Fauci’s emails, including but not limited to the approximately 50 pages of his emails that have been withheld from my office since September 2021;
    Safety surveillance data on the COVID-19 vaccines including proportional reporting ratios and empirical Bayesian data mining;
    Unredacted records previously released through Freedom of Information Act requests regarding the government’s awareness of myocarditis and pericarditis cases in post-vaccinated individuals;
    Data and records relating to COVID-19 vaccine lots associated with higher rates of adverse events;
    Order forms and receipts showing government researchers purchasing DNA sequences from a biotechnology company; and
    All communications relating to HHS’s receipt of and response (or lack thereof) to my oversight letters between January 2021 and the present. 
    HHS is required to comply with the subpoena by Feb. 18, 2025.
    Sen. Johnson’s questioning of Robert F. Kennedy, Jr. can be found here.
    The complete subpoena can be found here.

    MIL OSI USA News –

  • MIL-OSI USA: Reed Announces Committee Leadership Assignments for 119th Congress

    US Senate News:

    Source: United States Senator for Rhode Island Jack Reed
    WASHINGTON, DC – Today, after the Senate Appropriations Committee fully organized, U.S. Senator Jack Reed (D-RI) announced his full slate of committee and subcommittee assignments for the 119th Congress. 
    Senator Reed will continue serving on four ‘A’ committees: Armed Services; Appropriations; Banking, Housing, and Urban Affairs; and the Select Committee on Intelligence.  These assignments include two of the three ‘Super A’ Committees: Armed Services and Appropriations.
    Senator Reed will serve as Ranking Member of the Senate Armed Services Committee (SASC) and as the Ranking Member of the Appropriations Subcommittee on Financial Services and General Government (FSGG), which has jurisdiction over a diverse group of agencies responsible for regulating the financial and telecommunications industries; collecting taxes and providing taxpayer assistance; providing small business assistance; overseeing the White House and judicial branch operations, and the District of Columbia; construction and management of federal buildings; and overseeing the Federal workforce.
    With these assignments, Reed is well-positioned to deliver for Rhode Island while overseeing the U.S. Department of Defense and federal spending decisions through the appropriations process.
    “These key committee posts help me fix our roads and bridges, strengthen our economy, deliver for Rhode Island, and chart a responsible fiscal path.  My new assignment on the Financial Services and General Government Subcommittee provides another tool to support small business growth, expand economic opportunity, boost Rhode Island’s broadband connections, and ensure the health and safety of our financial markets,” said Reed.  “As Congress grapples with a range of complex challenges, I will do everything in my power to help lower prices for working families and ensure Rhode Islanders’ needs are met.  I will continue to be a relentless advocate for our state and focus on the issues that Rhode Islanders care about.  And I will promote and uphold the constitutional role of Congress, including Congress’s power of the purse. ”
    ARMED SERVICES COMMITTEE
    Senator Reed is the Ranking Member of the powerful Senate Armed Services Committee, which is responsible for overseeing the U.S. Department of Defense (DOD), military services operating across the domains of land, sea, air, cyberspace, and space, and all DOD agencies, including their budgets and policies, and national security aspects of nuclear energy.  Each year, SASC is tasked with producing and passing the National Defense Authorization Act (NDAA).
    In 2024, under Reed’s leadership as SASC Chairman, Congress passed the fiscal year 2025 National Defense Authorization Act (NDAA), which authorized $883.7 billion for the U.S. Department of Defense (DOD) and the national security programs of the U.S. Department of Energy.  The NDAA offers a blueprint to equip, supply, and train U.S. forces; provide for military families; and strengthen oversight of the Defense Department and military programs. The defense industry is a high-tech sector that contributes to Rhode Island’s economic growth, generates good-paying jobs, and has been a resilient segment of the state’s economy. According to the latest Rhode Island data, the defense industry generated over $4.3 billion in annual economic impact for Rhode Island and a total employment share of 6.2 percent of the state’s workforce.
    In addition to his leadership on the Armed Services Committee, Reed is also a member of the Appropriations Subcommittee on Defense, which provides him with additional oversight responsibilities in determining how defense dollars are spent.
    APPROPRIATIONS COMMITTEE
    Senator Reed will continue to serve as Rhode Island’s only member of the powerful Appropriations Committee, which controls the funding of the federal government.
    Senator Reed is the third most senior Democrat on the Appropriations Committee.  He works tirelessly to direct federal funding to the Ocean State to create jobs, strengthen infrastructure, and support economic and community development initiatives.
    Senator Reed will give up his leadership post on the Subcommittee on the Legislative Branch in order to help lead the Financial Services and General Government Subcommittee. 
    The FSGG subcommittee drafts the spending plan and oversees annual funding for financial-related agencies including the U.S. Department of Treasury; the Securities and Exchange Commission (SEC); and the Internal Revenue Service (IRS).  It is responsible for funding the Executive Office of the President and federal election security initiatives.  The panel also has jurisdiction over two dozen key agencies and programs that have a direct impact on Rhode Island, including:
    – The U.S. Small Business Administration (SBA), which supports local entrepreneurs and small businesses with outreach and loans and also provides loans following federally-declared disasters.
    – The Federal Trade Commission (FTC), which helps ensure competition in broad sectors of the economy and helps protect consumers from false advertising and business practices.
    – The Federal Communications Commission (FCC), which has jurisdiction over telecommunications and broadband matters.
    – The Office of National Drug Control Policy (ONDCP), which provides funding for High Intensity Drug Trafficking Areas nationwide and to Rhode Island.
    – The Federal Election Commission (FEC), with has jurisdiction over federal campaign finance laws.
    – The General Services Administration (GSA), which manages federal properties in Rhode Island and nationwide.
    – The Community Development Financial Institutions (CDFI) Fund which provides hundreds of millions annually to generate economic growth in local communities and provide access to credit and technical assistance to underserved areas.
    Additionally, Senator Reed will serve on five other Appropriations Subcommittees: Commerce, Justice, Science, and Related Agencies (CJS); Defense; Labor, Health and Human Services, Education, and Related Agencies (Labor-H); Military Construction, Veterans Affairs, and Related Agencies (MilCon-VA); and Transportation, Housing, and Urban Development (THUD).
    BANKING, HOUSING & URBAN AFFAIRS
    A champion of affordable housing, consumer protection, and mass-transit, Senator Reed will continue serving as a key member of the Banking, Housing & Urban Affairs Committee, which has broad oversight over our nation’s financial institutions, capital markets, consumer finance, monetary policy, and housing and mass-transit programs. 
    Senator Reed is the most senior Democratic member of the panel, but Senate rules dictate that members may only serve atop one full committee at a time.
    Senator Reed has used his Banking Committee post to author Wall Street reform and consumer protection laws, including his ‘warrants law,’ which forced the return of over $10 billion dollars to taxpayers.  He also successfully urged the U.S. Securities and Exchange Commission (SEC) to focus greater attention on climate risk disclosures for public companies.  The committee also oversees federal housing policy and authorizes mass-transit investments, and Senator Reed used his role on the committee led to create two affordable housing funds: the Housing Trust Fund and the Capital Magnet Fund.
    It was Senator Reed’s leadership on the Banking, Housing, and Urban Affairs Committee, coupled with his work on the Appropriations Committee, that earned him a spot as one of twenty members of the bipartisan working group that was tasked with developing the CARES Act (Public Law No. 116-136).  Senator Reed was the driving force behind the successful effort to create the $150 billion Coronavirus Relief Fund (CRF) in the CARES Act and successfully secured a small state minimum of $1.25 billion in the law.  Senator Reed continues to play an active role in pushing legislation to direct additional federal funds to states and local governments to help save lives and address the economic impact caused by the pandemic.
    As America faces an affordable housing crisis, which worsened during the pandemic, Senator Reed will play a key role in providing relief for renters and homeowners, and helping to revitalize communities by expanding the supply of affordable housing. Reed will also use his seat on this committee to boost mass-transit infrastructure in order to help connect communities and more Americans to jobs and economic opportunity.
    Senator Reed will serve on three key Banking subcommittees: Economic Policy; Financial Institutions and Consumer Protection; and Securities, Insurance, and Investment.
    INTELLIGENCE COMMITTEE
    By virtue of his leadership of the Senate Armed Services Committee, Reed is also an ex officio member of the high-profile Senate Select Committee on Intelligence, which oversees the U.S. Intelligence Community.  As an ex officio member of the panel, Senator Reed regularly participates in open and closed-door briefings and hearings with top intelligence officials from the Office of the Director of National Intelligence (ODNI), the Central Intelligence Agency (CIA), the Defense Intelligence Agency (DIA), and the National Security Agency (NSA), but he does not vote in committee.
    The Intelligence Committee was established in 1976 to oversee the range of civilian and military agencies and departments that make up the U.S. Intelligence Community, and has wide influence over U.S. national security and foreign policy.
    The President of the United States is required by law to ensure that the Intelligence Committee is kept “fully and currently informed” of intelligence activities.  As a result, U.S. intelligence agencies must notify the Committee of its activities, including covert actions.

    MIL OSI USA News –

  • MIL-OSI USA: Tuberville Praises Alabama Students, Teachers for Leading the Nation in Math Education Improvement

    US Senate News:

    Source: United States Senator Tommy Tuberville (Alabama)
    Alabama was only state with improvements in post-COVID math scores
    WASHINGTON – Today, U.S. Senator Tommy Tuberville (R-AL), Alabama’s voice on the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP), issued the following statement celebrating Alabama being the only state with improvements in post-COVID math scores among fourth graders:
    “Our children have suffered emotionally and cognitively because of Democrat lockdowns during the COVID pandemic. In many states, students were unnecessarily forced out of the classrooms to learn at home, where many of them didn’t have access to adequate technology and resources. While schools across the nation are still struggling to overcome this setback, Alabama is leading the way in math progress among fourth graders. This is a testament to Alabama’s dedicated educators who were unwavering in their dedication to equipping our students with the tools to succeed. I couldn’t be more proud of Alabama’s progress, and know that we will continue to lead the way in setting the gold standard for education.”
    The statement follows a disturbing report from the 2024 National Assessment of Educational Progress (NAEP) that shows students have not recovered to pre-pandemic levels of achievement, and in some cases have declined further. Alabama was the ONLY state that did not see a decline in post-COVID math scores among fourth graders.
    Senator Tuberville has been a strong advocate for returning students to the classroom, and continues to be a leader in the fight for school choice. 
    Senator Tommy Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans’ Affairs, HELP, and Aging Committees.

    MIL OSI USA News –

  • MIL-OSI: Sound Financial Bancorp, Inc. Q4 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    SEATTLE, Jan. 29, 2025 (GLOBE NEWSWIRE) —  Sound Financial Bancorp, Inc. (the “Company”) (Nasdaq: SFBC), the holding company for Sound Community Bank (the “Bank”), today reported net income of $1.9 million for the quarter ended December 31, 2024, or $0.74 diluted earnings per share, as compared to net income of $1.2 million, or $0.45 diluted earnings per share, for the quarter ended September 30, 2024, and $1.2 million, or $0.47 diluted earnings per share, for the quarter ended December 31, 2023. The Company also announced today that its Board of Directors declared a cash dividend on the Company’s common stock of $0.19 per share, payable on February 26, 2025 to stockholders of record as of the close of business on February 12, 2025.

    Comments from the President and Chief Executive Officer  
     
    “The Bank ended the year with many positives, including a 15-basis-point increase in net interest margin compared to the third quarter of 2024. This was largely due to our significant progress in reducing deposit costs, which fell by 16 basis points,” remarked Laurie Stewart, President and Chief Executive Officer. “Additionally, nonperforming loans decreased by 11.8% from the third quarter, and for the first time in more than a decade, we have no OREO,” concluded Ms. Stewart.

    “Notable progress was made in reducing funding costs during the quarter and in controlling expenses throughout the entire year. We hope to continue this momentum in 2025. Our staff across the company played an important role in these accomplishments by focusing on client relationships and increasing efficiencies through technological improvements,” explained Wes Ochs, Executive Vice President and Chief Financial Officer.

    Mr. Ochs continued, “We ended the year with the same balance sheet strategy that we used to close out 2023, which helped reduce the Bank’s asset size below $1 billion. This strategy is intended to provide the Bank with additional operational flexibility and continued cost savings in 2025.”
    Q4 2024 Financial Performance
    Total assets decreased $107.3 million or 9.7% to $993.6 million at December 31, 2024, from $1.10 billion at September 30, 2024, and decreased $1.6 million or 0.2% from $995.2 million at December 31, 2023.     Net interest income increased $347 thousand or 4.4% to $8.2 million for the quarter ended December 31, 2024, from $7.9 million for the quarter ended September 30, 2024, and increased $653 thousand or 8.6% from $7.6 million for the quarter ended December 31, 2023.
       
        Net interest margin (“NIM”), annualized, was 3.13% for the quarter ended December 31, 2024, compared to 2.98% for the quarter ended September 30, 2024 and 3.04% for the quarter ended December 31, 2023.
    Loans held-for-portfolio decreased $1.6 million or 0.2% to $900.2 million at December 31, 2024, compared to $901.7 million at September 30, 2024, and increased $5.7 million or 0.6% from $894.5 million at December 31, 2023.    
        A $14 thousand provision for credit losses was recorded for the quarter ended December 31, 2024, compared to an $8 thousand provision and a $27 thousand release of provision for credit losses for the quarters ended September 30, 2024 and December 31, 2023, respectively. At December 31, 2024, the allowance for credit losses on loans to total loans outstanding was 0.94%, compared to 0.95% at September 30, 2024 and 0.98% December 31, 2023.
    Total deposits decreased $92.4 million or 9.9% to $837.8 million at December 31, 2024, from $930.2 million at September 30, 2024, and increased $11.3 million or 1.4% from $826.5 million at December 31, 2023. Noninterest-bearing deposits increased $2.8 million or 2.2% to $132.5 million at December 31, 2024 compared to $129.7 million at September 30, 2024, and increased $5.8 million or 4.6% compared to $126.7 million at December 31, 2023.    
        Total noninterest income decreased $75 thousand or 6.1% to $1.2 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and increased $94 thousand or 8.8% compared to the quarter ended December 31, 2023.
    The loans-to-deposits ratio was 108% at December 31, 2024, compared to 97% at September 30, 2024 and 108% at December 31, 2023.    
        Total noninterest expense decreased $621 thousand or 8.1% to $7.1 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and decreased $248 thousand or 3.4% compared to the quarter ended December 31, 2023.
    Total nonperforming loans decreased $998 thousand or 11.8% to $7.5 million at December 31, 2024, from $8.5 million at September 30, 2024, and increased $3.9 million or 110.7% from $3.6 million at December 31, 2023. Nonperforming loans to total loans was 0.83% and the allowance for credit losses on loans to total nonperforming loans was 113.46% at December 31, 2024.    
        The Bank continued to maintain capital levels in excess of regulatory requirements and was categorized as “well-capitalized” at December 31, 2024.
           

    Operating Results

    Net interest income increased $347 thousand, or 4.4%, to $8.2 million for the quarter ended December 31, 2024, compared to $7.9 million for the quarter ended September 30, 2024, and increased $653 thousand, or 8.6%, from $7.6 million for the quarter ended December 31, 2023.The increase from the prior quarter was primarily the result of lower funding costs and an increase in average yield on loans receivable and investments, partially offset by a decrease in the average balance and yield on interest-bearing cash. The increase in net interest income compared to the same quarter one year ago was primarily due to a higher average yield on interest-earning assets, particularly loans receivable and investments, and an increase in the average balances of both loans receivable and interest-bearing cash, partially offset by a lower average yield on interest-bearing cash and higher funding costs.

    Interest income decreased $102 thousand, or 0.7%, to $14.7 million for the quarter ended December 31, 2024, compared to $14.8 million for the quarter ended September 30, 2024, and increased $1.4 million, or 10.5%, from $13.3 million for the quarter ended December 31, 2023. The decrease from the prior quarter was primarily due to a lower average balance of interest-bearing cash, and a 59 basis point decline in the average yield on interest-bearing cash, offset by a seven basis point increase in the average loan yield and a 16 basis point increase in the average yield on investments. The increase in interest income compared to the same quarter last year was due primarily to higher average balances of loans and interest-bearing cash, a 37 basis point increase in the average yield on loans, and a 43 basis point increase in the average yield on investments, partially offset by a decline in the average balance of investments and a 59 basis point decline in the average yield on interest-bearing cash.

    Interest income on loans increased $194 thousand, or 1.5%, to $13.1 million for the quarter ended December 31, 2024, compared to $12.9 million for the quarter ended September 30, 2024, and increased $1.0 million, or 8.6%, from $12.0 million for the quarter ended December 31, 2023. The average balance of total loans was $900.8 million for the quarter ended December 31, 2024, up from $898.6 million for the quarter ended September 30, 2024 and $884.7 million for the quarter ended December 31, 2023. The average yield on total loans was 5.77% for the quarter ended December 31, 2024, up from 5.70% for the quarter ended September 30, 2024 and 5.40% for the quarter ended December 31, 2023. The increase in the average loan yield during the current quarter, compared to both the prior quarter and the fourth quarter of 2023, was primarily due to the origination of new loans at higher interest rates. Additionally, variable-rate loans resetting to higher rates contributed to the increase in average yield compared to the prior quarters. The increase in the average balance during the current quarter compared to the prior quarter was primarily due to growth in commercial and multifamily loans, manufactured housing loans and floating home loans. This was partially offset by a decline in construction and land loans and commercial business loans. The average balances for one-to-four family loans, home equity loans, and other consumer loans remained relatively flat from the third quarter of 2024. The increase in the average balance of loans during the current quarter compared to the fourth quarter of 2023 was primarily due to loan growth across all categories, except for one-to-four family loans, construction and land loans, commercial business loans, and other consumer loans, with the largest decrease being in construction and land loans.

    Interest income on investments was $132 thousand for both the quarters ended December 31, 2024 and September 30, 2024, and $129 thousand for the quarter ended December 31, 2023. Interest income on interest-bearing cash decreased $296 thousand to $1.5 million for the quarter ended December 31, 2024, compared to $1.8 million for the quarter ended September 30, 2024, and increased $359 thousand from $1.2 million for the quarter ended December 31, 2023. The decrease from the prior quarter was due to decreases in the average yield and average balance of interest-bearing cash. The increase from the same quarter in the prior year was a result of a higher average balance, partially offset by a lower average yield.

    Interest expense decreased $449 thousand, or 6.4%, to $6.5 million for the quarter ended December 31, 2024, from $7.0 million for the quarter ended September 30, 2024, and increased $746 thousand, or 12.9%, from $5.8 million for the quarter ended December 31, 2023. The decrease in interest expense during the current quarter from the prior quarter was primarily the result of average balance decreases of $3.8 million in demand and NOW accounts, $2.3 million in certificate accounts and $9.5 million in FHLB advances, as well as lower average rates paid on all categories of interest-bearing deposits, partially offset by a $10.2 million increase in the average balance of savings and money market accounts. The increase in interest expense during the current quarter from the same quarter a year ago was primarily the result of a $91.9 million increase in the average balance of savings and money market accounts and a $1.3 million increase in the average balance of certificate accounts, as well as higher average rates paid on savings and money market accounts. This was partially offset by a $25.3 million decrease in the average balance of demand and NOW accounts and a $9.6 million decrease in the average balance of FHLB advances. The average cost of deposits was 2.58% for the quarter ended December 31, 2024, down from 2.74% for the quarter ended September 30, 2024 and up from 2.38% for the quarter ended December 31, 2023. The average cost of FHLB advances was 4.31% for the quarter ended December 31, 2024, down from 4.32% for the quarter ended September 30, 2024, and up from 4.26% for the quarter ended December 31, 2023.

    NIM (annualized) was 3.13% for the quarter ended December 31, 2024, up from 2.98% for the quarter ended September 30, 2024 and 3.04% for the quarter ended December 31, 2023. The increase in NIM from the prior quarter was the result of lower cost of funding, partially offset by a decrease in interest income on interest-earning assets. The increase in NIM from the quarter one year ago was primarily due to an increase in interest income on interest-earning assets, driven by the higher average balance in loans and interest-bearing cash and a higher yield earned on loans and investments, partially offset by a higher average balance of and cost of savings and money market accounts.

    A provision for credit losses of $14 thousand was recorded for the quarter ended December 31, 2024, consisting of a release of provision for credit losses on loans of $73 thousand and a provision for credit losses on unfunded loan commitments of $87 thousand. This compared to a provision for credit losses of $8 thousand for the quarter ended September 30, 2024, consisting of a provision for credit losses on loans of $106 thousand and a release of provision for credit losses on unfunded loan commitments of $98 thousand, and a release of provision for credit losses of $27 thousand for the quarter ended December 31, 2023, consisting of a provision for credit losses on loans of $337 thousand and a release of the provision for credit losses on unfunded loan commitments of $364 thousand. The increase in the provision for credit losses for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 resulted primarily from an additional qualitative adjustment related to our loan review, additional enhancements to the loss model related to how we adjust for the qualitative component, including the utilization of a scorecard to drive managements analysis, and growth in our unfunded construction loan portfolio, which has a higher loss rate than our other loan portfolios. These increases were offset by lower reserves in both our floating home sub-segment of other consumer loans within our quantitative analysis and in our qualitative analysis related to market conditions and value of underlying collateral, as economic conditions have improved. Expected loss estimates consider various factors, such as market conditions, borrower-specific information, projected delinquencies, and the impact of economic conditions on borrowers’ ability to repay.

    Noninterest income decreased $75 thousand, or 6.1%, to $1.2 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and increased $94 thousand, or 8.8%, compared to the quarter ended December 31, 2023. The decrease from the prior quarter was primarily related to a $24 thousand downward adjustment in fair value of mortgage servicing rights and a $59 thousand decrease in earnings from bank-owned life insurance (“BOLI”), both influenced by fluctuating market interest rates. These decreases were partially offset by an increase of $13 thousand in net gain on sale of loans due to higher sales volume in the fourth quarter of 2024, and a $7 thousand increase in gain on disposal of assets due to insurance claims exceeding the book value on the replacement of stolen laptops in the second quarter of 2024. The increase in noninterest income from the same quarter of 2023 was primarily due an $43 thousand increase in service charges and fee income primarily due to increases in late fees on loans, higher interchange income and income related to a new, multi-year agreement with our credit card provider that was effective in 2024, a late fee on one commercial loan and higher specialty deposit fees due to fewer reversals of fees in 2024, a $173 thousand increase in the fair value adjustment on mortgage servicing rights due to changes in prepayment speeds, servicing costs, and discount rate, and a $7 thousand increase in gain on disposal of assets as noted above. These increases were partially offset by a $95 thousand decrease in earnings on BOLI due to market rate fluctuations, and a $23 thousand decrease in net gain on sale of loans due to fewer loans sold, and an $11 thousand decrease in mortgage servicing income as a result of the portfolio paying down at a faster rate than we are replacing the loans. Loans sold during the quarter ended December 31, 2024, totaled $3.5 million, compared to $2.4 million and $4.5 million of loans sold during the quarters ended September 30, 2024 and December 31, 2023, respectively.

    Noninterest expense decreased $621 thousand, or 8.1%, to $7.1 million for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024, and decreased $248 thousand, or 3.4%, from the quarter ended December 31, 2023. The decrease from the quarter ended September 30, 2024 was primarily a result of lower salaries and benefits and operations expenses, partially offset by higher data processing expense. Salaries and benefits decreased $549 thousand primarily due to lower incentive compensation, lower retirement plan expense due to fluctuating market rates, lower medical expense due to higher medical costs during the third quarter of 2024, and lower salaries expense, as well as higher deferred salaries due to higher loan production. Operations expense decreased $211 thousand primarily due to a reversal of state and local tax expense related to higher estimated tax payments made than actual tax due, and lower operational losses in the current quarter as the prior quarter included the charge-off of a fraudulently obtained loan. This was partially offset by an $165 thousand increase in data processing expenses, reflecting new technology implementation costs. Compared to same quarter in 2023, the decrease in noninterest expense was primarily due to lower operations expenses, occupancy expenses and data processing expenses, which were partially offset by a $118 thousand increase in salaries and benefits costs. Operations expenses decreased due to reduction in loan originations costs, office expenses, operational losses, charitable contributions and state and local taxes, partially offset by higher professional fees primarily related to costs for future FDIC Improvement Act implementation. Data processing expenses decreased due to lower costs related to our core processor, while occupancy expenses decreased primarily due to fully amortized leasehold improvements. The increase in salaries and benefits compared to the same quarter last year reflected higher incentive compensation, lower deferred salaries, higher medical expenses due primarily to a change in insurance providers, and a higher contribution to our employee stock ownership plan due to the increase in value of our stock in 2024. This was partially offset by lower retirement plan expenses due to fluctuating market rates and lower salaries from a restructuring of positions at the end of 2023.

    Balance Sheet Review, Capital Management and Credit Quality

    Assets at December 31, 2024 totaled $993.6 million, down from $1.10 billion at September 30, 2024 and $995.22 million at December 31, 2023. The decrease in total assets from September 30, 2024 was primarily due to decreases in cash and cash equivalents and loans held-for-portfolio. The decrease from one year ago was primarily a result of lower balances of cash and cash equivalents and investment securities, offset by an increase in loans held-for-portfolio.

    Cash and cash equivalents decreased $105.3 million, or 70.7%, to $43.6 million at December 31, 2024, compared to $148.9 million at September 30, 2024, and decreased $6.0 million, or 12.2%, from $49.7 million at December 31, 2023. The decrease from the prior quarter was primarily due to higher deposit withdrawals, as well as the strategic decision to sell reciprocal deposits at the end of the year. Cash and cash equivalents decreased from one year ago primarily due to the increase in loans held-for-portfolio and the payoff of one FHLB borrowing, partially offset by an increase in deposits.

    Investment securities decreased $251 thousand, or 2.5%, to $9.9 million at December 31, 2024, compared to $10.2 million at September 30, 2024, and decreased $533 thousand, or 5.1%, from $10.5 million at December 31, 2023. Held-to-maturity securities totaled $2.1 million at both December 31, 2024 and September 30, 2024, and totaled $2.2 million at December 31, 2023. Available-for-sale securities totaled $7.8 million at December 31, 2024, compared to $8.0 million at September 30, 2024 and $8.3 million at December 31, 2023.

    Loans held-for-portfolio were $900.2 million at December 31, 2024, compared to $901.7 million at September 30, 2024 and $894.5 million at December 31, 2023.

    Nonperforming assets (“NPAs”), which are comprised of nonaccrual loans (including nonperforming modified loans), other real estate owned (“OREO”) and other repossessed assets, decreased $1.1 million, or 12.9%, to $7.5 million at December 31, 2024, from $8.6 million at September 30, 2024 and increased $3.4 million, or 81.3%, from $4.1 million at December 31, 2023. The decrease in NPAs from September 30, 2024 was primarily due to the payoff of seven loans totaling $1.2 million, one loan totaling $76 thousand returning to accrual status, and sale of one other real estate owned property for $115 thousand for a small net gain on sale, partially offset by the addition of seven loans totaling $326 thousand to nonaccrual. The increase in NPAs from one year ago was primarily due to the placement of an additional $9.3 million of loans on nonaccrual status, which included a $3.7 million matured commercial real estate loan where the borrower is in the process of securing financing from another lender, and a $2.4 million floating home loan, all of which are well secured. These additions were partially offset by payoffs totaling $4.2 million, the return of $784 thousand of loans to accrual status, charge-offs of $142 thousand, the sale of two other real estate owned properties for $685 thousand, and normal loan payments.

    NPAs to total assets were 0.75%, 0.78% and 0.42% at December 31, 2024, September 30, 2024 and December 31, 2023, respectively. The allowance for credit losses on loans to total loans outstanding was 0.94% at December 31, 2024, compared to 0.95% at September 30, 2024 and 0.98% at December 31, 2023. Net loan charge-offs for the fourth quarter of 2024 totaled $13 thousand, compared to $14 thousand for the third quarter of 2024, and $15 thousand for the fourth quarter of 2023.

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

      December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Nonperforming Loans:                  
    One-to-four family $ 537     $ 745     $ 822     $ 835     $ 1,108  
    Home equity loans   298       338       342       83       84  
    Commercial and multifamily   3,734       4,719       5,161       4,747       —  
    Construction and land   24       25       28       29       —  
    Manufactured homes   521       230       136       166       228  
    Floating homes   2,363       2,377       2,417       3,192       —  
    Commercial business   11       23       —       —       2,135  
    Other consumer   3       32       3       1       1  
    Total nonperforming loans   7,491       8,489       8,909       9,053       3,556  
    OREO and Other Repossessed Assets:                  
    Commercial and multifamily   —       —       —       575       575  
    Manufactured homes   —       115       115       115       —  
    Total OREO and repossessed assets   —       115       115       690       575  
    Total NPAs $ 7,491     $ 8,604     $ 9,024     $ 9,743     $ 4,131  
                       
    Percentage of Nonperforming Loans:                  
    One-to-four family   7.3 %     8.7 %     9.1 %     8.5 %     26.9 %
    Home equity loans   4.0       3.9       3.8       0.9       2.0  
    Commercial and multifamily   49.8       54.8       57.2       48.7       —  
    Construction and land   0.3       0.3       0.3       0.3       —  
    Manufactured homes   7.0       2.7       1.5       1.7       5.5  
    Floating homes   31.5       27.6       26.8       32.8       —  
    Commercial business   0.1       0.3       —       —       51.7  
    Other consumer   —       0.4       —       —       —  
    Total nonperforming loans   100.0       98.7       98.7       92.9       86.1  
    Percentage of OREO and Other Repossessed Assets:                  
    Commercial and multifamily   —       —       —       5.9       13.9  
    Manufactured homes   —       1.3       1.3       1.2       —  
    Total OREO and repossessed assets   —       1.3       1.3       7.1       13.9  
    Total NPAs   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %

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

      At or For the Quarter Ended:
      December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Allowance for Credit Losses on Loans                  
    Balance at beginning of period $ 8,585     $ 8,493     $ 8,598     $ 8,760     $ 8,438  
    (Release of) provision for credit losses during the period   (73 )     106       (88 )     (106 )     337  
    Net charge-offs during the period   (13 )     (14 )     (17 )     (56 )     (15 )
    Balance at end of period $ 8,499     $ 8,585     $ 8,493     $ 8,598     $ 8,760  
    Allowance for Credit Losses on Unfunded Loan Commitments                  
    Balance at beginning of period $ 147     $ 245     $ 266     $ 193     $ 557  
    Provision for (release of) provision for credit losses during the period   87       (98 )     (21 )     73       (364 )
    Balance at end of period   234       147       245       266       193  
    Allowance for Credit Losses $ 8,733     $ 8,732     $ 8,738     $ 8,864     $ 8,953  
    Allowance for credit losses on loans to total loans   0.94 %     0.95 %     0.96 %     0.96 %     0.98 %
    Allowance for credit losses to total loans   0.97 %     0.97 %     0.98 %     0.99 %     1.00 %
    Allowance for credit losses on loans to total nonperforming loans   113.46 %     101.13 %     95.33 %     94.97 %     246.34 %
    Allowance for credit losses to total nonperforming loans   116.58 %     102.86 %     98.08 %     97.91 %     251.77 %

    Total deposits decreased $92.4 million, or 9.9%, to $837.8 million at December 31, 2024, from $930.2 million at September 30, 2024 and increased $11.3 million, or 1.4%, from $826.5 million at December 31, 2023. The decrease in total deposits compared to the prior quarter-end was primarily a result of the movement of reciprocal deposits off balance sheet for strategic objectives at year-end, followed by the return of those deposits to our balance sheet in the first quarter of 2025, and a decrease in one high cost money market depositor relationship as part of our strategic decision to decrease our overall cost of funds. Noninterest-bearing deposits increased $2.8 million, or 2.2%, to $132.5 million at December 31, 2024, compared to $129.7 million at September 30, 2024 and increased $5.8 million, or 4.6%, from $126.7 million at December 31, 2023. Noninterest-bearing deposits represented 15.8%, 14.0% and 15.3% of total deposits at December 31, 2024, September 30, 2024 and December 31, 2023, respectively.

    FHLB advances totaled $25.0 million at December 31, 2024, compared to $40.0 million at both September 30, 2024, and December 31, 2023. The decrease from both prior dated was due to the repayment of a $15.0 million FHLB advance that matured in November 2024. FHLB advances are primarily used to support organic loan growth and to maintain liquidity ratios in line with our asset/liability objectives. FHLB advances outstanding at December 31, 2024 had maturities ranging from early 2026 through early 2028. Subordinated notes, net totaled $11.8 million at each of December 31, 2024, September 30, 2024 and December 31, 2023.

    Stockholders’ equity totaled $103.7 million at December 31, 2024, an increase of $1.4 million, or 1.4%, from $102.2 million at September 30, 2024, and an increase of $3.0 million, or 3.0%, from $100.7 million at December 31, 2023. The increase in stockholders’ equity from September 30, 2024 was primarily the result of $1.9 million of net income earned during the current quarter, $98 thousand in share-based compensation, and $19 thousand in common stock options exercised, partially offset by a $122 thousand increase in accumulated other comprehensive loss, net of tax and the payment of $486 thousand in cash dividends to the Company’s stockholders.

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

    Forward-Looking Statements Disclaimer

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

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

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

    CONSOLIDATED INCOME STATEMENTS
    (Dollars in thousands, unaudited)
        For the Quarter Ended
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Interest income   $ 14,736     $ 14,838   $ 14,039     $ 13,760     $ 13,337  
    Interest expense     6,516       6,965     6,591       6,300       5,770  
    Net interest income     8,220       7,873     7,448       7,460       7,567  
    Provision for (release of) credit losses     14       8     (109 )     (33 )     (27 )
    Net interest income after provision for (release of) credit losses     8,206       7,865     7,557       7,493       7,594  
    Noninterest income:                    
    Service charges and fee income     619       628     761       612       576  
    Earnings on bank-owned life insurance     127       186     134       177       222  
    Mortgage servicing income     277       280     279       282       288  
    Fair value adjustment on mortgage servicing rights     77       101     (116 )     (65 )     (96 )
    Net gain on sale of loans     53       40     74       90       76  
    Other income     7       —     30       —       —  
    Total noninterest income     1,160       1,235     1,162       1,096       1,066  
    Noninterest expense:                    
    Salaries and benefits     3,920       4,469     4,658       4,543       3,802  
    Operations     1,329       1,540     1,569       1,457       1,537  
    Regulatory assessments     189       189     220       189       198  
    Occupancy     409       414     397       444       458  
    Data processing     1,232       1,067     910       1,017       1,311  
    Net (gain) loss on OREO and repossessed assets     (21 )     —     (17 )     6       —  
    Total noninterest expense     7,058       7,679     7,737       7,656       7,306  
    Income before provision for income taxes     2,308       1,421     982       933       1,354  
    Provision for income taxes     389       267     187       163       143  
    Net income   $ 1,919     $ 1,154   $ 795     $ 770     $ 1,211  
    CONSOLIDATED INCOME STATEMENTS
    (Dollars in thousands, unaudited)
         
        For theYear Ended December 31
          2024       2023  
    Interest income   $ 57,374     $ 50,609  
    Interest expense     26,372       16,759  
    Net interest income     31,002       33,850  
    (Release of) provision for credit losses     (120 )     (273 )
    Net interest income after (release of) provision for credit losses     31,122       34,123  
    Noninterest income:        
    Service charges and fee income     2,620       2,527  
    Earnings on bank-owned life insurance     625       1,179  
    Mortgage servicing income     1,118       1,179  
    Fair value adjustment on mortgage servicing rights     (4 )     (219 )
    Net gain on sale of loans     258       340  
    Other income     38       —  
    Total noninterest income     4,655       5,006  
    Noninterest expense:        
    Salaries and benefits     17,590       17,135  
    Operations     5,894       6,095  
    Regulatory assessments     787       688  
    Occupancy     1,665       1,810  
    Data processing     4,226       4,388  
    Net (gain) loss on OREO and repossessed assets     (31 )     13  
    Total noninterest expense     30,131       30,129  
    Income before provision for income taxes     5,646       9,000  
    Provision for income taxes     1,006       1,561  
    Net income   $ 4,640     $ 7,439  
    CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands, unaudited)
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    ASSETS                    
    Cash and cash equivalents   $ 43,641     $ 148,930     $ 135,111     $ 137,977     $ 49,690  
    Available-for-sale securities, at fair value     7,790       8,032       7,996       8,115       8,287  
    Held-to-maturity securities, at amortized cost     2,130       2,139       2,147       2,157       2,166  
    Loans held-for-sale     487       65       257       351       603  
    Loans held-for-portfolio     900,171       901,733       889,274       897,877       894,478  
    Allowance for credit losses – loans     (8,499 )     (8,585 )     (8,493 )     (8,598 )     (8,760 )
    Total loans held-for-portfolio, net     891,672       893,148       880,781       889,279       885,718  
    Accrued interest receivable     3,471       3,705       3,413       3,617       3,452  
    Bank-owned life insurance, net     22,490       22,363       22,172       22,037       21,860  
    Other real estate owned (“OREO”) and other repossessed assets, net     —       115       115       690       575  
    Mortgage servicing rights, at fair value     4,769       4,665       4,540       4,612       4,632  
    Federal Home Loan Bank (“FHLB”) stock, at cost     1,730       2,405       2,406       2,406       2,396  
    Premises and equipment, net     4,697       4,807       4,906       6,685       5,240  
    Right-of-use assets     3,725       3,779       4,020       4,259       4,496  
    Other assets     7,031       6,777       6,995       4,500       6,106  
    TOTAL ASSETS   $ 993,633     $ 1,100,930     $ 1,074,859     $ 1,086,685     $ 995,221  
    LIABILITIES                    
    Interest-bearing deposits   $ 705,267     $ 800,480     $ 781,854     $ 788,217     $ 699,813  
    Noninterest-bearing deposits     132,532       129,717       124,915       128,666       126,726  
    Total deposits     837,799       930,197       906,769       916,883       826,539  
    Borrowings     25,000       40,000       40,000       40,000       40,000  
    Accrued interest payable     765       908       760       719       817  
    Lease liabilities     4,013       4,079       4,328       4,576       4,821  
    Other liabilities     9,371       9,711       9,105       9,578       9,563  
    Advance payments from borrowers for taxes and insurance     1,260       2,047       812       2,209       1,110  
    Subordinated notes, net     11,759       11,749       11,738       11,728       11,717  
    TOTAL LIABILITIES     889,967       998,691       973,512       985,693       894,567  
    STOCKHOLDERS’ EQUITY:                    
    Common stock     25       25       25       25       25  
    Additional paid-in capital     28,413       28,296       28,198       28,110       27,990  
    Retained earnings     76,272       74,840       74,173       73,907       73,627  
    Accumulated other comprehensive loss, net of tax     (1,044 )     (922 )     (1,049 )     (1,050 )     (988 )
    TOTAL STOCKHOLDERS’ EQUITY     103,666       102,239       101,347       100,992       100,654  
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 993,633     $ 1,100,930     $ 1,074,859     $ 1,086,685     $ 995,221  
    KEY FINANCIAL RATIOS
    (unaudited)
        For the Quarter Ended
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Annualized return on average assets   0.70 %   0.42 %   0.30 %   0.29 %   0.46 %
    Annualized return on average equity   7.40 %   4.50 %   3.17 %   3.06 %   4.78 %
    Annualized net interest margin(1)   3.13 %   2.98 %   2.92 %   2.95 %   3.04 %
    Annualized efficiency ratio(2)   75.25 %   84.31 %   89.86 %   89.48 %   84.63 %

    (1)   Net interest income divided by average interest earning assets.
    (2)   Noninterest expense divided by total revenue (net interest income and noninterest income).

    PER COMMON SHARE DATA
    (unaudited)
        At or For the Quarter Ended
        December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023
    Basic earnings per share   $ 0.75   $ 0.45   $ 0.31   $ 0.30   $ 0.47
    Diluted earnings per share   $ 0.74   $ 0.45   $ 0.31   $ 0.30   $ 0.47
    Weighted-average basic shares outstanding     2,547,210     2,544,233     2,540,538     2,539,213     2,542,175
    Weighted-average diluted shares outstanding     2,578,771     2,569,368     2,559,015     2,556,958     2,560,656
    Common shares outstanding at period-end     2,564,907     2,564,095     2,557,284     2,558,546     2,549,427
    Book value per share   $ 40.42   $ 39.87   $ 39.63   $ 39.47   $ 39.48

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

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

      Three Months Ended
      December 31, 2024   September 30, 2024   December 31, 2023
      Average Outstanding Balance   Interest Earned/
    Paid    		   Yield/
    Rate    		   Average Outstanding Balance   Interest Earned/
    Paid    		   Yield/
    Rate    		   Average Outstanding Balance   Interest Earned/
    Paid    		   Yield/
    Rate
    Interest-Earning Assets:                                  
    Loans receivable $ 900,832     $ 13,070   5.77 %   $ 898,570     $ 12,876   5.70 %   $ 884,677     $ 12,033   5.40 %
    Interest-earning cash   130,412       1,534   4.68 %     138,240       1,830   5.27 %     88,401       1,175   5.27 %
    Investments   13,263       132   3.96 %     13,806       132   3.80 %     14,479       129   3.53 %
    Total interest-earning assets $ 1,044,507       14,736   5.61 %     1,050,616     $ 14,838   5.62 %   $ 987,557       13,337   5.36 %
    Interest-Bearing Liabilities:                                  
    Savings and money market accounts $ 350,495       2,476   2.81 %   $ 340,281       2,688   3.14 %   $ 258,583       1,586   2.43 %
    Demand and NOW accounts   144,470       128   0.35 %     148,252       151   0.41 %     169,816       149   0.35 %
    Certificate accounts   301,293       3,413   4.51 %     303,632       3,524   4.62 %     300,042       3,436   4.54 %
    Subordinated notes   11,756       168   5.69 %     11,745       168   5.69 %     11,714       168   5.69 %
    Borrowings   30,546       331   4.31 %     40,000       434   4.32 %     40,109       431   4.26 %
    Total interest-bearing liabilities $ 838,560       6,516   3.09 %   $ 843,910       6,965   3.28 %   $ 780,264       5,770   2.93 %
    Net interest income/spread     $ 8,220   2.52 %       $ 7,873   2.34 %       $ 7,567   2.42 %
    Net interest margin         3.13 %           2.98 %           3.04 %
                                       
    Ratio of interest-earning assets to interest-bearing liabilities   125 %             124 %             127 %        
    Noninterest-bearing deposits $ 130,476             $ 132,762             $ 134,857          
    Total deposits   926,734     $ 6,017   2.58 %     924,927     $ 6,363   2.74 %     863,298     $ 5,171   2.38 %
    Total funding(1)   969,036       6,516   2.68 %     976,672       6,965   2.84 %     915,121       5,770   2.50 %

    (1)   Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

      Year Ended
      December 31, 2024   December 31, 2023
      Average
    Outstanding Balance    		   Interest Earned/Paid   Yield/Rate   Average
    Outstanding Balance    		   Interest Earned/Paid   Yield/Rate
    Interest-Earning Assets:                      
    Loans receivable $ 896,690     $ 50,499   5.63 %   $ 870,227     $ 46,470   5.34 %
    Interest-earning cash   124,259       6,367   5.12 %     74,708       3,621   4.85 %
    Investments   12,468       508   4.07 %     13,661       518   3.79 %
    Total interest-earning assets $ 1,033,417       57,374   5.55 %   $ 958,596       50,609   5.28 %
    Interest-Bearing Liabilities:                      
    Savings and money market accounts $ 319,314       9,145   2.86 %   $ 194,810       2,783   1.43 %
    Demand and NOW accounts   151,528       568   0.37 %     204,922       736   0.36 %
    Certificate accounts   309,441       14,363   4.64 %     280,238       10,617   3.79 %
    Subordinated notes   11,740       672   5.72 %     11,698       672   5.74 %
    Borrowings   37,623       1,624   4.32 %     43,977       1,951   4.44 %
    Total interest-bearing liabilities $ 829,646       26,372   3.18 %   $ 735,645       16,759   2.28 %
    Net interest income/spread     $ 31,002   2.37 %       $ 33,850   3.00 %
    Net interest margin         3.00 %           3.53 %
                           
    Ratio of interest-earning assets to interest-bearing liabilities   125 %             130 %        
    Noninterest-bearing deposits $ 131,141             $ 154,448          
    Total deposits   911,424     $ 24,076   2.64 %     834,418     $ 14,136   1.69 %
    Total funding(1)   960,787       26,372   2.74 %     890,093       16,759   1.88 %

    (1)   Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

    LOANS
    (Dollars in thousands, unaudited)
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Real estate loans:                    
    One-to-four family   $ 269,684     $ 271,702     $ 268,488     $ 279,213     $ 279,448  
    Home equity     26,686       25,199       26,185       24,380       23,073  
    Commercial and multifamily     371,516       358,587       342,632       324,483       315,280  
    Construction and land     73,077       85,724       96,962       111,726       126,758  
    Total real estate loans     740,963       741,212       734,267       739,802       744,559  
    Consumer Loans:                    
    Manufactured homes     41,128       40,371       38,953       37,583       36,193  
    Floating homes     86,411       86,155       81,622       84,237       75,108  
    Other consumer     17,720       18,266       18,422       18,847       19,612  
    Total consumer loans     145,259       144,792       138,997       140,667       130,913  
    Commercial business loans     15,605       17,481       17,860       19,075       20,688  
    Total loans     901,827       903,485       891,124       899,544       896,160  
    Less:                    
    Premiums     718       736       754       808       829  
    Deferred fees, net     (2,374 )     (2,488 )     (2,604 )     (2,475 )     (2,511 )
    Allowance for credit losses – loans     (8,499 )     (8,585 )     (8,493 )     (8,598 )     (8,760 )
    Total loans held-for-portfolio, net   $ 891,672     $ 893,148     $ 880,781     $ 889,279     $ 885,718  
    DEPOSITS
    (Dollars in thousands, unaudited)
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Noninterest-bearing demand   $ 132,532   $ 129,717   $ 124,915   $ 128,666   $ 126,726
    Interest-bearing demand     142,126     148,740     152,829     159,178     168,346
    Savings     61,252     61,455     63,368     65,723     69,461
    Money market(1)     206,067     285,655     253,873     241,976     154,044
    Certificates     295,822     304,630     311,784     321,340     307,962
    Total deposits   $ 837,799   $ 930,197   $ 906,769   $ 916,883   $ 826,539

    (1)   Includes $5.0 million of brokered deposits at December 31, 2023. 

    CREDIT QUALITY DATA
    (Dollars in thousands, unaudited)
        At or For the Quarter Ended
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
    Total nonperforming loans   $ 7,491     $ 8,489     $ 8,909     $ 9,053     $ 3,556  
    OREO and other repossessed assets     —       115       115       690       575  
    Total nonperforming assets   $ 7,491     $ 8,604     $ 9,024     $ 9,743     $ 4,131  
    Net charge-offs during the quarter   $ (13 )   $ (14 )   $ (17 )   $ (56 )   $ (15 )
    Provision for (release of) credit losses during the quarter     14       8       (109 )     (33 )     (27 )
    Allowance for credit losses – loans     8,499       8,585       8,493       8,598       8,760  
    Allowance for credit losses – loans to total loans     0.94 %     0.95 %     0.96 %     0.96 %     0.98 %
    Allowance for credit losses – loans to total nonperforming loans     113.46 %     101.13 %     95.33 %     94.97 %     246.34 %
    Nonperforming loans to total loans     0.83 %     0.94 %     1.00 %     1.01 %     0.40 %
    Nonperforming assets to total assets     0.75 %     0.78 %     0.84 %     0.90 %     0.42 %
    OTHER STATISTICS
    (Dollars in thousands, unaudited)
        At or For the Quarter Ended
        December 31,
    2024    		   September 30,
    2024    		   June 30,
    2024    		   March 31,
    2024    		   December 31,
    2023
                         
    Total loans to total deposits     107.64 %     97.13 %     98.27 %     98.11 %     108.42 %
    Noninterest-bearing deposits to total deposits     15.82 %     13.95 %     13.78 %     14.03 %     15.33 %
                         
    Average total assets for the quarter   $ 1,089,067     $ 1,095,404     $ 1,070,579     $ 1,062,036     $ 1,033,985  
    Average total equity for the quarter   $ 103,181     $ 102,059     $ 100,961     $ 101,292     $ 100,612  

    Contact

    Financial:    
    Wes Ochs      
    Executive Vice President/CFO    
    (206) 436-8587      
           
    Media:    
    Laurie Stewart      
    President/CEO    
    (206) 436-1495      
           

    The MIL Network –

  • MIL-OSI Security: Rochester Man Pleads Guilty for His Role in $250 Million Feeding Our Future Fraud Scheme

    Source: Office of United States Attorneys

    MINNEAPOLIS – A Rochester man pleaded guilty for his role in the $250 million fraud scheme that exploited a federally-funded child nutrition program during the COVID-19 pandemic, announced Acting U.S. Attorney Lisa D. Kirkpatrick.

    According to court documents, from approximately October 2020 through January 2022, Sharmake Jama, 37, knowingly participated in a scheme to defraud a federal child nutrition program designed to provide free meals to children in need. Rather than feed children, the defendants took advantage of the COVID-19 pandemic—and the resulting program changes—to enrich themselves by fraudulently misappropriating millions of dollars in federal child nutrition program funds.

    According to court documents, in September 2020, Jama and Aimee Bock applied for Jama’s Brava Restaurant to be enrolled in the Federal Child Nutrition Program under the sponsorship of Bock’s non-profit, Feeding Our Future. Jama enrolled in the Federal Child Nutrition Program after he first prepared application paperwork at the direction of Salim Said, the co-owner of Safari Restaurant in Minneapolis, which was another business involved in the scheme to defraud the food program.

    From late 2020 through 2021, Jama and other conspirators claimed Brava Restaurant was serving approximately 2,000 to 3,000 daily breakfasts and lunches to children, for which they fraudulently claimed and received millions of dollars in federal child nutrition program funds. To accomplish his scheme, Jama and his co-conspirators submitted fake attendance rosters purporting to list the names of children who purportedly received their food at sites. These rosters were fraudulent in that the names on them were fake or did not correctly reflect the number of children that were fed.

    According to his plea agreement entered today, Jama claimed Brava Restaurant had served more than 1.7 million meals in Rochester as part of the Federal Child Nutrition Program in a little over one year, a number substantially higher than the actual number of meals served. Based on these fraudulent claims, Feeding Our Future paid out over $5.3 million in federal child nutrition program reimbursements for meals purportedly served to children by the defendant and his co-conspirators. Jama knew his receipt of such funds was fraudulent because he and other conspirators intentionally submitted inflated meal counts. Jama’s Brava Restaurant ultimately received $4.3 million directly from Feeding Our Future and over $900,000 from Safari Restaurant, co-owned by Salim Said.

    As part of their scheme, Jama and his conspirators coordinated the establishment of shell companies through which they received and dispersed funds from the federal child nutrition program. Specifically, on January 7, 2021, Salim Said paid to register six different shell companies with the state of Minnesota for Jama and others. Salim Said paid to register Mumu LLC for Jama. In 2021, Jama deposited at least $872,230—almost all of which was misappropriated Federal Child Nutrition Program funds—into his Mumu LLC bank accounts.

    Jama used federal child nutrition funds to pay for personal expenditures unrelated to feeding children, including at least $88,000 for a 2021 GMC Sierra 3500 Denali 4WD Crew Cab truck and over $500,000 toward real estate in Rochester, Minnesota, and Rosemount, Minnesota.

    Jama pleaded guilty today in U.S. District Court before Chief Judge Patrick J. Schiltz to one count of wire fraud and one count of money laundering. His sentencing hearing will be scheduled at a later date.

    The case is the result of an investigation by the FBI, IRS – Criminal Investigations, and the U.S. Postal Inspection Service.

    Assistant U.S. Attorneys Matthew S. Ebert, Joseph H. Thompson, and Harry M. Jacobs are prosecuting the case. Assistant U.S. Attorney Craig Baune is handling the seizure and forfeiture of assets.

    MIL Security OSI –

  • MIL-OSI USA: Chair Ernst Delivers Opening Remarks at Kelly Loeffler Nomination Hearing

    US Senate News:

    Source: United States Senator Joni Ernst (R-IA)
    WASHINGTON – Today, at the Senate Committee on Small Business and Entrepreneurship hearing on the nomination of former Senator Kelly Loeffler to serve as the Small Business Administration (SBA) administrator, Chair Joni Ernst (R-Iowa) highlighted how Loeffler’s track record as a successful business leader provides the exact experience needed to reform the bloated agency and restore its mission.
    Among the biggest areas in need of reform, Ernst cited widespread fraud in COVD-era relief designated for small businesses, the SBA’s mismanaged loan and disaster aid programs, and rampant telework abuse.
    Click here watch Chair Ernst’s opening remarks.
    Ernst’s full remarks:
    “Senator Loeffler, as I already said, welcome to the Committee, and thank you for your willingness to serve in this role.
    “I greatly appreciate the time you’ve spent meeting with me and my colleagues prior to this hearing. I want to take a minute to recognize some of your family here supporting you today. First, your husband, Jeff. Thank you, Jeff for being here. Next, your brother Brian, and his family, who I understand traveled to Washington D.C. from their farm in Illinois. And also, your parents, Don and Lynda, who are watching the hearing from their home in Florida today. We appreciate you all making the trip here and tuning into this important hearing.
    “As a former member of this body, you understand the importance of the Senate’s advice and consent process, and I appreciate that you have fully embraced the committee’s standard, yet extensive, vetting of your experience and background in advance of today’s hearing and our upcoming vote on your confirmation. 
    “As a successful businesswoman, it is abundantly clear that you truly understand what it takes to be an entrepreneur.
    “Throughout your distinguished career, you’ve risen through the ranks at multiple companies due to your determination and grit, and you have started many successful businesses yourself.
    “Most importantly, you understand what it means to be overrun by Washington’s bureaucratic overreach—and that government must instead get out of businesses’ way so they can thrive.
    “Small businesses and their advocates are excited for your leadership. The Committee has received several letters of support for Senator Loeffler’s nomination.
    “The mission of the SBA is to aid small businesses to ensure economic prosperity and free competition.
    “Traditionally, SBA administers programs and services falling into three main buckets: there’s counseling, contracting, and access to capital.
    “While SBA once may have been characterized as a smaller agency, COVID small business programs made SBA a household name, as the agency received a whopping $1.1 trillion in taxpayer funding to assist small businesses during the pandemic.
    “With that funding came big responsibilities, and I remain concerned the SBA under the prior Administration failed to live up to its mission.
    “I believe substantial reforms must be made to get the SBA back in shape, and that is going to require strong leadership.
    “The Biden administration decided to turn a blind eye to COVID fraud and delinquencies, refusing to properly collect outstanding debt and fraudulent funds, which has huge implications to the taxpayer.
    “Reports have indicated SBA charged off about $18.6 billion worth of EIDL loans in Fiscal Year 2024.
    “Not once during the Biden administration was the SBA able to provide an accounting of their loans receivable and loan guarantees, which meant that the Government Accountability Office hasn’t been able to even issue a financial audit of the Agency since Fiscal Year 2020.
    “SBA also completely mismanaged and misinformed Congress last year regarding its disaster loan account, resulting in a shortfall lasting 66 days – an unacceptable failure for the disaster victims in North Carolina, South Carolina, Georgia, Virginia, and Florida.
    “I do appreciate that once the account was funded, SBA staff worked around the clock, including over the holidays, to get the money out to disaster victims, but I never want to see that situation unfold again.
    “While SBA is failing, it also appears that its workforce continues to stay home, while its more than 246,000 square foot Washington, D.C. headquarters sits empty.
    “The GAO found that even if everyone did show up to work in person, the SBA’s building space would still only be 67 percent utilized, which is a complete waste of taxpayer money.
    “That is why I introduced a bill to relocate 30 percent of the headquarters workforce to the SBA district offices across the country and cut 30 percent of office space.
    “The SBA has been completely out of touch with the real-world challenges of entrepreneurs, and while the Biden administration simultaneously let SBA employees stay home, they also added positions in Washington, D.C. while stripping offices in Iowa, New Hampshire, Utah, and other states.
    “I would like to work with you, Senator Loeffler, on ways to ensure SBA is effectively utilizing its personnel and ensuring that small businesses in all parts of America are able to access SBA programs if they need them.
    “I’ve detailed these concerns and others regarding the mess you have to clean up from the Biden administration, and potential landmines you will encounter, in a letter to President Trump on day one of his new Administration. I ask unanimous consent to enter that letter into the record.
    “Without objection, so ordered.
    “In Iowa, Main Street is in trouble, and I hear from my colleagues that this is true in their states across America.
    “Small businesses are the lifeblood of our rural communities, and for too long under the Biden administration, they’ve been crushed with red tape and woke program requirements, with no one caring about how that affects the day-to-day operations.
    “I see a great opportunity for the Trump administration, and you, to revitalize small businesses in America.
    “Thank you again for being here, and I look forward to your testimony.”

    MIL OSI USA News –

  • MIL-OSI: ACNB Corporation Announces First Quarter Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    GETTYSBURG, Pa., Jan. 29, 2025 (GLOBE NEWSWIRE) — ACNB Corporation (NASDAQ: ACNB), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., announced today that the Board of Directors approved and declared a regular quarterly cash dividend of $0.32 per share of ACNB Corporation common stock payable on March 14, 2025, to shareholders of record as of February 28, 2025. This per share amount reflects a 6.7% increase over the $0.30 per share paid in the first quarter of 2024. This dividend declaration is expected to result in aggregate dividend payments of approximately $3.38 million to ACNB Corporation shareholders in the first quarter of 2025, an increase of approximately 24% over the prior quarter, due to the additional shares expected to be issued to former Traditions Bancorp, Inc. shareholders upon the anticipated close of the acquisition on February 1, 2025.

    ACNB Corporation, headquartered in Gettysburg, PA, is the independent $2.4 billion financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and ACNB Insurance Services, Inc., Westminster, MD. Originally founded in 1857, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 27 community banking offices and two loan offices located in the Pennsylvania counties of Adams, Cumberland, Franklin, Lancaster and York and the Maryland counties of Baltimore, Carroll and Frederick. ACNB Insurance Services, Inc. is a full-service insurance agency with licenses in 46 states. The agency offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster and Jarrettsville, MD, and Gettysburg, PA. For more information regarding ACNB Corporation and its subsidiaries, please visit investor.acnb.com.

    FORWARD-LOOKING STATEMENTS – In addition to historical information, this press release may contain forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of Management or the Board of Directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as national, regional and local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. Such risks, uncertainties, and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: short-term and long-term effects of inflation and rising costs on the Corporation, customers and economy; effects of governmental and fiscal policies, as well as legislative and regulatory changes; effects of new laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which the Corporation and its subsidiaries must comply; impacts of the capital and liquidity requirements of the Basel III standards; effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; ineffectiveness of the business strategy due to changes in current or future market conditions; future actions or inactions of the United States government, including the effects of short-term and long-term federal budget and tax negotiations and a failure to increase the government debt limit or a prolonged shutdown of the federal government; effects of economic conditions particularly with regard to the negative impact of any pandemic, epidemic or health-related crisis and the responses thereto on the operations of the Corporation and current customers, specifically the effect of the economy on loan customers’ ability to repay loans; effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; inflation, securities market and monetary fluctuations; risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and interest rate protection agreements, as well as interest rate risks; difficulties in acquisitions and integrating and operating acquired business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; effects of technology changes; effects of general economic conditions and more specifically in the Corporation’s market areas; failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities; acts of war or terrorism or geopolitical instability; disruption of credit and equity markets; ability to manage current levels of impaired assets; loss of certain key officers; ability to maintain the value and image of the Corporation’s brand and protect the Corporation’s intellectual property rights; continued relationships with major customers; and, potential impacts to the Corporation from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses. We caution readers not to place undue reliance on these forward-looking statements. They only reflect Management’s analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the SEC, including the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Please also carefully review any Current Reports on Form 8-K filed by the Corporation with the SEC.

    ACNB #2025-3

    Contact: Kevin J. Hayes
    SVP/General Counsel,
    Secretary & Chief
    Governance Officer
    717.339.5161
    khayes@acnb.com

    The MIL Network –

  • MIL-OSI Economics: Microsoft Cloud and AI strength drives second quarter results

    Source: Microsoft

    Headline: Microsoft Cloud and AI strength drives second quarter results

    Microsoft Cloud and AI Strength Drives Second Quarter Results

    REDMOND, Wash. — January 29, 2025 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2024, as compared to the corresponding period of last fiscal year:

    ·        Revenue was $69.6 billion and increased 12%

    ·        Operating income was $31.7 billion and increased 17% (up 16% in constant currency)

    ·        Net income was $24.1 billion and increased 10%

    ·        Diluted earnings per share was $3.23 and increased 10%

    “We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.”

    “This quarter Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. ”We remain committed to balancing operational discipline with continued investments in our cloud and AI infrastructure.”

    Business Highlights

    Revenue in Productivity and Business Processes was $29.4 billion and increased 14% (up 13% in constant currency), with the following business highlights:

    ·        Microsoft 365 Commercial products and cloud services revenue increased 15% driven by Microsoft 365 Commercial cloud revenue growth of 16% (up 15% in constant currency)

    ·        Microsoft 365 Consumer products and cloud services revenue increased 8% driven by Microsoft 365 Consumer cloud revenue growth of 8%

    ·        LinkedIn revenue increased 9%

    ·        Dynamics products and cloud services revenue increased 15% (up 14% in constant currency) driven by Dynamics 365 revenue growth of 19% (up 18% in constant currency)

    Revenue in Intelligent Cloud was $25.5 billion and increased 19%, with the following business highlights:

    ·        Server products and cloud services revenue increased 21% driven by Azure and other cloud services revenue growth of 31%

    Revenue in More Personal Computing was $14.7 billion and was relatively unchanged, with the following business highlights:

    ·        Windows OEM and Devices revenue increased 4%

    ·        Xbox content and services revenue increased 2%

    ·        Search and news advertising revenue excluding traffic acquisition costs increased 21% (up 20% in constant currency)

    Microsoft returned $9.7 billion to shareholders in the form of dividends and share repurchases in the second quarter of fiscal year 2025.

    Business Outlook

    Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

    Quarterly Highlights, Product Releases, and Enhancements 

    Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

    Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

    Environmental, Social, and Governance (ESG)

    To learn more about Microsoft’s corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency. 

    Webcast Details

    Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on January 29, 2026.

    Constant Currency

    Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

    Financial Performance Constant Currency Reconciliation

     

    Three Months Ended December 31,

     ($ in millions, except per share amounts)

    Revenue

    Operating Income

    Net Income

    Diluted Earnings per Share

    2023 As Reported (GAAP)

    $62,020

    $27,032

    $21,870

    $2.93

    2024 As Reported (GAAP)

    $69,632

    $31,653

    $24,108

    $3.23

    Percentage Change Y/Y (GAAP)

    12%

    17%

    10%

    10%

    Constant Currency Impact

    $171

    $206

    $14

    $0.00

    Percentage Change Y/Y Constant Currency

    12%

    16%

    10%

    10%

     

    Segment Revenue Constant Currency Reconciliation

     

    Three Months Ended December 31,

     ($ in millions)

    Productivity and Business Processes

    Intelligent Cloud

    More Personal Computing

    2023 As Reported (GAAP)

    $25,854

    $21,525

    $14,641

    2024 As Reported (GAAP)

    $29,437

    $25,544

    $14,651

    Percentage Change Y/Y (GAAP)

    14%

    19%

    0%

    Constant Currency Impact

    $142

    $(22)

    $51

    Percentage Change Y/Y Constant Currency

    13%

    19%

    0%

    We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

    Selected Product and Service Revenue Constant Currency Reconciliation        

     

    Three Months Ended December 31, 2024

    Percentage Change Y/Y (GAAP)

    Constant Currency Impact

    Percentage Change Y/Y Constant Currency

    Microsoft Cloud

    21%

    0%

    21%

    Microsoft 365 Commercial products and cloud services

    15%

    0%

    15%

    Microsoft 365 Commercial cloud

    16%

    (1)%

    15%

    Microsoft 365 Consumer products and cloud services

    8%

    0%

    8%

    Microsoft 365 Consumer cloud

    8%

    0%

    8%

    LinkedIn

    9%

    0%

    9%

    Dynamics products and cloud services

    15%

    (1)%

    14%

    Dynamics 365

    19%

    (1)%

    18%

    Server products and cloud services

    21%

    0%

    21%

    Azure and other cloud services

    31%

    0%

    31%

    Windows OEM and Devices

    4%

    0%

    4%

    Xbox content and services

    2%

    0%

    2%

    Search and news advertising excluding traffic acquisition costs

    21%

    (1)%

    20%

     

    About Microsoft

    Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

    Forward-Looking Statements

    Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

    ·        intense competition in all of our markets that may adversely affect our results of operations;

    ·        focus on cloud-based and AI services presenting execution and competitive risks;

    ·        significant investments in products and services that may not achieve expected returns;

    ·        acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

    ·        impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

    ·        cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

    ·        disclosure and misuse of personal data that could cause liability and harm to our reputation;

    ·        the possibility that we may not be able to protect information stored in our products and services from use by others;

    ·        abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;

    ·        products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;

    ·        issues about the use of AI in our offerings that may result in reputational or competitive harm, or legal liability;

    ·        excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

    ·        supply or quality problems;

    ·        government enforcement under competition laws and new market regulation may limit how we design and market our products;

    ·        potential consequences of trade and anti-corruption laws;

    ·        potential consequences of existing and increasing legal and regulatory requirements;

    ·        laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

    ·        claims against us that may result in adverse outcomes in legal disputes;

    ·        uncertainties relating to our business with government customers;

    ·        additional tax liabilities;

    ·        sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk;

    ·        an inability to protect and utilize our intellectual property may harm our business and operating results;

    ·        claims that Microsoft has infringed the intellectual property rights of others;

    ·        damage to our reputation or our brands that may harm our business and results of operations;

    ·        adverse economic or market conditions that may harm our business;

    ·        catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;

    ·        exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; and

    ·        the dependence of our business on our ability to attract and retain talented employees.

    For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

    All information in this release is as of December 31, 2024. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

    For more information, press only:

    Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

    For more information, financial analysts and investors only:

    Brett Iversen, Vice President, Investor Relations, (425) 706-4400

    Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.


     

    MICROSOFT CORPORATION

    INCOME STATEMENTS

    (In millions, except per share amounts) (Unaudited)

    Three Months Ended

     December 31,

    Six Months Ended

     December 31,

     

    2024

     

    2023

     

    2024

     

    2023

    Revenue:

    Product

     $16,219

     $18,941

     $31,491

     $34,476

    Service and other

    53,413

     

    43,079

     

    103,726

     

    84,061

    Total revenue

    69,632

     

    62,020

     

    135,217

     

    118,537

    Cost of revenue:

    Product

    3,856

    5,964

    7,150

    9,495

    Service and other

    17,943

     

    13,659

     

    34,748

     

    26,430

    Total cost of revenue

    21,799

     

    19,623

     

    41,898

     

    35,925

    Gross margin

    47,833

    42,397

    93,319

    82,612

    Research and development

    7,917

    7,142

    15,461

    13,801

    Sales and marketing

    6,440

    6,246

    12,157

    11,433

    General and administrative

    1,823

    1,977

    3,496

    3,451

    Operating income

    31,653

     

    27,032

     

    62,205

     

    53,927

    Other expense, net

    (2,288)

     

    (506)

     

    (2,571)

     

    (117)

    Income before income taxes

    29,365

    26,526

    59,634

    53,810

    Provision for income taxes

    5,257

     

    4,656

     

    10,859

     

    9,649

    Net income

     $24,108

     

     $21,870

     

     $48,775

     

     $44,161

    Earnings per share:

    Basic

     $3.24

     $2.94

     $6.56

     $5.94

    Diluted

     $3.23

     $2.93

     $6.53

     $5.92

    Weighted average shares outstanding:

    Basic

    7,435

    7,432

    7,434

    7,431

    Diluted

    7,468

     

    7,468

     

    7,469

     

    7,465

     


     

    COMPREHENSIVE INCOME STATEMENTS

    (In millions) (Unaudited)

    Three Months Ended

     December 31,

    Six Months Ended

     December 31,

     

    2024

     

    2023

     

    2024

     

    2023

    Net income

     $24,108

     

     $21,870

     

     $48,775

     

     $44,161

    Other comprehensive income (loss), net of tax:

    Net change related to derivatives

    34

    (3)

    24

    18

    Net change related to investments

    (434)

    1,331

    680

    1,071

    Translation adjustments and other

    (1,034)

     

    660

     

    (730)

     

    305

    Other comprehensive income (loss)

    (1,434)

     

    1,988

     

    (26)

     

    1,394

    Comprehensive income

     $22,674

     

     $23,858

     

     $48,749

     

     $45,555

     


     

    BALANCE SHEETS

    (In millions) (Unaudited)

     

    December 31,

    2024

    June 30,

     2024

    Assets

    Current assets:

    Cash and cash equivalents

     $17,482

     $18,315

    Short-term investments

    54,073

    57,228

    Total cash, cash equivalents, and short-term investments

    71,555

    75,543

    Accounts receivable, net of allowance for doubtful accounts of $662 and $830

    48,188

    56,924

    Inventories

    909

    1,246

    Other current assets

    26,428

    26,021

    Total current assets

    147,080

    159,734

    Property and equipment, net of accumulated depreciation of $82,820 and $76,421

    166,902

    135,591

    Operating lease right-of-use assets

    22,816

    18,961

    Equity and other investments

    15,581

    14,600

    Goodwill

    119,191

    119,220

    Intangible assets, net

    25,385

    27,597

    Other long-term assets

    36,943

    36,460

    Total assets

     $533,898

     $512,163

    Liabilities and stockholders’ equity

    Current liabilities:

    Accounts payable

     $22,608

     $21,996

    Short-term debt

    0

    6,693

    Current portion of long-term debt

    5,248

    2,249

    Accrued compensation

    9,176

    12,564

    Short-term income taxes

    6,056

    5,017

    Short-term unearned revenue

    45,508

    57,582

    Other current liabilities

    20,286

    19,185

    Total current liabilities

    108,882

    125,286

    Long-term debt

    39,722

    42,688

    Long-term income taxes

    24,389

    27,931

    Long-term unearned revenue

    2,537

    2,602

    Deferred income taxes

    2,513

    2,618

    Operating lease liabilities

    17,254

    15,497

    Other long-term liabilities

    35,906

    27,064

    Total liabilities

    231,203

    243,686

    Commitments and contingencies

    Stockholders’ equity:

    Common stock and paid-in capital – shares authorized 24,000; outstanding 7,435 and 7,434

    104,829

    100,923

    Retained earnings

    203,482

    173,144

    Accumulated other comprehensive loss

    (5,616)

    (5,590)

    Total stockholders’ equity

    302,695

    268,477

    Total liabilities and stockholders’ equity

     $533,898

     $512,163

     


     

    CASH FLOWS STATEMENTS

    (In millions) (Unaudited)

    Three Months Ended

     December 31,

    Six Months Ended

     December 31,

     

    2024

     

    2023

     

    2024

     

    2023

    Operations

    Net income

     $24,108

     $21,870

     $48,775

     $44,161

    Adjustments to reconcile net income to net cash from operations:

    Depreciation, amortization, and other

    6,827

    5,959

    14,210

    9,880

    Stock-based compensation expense

    3,089

    2,828

    5,921

    5,335

    Net recognized losses on investments and derivatives

    976

    198

    851

    212

    Deferred income taxes

    (1,158)

    (1,702)

    (2,591)

    (2,270)

    Changes in operating assets and liabilities:

    Accounts receivable

    (5,978)

    (2,951)

    8,059

    8,083

    Inventories

    711

    1,474

    338

    969

    Other current assets

    (353)

    725

    (435)

    (71)

    Other long-term assets

    (1,089)

    (1,427)

    (2,850)

    (3,440)

    Accounts payable

    958

    (2,521)

    42

    (1,307)

    Unearned revenue

    (6,338)

    (5,538)

    (11,891)

    (9,664)

    Income taxes

    (3,395)

    (1,554)

    (2,379)

    (129)

    Other current liabilities

    3,217

    1,518

    (2,262)

    (2,588)

    Other long-term liabilities

    716

     

    (26)

     

    683

     

    265

    Net cash from operations

    22,291

     

    18,853

     

    56,471

     

    49,436

    Financing

    Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net

    0

    (8,490)

    (5,746)

    10,202

    Proceeds from issuance of debt

    0

    10,773

    0

    17,846

    Repayments of debt

    0

    (2,916)

    (966)

    (4,416)

    Common stock issued

    256

    261

    962

    946

    Common stock repurchased

    (4,986)

    (4,000)

    (9,093)

    (8,831)

    Common stock cash dividends paid

    (6,170)

    (5,574)

    (11,744)

    (10,625)

    Other, net

    (343)

     

    (201)

     

    (1,232)

     

    (508)

    Net cash from (used in) financing

    (11,243)

     

    (10,147)

     

    (27,819)

     

    4,614

    Investing

    Additions to property and equipment

    (15,804)

    (9,735)

    (30,727)

    (19,652)

    Acquisition of companies, net of cash acquired, and purchases of intangible and other assets

    (1,405)

    (65,029)

    (3,254)

    (66,215)

    Purchases of investments

    (2,050)

    (4,258)

    (3,670)

    (12,718)

    Maturities of investments

    2,604

    4,150

    4,740

    19,868

    Sales of investments

    2,559

    1,600

    4,527

    6,930

    Other, net

    (16)

    1,347

    (929)

    365

    Net cash used in investing

    (14,112)

     

    (71,925)

     

    (29,313)

     

    (71,422)

    Effect of foreign exchange rates on cash and cash equivalents

    (294)

     

    72

     

    (172)

     

    (27)

    Net change in cash and cash equivalents

    (3,358)

    (63,147)

    (833)

    (17,399)

    Cash and cash equivalents, beginning of period

    20,840

     

    80,452

     

    18,315

     

    34,704

    Cash and cash equivalents, end of period

     $17,482

     

     $17,305

     

     $17,482

     

     $17,305

     


     

    SEGMENT REVENUE AND OPERATING INCOME

    (In millions) (Unaudited)

     

    Three Months Ended

     December 31,

     

    Six Months Ended

     December 31,

     

     

     

    2024

     

    2023

     

    2024

     

    2023

    Revenue

     

     

     

     

     

     

     

    Productivity and Business Processes

     $29,437

     

     $25,854

     

     $57,754

     

     $51,080

    Intelligent Cloud

    25,544

     

    21,525

     

    49,636

     

    41,538

    More Personal Computing

    14,651

     

    14,641

     

    27,827

     

    25,919

    Total

     $69,632

     

     $62,020

     

     $135,217

     

     $118,537

    Operating Income

     

     

     

     

     

     

     

    Productivity and Business Processes

     $16,885

     

     $14,515

     

     $33,401

     

     $28,812

    Intelligent Cloud

    10,851

     

    9,555

     

    21,354

     

    18,463

    More Personal Computing

    3,917

     

    2,962

     

    7,450

     

    6,652

    Total

     $31,653

     

     $27,032

     

     $62,205

     

     $53,927

    We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

     

    MIL OSI Economics –

  • MIL-OSI Security: One Defendant Pleads Guilty And Two Others Charged With Fraudulently Obtaining $59 Million In Public Benefits And Laundering Proceeds To China

    Source: Office of United States Attorneys

    HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced that Bruce Jin, age 60, pleaded guilty before United States District Court Judge Jennifer P. Wilson to one count of conspiracy to commit wire fraud and one count of conspiracy to launder monetary instruments in the amount of approximately $59 million. The United States Attorney’s Office also announced that Jin was charged with those offenses in August 2023, along with Brian R. Cleland, age 71, and Carlos A. Grijalva, age 59. All three defendants are residents of the Los Angeles, California area. The indictment also contains additional wire fraud charges against Cleland and Jin individually.

    According to Acting United States Attorney John C. Gurganus, the indictment alleges that Cleland, Jin, and Grijalva, along with other unnamed coconspirators, conspired to obtain state unemployment compensation funds, and other public funds, through fraudulent means. The indictment alleges that the defendants and others entered into a series of agreements to make it appear as if they were operating legitimate businesses selling masks and other COVID19 personal protective equipment. In reality, the funds that the defendants obtained and laundered through their companies were derived from fraudulently obtained state unemployment compensation (“UC”) benefits. The indictment alleges that Economic Impact Payments, or “stimulus payments,” were also obtained through fraudulent means.

    According to the indictment, unnamed members of the conspiracy, including some believed to be located in China, established thousands of accounts at banks across the United States using the personal identifying information (“PII”) of identity theft victims. From there, fraudulent UC claims were generated and paid to these accounts, including accounts in the names of people residing in the Middle District of Pennsylvania. The indictment alleges that these fraudulent UC claims were also generated by fraudsters based in China. As a result of this fraudulent activity, millions of dollars in fraudulent UC payments were made by Pennsylvania, Virginia, Florida, and other states.

    After UC funds were paid out, they were then transferred from identity theft victims’ accounts to companies controlled by Cleland, Jin, and Grijalva. For instance, Jin, through companies that he controlled known as Ample International and Jin Commerce, allegedly received over $12 million in UC funds from the accounts of identity theft victims.  In addition, the defendants are alleged to have used ACH processing—a type of electronic bank-to-bank transfer—to obtain over $45 million in fraudulent funds from the accounts of identity theft victims. This money mostly went from the accounts of identity theft victims to companies controlled by Cleland and Grijalva, including MexUS Service, Group Mex USA, CCB Group, GC Accounting, and CLECO. After that, Cleland and Grijalva transferred over $30 million to Jin’s companies and over $6 million to a company controlled by an associate of Jin who is referred to in the indictment as COCONSPIRATOR 1. That associate’s company is known in the indictment as COMPANY 1.

    After Jin received the fraudulent funds, either from identity theft victims’ accounts or from Cleland and Grijalva through ACH processing, he then made international wire transfers totaling over $35 million to a bank account in China associated with a company known in the indictment as COMPANY 2. COMPANY 2 is controlled by an individual known in the indictment as COCONSPIRATOR 2, who, like COMPANY 2, is allegedly located in China. Jin also transferred over $2 million directly to COCONSPIRATOR 2.

    The indictment also contains forfeiture allegations seeking over $59 million in US currency, as well as the contents of three bank accounts belonging to COMPANY 1 and a property in Honolulu, Hawaii that was purchased by COCONSPIRATOR 1 using funds connected to the charged offenses.

    During his guilty plea, Bruce Jin admitted to the conduct that he is alleged to have engaged in with Cleland, Grijalva, and COCONSPIRATOR 2, as described above.

    Jin has been detained since his arrest in August 2023. Cleland and Grijalva have been released pending trial on conditions. Cleland and Grijalva have both pleaded not guilty to the charged offenses and are scheduled for trial in May 2025.

    “The Department of Justice is committed to identifying and punishing those who defrauded pandemic-era benefits programs, regardless of where they are located,” said Mandy Riedel, Director, COVID-19 Fraud Enforcement. “I commend the hard work of the prosecutors and investigators in the Middle District of Pennsylvania who doggedly pursued these organized overseas criminals to seek justice and the return of stolen tax payer funds.”

    “Bruce Jin and his co-defendants engaged in an unemployment insurance (UI) fraud scheme that targeted multiple state workforce agencies, including the Pennsylvania Department of Labor and Industry,” stated Syreeta Scott, Special Agent-in-Charge of the Mid-Atlantic Region, U.S. Department of Labor, Office of Inspector General. “Jin conspired to file fraudulent UI claims in the names of identity theft victims who were not entitled to such benefits. We will continue to work with our law enforcement partners to protect the integrity of the UI system from those who seek to exploit this critical benefit program.”

    “The millions of dollars fraudulently obtained in this case were meant to support struggling Americans, not to be funneled overseas,” said Wayne A. Jacobs, Special Agent in Charge of FBI Philadelphia. “The FBI is grateful for the ongoing collaboration of our partners as we work to hold accountable those who commit such egregious and complex financial crimes.”

    The case was investigated by the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General. Assistant U.S. Attorney Ravi Romel Sharma is prosecuting the case. 

    The U.S. Attorney General has established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

    The maximum penalty under federal law for wire fraud and conspiracy to commit wire fraud is 20 years of imprisonment, a term of supervised release following imprisonment, and a fine. The maximum penalty for conspiracy to commit money laundering is also 20 years of imprisonment, a term of supervised release following imprisonment, and a fine.

    A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

    Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

    # # #

    MIL Security OSI –

  • MIL-OSI: Brookline Bancorp Announces Fourth Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    Net Income of $17.5 million, EPS of $0.20

    Operating Earnings of $20.7 million, Operating EPS of $0.23

    Quarterly Dividend of $0.135

    BOSTON, Jan. 29, 2025 (GLOBE NEWSWIRE) — Brookline Bancorp, Inc. (NASDAQ: BRKL) (the “Company”) today announced net income of $17.5 million, or $0.20 per basic and diluted share, and excluding $3.4 million of merger-related charges, operating earnings after tax (non-GAAP) of $20.7 million, or $0.23 per basic and diluted share for the fourth quarter of 2024, compared to net income and operating earnings after tax (non-GAAP) of $20.1 million, or $0.23 per basic and diluted share, for the third quarter of 2024, and $22.9 million, or $0.26 per basic and diluted share, for the fourth quarter of 2023.

    For the year ended December 31, 2024, the Company reported net income of $68.7 million, or $0.77 per basic and diluted share, compared to $75.0 million, or $0.85 per basic and diluted share, for the year ended December 31, 2023. For the year ended December 31, 2024, the Company reported operating earnings after tax (non-GAAP) of $72.4 million, or $0.81 per basic and diluted share, compared to $92.9 million, or $1.05 per basic and diluted share, for the year ended December 31, 2023.

    Paul Perrault, Chairman and Chief Executive Officer, commented on the Company’s performance, “Brookline Bancorp had an excellent year in 2024. We finished the year with solid deposit and loan growth and are well positioned as we look forward to 2025. We are looking forward to 2025 and our recently announced strategic merger with Berkshire Hills Bancorp. I would like to recognize the contributions of our employees in contributing to our growth and success in 2024. Our employees exemplify the Brookline Bancorp culture of providing excellent customer service.”

    BALANCE SHEET

    Total assets at December 31, 2024 increased $228.6 million to $11.9 billion from $11.7 billion at September 30, 2024, and increased $523.1 million from $11.4 billion at December 31, 2023. At December 31, 2024, total loans and leases were $9.8 billion, representing an increase of $24.1 million from September 30, 2024, and an increase of $137.7 million from December 31, 2023.

    Total investment securities at December 31, 2024 increased $39.6 million to $895.0 million from $855.4 million at September 30, 2024, and decreased $21.6 million from $916.6 million at December 31, 2023. Total cash and cash equivalents at December 31, 2024 increased $135.8 million to $543.7 million from $407.9 million at September 30, 2024, and increased $410.6 million from $133.0 million at December 31, 2023. As of December 31, 2024, total investment securities and total cash and cash equivalents represented 12.1 percent of total assets, compared to 10.8 percent and 9.2 percent as of September 30, 2024 and December 31, 2023, respectively.

    Total deposits at December 31, 2024 increased $169.4 million to $8.9 billion from $8.7 billion at September 30, 2024, consisting of a $115.9 million increase in customer deposits and a $53.4 million increase in brokered deposits. Total deposits increased $353.5 million from $8.5 billion at December 31, 2023, primarily driven by growth in customer deposits.

    Total borrowed funds at December 31, 2024 increased $22.3 million to $1.5 billion from September 30, 2024, and increased $143.2 million from $1.4 billion at December 31, 2023.

    The ratio of stockholders’ equity to total assets was 10.26 percent at December 31, 2024, as compared to 10.54 percent at September 30, 2024, and 10.53 percent at December 31, 2023. The ratio of tangible stockholders’ equity to tangible assets (non-GAAP) was 8.27 percent at December 31, 2024, as compared to 8.50 percent at September 30, 2024, and 8.39 percent at December 31, 2023. Tangible book value per common share (non-GAAP) decreased $0.08 from $10.89 at September 30, 2024 to $10.81 at December 31, 2024, and increased $0.31 from $10.50 at December 31, 2023.

    NET INTEREST INCOME

    Net interest income increased $2.0 million to $85.0 million during the fourth quarter of 2024 from $83.0 million for the quarter ended September 30, 2024. The net interest margin increased 5 basis points to 3.12 percent for the three months ended December 31, 2024 from 3.07 percent for the three months ended September 30, 2024, primarily driven by lower funding costs partially offset by lower yields on loans and leases.

    NON-INTEREST INCOME

    Total non-interest income for the quarter ended December 31, 2024 increased $0.2 million to $6.6 million from $6.3 million for the quarter ended September 30, 2024. The increase was primarily driven by an increase of $1.1 million in loan level derivative income, net, partially offset by a decline of $0.8 million in mark to market on interest rate swaps.

    PROVISION FOR CREDIT LOSSES

    The Company recorded a provision for credit losses of $4.1 million for the quarter ended December 31, 2024, compared to $4.8 million for the quarter ended September 30, 2024. The decrease in the provision was largely driven by improving economic forecasts and stabilization in the volume of adversely graded credits.

    Total net charge-offs for the fourth quarter of 2024 were $7.3 million, compared to $3.8 million in the third quarter of 2024. The $7.3 million in net charge-offs was driven by one large $5.1 million charge-off in equipment financing which was previously reserved for. The ratio of net loan and lease charge-offs to average loans and leases on an annualized basis increased to 30 basis points for the fourth quarter of 2024 from 16 basis points for the third quarter of 2024.

    The allowance for loan and lease losses represented 1.28 percent of total loans and leases at December 31, 2024, compared to 1.31 percent at September 30, 2024, and 1.22 percent at December 31, 2023. The decrease in the ratio was driven by a reduction in specific reserves due to charge-offs in the quarter.

    ASSET QUALITY

    The ratio of total nonperforming loans and leases to total loans and leases was 0.71 percent at December 31, 2024 as compared to 0.73 percent at September 30, 2024. Total nonaccrual loans and leases decreased $1.9 million to $69.3 million at December 31, 2024 from $71.2 million at September 30, 2024. The ratio of nonperforming assets to total assets was 0.59 percent at December 31, 2024 as compared to 0.62 percent at September 30, 2024. Total nonperforming assets decreased $2.4 million to $70.5 million at December 31, 2024 from $72.8 million at September 30, 2024.

    NON-INTEREST EXPENSE

    Non-interest expense for the quarter ended December 31, 2024 increased $5.8 million to $63.7 million from $57.9 million for the quarter ended September 30, 2024. The increase was primarily driven by an increase of $3.4 million in merger and acquisition expense, and an increase of $2.1 million in compensation and employee benefits expense.

    PROVISION FOR INCOME TAXES

    The effective tax rate was 26.4 percent and 25.1 percent for the three and twelve months ended December 31, 2024 compared to 24.7 percent for the three months ended September 30, 2024 and 19.9 percent and 20.1 percent for the three and twelve months ended December 31, 2023.

    RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

    The annualized return on average assets decreased to 0.61 percent during the fourth quarter of 2024 compared to 0.70 percent for the third quarter of 2024; and was 0.60 percent for the year ended December 31, 2024, compared to 0.67 percent for the year ended December 31, 2023.

    The annualized return on average tangible stockholders’ equity (non-GAAP) decreased to 7.21 percent during the fourth quarter of 2024 compared to 8.44 percent for the third quarter of 2024; and was 7.24 percent for the year ended December 31, 2024 compared to 8.36 percent for the year ended December 31, 2023.

    DIVIDEND DECLARED

    The Company’s Board of Directors approved a dividend of $0.135 per share for the quarter ended December 31, 2024. The dividend will be paid on February 28, 2025 to stockholders of record on February 14, 2025.

    PROPOSED TRANSACTION WITH BERKSHIRE HILLS BANCORP, INC.

    On December 16, 2024, the Company, Berkshire Hills Bancorp, Inc. (“Berkshire”), and Commerce Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Berkshire formed solely to facilitate the merger (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Brookline, with Brookline as the surviving entity, and immediately thereafter, Brookline will merge with and into Berkshire, with Berkshire as the surviving entity (collectively, the “Merger”). As a result of the Merger, the separate corporate existence of the Company will cease, and Berkshire will continue as the surviving corporation. Under the terms of the Merger Agreement, which was unanimously approved by the Boards of Directors of both companies, each outstanding share of Company common stock will be exchanged for the right to receive 0.42 shares of Berkshire common stock. Holders of Company common stock will receive cash in lieu of fractional shares of Berkshire common stock. As a result of the proposed transaction and a $100 million common stock offering by Berkshire to support the proposed transaction, Berkshire stockholders will own approximately 51%, Brookline stockholders will own approximately 45%, and investors in new shares will own approximately 4% of the outstanding shares of the combined company. The proposed transaction is expected to close by the end of the second half of 2025, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approvals from Berkshire and the Company stockholders.

    CONFERENCE CALL

    The Company will conduct a conference call/webcast at 1:30 PM Eastern Time on Thursday, January 30, 2025 to discuss the results for the quarter, business highlights and outlook. A copy of the Earnings Presentation is available on the Company’s website, www.brooklinebancorp.com. To listen to the call and view the Company’s Earnings Presentation, please join the call via https://events.q4inc.com/attendee/129324302. To listen to the call without access to the slides, please dial 833-470-1428 (United States) or 404-975-4839 (internationally) and ask for the Brookline Bancorp, Inc. call (Access Code 138268). A recording of the call will be available for one week following the call on the Company’s website under “Investor Relations” or by dialing 866-813-9403 (United States) or 929-458-6194 (internationally) and entering the passcode: 646121.

    ABOUT BROOKLINE BANCORP, INC.

    Brookline Bancorp, Inc., a bank holding company with approximately $11.9 billion in assets and branch locations in eastern Massachusetts, Rhode Island and the Lower Hudson Valley of New York State, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank. The Company provides commercial and retail banking services and cash management and investment services to customers throughout Central New England and the Lower Hudson Valley of New York State. More information about Brookline Bancorp, Inc. and its banks can be found at the following websites: www.brooklinebank.com, www.bankri.com and www.pcsb.com.

    FORWARD-LOOKING STATEMENTS

    Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (“SEC”), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters, including statements regarding the Company’s business, credit quality, financial condition, liquidity and results of operations. Forward-looking statements may differ, possibly materially, from what is included in this press release due to factors and future developments that are uncertain and beyond the scope of the Company’s control. These include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the right of the Company or Berkshire to terminate the merger agreement; the outcome of any legal proceedings that may be instituted against Berkshire or Company; delays in completing the proposed transaction with Berkshire; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction) or stockholder approvals, or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all, including the ability of Berkshire and the Company to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the impact of certain restrictions during the pendency of the proposed transaction on the parties’ ability to pursue certain business opportunities and strategic transactions; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; changes in interest rates; general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; turbulence in the capital and debt markets; competitive pressures from other financial institutions; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, and future pandemics; changes in regulation; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; and changes in assumptions used in making such forward-looking statements. Forward-looking statements involve risks and uncertainties which are difficult to predict. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the risks outlined in the Company’s Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and other filings submitted to the SEC. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

    BASIS OF PRESENTATION

    The Company’s consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) as set forth by the Financial Accounting Standards Board in its Accounting Standards Codification and through the rules and interpretive releases of the SEC under the authority of federal securities laws. Certain amounts previously reported have been reclassified to conform to the current period’s presentation.

    NON-GAAP FINANCIAL MEASURES

    The Company uses certain non-GAAP financial measures, such as operating earnings after tax, operating earnings per common share, operating return on average assets, operating return on average tangible assets, operating return on average stockholders’ equity, operating return on average tangible stockholders’ equity, tangible book value per common share, tangible stockholders’ equity to tangible assets, return on average tangible assets (annualized) and return on average tangible stockholders’ equity (annualized). These non-GAAP financial measures provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial services sector. A detailed reconciliation table of the Company’s GAAP to the non-GAAP measures is attached.

    INVESTOR RELATIONS:

    Contact: Carl M. Carlson
    Brookline Bancorp, Inc.
    Co-President and Chief Financial and Strategy Officer
    (617) 425-5331
    carl.carlson@brkl.com
     
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Selected Financial Highlights (Unaudited)
     
      At and for the Three Months Ended At and for the Twelve
    Months Ended
      December 31,
    2024    		 September 30,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023    		 December 31,
    2024    		 December 31,
    2023
      (Dollars In Thousands Except per Share Data)
    Earnings Data:              
    Net interest income $ 84,988   $ 83,008   $ 80,001   $ 81,588   $ 83,555   $ 329,585   $ 339,711  
    Provision for credit losses on loans   4,141     4,832     5,607     7,423     3,851     22,003     37,868  
    Provision (credit) for credit losses on investments   (104 )   (172 )   (39 )   (44 )   (76 )   (359 )   339  
    Non-interest income   6,587     6,348     6,396     6,284     8,027     25,615     31,934  
    Non-interest expense   63,719     57,948     59,184     61,014     59,244     241,865     239,524  
    Income before provision for income taxes   23,819     26,748     21,645     19,479     28,563     91,691     93,914  
    Net income   17,536     20,142     16,372     14,665     22,888     68,715     74,999  
                   
    Performance Ratios:              
    Net interest margin (1)   3.12 %   3.07 %   3.00 %   3.06 %   3.15 %   3.06 %   3.24 %
    Interest-rate spread (1)   2.35 %   2.26 %   2.14 %   2.21 %   2.39 %   2.24 %   2.50 %
    Return on average assets (annualized)   0.61 %   0.70 %   0.57 %   0.51 %   0.81 %   0.60 %   0.67 %
    Return on average tangible assets (annualized) (non-GAAP)   0.62 %   0.72 %   0.59 %   0.53 %   0.83 %   0.61 %   0.69 %
    Return on average stockholders’ equity (annualized)   5.69 %   6.63 %   5.49 %   4.88 %   7.82 %   5.67 %   6.42 %
    Return on average tangible stockholders’ equity (annualized) (non-GAAP)   7.21 %   8.44 %   7.04 %   6.26 %   10.12 %   7.24 %   8.36 %
    Efficiency ratio (2)   69.58 %   64.85 %   68.50 %   69.44 %   64.69 %   68.09 %   64.45 %
                   
    Per Common Share Data:              
    Net income — Basic $ 0.20   $ 0.23   $ 0.18   $ 0.16   $ 0.26   $ 0.77   $ 0.85  
    Net income — Diluted   0.20     0.23     0.18     0.16     0.26     0.77     0.85  
    Cash dividends declared   0.135     0.135     0.135     0.135     0.135     0.540     0.540  
    Book value per share (end of period)   13.71     13.81     13.48     13.43     13.48     13.71     13.48  
    Tangible book value per common share (end of period) (non-GAAP)   10.81     10.89     10.53     10.47     10.50     10.81     10.50  
    Stock price (end of period)   11.80     10.09     8.35     9.96     10.91     11.80     10.91  
                   
    Balance Sheet:              
    Total assets $ 11,905,326   $ 11,676,721   $ 11,635,292   $ 11,542,731   $ 11,382,256   $ 11,905,326   $ 11,382,256  
    Total loans and leases   9,779,288     9,755,236     9,721,137     9,655,086     9,641,589     9,779,288     9,641,589  
    Total deposits   8,901,644     8,732,271     8,737,036     8,718,653     8,548,125     8,901,644     8,548,125  
    Total stockholders’ equity   1,221,939     1,230,362     1,198,480     1,194,231     1,198,644     1,221,939     1,198,644  
                   
    Asset Quality:              
    Nonperforming assets $ 70,452   $ 72,821   $ 62,683   $ 42,489   $ 45,324   $ 70,452   $ 45,324  
    Nonperforming assets as a percentage of total assets   0.59 %   0.62 %   0.54 %   0.37 %   0.40 %   0.59 %   0.40 %
    Allowance for loan and lease losses $ 125,083   $ 127,316   $ 121,750   $ 120,124   $ 117,522   $ 125,083   $ 117,522  
    Allowance for loan and lease losses as a percentage of total loans and leases   1.28 %   1.31 %   1.25 %   1.24 %   1.22 %   1.28 %   1.22 %
    Net loan and lease charge-offs $ 7,252   $ 3,808   $ 8,387   $ 8,781   $ 7,141   $ 28,228   $ 19,663  
    Net loan and lease charge-offs as a percentage of average loans and leases (annualized)   0.30 %   0.16 %   0.35 %   0.36 %   0.30 %   0.29 %   0.21 %
                   
    Capital Ratios:              
    Stockholders’ equity to total assets   10.26 %   10.54 %   10.30 %   10.35 %   10.53 %   10.26 %   10.53 %
    Tangible stockholders’ equity to tangible assets (non-GAAP)   8.27 %   8.50 %   8.23 %   8.25 %   8.39 %   8.27 %   8.39 %
                   
    (1) Calculated on a fully tax-equivalent basis.
    (2) Calculated as non-interest expense as a percentage of net interest income plus non-interest income.
                   
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets (Unaudited)
     
      December 31,
    2024    		 September 30,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023
    ASSETS (In Thousands Except Share Data)
    Cash and due from banks $ 64,673   $ 82,168   $ 60,067   $ 45,708   $ 34,514  
    Short-term investments   478,997     325,721     283,017     256,178     98,513  
    Total cash and cash equivalents   543,670     407,889     343,084     301,886     133,027  
    Investment securities available-for-sale   895,034     855,391     856,439     865,798     916,601  
    Total investment securities   895,034     855,391     856,439     865,798     916,601  
    Allowance for investment security losses   (82 )   (186 )   (359 )   (398 )   (441 )
    Net investment securities   894,952     855,205     856,080     865,400     916,160  
    Loans and leases held-for-sale   —     —     —     6,717     —  
    Loans and leases:          
    Commercial real estate loans   5,716,114     5,779,290     5,782,111     5,755,239     5,764,529  
    Commercial loans and leases   2,506,664     2,453,038     2,443,530     2,416,904     2,399,668  
    Consumer loans   1,556,510     1,522,908     1,495,496     1,482,943     1,477,392  
    Total loans and leases   9,779,288     9,755,236     9,721,137     9,655,086     9,641,589  
    Allowance for loan and lease losses   (125,083 )   (127,316 )   (121,750 )   (120,124 )   (117,522 )
    Net loans and leases   9,654,205     9,627,920     9,599,387     9,534,962     9,524,067  
    Restricted equity securities   83,155     82,675     78,963     74,709     77,595  
    Premises and equipment, net of accumulated depreciation   86,781     86,925     88,378     89,707     89,853  
    Right-of-use asset operating leases   43,527     41,934     35,691     33,133     30,863  
    Deferred tax asset   56,620     50,827     60,032     60,484     56,952  
    Goodwill   241,222     241,222     241,222     241,222     241,222  
    Identified intangible assets, net of accumulated amortization   17,461     19,162     20,830     22,499     24,207  
    Other real estate owned and repossessed assets   1,103     1,579     1,974     1,817     1,694  
    Other assets   282,630     261,383     309,651     310,195     286,616  
    Total assets $ 11,905,326   $ 11,676,721   $ 11,635,292   $ 11,542,731   $ 11,382,256  
    LIABILITIES AND STOCKHOLDERS’ EQUITY          
    Deposits:          
    Demand checking accounts $ 1,692,394   $ 1,681,858   $ 1,638,378   $ 1,629,371   $ 1,678,406  
    NOW accounts   617,246     637,374     647,370     654,748     661,863  
    Savings accounts   1,721,247     1,736,989     1,735,857     1,727,893     1,669,018  
    Money market accounts   2,116,360     2,041,185     2,073,557     2,065,569     2,082,810  
    Certificate of deposit accounts   1,885,444     1,819,353     1,718,414     1,670,147     1,574,855  
    Brokered deposit accounts   868,953     815,512     923,460     970,925     881,173  
    Total deposits   8,901,644     8,732,271     8,737,036     8,718,653     8,548,125  
    Borrowed funds:          
    Advances from the FHLB   1,355,926     1,345,003     1,265,079     1,150,153     1,223,226  
    Subordinated debentures and notes   84,328     84,293     84,258     84,223     84,188  
    Other borrowed funds   79,592     68,251     80,125     127,505     69,256  
    Total borrowed funds   1,519,846     1,497,547     1,429,462     1,361,881     1,376,670  
    Operating lease liabilities   44,785     43,266     37,102     34,235     31,998  
    Mortgagors’ escrow accounts   15,875     14,456     17,117     16,245     17,239  
    Reserve for unfunded credits   5,981     6,859     11,400     15,807     19,767  
    Accrued expenses and other liabilities   195,256     151,960     204,695     201,679     189,813  
    Total liabilities   10,683,387     10,446,359     10,436,812     10,348,500     10,183,612  
    Stockholders’ equity:          
    Common stock, $0.01 par value; 200,000,000 shares authorized; 96,998,075 shares issued, 96,998,075 shares issued, 96,998,075 shares issued, 96,998,075 shares issued, and 96,998,075 shares issued, respectively   970     970     970     970     970  
    Additional paid-in capital   902,584     901,562     904,775     903,726     902,659  
    Retained earnings   458,943     453,555     445,560     441,285     438,722  
    Accumulated other comprehensive income   (52,882 )   (38,081 )   (61,693 )   (60,841 )   (52,798 )
    Treasury stock, at cost;          
    7,019,384 shares, 7,015,843 shares, 7,373,009 shares, 7,354,399 shares, and 7,354,399 shares, respectively   (87,676 )   (87,644 )   (91,132 )   (90,909 )   (90,909 )
    Total stockholders’ equity   1,221,939     1,230,362     1,198,480     1,194,231     1,198,644  
    Total liabilities and stockholders’ equity $ 11,905,326   $ 11,676,721   $ 11,635,292   $ 11,542,731   $ 11,382,256  
               
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (Unaudited)
     
      Three Months Ended
      December 31,
    2024    		 September 30,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023
      (In Thousands Except Share Data)
    Interest and dividend income:          
    Loans and leases $ 147,436   $ 149,643   $ 145,585   $ 145,265   $ 142,948  
    Debt securities   6,421     6,473     6,480     6,878     6,945  
    Restricted equity securities   1,460     1,458     1,376     1,492     1,333  
    Short-term investments   2,830     1,986     1,914     1,824     1,093  
    Total interest and dividend income   158,147     159,560     155,355     155,459     152,319  
    Interest expense:          
    Deposits   56,562     59,796     59,721     56,884     54,034  
    Borrowed funds   16,597     16,756     15,633     16,987     14,730  
    Total interest expense   73,159     76,552     75,354     73,871     68,764  
    Net interest income   84,988     83,008     80,001     81,588     83,555  
    Provision for credit losses on loans   4,141     4,832     5,607     7,423     3,851  
    Credit for credit losses on investments   (104 )   (172 )   (39 )   (44 )   (76 )
    Net interest income after provision for credit losses   80,951     78,348     74,433     74,209     79,780  
    Non-interest income:          
    Deposit fees   2,297     2,353     3,001     2,897     3,064  
    Loan fees   439     464     702     789     515  
    Loan level derivative income, net   1,115     —     106     437     778  
    Gain on sales of loans and leases   406     415     130     —     410  
    Other   2,330     3,116     2,457     2,161     3,260  
    Total non-interest income   6,587     6,348     6,396     6,284     8,027  
    Non-interest expense:          
    Compensation and employee benefits   37,202     35,130     34,762     36,629     35,401  
    Occupancy   5,393     5,343     5,551     5,769     5,127  
    Equipment and data processing   6,780     6,831     6,732     7,031     7,245  
    Professional services   1,345     2,143     1,745     1,900     1,442  
    FDIC insurance   2,017     2,118     2,025     1,884     1,839  
    Advertising and marketing   1,303     859     1,504     1,574     758  
    Amortization of identified intangible assets   1,701     1,668     1,669     1,708     1,965  
    Merger and restructuring expense   3,378     —     823     —     —  
    Other   4,600     3,856     4,373     4,519     5,467  
    Total non-interest expense   63,719     57,948     59,184     61,014     59,244  
    Income before provision for income taxes   23,819     26,748     21,645     19,479     28,563  
    Provision for income taxes   6,283     6,606     5,273     4,814     5,675  
    Net income $ 17,536   $ 20,142   $ 16,372   $ 14,665   $ 22,888  
    Earnings per common share:          
    Basic $ 0.20   $ 0.23   $ 0.18   $ 0.16   $ 0.26  
    Diluted $ 0.20   $ 0.23   $ 0.18   $ 0.16   $ 0.26  
    Weighted average common shares outstanding during the period:        
    Basic   89,098,443     89,033,463     88,904,692     88,894,577     88,867,159  
    Diluted   89,483,964     89,319,611     89,222,315     89,181,508     89,035,505  
    Dividends paid per common share $ 0.135   $ 0.135   $ 0.135   $ 0.135   $ 0.135  
               
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (Unaudited)
       
      Twelve Months Ended December 31,
      2024 2023
      (In Thousands Except Share Data)
    Interest and dividend income:    
    Loans and leases $ 587,929   $ 533,739
    Debt securities   26,252     29,648
    Restricted equity securities   5,786     5,571
    Short-term investments   8,554     8,329
    Total interest and dividend income   628,521     577,287
    Interest expense:    
    Deposits   232,963     175,665
    Borrowed funds   65,973     61,911
    Total interest expense   298,936     237,576
    Net interest income   329,585     339,711
    Provision for credit losses on loans   22,003     37,868
    (Credit) provision for credit losses on investments   (359 )   339
    Net interest income after provision for credit losses   307,941     301,504
    Non-interest income:    
    Deposit fees   10,548     11,611
    Loan fees   2,394     2,036
    Loan level derivative income, net   1,658     3,890
    Gain on investment securities, net   —     1,704
    Gain on sales of loans and leases   951     2,581
    Other   10,064     10,112
    Total non-interest income   25,615     31,934
    Non-interest expense:    
    Compensation and employee benefits   143,723     138,895
    Occupancy   22,056     20,203
    Equipment and data processing   27,374     27,004
    Professional services   7,133     7,226
    FDIC insurance   8,044     7,844
    Advertising and marketing   5,240     4,724
    Amortization of identified intangible assets   6,746     7,840
    Merger and restructuring expense   4,201     7,411
    Other   17,348     18,377
    Total non-interest expense   241,865     239,524
    Income before provision for income taxes   91,691     93,914
    Provision for income taxes   22,976     18,915
    Net income $ 68,715   $ 74,999
    Earnings per common share:    
    Basic $ 0.77   $ 0.85
    Diluted $ 0.77   $ 0.85
    Weighted average common shares outstanding during the period:  
    Basic   88,983,248     88,230,681
    Diluted   89,302,304     88,450,646
    Dividends paid per common share $ 0.540   $ 0.540
         
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Asset Quality Analysis (Unaudited)
     
      At and for the Three Months Ended
      December 31,
    2024    		 September 30,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023
      (Dollars in Thousands)
    NONPERFORMING ASSETS:          
    Loans and leases accounted for on a nonaccrual basis:          
    Commercial real estate mortgage $ 11,525   $ 11,595   $ 11,659   $ 18,394   $ 19,608  
    Multi-family mortgage   6,596     1,751     —     —     —  
    Construction   —     —     —     —     —  
    Total commercial real estate loans   18,121     13,346     11,659     18,394     19,608  
               
    Commercial   14,676     15,734     16,636     3,096     3,886  
    Equipment financing   31,509     37,223     27,128     13,668     14,984  
    Total commercial loans and leases   46,185     52,957     43,764     16,764     18,870  
               
    Residential mortgage   3,999     3,862     4,495     4,563     4,292  
    Home equity   1,043     1,076     790     950     860  
    Other consumer   1     1     1     1     —  
    Total consumer loans   5,043     4,939     5,286     5,514     5,152  
               
    Total nonaccrual loans and leases   69,349     71,242     60,709     40,672     43,630  
               
    Other real estate owned   700     780     780     780     780  
    Other repossessed assets   403     799     1,194     1,037     914  
    Total nonperforming assets $ 70,452   $ 72,821   $ 62,683   $ 42,489   $ 45,324  
               
    Loans and leases past due greater than 90 days and still accruing $ 811   $ 16,091   $ 4,994   $ 363   $ 228  
               
    Nonperforming loans and leases as a percentage of total loans and leases   0.71 %   0.73 %   0.62 %   0.42 %   0.45 %
    Nonperforming assets as a percentage of total assets   0.59 %   0.62 %   0.54 %   0.37 %   0.40 %
               
    PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES:      
    Allowance for loan and lease losses at beginning of period $ 127,316   $ 121,750   $ 120,124   $ 117,522   $ 119,081  
    Charge-offs   (8,414 )   (4,183 )   (8,823 )   (5,390 )   (7,722 )
    Recoveries   1,162     375     436     309     581  
    Net charge-offs   (7,252 )   (3,808 )   (8,387 )   (5,081 )   (7,141 )
    Provision for loan and lease losses excluding unfunded commitments *   5,019     9,374     10,013     7,683     5,582  
    Allowance for loan and lease losses at end of period $ 125,083   $ 127,316   $ 121,750   $ 120,124   $ 117,522  
               
    Allowance for loan and lease losses as a percentage of total loans and leases   1.28 %   1.31 %   1.25 %   1.24 %   1.22 %
               
    NET CHARGE-OFFS:          
    Commercial real estate loans $ —   $ —   $ 3,819   $ 606   $ 1,087  
    Commercial loans and leases **   7,257     3,797     4,571     8,179     6,061  
    Consumer loans   (5 )   11     (3 )   (4 )   (7 )
    Total net charge-offs $ 7,252   $ 3,808   $ 8,387   $ 8,781   $ 7,141  
               
    Net loan and lease charge-offs as a percentage of average loans and leases (annualized)   0.30 %   0.16 %   0.35 %   0.36 %   0.30 %
               
    *Provision for loan and lease losses does not include (credit) provision of $(0.9 million), $(4.5 million), $(4.4 million), $(0.3 million), and $(1.7 million) for credit losses on unfunded commitments during the three months ended December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024, and December 31, 2023, respectively.
    ** The balance at March 31, 2024 includes a $3.7 million charge-off on a letter of credit which impacted the provision.
               
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Average Yields / Costs (Unaudited)
     
      Three Months Ended
      December 31, 2024 September 30, 2024 December 31, 2023
      Average
    Balance    		 Interest (1) Average
    Yield/
    Cost    		 Average
    Balance    		 Interest (1) Average
    Yield/
    Cost    		 Average
    Balance    		 Interest (1) Average
    Yield/
    Cost
      (Dollars in Thousands)
    Assets:                  
    Interest-earning assets:                  
    Investments:                  
    Debt securities (2) $ 856,065 $ 6,463 3.02 % $ 853,924 $ 6,516 3.05 % $ 876,350 $ 6,986 3.19 %
    Restricted equity securities (2)   75,879   1,459 7.69 %   75,225   1,459 7.76 %   67,567   1,334 7.90 %
    Short-term investments   236,784   2,830 4.78 %   145,838   1,986 5.44 %   85,790   1,093 5.09 %
    Total investments   1,168,728   10,752 3.68 %   1,074,987   9,961 3.71 %   1,029,707   9,413 3.66 %
    Loans and Leases:                  
    Commercial real estate loans (3)   5,752,591   81,195 5.52 %   5,772,456   83,412 5.65 %   5,727,930   81,653 5.58 %
    Commercial loans (3)   1,170,295   19,750 6.61 %   1,079,084   18,440 6.69 %   969,603   16,296 6.58 %
    Equipment financing (3)   1,310,143   26,295 8.03 %   1,353,649   26,884 7.94 %   1,347,589   25,211 7.48 %
    Consumer loans (3)   1,529,654   20,881 5.44 %   1,505,095   21,123 5.60 %   1,475,580   19,888 5.37 %
    Total loans and leases   9,762,683   148,121 6.07 %   9,710,284   149,859 6.17 %   9,520,702   143,048 6.01 %
    Total interest-earning assets   10,931,411   158,873 5.81 %   10,785,271   159,820 5.93 %   10,550,409   152,461 5.78 %
    Non-interest-earning assets   649,161       666,067       721,532    
    Total assets $ 11,580,572     $ 11,451,338     $ 11,271,941    
                       
    Liabilities and Stockholders’ Equity:                  
    Interest-bearing liabilities:                  
    Deposits:                  
    NOW accounts $ 630,408   1,056 0.67 % $ 639,561   1,115 0.69 % $ 657,134   1,146 0.69 %
    Savings accounts   1,741,355   10,896 2.49 %   1,738,756   12,098 2.77 %   1,658,144   10,684 2.56 %
    Money market accounts   2,083,033   13,856 2.65 %   2,038,048   15,466 3.02 %   2,140,225   16,239 3.01 %
    Certificates of deposit   1,857,483   20,691 4.43 %   1,768,026   20,054 4.51 %   1,530,772   14,517 3.76 %
    Brokered deposit accounts   797,910   10,063 5.02 %   841,067   11,063 5.23 %   880,604   11,448 5.16 %
    Total interest-bearing deposits   7,110,189   56,562 3.16 %   7,025,458   59,796 3.39 %   6,866,879   54,034 3.12 %
    Borrowings:                  
    Advances from the FHLB   1,144,157   13,958 4.77 %   1,139,049   14,366 4.94 %   965,846   11,943 4.84 %
    Subordinated debentures and notes   84,311   1,944 9.22 %   84,276   1,378 6.54 %   84,170   1,381 6.56 %
    Other borrowed funds   65,947   695 4.20 %   53,102   1,012 7.58 %   136,566   1,406 4.09 %
    Total borrowings   1,294,415   16,597 5.02 %   1,276,427   16,756 5.14 %   1,186,582   14,730 4.86 %
    Total interest-bearing liabilities   8,404,604   73,159 3.46 %   8,301,885   76,552 3.67 %   8,053,461   68,764 3.39 %
    Non-interest-bearing liabilities:                  
    Demand checking accounts   1,693,138       1,669,092       1,723,849    
    Other non-interest-bearing liabilities   250,303       264,324       323,855    
    Total liabilities   10,348,045       10,235,301       10,101,165    
    Stockholders’ equity   1,232,527       1,216,037       1,170,776    
    Total liabilities and equity $ 11,580,572     $ 11,451,338     $ 11,271,941    
    Net interest income (tax-equivalent basis) /Interest-rate spread (4)     85,714 2.35 %     83,268 2.26 %     83,697 2.39 %
    Less adjustment of tax-exempt income     726       260       142  
    Net interest income   $ 84,988     $ 83,008     $ 83,555  
    Net interest margin (5)     3.12 %     3.07 %     3.15 %
                       
    (1) Tax-exempt income on debt securities, equity securities and revenue bonds included in commercial real estate loans is included on a tax-equivalent basis.
    (2) Average balances include unrealized gains (losses) on investment securities. Dividend payments may not be consistent and average yield on equity securities may vary from month to month.
    (3) Loans on nonaccrual status are included in the average balances.
    (4) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
    (5) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.
                       
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Average Yields / Costs (Unaudited)
     
      Twelve Months Ended
      December 31, 2024 December 31, 2023
      Average
    Balance    		 Interest (1) Average
    Yield/
    Cost    		 Average
    Balance    		 Interest (1) Average
    Yield/
    Cost
      (Dollars in Thousands)
    Assets:            
    Interest-earning assets:            
    Investments:            
    Debt securities (2) $ 862,381 $ 26,416 3.06 % $ 947,782 $ 29,891 3.15 %
    Restricted equity securities (2)   74,788   5,786 7.74 %   72,264   5,572 7.71 %
    Short-term investments   164,445   8,554 5.20 %   158,718   8,329 5.25 %
    Total investments   1,101,614   40,756 3.70 %   1,178,764   43,792 3.72 %
    Loans and Leases:            
    Commercial real estate loans (3)   5,760,432   327,221 5.59 %   5,654,385   307,652 5.37 %
    Commercial loans (3)   1,086,460   73,369 6.65 %   929,077   59,110 6.28 %
    Equipment financing (3)   1,352,993   106,329 7.86 %   1,277,224   92,112 7.21 %
    Consumer loans (3)   1,501,626   82,273 5.47 %   1,470,677   75,098 5.10 %
    Total loans and leases   9,701,511   589,192 6.07 %   9,331,363   533,972 5.72 %
    Total interest-earning assets   10,803,125   629,948 5.83 %   10,510,127   577,764 5.50 %
    Non-interest-earning assets   670,299       704,244    
    Total assets $ 11,473,424     $ 11,214,371    
                 
    Liabilities and Stockholders’ Equity:            
    Interest-bearing liabilities:            
    Deposits:            
    NOW accounts $ 650,225   4,543 0.70 % $ 720,572   4,275 0.59 %
    Savings accounts   1,726,504   46,220 2.68 %   1,439,293   27,974 1.94 %
    Money market accounts   2,056,066   60,796 2.96 %   2,205,430   58,153 2.64 %
    Certificates of deposit   1,737,697   76,134 4.38 %   1,428,727   44,122 3.09 %
    Brokered deposit accounts   873,182   45,270 5.18 %   819,419   41,141 5.02 %
    Total interest-bearing deposits   7,043,674   232,963 3.31 %   6,613,441   175,665 2.66 %
    Borrowings:            
    Advances from the FHLB   1,124,432   55,851 4.89 %   1,092,996   52,467 4.73 %
    Subordinated debentures and notes   84,258   6,074 7.21 %   84,116   5,476 6.51 %
    Other borrowed funds   78,859   4,048 5.13 %   124,793   3,968 3.18 %
    Total borrowings   1,287,549   65,973 5.04 %   1,301,905   61,911 4.69 %
    Total interest-bearing liabilities   8,331,223   298,936 3.59 %   7,915,346   237,576 3.00 %
    Non-interest-bearing liabilities:            
    Demand checking accounts   1,657,922       1,823,759    
    Other non-interest-bearing liabilities   273,243       307,160    
    Total liabilities   10,262,388       10,046,265    
    Stockholders’ equity   1,211,036       1,168,106    
    Total liabilities and equity $ 11,473,424     $ 11,214,371    
    Net interest income (tax-equivalent basis) /Interest-rate spread (4)     331,012 2.24 %     340,188 2.50 %
    Less adjustment of tax-exempt income     1,427       477  
    Net interest income   $ 329,585     $ 339,711  
    Net interest margin (5)     3.06 %     3.24 %
                 
    (1) Tax-exempt income on debt securities, equity securities and revenue bonds included in commercial real estate loans is included on a tax-equivalent basis.
    (2) Average balances include unrealized gains (losses) on investment securities. Dividend payments may not be consistent and average yield on equity securities may vary from month to month.
    (3) Loans on nonaccrual status are included in the average balances.
    (4) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
    (5) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.
                 
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Non-GAAP Financial Information (Unaudited)
             
          At and for the Three Months Ended
    December 31,    		 At and for the Twelve Months Ended
    December 31,
            2024 2023 2024 2023
    Reconciliation Table – Non-GAAP Financial Information   (Dollars in Thousands Except Share Data)
                 
    Reported Pretax Income     $ 23,819   $ 28,563   $ 91,691   $ 93,914  
    Less:              
    Security gains   —     —     —     1,704  
    Add:              
    Day 1 PCSB CECL provision         —     —     —     16,744  
    Merger and acquisition expenses     3,378     —     4,201     7,411  
    Operating Pretax income   $ 27,197   $ 28,563   $ 95,892   $ 116,365  
    Effective tax rate     23.9 %   19.9 %   24.5 %   20.1 %
    Provision for income tax     6,511     5,675     23,480     23,437  
    Operating earnings after tax       $ 20,686   $ 22,888   $ 72,412   $ 92,928  
                   
    Operating earnings per common share:            
    Basic       $ 0.23   $ 0.26   $ 0.81   $ 1.05  
    Diluted       $ 0.23   $ 0.26   $ 0.81   $ 1.05  
                   
    Weighted average common shares outstanding during the period:          
    Basic         89,098,443     88,867,159     88,983,248     88,230,681  
    Diluted         89,483,964     89,035,505     89,302,304     88,450,646  
                   
                   
    Return on average assets *       0.61 %   0.81 %   0.60 %   0.67 %
    Less:              
    Security gains (after-tax) *       — %   — %   — %   0.01 %
    Add:              
    Day 1 PCSB CECL provision (after-tax) *     — %   — %   — %   0.12 %
    Merger and acquisition expenses (after-tax) *     0.09 %   — %   0.03 %   0.05 %
    Operating return on average assets *       0.70 %   0.81 %   0.63 %   0.83 %
                   
                   
    Return on average tangible assets *       0.62 %   0.83 %   0.61 %   0.69 %
    Less:              
    Security gains (after-tax) *       — %   — %   — %   0.01 %
    Add:              
    Day 1 PCSB CECL provision (after-tax) *     — %   — %   — %   0.12 %
    Merger and acquisition expenses (after-tax) *     0.09 %   — %   0.03 %   0.05 %
    Operating return on average tangible assets *       0.71 %   0.83 %   0.64 %   0.85 %
                   
                   
    Return on average stockholders’ equity *       5.69 %   7.82 %   5.67 %   6.42 %
    Less:              
    Security gains (after-tax) *       — %   — %   — %   0.12 %
    Add:              
    Day 1 PCSB CECL provision (after-tax) *     — %   — %   — %   1.14 %
    Merger and acquisition expenses (after-tax) *     0.83 %   — %   0.26 %   0.51 %
    Operating return on average stockholders’ equity *     6.52 %   7.82 %   5.93 %   7.95 %
                   
                   
    Return on average tangible stockholders’ equity *     7.21 %   10.12 %   7.24 %   8.36 %
    Less:              
    Security gains (after-tax) *       — %   — %   — %   0.15 %
    Add:              
    Day 1 PCSB CECL provision (after-tax) *     — %   — %   — %   1.49 %
    Merger and acquisition expenses (after-tax) *     1.06 %   — %   0.33 %   0.66 %
    Operating return on average tangible stockholders’ equity *     8.27 %   10.12 %   7.57 %   10.36 %
    * Ratios at and for the three months ended are annualized.          
                   
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Non-GAAP Financial Information (Unaudited)
     
      At and for the Three Months Ended At and for the Twelve
    Months Ended
      December 31,
    2024    		 September 30,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023    		 December 31,
    2024    		 December 31,
    2023
      (Dollars in Thousands)
                   
    Net income, as reported $ 17,536   $ 20,142   $ 16,372   $ 14,665   $ 22,888   $ 68,715   $ 74,999  
                   
    Average total assets $ 11,580,572   $ 11,451,338   $ 11,453,394   $ 11,417,185   $ 11,271,941   $ 11,473,424   $ 11,214,371  
    Less: Average goodwill and average identified intangible assets, net   259,496     261,188     262,859     264,536     266,225     262,011     270,637  
    Average tangible assets $ 11,321,076   $ 11,190,150   $ 11,190,535   $ 11,152,649   $ 11,005,716   $ 11,211,413   $ 10,943,734  
                   
    Return on average tangible assets (annualized)   0.62 %   0.72 %   0.59 %   0.53 %   0.83 %   0.61 %   0.69 %
                   
    Average total stockholders’ equity $ 1,232,527   $ 1,216,037   $ 1,193,385   $ 1,201,904   $ 1,170,776   $ 1,211,036   $ 1,168,106  
    Less: Average goodwill and average identified intangible assets, net   259,496     261,188     262,859     264,536     266,225     262,011     270,637  
    Average tangible stockholders’ equity $ 973,031   $ 954,849   $ 930,526   $ 937,368   $ 904,551   $ 949,025   $ 897,469  
                   
    Return on average tangible stockholders’ equity (annualized)   7.21 %   8.44 %   7.04 %   6.26 %   10.12 %   7.24 %   8.36 %
                   
    Total stockholders’ equity $ 1,221,939   $ 1,230,362   $ 1,198,480   $ 1,194,231   $ 1,198,644   $ 1,221,939   $ 1,198,644  
    Less:              
    Goodwill   241,222     241,222     241,222     241,222     241,222     241,222     241,222  
    Identified intangible assets, net   17,461     19,162     20,830     22,499     24,207     17,461     24,207  
    Tangible stockholders’ equity $ 963,256   $ 969,978   $ 936,428   $ 930,510   $ 933,215   $ 963,256   $ 933,215  
                   
    Total assets $ 11,905,326   $ 11,676,721   $ 11,635,292   $ 11,542,731   $ 11,382,256   $ 11,905,326   $ 11,382,256  
    Less:              
    Goodwill   241,222     241,222     241,222     241,222     241,222     241,222     241,222  
    Identified intangible assets, net   17,461     19,162     20,830     22,499     24,207     17,461     24,207  
    Tangible assets $ 11,646,643   $ 11,416,337   $ 11,373,240   $ 11,279,010   $ 11,116,827   $ 11,646,643   $ 11,116,827  
                   
    Tangible stockholders’ equity to tangible assets   8.27 %   8.50 %   8.23 %   8.25 %   8.39 %   8.27 %   8.39 %
                   
    Tangible stockholders’ equity $ 963,256   $ 969,978   $ 936,428   $ 930,510   $ 933,215   $ 963,256   $ 933,215  
                   
    Number of common shares issued   96,998,075     96,998,075     96,998,075     96,998,075     96,998,075     96,998,075     96,998,075  
    Less:              
    Treasury shares   7,019,384     7,015,843     7,373,009     7,354,399     7,354,399     7,019,384     7,354,399  
    Unvested restricted shares   880,248     883,789     713,443     749,099     749,099     880,248     749,099  
    Number of common shares outstanding   89,098,443     89,098,443     88,911,623     88,894,577     88,894,577     89,098,443     88,894,577  
                   
    Tangible book value per common share $ 10.81   $ 10.89   $ 10.53   $ 10.47   $ 10.50   $ 10.81   $ 10.50  

    PDF available: http://ml.globenewswire.com/Resource/Download/396afece-df5e-4cc5-a637-0706599b2b0d

    The MIL Network –

  • MIL-Evening Report: Australian democracy is not dead, but needs help to ensure its survival

    Source: The Conversation (Au and NZ) – By Mark Evans, Deputy Vice-chancellor Research, Charles Sturt University

    Democracies worldwide are suffering from legitimacy problems. This is reflected in low levels of public trust in key political institutions, the polarisation of politics, and the erosion of public confidence in the capacity of governments to address societal concerns.

    According to the 2024 Edelman Trust Barometer, only 50% of people worldwide trust their government, and the tally is even lower in many developed countries such as the United States and United Kingdom. A study by the Pew Research Center found only 20% of Americans trust their national government to do what is right “just about always” or “most of the time”.

    Citizens almost everywhere view their elected officials and public institutions with suspicion. They believe decisions are made to serve special interests rather than the common good. This culture of discontentment is leading to reduced civic engagement, increased polarisation, the rise of identity politics, and a general sense of disillusionment with the political process. It has also sparked an upsurge in speculation as to whether democracy is dying, in recession or crisis.

    So how does Australia compare with this global pattern?

    The Australian context

    The findings of the New Democratic Audit of Australia have just been published. They provide a timely and comprehensive evaluation of the current state of Australian democratic life.

    The audit promises to bridge significant gaps in our understanding of Australia’s democracy.

    A team of leading academics from universities in every state and territory deploys an audit approach to assess the democratic performance of federal, state and territory-level political institutions. It then examines how they have enabled or undermined Australian political life.

    For instance, the monopoly of Australian governance by Coalition and Labor parties has only just begun to adjust to growing disillusionment with the two-party system.

    To date, Australia has successfully avoided both rancorous populist politics (as in the US) and serious governance decline (as in the UK). However, the Voice to Parliament referendum and continued pandering to regressive immigration policies suggests populism could well be on the rise.

    So what did the New Democratic Audit find?

    Democracy under stress

    1. Declining public trust in government. Trust in Australian political institutions is in decline. Only 30% of Australians report trust in government officials, according to the Australian Election Study.

    The main concerns driving the decline in trust are lack of transparency in decision-making, perceptions of public sector inefficiency, political corruption, and the disconnection between politicians and citizens. Australians also express concerns about poor communication of policies. Furthermore, they believe governments have failed to deliver solutions to pressing issues such as the cost of living, wage stagnation and climate action.

    A significant proportion of the population believes the country has become more divided. Major sources of division are the perception of the rich and powerful as a major dividing force (72%), followed by hostile foreign governments (69%), journalists (51%), and government leaders (49%).

    2. Strong public satisfaction with democracy. Despite low trust in government, the 2024 World Values Survey shows that support for democratic values in Australia — such as free and fair elections, the rule of law, and representative democracy — remains strong. There is also a growing emphasis post-pandemic on the need for governments to address long-term challenges such as climate change and income inequality.

    3. Australia is viewed internationally as a leading liberal democracy. Despite the challenges, Australia is assessed in most global rankings as one of the leading liberal democracies, with continuous economic growth, a strong federal system, and competitive elections. Its institutions have generally performed well, even in the face of global challenges such as the COVID pandemic. Australia is classed as one of only 24 “full democracies”.

    4. The “protective power of democracy” is under pressure. The audit emphasises economist Amartya Sen’s concept of the “protective power of democracy as critical to achieving high quality democratic governance”. This relies on four components: electoral integrity, participatory opportunities, liberal values and good democratic governance.

    5. Electoral integrity. Australia’s elections are free and fair, thanks to an independent election commission. However, concerns about government advertising and political donations undermine the fairness of elections, giving incumbent governments an advantage.

    6. Public participation. Australia performs poorly in facilitating citizen participation beyond voting. Opportunities for civil society engagement, through localism, citizen juries or assemblies, are limited. Parliaments at various levels are not adequately representative in terms of gender and ethnicity, and regional policy concerns are often ignored.

    7. Liberal values. Australia has made improvements in protecting civil rights, especially concerning LGBTQ+ issues and gender equality. But there remain significant gaps in protecting the rights of the most vulnerable groups, including Indigenous communities, differently abled people, and refugees. Australia lacks a comprehensive charter of human rights, and there are ongoing issues with the erosion of civil liberties.

    8. Good democratic governance. This component refers to the instrumental importance of governments being responsible and accountable, responsive to the needs of the citizenry in service terms, and free from corruption. This is where the performance or supply of government matters most.

    The audit finds Australia’s institutions are generally effective and adaptive, as seen in responses to the bushfires and the COVID pandemic. However, the federal government wields disproportionate power, which undermines traditional checks and balances. Public perception of corruption in politics and the public sector is also a growing public concern.

    Reimagining Australian democracy

    The audit concludes that Australia remains a full democracy, but faces critical challenges that require reflection and reinvention.

    To renew its democracy, Australia must make its system of government more representative, accountable and responsive to the needs of citizens. There is a need for a stronger focus on integrity in politics, ensuring governments act transparently, empathetically and in ways that deliver tangible outcomes for the public. Public dissatisfaction with political corruption, inefficiency and a lack of responsiveness must be addressed to restore trust in political institutions.

    While Australia continues to be a leading democracy, it faces pressing challenges that could undermine the sustainability of its democratic institutions if not addressed. The audit calls for a period of democratic reinvention, with an emphasis on improving governance to better serve citizens and maintain public trust in democracy.

    The New Democratic Audit is free for download at: https://press.lse.ac.uk/site/books/e/10.31389/lsepress.ada/

    Mark Evans has received funding and in-kind support to complete democratic audits in the United Kingdom (Joseph Rowntree Charitable Trust) and Australia (Museum of Australian Democracy at Old Parliament House, Canberra).

    – ref. Australian democracy is not dead, but needs help to ensure its survival – https://theconversation.com/australian-democracy-is-not-dead-but-needs-help-to-ensure-its-survival-235638

    MIL OSI Analysis – EveningReport.nz –

  • MIL-OSI: Penns Woods Bancorp, Inc. Reports Fourth Quarter 2024 Earnings

    Source: GlobeNewswire (MIL-OSI)

    WILLIAMSPORT, Pa., Jan. 29, 2025 (GLOBE NEWSWIRE) — Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

    Penns Woods Bancorp, Inc. achieved net income of $17.7 million for the twelve months ended December 31, 2024, resulting in basic and diluted earnings per share of $2.35.

    Highlights

    • Net income, as reported under generally accepted accounting principles (GAAP), for the three and twelve months ended December 31, 2024 was $3.7 million and $17.7 million, respectively, compared to $5.6 million and $16.6 million for the same periods of 2023. Results for the three and twelve months ended December 31, 2024 compared to 2023 were impacted by an increase in net interest income of $1.6 million and $3.9 million, respectively, as the cost of funds stabilized. The three and twelve month periods ended December 31, 2024 have been impacted by after-tax merger related expenses of $581,000 resulting from the announced acquisition of the company by Northwest Bancshares, Inc. The disposal of assets related to two former branch properties resulted in a one time after-tax loss of $261,000 for the twelve month period ended December 31, 2024.
    • The allowance for credit losses was impacted for the three and twelve months ended December 31, 2024 by a provision for credit losses of $420,000 and $121,000, respectively, compared to a negative provision for credit losses of $1.7 million and $1.5 million for the 2023 periods. The recognition of a negative provision for credit losses for the 2023 periods was due primarily to a recovery on a commercial loan which positively affected the historical loss rates, and the payoff of a nonperforming commercial loan.
    • Basic and diluted earnings per share for the three months ended December 31, 2024 were $0.50 and $0.49, respectively, while the twelve months ended December 31, 2024 basic and diluted was $2.35. This compares to basic and diluted earnings per share of $0.77 and $2.34, respectively, for the three and twelve month periods ended December 31, 2023.
    • Annualized return on average assets was 0.67% for the three months ended December 31, 2024, compared to 1.02% for the corresponding period of 2023. Return on average assets was 0.80% for the twelve months ended December 31, 2024, compared to 0.79% for the corresponding period of 2023.
    • Annualized return on average equity was 7.28% for the three months ended December 31, 2024, compared to 12.60% for the corresponding period of 2023. Return on average equity was 9.14% for the twelve months ended December 31, 2024, compared to 9.84% for the corresponding period of 2023.

    Net Income

    Net income from core operations (“core earnings”), which is a non-GAAP measure of net income excluding net securities gains or losses, was $4.4 million and $18.4 million, respectively, for the three and twelve months ended December 31, 2024 compared to $5.6 million and $16.7 million for the same periods of 2023. Core earnings per share (non-GAAP) for the three months ended December 31, 2024 were basic $0.58 and diluted $0.57 while basic and diluted for the twelve months ended December 31, 2024 were $2.44. Basic and diluted core earnings per share for the three and twelve month periods of 2023 were $0.77 and $2.36, respectively. Annualized core return on average assets and core return on average equity (non-GAAP) were 0.78% and 8.48%, respectively, for the three months ended December 31, 2024, compared to 1.02% and 12.63% for the corresponding period of 2023. Annualized core return on average assets and core return on average equity (non-GAAP) were 0.83% and 9.46%, respectively, for the twelve months ended December 31, 2024, compared to 0.79% and 9.93% for the corresponding period of 2023. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, core earnings per share and tangible book value per share to the comparable GAAP financial measures is included at the end of this press release.

    Net Interest Margin

    The net interest margin for the three and twelve months ended December 31, 2024 was 2.98% and 2.83% respectively, compared to 2.73% and 2.80% for the corresponding periods of 2023. The increase in the net interest margin for the three month period was driven by an increase in the rate collected on interest-earning assets of 34 basis points (“bps”), while the decrease in the net interest margin for the twelve month period was driven by a 74 bps increase in the rate paid on interest-bearing liabilities. The overall increase in interest rates over the periods resulted in increases to both the yield on the earnings asset portfolio and the rate paid on interest-bearing liabilities. Driving the increase in the yield and interest income on the earning assets portfolio was the repricing of legacy assets coupled with portfolio growth. The average loan portfolio balance increased $47.4 million and $106.9 million, respectively, for the three and twelve month periods ended December 31, 2024 compared to the same periods of 2023 as the average yield on the portfolio increased 31 bps and 61 bps, resulting in an increase in taxable equivalent interest income of $2.0 million and $16.5 million, for the periods. The three and twelve month periods ended December 31, 2024 were impacted by an increase of 57 bps and 66 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates, which resulted in an increase in taxable equivalent interest income of $285,000 and $1.5 million, respectively. Short-term borrowings decreased leading to a decrease of $1.8 million and $3.9 million, respectively, in expense for the three and twelve month periods ended December 31, 2024 compared to the same periods of 2023. The rate paid on interest-bearing deposits increased 37 bps and 96 bps, respectively, or $2.1 million and $13.8 million in expense, for the three and twelve month periods ended December 31, 2024 compared to the corresponding periods of 2023 due to the rate environment, an increase in competition for deposits, and a migration of deposit balances from core deposits to higher rate time deposits. The rates paid on time deposits significantly contributed to the increase in funding costs as rates paid for the three and twelve month periods ended December 31, 2024 compared to the same periods of 2023 increased 29 bps and 87 bps, respectively, or $1.7 million and $9.9 million in expense, as deposit gathering campaigns continued to focus on time deposits with a maturity of five to twenty-four months. In addition, brokered deposits have been utilized to assist with funding the loan portfolio growth and contributed to the increase in time deposit funding costs, while lowering the reliance on higher cost short-term borrowings.

    Assets

    Total assets increased to $2.2 billion at December 31, 2024, an increase of $27.5 million compared to December 31, 2023.  Net loans increased $36.9 million to $1.9 billion at December 31, 2024 compared to December 31, 2023, as continued emphasis was placed on commercial loan growth and indirect auto lending. The investment portfolio decreased $10.7 million from December 31, 2023 to December 31, 2024.

    Non-performing Loans

    The ratio of non-performing loans to total loans ratio increased to 0.47% at December 31, 2024 from 0.17% at December 31, 2023, as non-performing loans increased to $8.9 million at December 31, 2024 from $3.1 million at December 31, 2023. The majority of non-performing loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have been classified as individually evaluated loans that have a specific allocation recorded within the allowance for credit losses. Net loan charge offs of $228,000 and $540,000 for the three and twelve months ended December 31, 2024, respectively, impacted the allowance for credit losses, which was 0.63% of total loans at December 31, 2024 compared to 0.62% at December 31, 2023. Exposure to non-owner occupied office space is minimal at $14.1 million at December 31, 2024 with none of these loans being delinquent.

    Deposits

    Deposits increased $116.6 million to $1.7 billion at December 31, 2024 compared to December 31, 2023. Noninterest-bearing deposits decreased $14.2 million to $456.9 million at December 31, 2024 compared to December 31, 2023.  Core deposits declined $17.8 million as deposits migrated from core deposit accounts into time deposits as market rates and competition for deposits increased. Core deposit gathering efforts remained focused on increasing the utilization of electronic (internet and mobile) deposit banking by our customers. Core deposits have remained stable at $1.2 billion over the past five quarters. Interest-bearing deposits increased $130.8 million from December 31, 2023 to December 31, 2024 due to growth in the time deposit portfolio of $80.8 million as customers sought a higher rate of interest. Brokered deposit balances increased $53.6 million to $178.3 million at December 31, 2024 as this funding source was utilized to supplement funding loan portfolio growth, while reducing the need to draw upon available borrowing lines. A campaign to attract time deposits with a maturity of five to twenty-four months commenced during the latter part of 2022 and has continued throughout 2023 and 2024 with current efforts centered on five months.

    Shareholders’ Equity

    Shareholders’ equity increased $13.7 million to $205.2 million at December 31, 2024 compared to December 31, 2023.  During the three and twelve months ended December 31, 2024 there were no shares issued under the previously disclosed registered at-the-market offering. A total 31,066 shares for net proceeds of $632,000 were issued as part of the Dividend Reinvestment Plan during the twelve months ended December 31, 2024. Accumulated other comprehensive loss of $5.3 million at December 31, 2024 decreased from a loss of $9.2 million at December 31, 2023 as a result of a decrease in net unrealized loss on available for sale securities to $4.6 million at December 31, 2024 from a net unrealized loss of $6.4 million at December 31, 2023, coupled with a decrease in loss of $2.0 million in the defined benefit plan obligation. The current level of shareholders’ equity equates to a book value per share of $27.16 at December 31, 2024 compared to $25.51 at December 31, 2023, and an equity to asset ratio of 9.19% at December 31, 2024 and 8.69% at December 31, 2023. Tangible book value per share (a non-GAAP measure) increased to $24.97 at December 31, 2024 compared to $23.29 at December 31, 2023. Dividends declared for the three and twelve months ended December 31, 2024 and 2023 were $0.32 and $1.28 per share.

    Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates sixteen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, Union, and Blair Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County, and United Insurance Solutions, LLC, which offers insurance products.  Investment and insurance products are offered through Jersey Shore State Bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.

    NOTE:  This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  Management uses the non-GAAP measure of net income from core operations in its analysis of the company’s performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses. Because these certain items and their impact on the Company’s performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company’s core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

    This press release may contain certain “forward-looking statements” including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact.  The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company’s organization, compensation and benefit plans; (iii) the effect on the Company’s competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; (v) the effects of health emergencies, including the spread of infectious diseases or pandemics; (vi) the effect of changes in the business cycle and downturns in the local, regional or national economies; or (vii) any potential adverse events or developments resulting from the merger agreement, dated December 16, 2024, between Penns Woods Bancorp, Inc. and Northwest Bancshares, Inc., including, without limitation, any event, change, or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement or the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or to successfully integrate the business and operations of Jersey Shore State Bank and Luzerne Bank with those of Northwest Savings Bank after closing.  For a list of other factors which could affect the Company’s results, see the Company’s filings with the Securities and Exchange Commission, including “Item 1A.  Risk Factors,” set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

    You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise.  The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.

    Previous press releases and additional information can be obtained from the Company’s website at www.pwod.com.

    Contact: Richard A. Grafmyre, Chief Executive Officer
      110 Reynolds Street
      Williamsport, PA 17702
      570-322-1111 e-mail: pwod@pwod.com
     
    PENNS WOODS BANCORP, INC.
    CONSOLIDATED BALANCE SHEET
    (UNAUDITED)
     
        December 31,
    (In Thousands, Except Share and Per Share Data)     2024       2023     % Change
    ASSETS:                
    Noninterest-bearing cash           $         19,989     $         28,969             (31.00 ) %
    Interest-bearing balances in other financial institutions                     8,983               8,493             5.77   %
    Total cash and cash equivalents                     28,972               37,462             (22.66 ) %
                     
    Investment debt securities, available for sale, at fair value                     184,542               190,945             (3.35 ) %
    Investment equity securities, at fair value                     1,111               1,122             (0.98 ) %
    Restricted investment in bank stock                     20,032               24,323             (17.64 ) %
    Loans held for sale                     3,266               3,993             (18.21 ) %
    Loans                     1,877,078               1,839,764             2.03   %
    Allowance for credit losses                     (11,848 )             (11,446 )           3.51   %
    Loans, net                     1,865,230               1,828,318             2.02   %
    Premises and equipment, net                     27,789               30,250             (8.14 ) %
    Accrued interest receivable                     11,114               11,044             0.63   %
    Bank-owned life insurance                     45,681               33,867             34.88   %
    Investment in limited partnerships                     6,691               7,815             (14.38 ) %
    Goodwill                     16,450               16,450             —   %
    Intangibles                     107               210             (49.05 ) %
    Operating lease right of use asset             2,811               2,512             11.90   %
    Deferred tax asset                     3,493               4,655             (24.96 ) %
    Other assets                     15,049               11,843             27.07   %
    TOTAL ASSETS           $         2,232,338     $         2,204,809             1.25   %
                     
    LIABILITIES:                
    Interest-bearing deposits           $         1,249,145     $         1,118,320             11.70   %
    Noninterest-bearing deposits                     456,936               471,173             (3.02 ) %
    Total deposits                     1,706,081               1,589,493             7.33   %
                    %
    Short-term borrowings                     42,200               145,926             (71.08 ) %
    Long-term borrowings                     254,588               252,598             0.79   %
    Accrued interest payable                     4,664               3,814             22.29   %
    Operating lease liability                     2,889               2,570             12.41   %
    Other liabilities                     16,685               18,852             (11.49 ) %
    TOTAL LIABILITIES                     2,027,107               2,013,253             0.69   %
                     
    SHAREHOLDERS’ EQUITY:                
    Preferred stock, no par value, 3,000,000 shares authorized; no shares issued                     —               —     n/a
    Common stock, par value $5.55, 22,500,000 shares authorized; 8,066,968 and 8,019,219 shares issued; 7,556,743 and 7,508,994 shares outstanding                     44,815               44,550             0.59   %
    Additional paid-in capital                     63,193               61,733             2.37   %
    Retained earnings                     115,331               107,238             7.55   %
    Accumulated other comprehensive loss:                
    Net unrealized loss on available for sale securities                     (4,567 )             (6,396 )           28.60   %
    Defined benefit plan                     (726 )             (2,754 )           73.64   %
    Treasury stock at cost, 510,225 shares                     (12,815 )             (12,815 )           —   %
    TOTAL SHAREHOLDERS’ EQUITY                     205,231               191,556             7.14   %
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY           $         2,232,338     $         2,204,809             1.25   %
     
    PENNS WOODS BANCORP, INC.
    CONSOLIDATED STATEMENT OF INCOME
    (UNAUDITED)
     
        Three Months Ended December 31,   Twelve Months Ended December 31,
    (In Thousands, Except Share and Per Share Data)     2024       2023     % Change
    		     2024       2023     % Change
    INTEREST AND DIVIDEND INCOME:                                
    Loans including fees           $         25,759     $         23,720             8.60   %   $         99,780     $         83,291             19.80   %
    Investment securities:                                
    Taxable                     1,826               1,476             23.71   %             7,039               5,346             31.67   %
    Tax-exempt                     59               107             (44.86 ) %             292               517             (43.52 ) %
    Dividend and other interest income                     607               614             (1.14 ) %             2,587               2,441             5.98   %
    TOTAL INTEREST AND DIVIDEND INCOME                     28,251               25,917             9.01   %             109,698               91,595             19.76   %
                                     
    INTEREST EXPENSE:                                
    Deposits                     9,523               7,445             27.91   %             35,962               22,131             62.50   %
    Short-term borrowings                     479               2,317             (79.33 ) %             4,503               8,401             (46.40 ) %
    Long-term borrowings                     2,686               2,207             21.70   %             10,353               6,099             69.75   %
    TOTAL INTEREST EXPENSE                     12,688               11,969             6.01   %             50,818               36,631             38.73   %
                                     
    NET INTEREST INCOME                     15,563               13,948             11.58   %             58,880               54,964             7.12   %
                                     
    PROVISION (RECOVERY) FOR CREDIT LOSSES                      420               (1,742 )           124.11   %             121               (1,479 )           108.18   %
                                     
    NET INTEREST INCOME AFTER PROVISION (RECOVERY) OF CREDIT LOSSES                     15,143               15,690             (3.49 ) %             58,759               56,443             4.10   %
                                     
    NON-INTEREST INCOME:                                
    Service charges                     516               533             (3.19 ) %             2,067               2,090             (1.10 ) %
    Net debt securities losses, available for sale                     (9 )             (68 )           86.76   %             (49 )             (193 )           74.61   %
    Net equity securities (losses) gains                     (35 )             50             (170.00 ) %             (11 )             15             (173.33 ) %
    Bank-owned life insurance                     303               171             77.19   %             1,159               1,063             9.03   %
    Gain on sale of loans                     463               314             47.45   % .           1,484               1,046             41.87   %
    Insurance commissions                     128               113             13.27   %             553               529             4.54   %
    Brokerage commissions                     163               127             28.35   %             684               575             18.96   %
    Loan broker income                     543               264             105.68   %             1,384               992             39.52   %
    Debit card income                     385               333             15.62   %             1,437               1,328             8.21   %
    Other                     253               384             (34.11 ) %             910               930             (2.15 ) %
    TOTAL NON-INTEREST INCOME                     2,710               2,221             22.02   %             9,618               8,375             14.84   %
                                     
    NON-INTEREST EXPENSE:                                
    Salaries and employee benefits                     7,032               6,284             11.90   %             26,256               25,062             4.76   %
    Occupancy                     758               746             1.61   %             3,152               3,168             (0.51 ) %
    Furniture and equipment                     1,233               889             38.70   %             3,669               3,392             8.17   %
    Software amortization                     339               250             35.60   %             996               843             18.15   %
    Pennsylvania shares tax                     351               275             27.64   %             1,373               1,082             26.89   %
    Professional fees                     523               640             (18.28 ) %             2,177               2,953             (26.28 ) %
    Federal Deposit Insurance Corporation deposit insurance                     385               456             (15.57 ) %             1,564               1,578             (0.89 ) %
    Marketing                     74               90             (17.78 ) %             283               684             (58.63 ) %
    Intangible amortization                     25               25             —   %             102               117             (12.82 ) %
    Merger expense                     735               —     n/a             735               —     n/a
    Other                     1,525               1,342             13.64   %             6,177               5,617             9.97   %
    TOTAL NON-INTEREST EXPENSE                     12,980               10,997             18.03   %             46,484               44,496             4.47   %
    INCOME BEFORE INCOME TAX PROVISION                     4,873               6,914             (29.52 ) %             21,893               20,322             7.73   %
    INCOME TAX PROVISION                     1,132               1,359             (16.70 ) %             4,154               3,714             11.85   %
    NET INCOME AVAILABLE TO COMMON SHAREHOLDERS’   $         3,741     $         5,555             (32.66 ) %   $         17,739     $         16,608             6.81   %
    EARNINGS PER SHARE – BASIC            $         0.50     $         0.77             (35.06 ) %   $         2.35     $         2.34             0.43   %
    EARNINGS PER SHARE – DILUTED           $         0.49     $         0.77             (36.36 ) %   $         2.35     $         2.34             0.43   %
    WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC                     7,555,168               7,255,222             4.13   %             7,535,397               7,112,450             5.95   %
    WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED                     7,693,185               7,255,222             6.04   %             7,543,111               7,112,450             6.06   %
     
    PENNS WOODS BANCORP, INC.
    AVERAGE BALANCES AND INTEREST RATES 
    (UNAUDITED)
     
        Three Months Ended
        December 31, 2024   December 31, 2023
    (Dollars in Thousands)   Average 
    Balance (1)    		   Interest   Average 
    Rate    		   Average 
    Balance (1)    		   Interest   Average 
    Rate
    ASSETS:                        
    Tax-exempt loans (3)           $         69,967     $         453             2.58   %   $         68,234     $         478             2.78   %
    All other loans                     1,806,212               25,401             5.59   %             1,760,509               23,342             5.26   %
    Total loans (2)                     1,876,179               25,854             5.48   %             1,828,743               23,820             5.17   %
                             
    Taxable securities                     199,868               2,277             4.63   %             193,744               1,932             4.04   %
    Tax-exempt securities (3)                     11,317               75             2.70   %             18,041               135             3.03   %
    Total securities                     211,185               2,352             4.53   %             211,785               2,067             3.96   %
                             
    Interest-bearing balances in other financial institutions                     13,136               156             4.72   %             11,795               158             5.31   %
                             
    Total interest-earning assets                     2,100,500               28,362             5.38   %             2,052,323               26,045             5.04   %
                             
    Other assets                     137,840                       130,421          
                             
    TOTAL ASSETS           $         2,238,340             $         2,182,744          
                             
    LIABILITIES AND SHAREHOLDERS’ EQUITY:                        
    Savings           $         209,300               266             0.51   %   $         222,740               229             0.41   %
    Super Now deposits                     220,792               1,070             1.93   %             227,113               1,129             1.97   %
    Money market deposits                     323,181               2,656             3.27   %             293,542               2,217             3.00   %
    Time deposits                     504,683               5,531             4.36   %             377,516               3,870             4.07   %
    Total interest-bearing deposits                     1,257,956               9,523             3.01   %             1,120,911               7,445             2.64   %
                             
    Short-term borrowings                     38,495               479             4.96   %             163,088               2,317             5.63   %
    Long-term borrowings                     256,521               2,686             4.17   %             235,998               2,207             3.71   %
    Total borrowings                     295,016               3,165             4.27   %             399,086               4,524             4.50   %
                             
    Total interest-bearing liabilities                     1,552,972               12,688             3.25   %             1,519,997               11,969             3.12   %
                             
    Demand deposits                     454,612                       457,546          
    Other liabilities                     25,218                       28,786          
    Shareholders’ equity                     205,538                       176,415          
                             
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY           $         2,238,340             $         2,182,744          
    Interest rate spread (3)                           2.13   %                   1.92   %
    Net interest income/margin (3)               $         15,674             2.98   %       $         14,076             2.73   %
    1. Information on this table has been calculated using average daily balance sheets to obtain average balances.
    2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
    3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%.
       
        Three Months Ended December 31,
          2024       2023  
    Total interest income           $         28,251     $         25,917  
    Total interest expense                     12,688               11,969  
    Net interest income (GAAP)                     15,563               13,948  
    Tax equivalent adjustment                     111               128  
    Net interest income (fully taxable equivalent) (non-GAAP)           $         15,674     $         14,076  
     
    PENNS WOODS BANCORP, INC.
    AVERAGE BALANCES AND INTEREST RATES 
    (UNAUDITED)
     
        Twelve Months Ended
        December 31, 2024   December 31, 2023
    (Dollars in Thousands)   Average 
    Balance (1)    		   Interest   Average 
    Rate    		   Average 
    Balance (1)    		   Interest   Average 
    Rate
    ASSETS:                        
    Tax-exempt loans (3)           $         69,448     $         1,943             2.80   %   $         66,863     $         1,849             2.77   %
    All other loans                     1,796,096               98,245             5.47   %             1,691,742               81,830             4.84   %
    Total loans (2)                     1,865,544               100,188             5.37   %             1,758,605               83,679             4.76   %
                             
    Taxable securities                     202,934               9,072             4.47   %             189,804               7,263             3.83   %
    Tax-exempt securities (3)                     13,045               370             2.84   %             23,872               654             2.74   %
    Total securities                     215,979               9,442             4.37   %             213,676               7,917             3.71   %
                             
    Interest-bearing balances in other financial institutions                     11,074               554             5.00   %             10,916               524             4.80   %
                             
    Total interest-earning assets                     2,092,597               110,184             5.27   %             1,983,197               92,120             4.65   %
                             
    Other assets                     132,720                       131,704          
                             
    TOTAL ASSETS           $         2,225,317             $         2,114,901          
                             
    LIABILITIES AND SHAREHOLDERS’ EQUITY:                        
    Savings           $         215,107               1,077             0.50   %   $         231,000               685             0.30   %
    Super Now deposits                     218,932               4,373             2.00   %             276,868               4,155             1.50   %
    Money market deposits                     311,836               10,390             3.33   %             292,755               7,024             2.40   %
    Time deposits                     460,869               20,122             4.37   %             293,252               10,267             3.50   %
    Total interest-bearing deposits                     1,206,744               35,962             2.98   %             1,093,875               22,131             2.02   %
                             
    Short-term borrowings                     82,046               4,503             5.49   %             157,140               8,401             5.36   %
    Long-term borrowings                     256,850               10,353             4.03   %             186,094               6,099             3.28   %
    Total borrowings                     338,896               14,856             4.40   %             343,234               14,500             4.23   %
                             
    Total interest-bearing liabilities                     1,545,640               50,818             3.29   %             1,437,109               36,631             2.55   %
                             
    Demand deposits                     454,878                       477,828          
    Other liabilities                     30,680                       31,243          
    Shareholders’ equity                     194,119                       168,721          
                             
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY           $         2,225,317             $         2,114,901          
    Interest rate spread (3)                           1.98   %                   2.10   %
    Net interest income/margin (3)               $         59,366             2.83   %       $         55,489             2.80   %
    1. Information on this table has been calculated using average daily balance sheets to obtain average balances.
    2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
    3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%.
       
        Twelve months ended December 31,
          2024       2023  
    Total interest income           $         109,698     $         91,595  
    Total interest expense                     50,818               36,631  
    Net interest income (GAAP)                     58,880               54,964  
    Tax equivalent adjustment                     486               525  
    Net interest income (fully taxable equivalent) (non-GAAP)           $         59,366     $         55,489  
    (Dollars in Thousands, Except Per Share Data, Unaudited)   Quarter Ended
        12/31/2024   9/30/2024   6/30/2024   3/31/2024   12/31/2023
    Operating Data                    
    Net income           $         3,741       $         4,801       $         5,390       $         3,808       $         5,555    
    Net interest income                     15,563                 15,056                 14,515                 13,746                 13,948    
    Provision (recovery) for credit losses                     420                 740                 (1,177 )               138                 (1,742 )  
    Net security (losses) gains                     (44 )               36                 (19 )               (33 )               (18 )  
    Non-interest income, excluding net security (losses) gains                     2,754                 2,385                 2,044                 2,495                 2,239    
    Non-interest expense                     12,980                 10,884                 10,996                 11,623                 10,997    
                         
    Performance Statistics                    
    Net interest margin                     2.98   %             2.88   %             2.83   %             2.69   %             2.73   %
    Annualized cost of total deposits                     2.22   %             2.27   %             2.14   %             2.01   %             1.89   %
    Annualized non-interest income to average assets                     0.48   %             0.43   %             0.37   %             0.45   %             0.41   %
    Annualized non-interest expense to average assets                     2.32   %             1.95   %             1.98   %             2.10   %             2.02   %
    Annualized return on average assets                     0.67   %             0.86   %             0.97   %             0.69   %             1.02   %
    Annualized return on average equity                     7.28   %             9.60   %             11.12   %             8.03   %             12.60   %
    Annualized net loan charge-offs (recoveries) to average loans     0.05   %     0.07   %     (0.09 ) %     0.08   %     (0.05 ) %
    Net charge-offs (recoveries)                      228                 328                 (396 )               380                 (209 )  
    Efficiency ratio                     70.73   %             62.26   %             66.25   %             71.41   %             67.78   %
                         
    Per Share Data                    
    Basic earnings per share           $         0.50       $         0.64       $         0.72       $         0.51       $         0.77    
    Diluted earnings per share                     0.49                 0.64                 0.72                 0.51                 0.77    
    Dividend declared per share                     0.32                 0.32                 0.32                 0.32                 0.32    
    Book value                     27.16                 26.96                 26.13                 25.72                 25.51    
    Tangible book value (Non-GAAP)                     24.97                 24.77                 23.93                 23.50                 23.29    
    Common stock price:                    
    High                     34.06                 23.98                 21.08                 22.64                 23.64    
    Low                     23.74                 19.29                 17.17                 18.44                 20.05    
    Close                     30.39                 23.79                 20.55                 19.41                 22.51    
    Weighted average common shares:                    
    Basic                     7,555                 7,544                 7,529                 7,513                 7,255    
    Fully Diluted                     7,693                 7,544                 7,529                 7,513                 7,255    
    End-of-period common shares:                    
    Issued                     8,067                 8,065                 8,052                 8,036                 8,019    
    Treasury                     (510 )               (510 )               (510 )               (510 )               (510 )  
    (Dollars in Thousands, Unaudited)   Quarter Ended
        12/31/2024   9/30/2024   6/30/2024   3/31/2024   12/31/2023
    Financial Condition Data:                    
    General                    
    Total assets           $         2,232,338       $         2,259,250       $         2,234,617       $         2,210,116       $         2,204,809    
    Loans, net                     1,865,230                 1,863,586                 1,855,054                 1,843,805                 1,828,318    
    Goodwill                     16,450                 16,450                 16,450                 16,450                 16,450    
    Intangibles                     107                 133                 158                 184                 210    
    Total deposits                     1,706,081                 1,700,321                 1,648,093                 1,618,562                 1,589,493    
    Noninterest-bearing                     456,936                 452,922                 461,092                 471,451                 471,173    
    Savings                     208,340                 211,560                 218,354                 220,932                 219,287    
    NOW                     212,687                 218,279                 209,906                 208,073                 214,888    
    Money Market                     308,977                 321,614                 320,101                 299,916                 299,353    
    Time Deposits                     340,844                 328,294                 310,187                 292,372                 260,067    
    Brokered Deposits                     178,297                 167,652                 128,453                 125,818                 124,725    
    Total interest-bearing deposits                     1,249,145                 1,247,399                 1,187,001                 1,147,111                 1,118,320    
                         
    Core deposits*                     1,186,940                 1,204,375                 1,209,453                 1,200,372                 1,204,701    
    Shareholders’ equity                     205,231                 203,694                 197,087                 193,517                 191,556    
                         
    Asset Quality                    
    Non-performing loans           $         8,904       $         7,940       $         6,784       $         7,958       $         3,148    
    Non-performing loans to total assets                     0.40   %             0.35   %             0.30   %             0.36   %             0.14   %
    Allowance for credit losses on loans                     11,848                 11,588                 11,234                 11,542                 11,446    
    Allowance for credit losses on loans to total loans                     0.63   %             0.62   %             0.60   %             0.62   %             0.62   %
    Allowance for credit losses on loans to non-performing loans                     133.06   %             145.94   %             165.60   %             145.04   %             363.60   %
    Non-performing loans to total loans                     0.47   %             0.42   %             0.36   %             0.43   %             0.17   %
                         
    Capitalization                    
    Shareholders’ equity to total assets                     9.19   %             9.02   %             8.82   %             8.76   %             8.69   %
                                                       
    * Core deposits are defined as total deposits less time deposits and brokered deposits.
     
    Reconciliation of GAAP and Non-GAAP Financial Measures
    (UNAUDITED)
     
        Three Months Ended December 31,   Twelve Months Ended December 31,
    (Dollars in Thousands, Except Per Share Data, Unaudited)    2024    2023    2024    2023
    GAAP net income           $         3,741       $         5,555       $         17,739       $         16,608    
    Net securities losses, net of tax                     35                 14                 47                 141    
    Merger expenses, net of tax                     581                 —                 581                 —    
    Non-GAAP core earnings           $         4,357       $         5,569       $         18,367       $         16,749    
                     
        Three Months Ended December 31,   Twelve Months Ended December 31,
         2024    2023    2024    2023
    Return on average assets (ROA)                     0.67   %             1.02   %             0.80   %             0.79   %
    Net securities losses, net of tax                     0.01   %             —   %             —   %             —   %
    Merger expenses, net of tax                     0.10   %             —   %             0.03   %             —   %
    Non-GAAP core ROA                     0.78   %             1.02   %             0.83   %             0.79   %
                     
        Three Months Ended December 31,   Twelve Months Ended December 31,
         2024    2023    2024    2023
    Return on average equity (ROE)                     7.28   %             12.60   %             9.14   %             9.84   %
    Net securities losses, net of tax                     0.07   %             0.03   %             0.02   %             0.09   %
    Merger expenses, net of tax                     1.13   %             —   %             0.30   %             —   %
    Non-GAAP core ROE                     8.48   %             12.63   %             9.46   %             9.93   %
                     
        Three Months Ended December 31,   Twelve Months Ended December 31,
         2024    2023    2024    2023
    Basic earnings per share (EPS)           $         0.50       $         0.77       $         2.35       $         2.34    
    Net securities losses, net of tax                     —                 —                 0.01                 0.02    
    Merger expenses, net of tax                     0.08                 —                 0.08                 —    
    Non-GAAP basic core EPS           $         0.58       $         0.77       $         2.44       $         2.36    
             
        Three Months Ended December 31,   Twelve Months Ended December 31,
         2024    2023    2024    2023
    Diluted EPS           $         0.49       $         0.77       $         2.35       $         2.34    
    Net securities losses, net of tax                     —                 —                 0.01                 0.02    
    Merger expenses, net of tax                     0.08                 —                 0.08                 —    
    Non-GAAP diluted core EPS           $         0.57       $         0.77       $         2.44       $         2.36    
    (Dollars in Thousands, Except Share and Per Share Data, Unaudited)   Quarter Ended
        12/31/2024   9/30/2024   6/30/2024   3/31/2024   12/31/2023
    Total shareholders’ equity           $         205,231     $         203,694     $         197,087     $         193,517     $         191,556  
    Goodwill                     (16,450 )             (16,450 )             (16,450 )             (16,450 )             (16,450 )
    Intangibles                     (107 )             (133 )             (158 )             (184 )             (210 )
    Tangible shareholders’ equity           $         188,674     $         187,111     $         180,479     $         176,883     $         174,896  
                         
    Shares outstanding                     7,556,743               7,554,488               7,541,474               7,525,372               7,508,994  
                         
    Book value per share           $         27.16     $         26.96     $         26.13     $         25.72     $         25.51  
    Tangible book value per share (Non-GAAP)           $         24.97     $         24.77     $         23.93     $         23.50     $         23.29  
                                             

    The MIL Network –

  • MIL-Evening Report: How do workers cope in no-win situations? Midwives found out the hard way during the pandemic

    Source: The Conversation (Au and NZ) – By James Greenslade-Yeats, Research Fellow in Management, Auckland University of Technology

    Eldar Nurkovic/Shutterstock

    During the pandemic, midwives faced what researchers call a “pragmatic paradox” – a situation where contradictory demands are imposed on individuals who can neither refuse nor fulfil the demands.

    Midwives needed to care for women and babies despite the risk of infecting them with the virus. Their experiences shed important light on how we can think about no-win situations in the workplace.

    In our recently published research, we surveyed 215 New Zealand midwives about their experiences of working through COVID lockdowns and how they coped with what felt at times like a no-win situation.

    The absurdity of contradictory demands

    Pragmatic paradoxes place workers in absurd, no-win situations. They can occur simply because of leadership issues or glitches in management bureaucracies. They can also happen during unique crises – such as the pandemic.

    But many workers are so used to feeling powerless that they may not recognise – much less question – the absurdity of contradictory demands.

    This is especially true in situations where workers lack opportunities to discuss or challenge the directives they receive from above.

    When the pandemic struck, midwives’ professional roles suddenly entailed an inherent contradiction they had no opportunity to question.

    They were contractually obligated to protect societal wellbeing by providing ongoing maternity services. Yet due to the fast evolving situation and initial shortages of safety equipment, providing those services entailed risking public wellbeing by exposing themselves and their clients to the virus.

    As one of our research participants explained:

    I felt that I was in a very difficult situation. I was connecting with multiple “bubbles” on a daily basis. I was scared that I could be in a position to pass COVID on to vulnerable people.

    As expected, most midwives in our study felt disempowered by the tensions of this situation:

    I felt extremely vulnerable. As a lead maternity carer midwife, considered an essential service, I had no control over whether I could just not work.

    But surprisingly, a small number of midwives were seemingly motivated by it. As one explained,

    [My family] thought I was “brave” and “courageous” to keep working – but this was simply my job! I felt like I had a duty to pregnant women to front up and continue as per normal.

    During the pandemic, midwives faced a pragmatic paradox – they were expected to enter multiple people’s homes while also preventing the spread of COVID-19.
    metamorworks/Shutterstock

    Recognised and supported?

    Why would some midwives feel motivated by their contractual obligations to fulfil contradictory demands?

    The crux, we found, was not whether they were aware of the contradiction inherent in their situation, but whether that awareness was accompanied by a sense of professional recognition and support.

    If midwives felt like they were recognised and supported in their ongoing efforts – like valuable members in the “team of five million” – they framed and accepted their contradictory situation as part of a societal duty.

    Midwives placed particular importance on recognition and support from the government and the public. As one explained,

    I felt the love. Heading out on the motorway I would see the sign thanking essential workers. And the government was always mentioning us and thanking us.

    In contrast, if they felt like health system leaders and the public were oblivious to their situation, they interpreted contradictory work demands as stressful and disempowering.

    Another midwife said,

    I became very angry and felt midwives were like lambs to the slaughter – we had no PPE, we were being told to carry on working, in the media we were invisible. Our professional body seemed to put the women we cared for ahead of our wellbeing.

    Managing pragmatic paradoxes

    There are two ways to look at the implications of our findings. One is to suggest pragmatic paradoxes are not as bad as they initially seem.

    Contradictions abound in contemporary society, so it may be inevitable people face conflicting yet unrefusable demands in their jobs. But if leaders and managers can motivate workers to embrace those demands – or at least recognise the difficulty of the tasks – the outcome can be positive.

    An alternative reading is workers who feel motivated by pragmatic paradoxes are casualties of something akin to gaslighting. According to this logic, contradictory demands are imposed by those at the top of their respective organisations and societies, so that’s where the demands ought to be dealt with.

    For example, the government could have minimised the risks midwives faced during the pandemic by better access to protective equipment, thereby resolving their contradictory situation. Suggesting contradictory demands should be passed down to lower-level workers is therefore equivalent to accepting a certain level of oppression.

    Whichever interpretation resonates more, our research underscores the importance of communication as a means of ensuring workers are not disempowered by pragmatic paradoxes.

    Over the course of the pandemic, healthcare workers worldwide eventually improved their contradictory situation by posting on social media and talking to the press. Political leaders and health management recognised the workforce needed greater support to navigate the contradictory demands of risking wellbeing to protect wellbeing.

    The broader lesson is when people face contradictory directives, they should be able to discuss and challenge them.

    Research suggests that in interpersonal situations, humour may be an effective means of doing so without directly threatening the power or competence of those in charge.

    Of course, this brings us to one final paradox: that encouraging humour and employee voice requires fostering the type of environment where pragmatic paradoxes are unlikely to thrive in the first place.

    Tago Mharapara receives funding from Auckland University of Technology

    James Greenslade-Yeats does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. How do workers cope in no-win situations? Midwives found out the hard way during the pandemic – https://theconversation.com/how-do-workers-cope-in-no-win-situations-midwives-found-out-the-hard-way-during-the-pandemic-247679

    MIL OSI Analysis – EveningReport.nz –

  • MIL-OSI USA: Kennedy: “If you don’t believe we’re going to have to cut spending substantially, then you shouldn’t be driving”

    US Senate News:

    Source: United States Senator John Kennedy (Louisiana)

    Watch Kennedy’s comments here. 
    WASHINGTON – Sen. John Kennedy (R-La.) explained why Congress must focus on spending cuts over the next six months even as it bolsters America’s national defense, extends its 2017 tax cuts, addresses inflation and grows the country’s economy enough to pay down its national debt in a speech on the Senate floor.
    Key excerpts of Kennedy’s speech are below:
    “If we don’t extend those tax cuts, it is going to drive our GDP and our economy on a journey to the center of the Earth. Even my Democratic friends know those tax cuts have to be extended, but we have got other things we have to do, too. We are deficit spending. We are spending money around here like it was pond water, like it was ditch water. . . . I don’t want to blame it all on President Biden, but, if the shoe fits, wear it, Cinderella.”
    . . .
    “We have now got $36 trillion worth of national debt. . . . That is the most debt we have ever had, well over 100% of GDP. So, we have got to renew the tax cuts, . . . and we have got to stop the deficit spending, and we have got to reduce our debt—but there’s more. There’s more.
    “We have got to increase defense spending because President Xi is working with President Putin, who is working with the Ayatollah in Iran. . . . I don’t want America to be the world’s policeman, but I don’t want President Xi or President Putin or the Ayatollah in Iran to be the world’s policemen either. Weakness invites the wolves, and we have got to start spending more money on defense.
    “Now you don’t have to be Einstein’s cousin to figure out that all the things that I just described that we have to do in the next year-to-six-months could be called ‘competing interests’—tax cuts, stop deficit spending, reduce the debt, but find more money for defense. Something has got to give . . . we are going to have to reduce spending.
    “Since 2019, the American population has grown 2%. We are not having babies. Two percent—and that is after all the illegal immigration. Do you know what has happened to our budget? It has gone up [nearly] 55%.”
    . . .
    “We’re going to have to reduce spending to pre-pandemic levels, and that is what this [Office of Management and Budget] memorandum today—which temporarily held up the spending of some money, consistent with President Trump’s executive orders—was the first baby step toward. That is what this is all about. That is what this is all about. The world is not going to spin off its axis.”
    . . .
    “So, I hope all the folks today will go home and take off their Batman t-shirts, wash them [because they’re] probably a little sweaty. I hope everybody will go home—those who drink, have a cocktail—take their meds and put this all in perspective. That’s what that OMB memorandum was all about.”
    . . . 
    “If you don’t believe we’re going to have to cut spending substantially in order to get out of this mess that has been created, then you shouldn’t be driving.”
     Watch Kennedy’s full speech here.

    MIL OSI USA News –

  • MIL-OSI Global: Is no amount of alcohol safe? Understanding risks and public health guidelines

    Source: The Conversation – Canada – By Scott Lear, Professor of Health Sciences, Simon Fraser University

    While it may be true that there is no safe level of alcohol consumption, are alarmist statements a good motivator for health messaging, or is there danger to using them? (Shutterstock)

    The United States surgeon general recently called for a warning of cancer risk on alcohol labels. And I agree. But the discourse that has come out in the media, by health professionals and health influencers, has been alarmist and a disservice to informing the public on the real cancer risks associated with alcohol.

    I’m a professor in Health Sciences at Simon Fraser University and I study how behaviours relate to the disease. I also write a blog on the role health behaviours play in your health.

    Alcohol and cancer risk

    The surgeon general’s comments follow reports from the World Health Organization and Canada’s Guidance on Alcohol and Health, both of which state there is no safe amount of alcohol you can consume.

    This has been repeated by health professionals, those in public health and on social media, where health influencers have described alcohol as a toxin.

    But are these alarmist statements a good motivator for health messaging, or is there danger to using them?

    Statistically, your risk for cancer goes up from the very first sip of alcohol. That doesn’t mean you will get cancer from drinking alcohol, it just means your chances increase. And as you drink more alcohol, your chances further increase. It’s like betting in roulette: the more numbers you bet on, the more likely you are to win. Or in this case, lose.

    Out of 800 women, one drink per week will result in two additional women getting breast cancer.
    (Shutterstock)

    However, what’s lost in this messaging is how much this risk is. Based on Canada’s Guidance on Alcohol and Health, having one drink per week increases a women’s risk for breast cancer by 1.8 per cent. Approximately one in eight women will develop breast cancer in their life. Therefore, out of 800 women, one drink per week will result in two additional women getting breast cancer. Having one drink per day increases the risk seven-fold. These are real people who might otherwise not get breast cancer if they abstained from alcohol.

    While saying no amount of alcohol is safe is true, this can apply to a lot of common activities. In Canada, there are approximately 300 pedestrian deaths per year. Each day, on average, five Canadians die in motor vehicle accidents.

    While these numbers are much lower than the number of people who die from cancer each year, it would also be accurate to say there is no amount of walking or driving that is safe. Despite this, people will continue to cross the street and people will continue to drive. But this illustrates the challenge in informing the public about risks and changing behaviour.

    Fear in public health messaging

    The use of fear in public health messaging should only be used if there’s an effective solution. In the case of alcohol, there is: abstinence.
    (Shutterstock)

    The use of fear in public health has a long history. But measuring the effect of these campaigns is hard. Graphic images are used on tobacco products to scare people away from smoking. Carefully controlled studies indicate they increase health awareness but may have limited effect on smoking. However, similar graphic images on bottles of sugar-sweetened beverages in controlled studies has been shown to reduce consumption.

    During the COVID-19 pandemic, fear was at the forefront of public health efforts to control the spread of SARS-CoV-2. Indeed, the use of fear in public health messaging seemed to be quite an effective tool in ensuring behavioural compliance in pandemic measures. Community interviews of parents showed fear was at the root of both getting their children vaccinated (fear of the disease) or not (fear of the vaccination).

    The use of fear in public health messaging should only be used if there’s an effective solution. In the case of alcohol, there is: abstinence. But the use of fear should also be commensurate with the risk, otherwise it risks having people tune out.

    This may be particularly problematic when previous guidelines stated beneficial effects of moderate drinking and current guidelines on alcohol state one to two drinks per day is acceptable. Instead, the public may be best served by communicating the risk in terms the public understands, such as how many more people will get cancer from drinking.

    Alcohol should have a warning label on it

    Alcohol consumption in Canada is on the decline. In 2022, alcohol consumption decreased by 1.2 per cent compared to 2021. And in 2023, 54 per cent of Canadians reported having no alcohol over the previous week, with younger Canadians drinking less than their older counterparts. These trends are similar in the United States.

    More than 40 countries have a warning label on alcohol (although far fewer mention cancer), but Canada and many European countries are not included. They should be. Alcohol is a highly addictive substance that can destroy the lives of those addicted to it and those around them. It impairs judgment and accounts for dozens of deaths per year from drinking and driving.

    Pregnant women drinking alcohol also increase their risk of their child having fetal alcohol spectrum disorder. Alcohol is also a drug you can overdose from.

    Warning labels on alcohol are a good step to reduce health risks, as long as they are clear and informative.

    Scott Lear receives funding from the Canadian Institutes of Health Research and Hamilton Health Sciences, and has received funding from the Heart and Stroke Foundation, Novo Nordisk, and the Robert Wood Johnson Foundation.

    – ref. Is no amount of alcohol safe? Understanding risks and public health guidelines – https://theconversation.com/is-no-amount-of-alcohol-safe-understanding-risks-and-public-health-guidelines-247883

    MIL OSI – Global Reports –

  • MIL-OSI Russia: Slovak Republic: Staff Concluding Statement of the 2025 Article IV Mission

    Source: IMF – News in Russian

    January 29, 2025

    A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

    The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

    Washington, DC: An International Monetary Fund mission, led by Magnus Saxegaard, and comprising Christian Bogmans, Shinya Kotera, Yen Mooi, and Jonathan Pampolina conducted discussions for the 2025 Article IV consultation with the Slovak Republic virtually during December 4-13, 2024, and in Bratislava, Slovakia, during January 15-28, 2025. Sumiko Ogawa, Financial Sector Assessment Program (FSAP) mission chief, joined the concluding meeting. At the conclusion of the visit, the mission issued the following statement:

    Slovakia, like much of the EU, faces headwinds related to geoeconomic fragmentation, high energy costs, and demographic change. Growth has held up in recent years, but at the cost of a much-increased fiscal deficit. Steadfast implementation of the authorities’ ambitious 4-year consolidation plan is needed to reverse the upward trajectory in public debt, alongside policies to strengthen financial resilience and structural reforms to bolster medium-term growth, including through efforts to strengthen governance and reduce vulnerability to corruption.

    Economic Developments, Outlook, and Risks

    The Slovak economy is recovering. The economy slowed sharply in 2022-23, but growth is estimated to have accelerated to 2.1 percent in 2024, outpacing that in the euro area. Private consumption was the main driver fueled by recovering real wages, the extension of household energy support, and more generous pensions. Meanwhile, an increase in public consumption partially offset a slowdown in EU-funded public investments. While inflation has declined from record-highs in 2023, it increased in 2024H2 due to higher global food price inflation. Core inflation is higher than in the euro area, driven by a tight labor market and strong nominal wage growth.

    Economic growth is projected to moderate to 1.9 percent in 2025, before rising to 2.1 percent in 2026. The fiscal consolidation in 2025 will lower growth directly by slowing government spending, and indirectly as higher taxes put upward pressure on prices and dampen private consumption, though the effect will be partially mitigated by the one-year extension of household energy support and strong EU-funded public investments. Meanwhile external demand is expected to remain subdued. For 2026, higher growth in trading partners and increased capacity in the automotive sector is expected to boost exports. Inflation is projected to rise temporarily to 4.0 percent in 2025 and moderate to 3.2 percent in 2026. Adverse demographic trends and lower productivity growth imply that Slovakia’s medium-term growth, as projected by staff, is expected to be significantly lower than its pre-pandemic average, and below IMF forecasts of medium-term growth in other Central, Eastern, and Southeastern Europe (CESEE) countries with comparable income levels.

    Risks to growth are tilted to the downside while risks to inflation are broadly balanced. Near term risks include a global slowdown or intensifying trade policy uncertainty which would weigh on growth and exert downward pressure on inflation. Domestically, slippages in fiscal consolidation could increase sovereign spreads and tighten financial conditions. A lack of political consensus on structural reforms and concerns about institutional quality could deter private investment and slow the disbursement of EU funds that have been critical in supporting public investment. A correction in real estate prices combined with an economic downturn could trigger losses for financial institutions. Meanwhile, continued strong nominal wage growth could undermine competitiveness and keep inflation elevated.

    Fiscal Policy

    Slovakia’s fiscal outlook is challenging. The fiscal deficit is projected to have increased to 5.7 percent in 2024 from 5.2 percent in 2023 due to a combination of revenue easing and higher spending that more than offset the 0.6 percent of GDP in net consolidation measures in the 2024 budget. This increase follows the 3.6 percentage points of GDP widening of the fiscal deficit in 2023. While the change in government in October 2023 meant time to finalize the 2024 budget was short, it is clear ex-post that robust growth combined with significant medium-term fiscal challenges would have warranted a tighter fiscal stance in 2024.

    The mission welcomes the authorities’ ambitious fiscal consolidation targets for 2025-28, which is commensurate with the scale of Slovakia’s fiscal challenges.

    • The 2025 budget targets a reduction in the headline deficit to 4.7 percent of GDP. Fund staff’s more conservative macroeconomic forecasts imply an overall deficit of 4.9 percent of GDP in 2025. However, the projected structural tightening is broadly in line with the budget. These forecasts are subject to significant downside risks, including from a lower-than-expected yield from the fiscal consolidation measures or a worse economic outlook. If revenues in 2025 appear to be falling short of targets (as implied by staff’s macroeconomic forecasts) the authorities should limit the resulting increase in the deficit, including by saving as much as possible of the contingency buffer.
    • Beyond 2025, the medium-term fiscal structural plan targets another 2.5 percentage points of GDP reduction in the fiscal deficit to bring it close to 2 percent of GDP by 2028, though measures to achieve this consolidation are not yet specified. Staff projections suggest that the fiscal consolidation envisaged over the next four years, if met, will reverse the increase in the deficit over the past two years and put public debt on a downward path by the end of the projection period. Staff’s baseline forecast, which does not include any further consolidation beyond that in the 2025 budget, entails a gradual increase in the deficit over the medium term, with public debt rising to 75 percent of GDP by end-2030 from 56 percent of GDP in 2023.

    The consolidation measures for 2025 are a step in the right direction. Several of the measures are welcome and will help reduce the deficit on a structural basis, including the increase in the basic VAT rate, and better targeting of child benefits. However, the increase in the number of items subject to reduced VAT rates deprives the government of much needed revenue, while the financial transactions tax (FTT) could weaken financial intermediation and increase incentives for informality.

    The measures to lower Slovakia’s fiscal deficit closer to 2 percent of GDP by 2028 should be consistent with Slovakia’s long-term growth and climate objectives, while protecting the most vulnerable in society. While there is no definitive evidence that reducing spending is more effective than increasing revenues in terms of economic efficiency or equity, prioritizing the rationalization of expenditures moving forward would result in a more balanced fiscal consolidation, given the reliance on revenue-based measures thus far.

    • Spending: According to Fund staff estimates, value for Money initiatives, including a reduction in subsidies, could yield savings of up to 0.5 percent of GDP, while improved targeting could reduce social spending by as much as 0.8 percent of GDP. Also, there may be scope to increase efficiency by trimming departmental budgets and reducing public sector wage growth, though this should be done cautiously to avoid unintended cuts in service delivery. Reversing the increase of the 13th pension could yield about 0.4 percent of GDP in savings while eliminating the recently introduced early retirement option could yield fiscal savings over the long-term. Finally, energy support measures to households (projected to cost 0.2 percent of GDP in 2025) should be phased out as they are costly and discourage energy conservation.
    • Revenues: Reducing the number of items subject to reduced VAT rates could generate as much as 1.3 percent of GDP in savings, while raising property taxes by transitioning to a market value-based system could generate around 0.3 percent in additional revenue. Plans to counter tax evasion and reduce the VAT compliance gap are welcome and could yield up to 0.5 percent of GDP in revenues. Finally, the authorities should replace the FTT with alternative revenue sources, while phasing out the bank levy as planned.

    Safeguarding Slovakia’s strong fiscal framework is essential for the credibility of the consolidation effort. Aligning Slovakia’s national expenditure ceiling framework with the new EU fiscal rules avoids inconsistencies and streamlines the budget process but continued focus on the long-term fiscal outlook (beyond the horizon used for the EU fiscal framework) remains useful given Slovakia’s medium-term fiscal challenges. Slovakia’s strong and independent Council for Budgetary Responsibility can help by monitoring the impact of government policies on the long-term sustainability of public finances. Lastly, the mission recommends reforming the debt brake before it comes into effect in 2026, to avoid the risk of a disruptive fiscal consolidation.

    The mission welcomes the government’s objective to increase absorption of EU funds. The Slovak government is working with the OECD and the European Commission to identify concrete measures to increase absorption. In this regard, there is a need to strengthen project management capacity, especially at the municipal level, while the preparation of a national investment plan could help guide the timely selection of investment projects.

    Financial Sector Policy

    The 2024 Financial Sector Assessment Program (FSAP)—an in-depth review of the financial sector—assessed the banking sector to be resilient against severe shocks, reflecting a healthy level of buffers and profitability. The residential real estate market remains a source of vulnerability. In particular, tighter financial conditions, an economic slowdown, and a decline in still-elevated house prices could put pressure on households’ repayment capacity and increase the riskiness of banks’ mortgage portfolios. Also, risks remain elevated in the office segment of the commercial real estate (CRE) market while banks with large exposures to firms facing geopolitical risks could be vulnerable to credit losses. That said, solvency stress tests indicate that banks have sufficient capital to withstand severe macro-financial shocks. Likewise, liquidity stress tests indicate that the banking system as a whole is resilient to funding and market liquidity shocks.

    The current macroprudential stance is broadly appropriate, but the policy framework could be further developed over the medium term to help attenuate cyclical and structural risks.

    • Residual risks in the residential and CRE markets suggest the current level of the countercyclical capital buffer (CCyB) is appropriate. Borrower-based measures (BBMs) have contributed to contain household credit risk and should remain in force. The authorities should stand ready to activate the systemic risk buffer on banks’ CRE exposures before risks in the sector become systemic.
    • The macroprudential policy framework could be further strengthened by adopting a positive neutral countercyclical capital buffer (pnCCyB). A pnCCyB would help safeguard the availability of releasable capital and give policymakers time to collect evidence of a build-up in vulnerabilities. A healthy level of profitability and/or the availability of voluntary buffers would help facilitate a smooth introduction of a pnCCyB. In addition, remaining leakages in the BBMs (e.g. co-financing a mortgage with a consumer loan) should be closed, while the BBM speed limits should be differentiated across borrower categories (e.g. first- and second-time home buyers, investors, and mortgage top-ups).

    Financial resilience could be bolstered by strengthening the supervision of less significant institutions (LSIs) as well as the crisis management framework.

    • The NBS’s supervisory powers and operational independence should be enhanced by restricting banks’ appeals only to supervisory decisions and corrective measures that are finalized, and by strengthening the legal protections for supervisors. Moreover, the NBS should streamline off-site supervision to align with LSI’s risk profile and strengthen on-site inspections to bolster the overall effectiveness of LSI supervision.
    • The financial safety net and crisis management framework should be reinforced by ensuring that the National Resolution Authority (NRA) has adequate resources, preventing the judiciary from suspending or reversing resolution decisions, ensuring NRA resolutions are immediately enforceable, and enhancing the legal protection of staff involved in resolution. Meanwhile, the authorities should remove active bankers from the board of the deposit guarantee fund to prevent conflicts of interest, while expanding the fund’s mandate and financial strength to enable it to play a broader role in crisis management.

    Efforts to strengthen the AML/CFT framework should continue. In particular, the authorities should review the criteria for the application of ML/TF sanctions, strengthen coordination between the NBS and Financial Intelligence Unit, and introduce mechanisms to verify beneficial ownership information and sanction the submission of inaccurate information.

    Structural Policy

    Slovakia needs structural reforms to diversify its economy, enhance resilience to global shocks and sustain productivity growth. The success of the automotive sector has led to decades of strong growth but exposed Slovakia to global trends related to the green transition and automation. To improve resilience and sustain productivity growth the authorities should intensify efforts to promote innovation and technology adoption. In this context, the mission welcomes the increase in direct government R&D spending, but further efforts are needed to stimulate business R&D including in small firms and startups that are not yet profitable. At the same time, deepening the European single market would allow innovative firms to leverage economies of scale. Finally, advancing the capital market union would facilitate cross-border flows of capital including equity financing and venture capital, which is critical for supporting startups, particularly in countries with less-developed capital markets.

    The automotive sector is facing headwinds related to the unfolding green transition and rapid rise of electronic vehicle (EV) production in other markets. To address these challenges, the authorities should encourage innovation across the entire domestic EV production supply chain, promote efforts to diversify the economy, and enhance Active Labor Market Policies (ALMPs) to facilitate the movement of workers across sectors.

    The challenges of an aging population require policies to increase the labor force. Flexible working arrangements, shortening the 3-year long maximum parental leave period, and improved child and elderly care could increase female participation, while tax credits and restrictions on early retirement could raise labor force participation among the elderly. The recent easing of national visa rules for foreign workers in professions with shortages could boost migrant inflows, but further efforts are needed to integrate and retain migrants, including by scaling up language training and streamlining certification recognition. Increased focus on vocational education and training would help bring down Slovakia’s high youth unemployment.

    Maintaining a favorable investment climate, strengthening governance, and reducing vulnerability to corruption will help lift the economy’s growth potential.

    • Governance indicators and perceptions of judicial independence lag peers, and recent surveys point to a decline in the perceived effectiveness of anti-corruption policies.
    • A new national anti-corruption strategy is expected to be released mid-year. In that context, the authorities should verify that the new institutional framework that replaced the dissolved Special Prosecutor’s Office and National Crime Agency has not weakened the institutional capacity to investigate and prosecute high-level corruption. Also, the asset declaration and conflict of interest framework for high-risk public officials could be improved. Specifically, broadening the scope of covered public officials, and centralizing and digitizing the submission and publication process with robust verification procedures and appropriate sanctions, would be beneficial. Finally, existing safeguards pertaining to the Prosecutor General’s authority to annul decisions by lower-level prosecutors should be strengthened.
    • Safeguards to ensure members of the Judicial Council can only be recalled based on specific and reasonable grounds would enhance judicial independence. Also, the crime of “abuse of law”, whereby judges are subject to criminal liability for their decisions, can have an intimidating effect on judges. Additional safeguards to ensure the framework balances the accountability of judges and independent judicial decision-making would be beneficial.

    While greenhouse gas emissions have fallen by 50 percent since 1990, further efforts are needed to cut emissions by 55 percent by 2030 and to reach net-zero by 2050. Slovakia should move expeditiously to fully implement the ETS II scheme for road transport and buildings and could consider gradually raising environmental levies in these sectors until the scheme becomes operational in 2027. The authorities should continue exploring options to replace two coal-fired blast furnaces in the steel industry and phase out fossil fuel subsidies. Also, supporting environmental R&D and green technology would support mitigation efforts and economic diversification. Lastly, a more integrated energy market in Europe would encourage investment in renewables and enhance energy security and reduce energy prices.

    The IMF team thanks the authorities and other interlocutors for their generous hospitality and constructive dialogue.

     Table 1. Slovakia: Selected Economic Indicators, 2020–2030 
     
    IMF Communications Department
    MEDIA RELATIONS

    PRESS OFFICER: Boris Balabanov

    Phone: +1 202 623-7100Email: MEDIA@IMF.org

    https://www.imf.org/en/News/Articles/2025/01/29/mcs-012925-slovak-republic-staff-concluding-statement-of-the-2025-article-iv-mission

    MIL OSI

    MIL OSI Russia News –

  • MIL-OSI Economics: Slovak Republic: Staff Concluding Statement of the 2025 Article IV Mission

    Source: International Monetary Fund

    January 29, 2025

    A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

    The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

    Washington, DC: An International Monetary Fund mission, led by Magnus Saxegaard, and comprising Christian Bogmans, Shinya Kotera, Yen Mooi, and Jonathan Pampolina conducted discussions for the 2025 Article IV consultation with the Slovak Republic virtually during December 4-13, 2024, and in Bratislava, Slovakia, during January 15-28, 2025. Sumiko Ogawa, Financial Sector Assessment Program (FSAP) mission chief, joined the concluding meeting. At the conclusion of the visit, the mission issued the following statement:

    Slovakia, like much of the EU, faces headwinds related to geoeconomic fragmentation, high energy costs, and demographic change. Growth has held up in recent years, but at the cost of a much-increased fiscal deficit. Steadfast implementation of the authorities’ ambitious 4-year consolidation plan is needed to reverse the upward trajectory in public debt, alongside policies to strengthen financial resilience and structural reforms to bolster medium-term growth, including through efforts to strengthen governance and reduce vulnerability to corruption.

    Economic Developments, Outlook, and Risks

    The Slovak economy is recovering. The economy slowed sharply in 2022-23, but growth is estimated to have accelerated to 2.1 percent in 2024, outpacing that in the euro area. Private consumption was the main driver fueled by recovering real wages, the extension of household energy support, and more generous pensions. Meanwhile, an increase in public consumption partially offset a slowdown in EU-funded public investments. While inflation has declined from record-highs in 2023, it increased in 2024H2 due to higher global food price inflation. Core inflation is higher than in the euro area, driven by a tight labor market and strong nominal wage growth.

    Economic growth is projected to moderate to 1.9 percent in 2025, before rising to 2.1 percent in 2026. The fiscal consolidation in 2025 will lower growth directly by slowing government spending, and indirectly as higher taxes put upward pressure on prices and dampen private consumption, though the effect will be partially mitigated by the one-year extension of household energy support and strong EU-funded public investments. Meanwhile external demand is expected to remain subdued. For 2026, higher growth in trading partners and increased capacity in the automotive sector is expected to boost exports. Inflation is projected to rise temporarily to 4.0 percent in 2025 and moderate to 3.2 percent in 2026. Adverse demographic trends and lower productivity growth imply that Slovakia’s medium-term growth, as projected by staff, is expected to be significantly lower than its pre-pandemic average, and below IMF forecasts of medium-term growth in other Central, Eastern, and Southeastern Europe (CESEE) countries with comparable income levels.

    Risks to growth are tilted to the downside while risks to inflation are broadly balanced. Near term risks include a global slowdown or intensifying trade policy uncertainty which would weigh on growth and exert downward pressure on inflation. Domestically, slippages in fiscal consolidation could increase sovereign spreads and tighten financial conditions. A lack of political consensus on structural reforms and concerns about institutional quality could deter private investment and slow the disbursement of EU funds that have been critical in supporting public investment. A correction in real estate prices combined with an economic downturn could trigger losses for financial institutions. Meanwhile, continued strong nominal wage growth could undermine competitiveness and keep inflation elevated.

    Fiscal Policy

    Slovakia’s fiscal outlook is challenging. The fiscal deficit is projected to have increased to 5.7 percent in 2024 from 5.2 percent in 2023 due to a combination of revenue easing and higher spending that more than offset the 0.6 percent of GDP in net consolidation measures in the 2024 budget. This increase follows the 3.6 percentage points of GDP widening of the fiscal deficit in 2023. While the change in government in October 2023 meant time to finalize the 2024 budget was short, it is clear ex-post that robust growth combined with significant medium-term fiscal challenges would have warranted a tighter fiscal stance in 2024.

    The mission welcomes the authorities’ ambitious fiscal consolidation targets for 2025-28, which is commensurate with the scale of Slovakia’s fiscal challenges.

    • The 2025 budget targets a reduction in the headline deficit to 4.7 percent of GDP. Fund staff’s more conservative macroeconomic forecasts imply an overall deficit of 4.9 percent of GDP in 2025. However, the projected structural tightening is broadly in line with the budget. These forecasts are subject to significant downside risks, including from a lower-than-expected yield from the fiscal consolidation measures or a worse economic outlook. If revenues in 2025 appear to be falling short of targets (as implied by staff’s macroeconomic forecasts) the authorities should limit the resulting increase in the deficit, including by saving as much as possible of the contingency buffer.
    • Beyond 2025, the medium-term fiscal structural plan targets another 2.5 percentage points of GDP reduction in the fiscal deficit to bring it close to 2 percent of GDP by 2028, though measures to achieve this consolidation are not yet specified. Staff projections suggest that the fiscal consolidation envisaged over the next four years, if met, will reverse the increase in the deficit over the past two years and put public debt on a downward path by the end of the projection period. Staff’s baseline forecast, which does not include any further consolidation beyond that in the 2025 budget, entails a gradual increase in the deficit over the medium term, with public debt rising to 75 percent of GDP by end-2030 from 56 percent of GDP in 2023.

    The consolidation measures for 2025 are a step in the right direction. Several of the measures are welcome and will help reduce the deficit on a structural basis, including the increase in the basic VAT rate, and better targeting of child benefits. However, the increase in the number of items subject to reduced VAT rates deprives the government of much needed revenue, while the financial transactions tax (FTT) could weaken financial intermediation and increase incentives for informality.

    The measures to lower Slovakia’s fiscal deficit closer to 2 percent of GDP by 2028 should be consistent with Slovakia’s long-term growth and climate objectives, while protecting the most vulnerable in society. While there is no definitive evidence that reducing spending is more effective than increasing revenues in terms of economic efficiency or equity, prioritizing the rationalization of expenditures moving forward would result in a more balanced fiscal consolidation, given the reliance on revenue-based measures thus far.

    • Spending: According to Fund staff estimates, value for Money initiatives, including a reduction in subsidies, could yield savings of up to 0.5 percent of GDP, while improved targeting could reduce social spending by as much as 0.8 percent of GDP. Also, there may be scope to increase efficiency by trimming departmental budgets and reducing public sector wage growth, though this should be done cautiously to avoid unintended cuts in service delivery. Reversing the increase of the 13th pension could yield about 0.4 percent of GDP in savings while eliminating the recently introduced early retirement option could yield fiscal savings over the long-term. Finally, energy support measures to households (projected to cost 0.2 percent of GDP in 2025) should be phased out as they are costly and discourage energy conservation.
    • Revenues: Reducing the number of items subject to reduced VAT rates could generate as much as 1.3 percent of GDP in savings, while raising property taxes by transitioning to a market value-based system could generate around 0.3 percent in additional revenue. Plans to counter tax evasion and reduce the VAT compliance gap are welcome and could yield up to 0.5 percent of GDP in revenues. Finally, the authorities should replace the FTT with alternative revenue sources, while phasing out the bank levy as planned.

    Safeguarding Slovakia’s strong fiscal framework is essential for the credibility of the consolidation effort. Aligning Slovakia’s national expenditure ceiling framework with the new EU fiscal rules avoids inconsistencies and streamlines the budget process but continued focus on the long-term fiscal outlook (beyond the horizon used for the EU fiscal framework) remains useful given Slovakia’s medium-term fiscal challenges. Slovakia’s strong and independent Council for Budgetary Responsibility can help by monitoring the impact of government policies on the long-term sustainability of public finances. Lastly, the mission recommends reforming the debt brake before it comes into effect in 2026, to avoid the risk of a disruptive fiscal consolidation.

    The mission welcomes the government’s objective to increase absorption of EU funds. The Slovak government is working with the OECD and the European Commission to identify concrete measures to increase absorption. In this regard, there is a need to strengthen project management capacity, especially at the municipal level, while the preparation of a national investment plan could help guide the timely selection of investment projects.

    Financial Sector Policy

    The 2024 Financial Sector Assessment Program (FSAP)—an in-depth review of the financial sector—assessed the banking sector to be resilient against severe shocks, reflecting a healthy level of buffers and profitability. The residential real estate market remains a source of vulnerability. In particular, tighter financial conditions, an economic slowdown, and a decline in still-elevated house prices could put pressure on households’ repayment capacity and increase the riskiness of banks’ mortgage portfolios. Also, risks remain elevated in the office segment of the commercial real estate (CRE) market while banks with large exposures to firms facing geopolitical risks could be vulnerable to credit losses. That said, solvency stress tests indicate that banks have sufficient capital to withstand severe macro-financial shocks. Likewise, liquidity stress tests indicate that the banking system as a whole is resilient to funding and market liquidity shocks.

    The current macroprudential stance is broadly appropriate, but the policy framework could be further developed over the medium term to help attenuate cyclical and structural risks.

    • Residual risks in the residential and CRE markets suggest the current level of the countercyclical capital buffer (CCyB) is appropriate. Borrower-based measures (BBMs) have contributed to contain household credit risk and should remain in force. The authorities should stand ready to activate the systemic risk buffer on banks’ CRE exposures before risks in the sector become systemic.
    • The macroprudential policy framework could be further strengthened by adopting a positive neutral countercyclical capital buffer (pnCCyB). A pnCCyB would help safeguard the availability of releasable capital and give policymakers time to collect evidence of a build-up in vulnerabilities. A healthy level of profitability and/or the availability of voluntary buffers would help facilitate a smooth introduction of a pnCCyB. In addition, remaining leakages in the BBMs (e.g. co-financing a mortgage with a consumer loan) should be closed, while the BBM speed limits should be differentiated across borrower categories (e.g. first- and second-time home buyers, investors, and mortgage top-ups).

    Financial resilience could be bolstered by strengthening the supervision of less significant institutions (LSIs) as well as the crisis management framework.

    • The NBS’s supervisory powers and operational independence should be enhanced by restricting banks’ appeals only to supervisory decisions and corrective measures that are finalized, and by strengthening the legal protections for supervisors. Moreover, the NBS should streamline off-site supervision to align with LSI’s risk profile and strengthen on-site inspections to bolster the overall effectiveness of LSI supervision.
    • The financial safety net and crisis management framework should be reinforced by ensuring that the National Resolution Authority (NRA) has adequate resources, preventing the judiciary from suspending or reversing resolution decisions, ensuring NRA resolutions are immediately enforceable, and enhancing the legal protection of staff involved in resolution. Meanwhile, the authorities should remove active bankers from the board of the deposit guarantee fund to prevent conflicts of interest, while expanding the fund’s mandate and financial strength to enable it to play a broader role in crisis management.

    Efforts to strengthen the AML/CFT framework should continue. In particular, the authorities should review the criteria for the application of ML/TF sanctions, strengthen coordination between the NBS and Financial Intelligence Unit, and introduce mechanisms to verify beneficial ownership information and sanction the submission of inaccurate information.

    Structural Policy

    Slovakia needs structural reforms to diversify its economy, enhance resilience to global shocks and sustain productivity growth. The success of the automotive sector has led to decades of strong growth but exposed Slovakia to global trends related to the green transition and automation. To improve resilience and sustain productivity growth the authorities should intensify efforts to promote innovation and technology adoption. In this context, the mission welcomes the increase in direct government R&D spending, but further efforts are needed to stimulate business R&D including in small firms and startups that are not yet profitable. At the same time, deepening the European single market would allow innovative firms to leverage economies of scale. Finally, advancing the capital market union would facilitate cross-border flows of capital including equity financing and venture capital, which is critical for supporting startups, particularly in countries with less-developed capital markets.

    The automotive sector is facing headwinds related to the unfolding green transition and rapid rise of electronic vehicle (EV) production in other markets. To address these challenges, the authorities should encourage innovation across the entire domestic EV production supply chain, promote efforts to diversify the economy, and enhance Active Labor Market Policies (ALMPs) to facilitate the movement of workers across sectors.

    The challenges of an aging population require policies to increase the labor force. Flexible working arrangements, shortening the 3-year long maximum parental leave period, and improved child and elderly care could increase female participation, while tax credits and restrictions on early retirement could raise labor force participation among the elderly. The recent easing of national visa rules for foreign workers in professions with shortages could boost migrant inflows, but further efforts are needed to integrate and retain migrants, including by scaling up language training and streamlining certification recognition. Increased focus on vocational education and training would help bring down Slovakia’s high youth unemployment.

    Maintaining a favorable investment climate, strengthening governance, and reducing vulnerability to corruption will help lift the economy’s growth potential.

    • Governance indicators and perceptions of judicial independence lag peers, and recent surveys point to a decline in the perceived effectiveness of anti-corruption policies.
    • A new national anti-corruption strategy is expected to be released mid-year. In that context, the authorities should verify that the new institutional framework that replaced the dissolved Special Prosecutor’s Office and National Crime Agency has not weakened the institutional capacity to investigate and prosecute high-level corruption. Also, the asset declaration and conflict of interest framework for high-risk public officials could be improved. Specifically, broadening the scope of covered public officials, and centralizing and digitizing the submission and publication process with robust verification procedures and appropriate sanctions, would be beneficial. Finally, existing safeguards pertaining to the Prosecutor General’s authority to annul decisions by lower-level prosecutors should be strengthened.
    • Safeguards to ensure members of the Judicial Council can only be recalled based on specific and reasonable grounds would enhance judicial independence. Also, the crime of “abuse of law”, whereby judges are subject to criminal liability for their decisions, can have an intimidating effect on judges. Additional safeguards to ensure the framework balances the accountability of judges and independent judicial decision-making would be beneficial.

    While greenhouse gas emissions have fallen by 50 percent since 1990, further efforts are needed to cut emissions by 55 percent by 2030 and to reach net-zero by 2050. Slovakia should move expeditiously to fully implement the ETS II scheme for road transport and buildings and could consider gradually raising environmental levies in these sectors until the scheme becomes operational in 2027. The authorities should continue exploring options to replace two coal-fired blast furnaces in the steel industry and phase out fossil fuel subsidies. Also, supporting environmental R&D and green technology would support mitigation efforts and economic diversification. Lastly, a more integrated energy market in Europe would encourage investment in renewables and enhance energy security and reduce energy prices.

    The IMF team thanks the authorities and other interlocutors for their generous hospitality and constructive dialogue.

     Table 1. Slovakia: Selected Economic Indicators, 2020–2030 
     
    IMF Communications Department
    MEDIA RELATIONS

    PRESS OFFICER: Boris Balabanov

    Phone: +1 202 623-7100Email: MEDIA@IMF.org

    MIL OSI Economics –

  • MIL-OSI Global: AI can affect anonymous surveys. Here are some ways for researchers to mitigate its impact

    Source: The Conversation – Canada – By Christopher Dietzel, Postdoctoral fellow, the DIGS Lab, Concordia University

    Anonymous surveys protect participants from becoming targets of anti-2SLGBTQIA+ hate. However, researchers need to be careful about the potential for bad actors to spoil survey data. (Shutterstock)

    As 2SLGBTQIA+ people are increasingly under threat in Canada, and facing escalating dangers from the Donald Trump administration in the United States, more research is urgently needed to understand how to address issues of gender and sexual diversity moving forward.

    Unfortunately, researchers who aim to explore emerging issues impacting 2SLGBTQIA+ communities and develop interventions to support them are facing a new problem: what if our research participants aren’t actually real?

    Anonymous online surveys are a great way for marginalized groups, including 2SLGBTQIA+ communities, to contribute to research without significant time commitments. Anonymous surveys also protect participants from becoming targets of anti-2SLGBTQIA+ hate. However, researchers need to be careful about the potential of disingenuous participants to spoil survey data.

    The anonymous nature of online research makes it easy for someone to infiltrate research studies and submit false responses. This issue is not new, as researchers have dealt with this concern for years. Ineligible participants may participate in surveys to access honorariums or sabotage research on topics they disagree with.

    As artificial intelligence (AI) becomes more advanced, this problem is magnified. And while AI detectors exist, they are not always accurate and cannot confront the issue of human respondents who are simply lying in their survey responses.

    Our team has conducted online research about digital hate targeting 2SLGBTQIA+ professionals and organizations in Canada through the Ontario Digital Literacy and Access Network. We encountered this problem with two surveys we administered in 2024. Researchers from the SHaG Lab at Dalhousie University and the DIGS Lab at Concordia University confronted similar issues when conducting online surveys about 2SLGBTQIA+ issues.

    This shared concern about participant authenticity and the potential infiltration of dishonest respondents — whether AI or not — has led us to identify issues that could have a negative impact on online research.

    Anonymous online surveys are a great way for marginalized groups, including 2SLGBTQIA+ communities, to contribute to research; however, ineligible participants and AI bots can undermine their accuracy.
    (Shutterstock)

    The challanges we encountered

    Location:
    Our most recent survey focused on Two Spirit, trans and non-binary professionals working at 2SLGBTQIA+ organizations in Canada. The narrow participant criteria made it easy to check IP addresses and spot ones that did not qualify. We could also identify and block IP addresses that submitted multiple responses.

    When reviewing the data, we found that many of the suspicious responses were linked to one IP address located in China. We also received a high volume of responses claiming to come from Prince Edward Island. This was suspect, not only because of contradictory IP addresses, but because the number of responses seemed disproportionately high for the population of the smallest Canadian province.

    Time:
    Our survey received 1,491 responses within three days, which was suspicious given the narrow eligibility criteria. Many responses were completed too quickly for a survey that included written responses. We also noticed that there were waves of responses, and those respondents completed the survey in roughly the same amount of time.

    Incentives:
    It is hard to know exactly why people complete surveys for which they are ineligible. Some people may may do it for the compensation on offer. Others many want to spoil the data. We noticed that false responses increased when some form of compensation was offered, whether it was cash or gift cards.



    Read more:
    Imposter participants challenge research integrity in the digital age

    Email addresses:
    Another pattern we noticed was the use of generic Outlook or Yahoo email addresses, which followed the formula of first name-last name-numbers. While many people might use this same format, this is also an easy and quick way to create email addresses en masse.

    Contradictions:
    When looking at the data, we found that many responses did not make sense for our target demographic group. There were a lot of “prefer not to answer” responses to prompts about pronouns, gender identity and sexual orientation.

    Many respondents also selected “yes” when asked if they were First Nations, Inuit or Métis, but then wrote “white” when asked about their race or ethnicity. Identities can be complex, and what appears to be a contradiction may in fact be an intersection that is poorly represented through demographic questionnaires. Flagging potentially fake responses based on how we assume respondents will identify themselves is a bad idea for research about 2SLGBTQIA+ people who inhabit non-normative gender and sexual identities.

    Some of these responses were also flagged because of other issues, including IP address and completion rate. However, there were others that were less suspicious, leaving us unsure about their validity.

    These responses may have been created by AI bots or by people using AI to generate responses and manually enter them. It could have been someone actively trying to misrepresent themselves or someone who earnestly wants to contribute but does not feel confident in their English-language skills or writing ability. For this reason, it is important to consider multiple factors when reviewing survey responses to determine whether data is usable.

    AI presents new opportunities and challenges for online research.
    (Shutterstock)

    Moving forward

    Technology like AI chatbots presents new opportunities and new challenges for online research that require specific interventions. The concerns we’ve outlined are potential red flags that can help alert researchers to suspicious data.

    Some solutions we found for these issues include IP tracking, requiring a password to access the survey, asking the same question twice to verify that the responses match, and having “attention check” or “trap” questions where respondents are asked to select a specific response.

    Researchers can also flag “speeder” respondents who take less than one-third of the median response time, and average respondents who select the same responses across the survey, like always choosing the first option. Some researchers may already be aware of these and other solutions, and we encourage anyone doing online research to be prepared to address dishonest participants and protect the integrity of their data.

    While these solutions may require additional time, labour and resources, it is important not to abandon online research. In-person methods are not always viable or accessible, particularly to reach 2SLGBTQIA+ people and other marginalized populations.

    Research in this area is vital. We encourage other researchers to share their experiences and solutions to these problems to raise awareness.

    Christopher Dietzel receives funding from Le Fonds de recherche du Québec – Société et culture (FRQSC) and is the community research advisor of the Ontario Digital Literacy and Access Network (ODLAN).

    Evan Vipond is a research officer at the Ontario Digital Literacy and Access Network (ODLAN).

    Hannah Maitland is the co-founder and administrative coordinator of the Ontario Digital Literacy and Access Network (ODLAN).

    – ref. AI can affect anonymous surveys. Here are some ways for researchers to mitigate its impact – https://theconversation.com/ai-can-affect-anonymous-surveys-here-are-some-ways-for-researchers-to-mitigate-its-impact-247758

    MIL OSI – Global Reports –

  • MIL-OSI USA: Lankford, Coons Lead Bill to Incentivize Charitable Giving

    US Senate News:

    Source: United States Senator for Oklahoma James Lankford
    WASHINGTON, DC – Senators James Lankford (R-OK) and Chris Coons (D-DE) introduced the Charitable Actto expand and extend the expired non-itemized deduction for charitable giving. The bill would ensure Americans who donate to charities, houses of worship, religious organizations, and other nonprofits of their choice are able to deduct that donation from their federal taxes at a higher level than the previous $300 deduction.  
    This provision was first included under the CARES Act passed by President Donald J. Trump. The policy resulted in 90 million tax returns utilizing the deduction, and households making between $30,000 and $100,000 saw the largest increase in charitable giving. Charitable organizations received $30 billion in increased donations as a result. 
    “America’s first safety net should never be the government—government is the least efficient caregiver by far. Our families, churches, and other nonprofits do incredible work to lift up those who need it most. Updating the tax law to incentivize giving empowers Americans to make an even bigger impact for the homeless, hurting, and hungry,” said Lankford. 
    “Delawareans have always risen to the occasion in support of our communities,” said Coons. “Last year, Americans demonstrated our generosity by donating a collective $557 billion to charities, houses of worship, and nonprofits. I am proud to reintroduce the Charitable Act with Senator Lankford to help the federal government encourage even more Americans to embrace the civic virtue of giving to those in need.”
    Lankford and Coons were joined on this bill by Senators Catherine Cortez Masto (D-NV), John Hickenlooper (D-CO), Pete Ricketts (R-NE), Amy Klobuchar (D-MN), Raphael Warnock (D-GA), Jeanne Shaheen (D-NH), John Curtis (R-UT), Marsha Blackburn (R-TN), Jerry Moran (R-KS), Katie Britt (R-AL), and Tim Scott (R-NC).
    This bill is supported by numerous organizations including National Council of Nonprofits (25,000 member organizations), Charitable Giving Coalition (175 member organizations), the Nonprofit Alliance, Faith & Giving Coalition, Leadership 18, Independent Sector, YMCA, Council on Foundations, American Endowment Foundation, Philanthropy Southwest, Christian Alliance for Orphans, Ethics & Religious Liberty Commission, United Philanthropy Forum, National Association of Charitable Gift Planners, Association of Art Museum Directors, ECFA, Association of Fundraising Professionals, Council for Advancement and Support of Education, Americans for the Arts, American Heart Association, Oklahoma Center for Nonprofits, Delaware Alliance for Nonprofit Advancement, Maryland Nonprofits, Boys and Girls Club of America, March of Dimes, and Habitat for Humanity.
    “Bravo to Senators Lankford and Coons on this much-needed support for America’s nonprofits. They both understand from personal experience the key role the nonprofit sector plays both as a provider of critical services to millions of Americans and as a major employer in Oklahoma and nationwide. In this era of historic inflation and ever-rising costs, the need for nonprofit services has not declined — in fact, we are needed more than ever. The Charitable Act will help recreate an environment of years past where charitable givers at every level can feel incentivized and appreciated—after all, we are all in this together,” said Marnie Taylor, President & CEO, Oklahoma Center for Nonprofits. 
    “Nonprofits are the backbone of our communities, addressing critical needs and enhancing the quality of life for all. The Charitable Act is a vital step in restoring a proven incentive that encourages generosity and empowers nonprofits to meet growing demands, even in challenging times. We applaud Senators Lankford and Coons for their leadership and steadfast commitment to strengthening the nonprofit sector, ensuring we can continue to deliver essential services and drive positive change.” said Sheila Bravo, President and CEO, Delaware Alliance for Nonprofit Advancement.
    “Faith & Giving heartily thanks and commends Senators James Lankford and Chris Coons for reintroducing the Charitable Act to restore a charitable deduction for taxpayers who do not itemize. Giving by individuals is the financial lifeblood of many thousands of American faith communities and faith-based organizations. Yet since 2017 individual giving to religion has fallen billions of dollars short of keeping pace with inflation. No single policy is more important for restoring the health of individual giving and faith-based charities than a non-itemizer charitable deduction like the one Congress created to stimulate giving in 2020 and 2021,” Brian Walsh, Executive Director, Faith & Giving. 
    “Nonprofits need tools like the nonitemizer deduction proposed by the Charitable Act to meet growing and changing community needs,” said YMCA of the USA President and CEO Suzanne McCormick. “We saw this policy unlock more giving when it was enacted temporarily during the pandemic, and we know that making it permanent will help YMCAs serve and support more neighbors every day. Senators Lankford and Coons recognize the important role nonprofits play in communities and understand that the universal charitable deduction helps nonprofits like the Y make their communities stronger. I’m grateful for their leadership.”
    “The temporary non-itemizer charitable deduction implemented in 2020 and 2021 led to an additional $18 billion in donations to nonprofits. As nonprofits are faced with higher demand for services, increased costs, workforce challenges, and declining donations, the Charitable Act presents an opportunity to reinstate that incentive and provide nonprofits with more resources to carry out their mission. The networks of the National Council of Nonprofits enthusiastically endorse this vital legislation and appreciate leaders like Sen. Lankford and Sen. Coons who continue to be stalwart champions for these efforts and the nonprofit sector,” said Diane Yentel, President & CEO, National Council of Nonprofits.
    “Generosity is a core American value that should be incentivized to help meet the evolving needs of communities,” said Kathleen Enright, Council on Foundations president and CEO. “The temporary non-itemizer deduction in the CARES Act successfully sparked more people to give. We hope Congress will cement this effective policy into law and inspire many more generous Americans to give charitably to support one another and the causes they value. We thank the House and Senate sponsors of the Charitable Act for their leadership on this issue.”
    “American Endowment Foundation (AEF) is mission-motivated to expand philanthropy, and many current and potential donors are seeking new ways to connect with their communities and give back. However, today’s tax code excludes nonitemizers from deducting their charitable contributions, limiting their ability to give. The Charitable Act would level the playing field, offering all donors—regardless of whether they itemize—more opportunities to support their communities. We are proud to support this important legislation and look forward to collaborating with Congress to enact policies that expand philanthropy for everyone,” said Ron Ransom, Chief Executive Officer, American Endowment Foundation.
    “The Charitable Act represents an opportunity to continue to strengthen the philanthropic ecosystem with tax incentives that will reverse a downward trend in levels of charitable giving. Philanthropy Southwest, its members and the charitable sector continue to confront unprecedented needs. By recognizing tax code should support giving at all levels and from all Americans, and encouraging more Americans to support nonprofit organizations, this legislation has the potential to create meaningful, lasting impact across our most critical social challenges,” said Tony J. Fundaro, President & CEO, Philanthropy Southwest. 
    “The generosity of ordinary citizens reflects America at her best and provides immense public good.  It fuels vital projects and services, from aid to the needy, to education for the young, to parks, museums, and civic life, and so much more.  Citizen-giving also nurtures strong, healthy accountability for nonprofits, insisting that they prove their worth in order to earn the support of their neighbors.  Finally, as many studies now confirm, generosity benefits givers, too — measurably boosting happiness, connectedness, and overall well-being.  The Charitable Act will significantly advance all of these benefits and more,” said Jedd Medefind, President, Christian Alliance for Orphans (CAFO). 
    “Churches, faith-based organizations, and other non-profit institutions that depend on charitable giving are the backbone of a healthy civil society, contributing to our communities and serving those in need. Southern Baptists have long understood this principle. Therefore, the ERLC fully supports Sen. Lankford’s reintroduction of the Charitable Act that would extend the Charitable Deduction to 100% of taxpayers. This legislation deserves broad support and quick passage,” said ERLC’s President, Brent Leatherwood. 
    “Charitable giving supports lifesaving work, provides essential services, and strengthens our communities. The past few years have offered incontrovertible proof that tax incentives impact giving: when everyday Americans had access to the charitable deduction, they gave more generously. Fortunately, Congress has a rare opportunity to strengthen the work of charitable organizations and the fabric of our nation by passing the Charitable Act this year,” said Independent Sector President and CEO Dr. Akilah Watkins.
    “United Philanthropy Forum commends these Congressional champions for their steadfast support of America’s charitable sector and the vital services these organizations provide to communities nationwide,” said Deborah Aubert Thomas, President & CEO of United Philanthropy Forum. “The Forum maintains that implementing a non-itemizer deduction would modernize giving incentives, strengthen our nation’s philanthropic foundation, and empower donors across all tax brackets to increase their charitable investments. This approach would be particularly impactful in engaging younger generations in meaningful charitable giving that strengthens their communities,” said Deborah Aubert Thomas, President and CEO, United Philanthropy Forum. 
    “We applaud the reintroduction of this important legislation that would provide all taxpayers with access to the charitable deduction for their generosity,” said Michael Kenyon, President & CEO of the National Association of Charitable Gift Planners. “As gift planners, we know that once a donor starts to support a cause or organization, they are much more likely to continue giving in the future, no matter the size of their initial contribution. Restoring a non-itemizer charitable would encourage all taxpayers, irrespective of income level, to give, instilling a habit of philanthropy that will drive more dollars to charity for years to come from a new generation of givers.”
    “The Charitable Act isn’t just about tax policy – it’s about democratizing generosity and unleashing the full potential of American philanthropy. When teachers, nurses, and other everyday heroes can’t receive the same tax benefits for their charitable giving as wealthy donors, we’re reinforcing inequality in our giving ecosystem. We cannot afford to discourage giving from hardworking Americans. The Charitable Act would empower all donors, regardless of tax filing status, to make a bigger impact and strengthen the vital services that our communities desperately need,” said Shannon McCracken, CEO The Nonprofit Alliance. 
    “The Association of Art Museum Directors thanks Sens. Lankford and Coons for their leadership on the Charitable Act. Donations make possible free and reduced admissions, educational programs, and a host of community services.  We look forward to a resurgence of giving upon passage of their bill, just as gifts increased following the temporary enactment of a deduction for non-itemizers in 2020-21,” said Christine Anagnos, Executive Director of the Association of Art Museum Directors.
    “The charitable deduction sends a powerful message that America wants to honor and encourage openhanded generosity,” said ECFA President & CEO Michael Martin. “The Charitable Act wisely democratizes this proven incentive and supports habits of giving for all taxpayers regardless of whether they itemize on their tax forms or not.”
    “According to Q3 2024 data compiled by AFP’s Fundraising Effectiveness Project, the number of small gift donors (gifts under $100) saw a steep decline of -12.4%; this is a continued decline in the last two years since the charitable deduction for non-itemizers was not renewed.,” said Mike Geiger, President and CEO of the Association of Fundraising Professionals. “On behalf of our more than 26,000 fundraising professional members that raise more than $100 billion annually for charities, we are grateful for our Congressional champions reintroducing the bipartisan Charitable Act as this giving incentive will support nonprofits in their communities who rely on these funds to provide much needed services.”
    “We are grateful for the leadership of Senators Lankford and Coons in reintroducing the bipartisan Charitable Act, legislation that will ensure that all American taxpayers, regardless of income, are encouraged to give more to support local soup kitchens, homeless and domestic abuse shelters, disaster relief organizations, schools, cultural organizations, and religious congregations and ministries—among innumerable other crucial charities. We know from experience that a charitable deduction for non-itemizers will generate additional giving. In 2020 and 2021, the CGC and its members successfully worked with Congress to enact a modest temporary charitable deduction for non-itemizers that led to increased giving, particularly through a significant increase in small gifts. In 2020, 42 million taxpayers used the temporary universal charitable deduction to give $10.9 billion to charities, with a quarter of the Americans taking that $300 deduction made less than $30,000. We look forward to working with Sens. Lankford, Coons and their colleagues to ensure that this important proposal is included in tax reform legislation,” said Brian Flahaven, Chair, Charitable Giving Coalition. 
    “Donors invest in schools, colleges, and universities because of the essential role they play in transforming lives and society. By restoring a charitable deduction for non-itemizers, the bipartisan Charitable Act will encourage more Americans to make donations aimed at funding scholarships, educating and preparing students, supporting ground-breaking research, and strengthening academic programs. We applaud and thank Senators James Lankford (R-OK) and Chris Coons (D-DE) for re-introducing the Charitable Act and look forward to advocating for its speedy enactment,” said Sue Cunningham, President and CEO, Council for Advancement and Support of Education.
    “Small donations are crucial to the nonprofit arts and culture sector, which generated $151.7 billion in economic activity, supported 2.6 million jobs, created $29.1 billion in tax revenue, and provided residents $101 billion in personal income in 2022. Those who do not itemize on their taxes are a crucial part of this sector,” said Suzy Delvalle, co-CEO of Americans for the Arts.
    “When we support the arts through small donations, we invest in both economic and community well-being, particularly in rural areas. We thank Senator Lankford and Senator Coons for their leadership on this important issue,” said Jamie Bennett, co-CEO of Americans for the Arts.
    “Charitable organizations work tirelessly to improve and enrich communities nationwide. The bipartisan Charitable Act would support the life-changing work of our nation’s charities by encouraging middle- and lower-income taxpayers to contribute to nonprofits making an impact across the country. The American Heart Association thanks the congressional champions reintroducing the Charitable Act and looks forward to working with these lawmakers to pass this bill,” said Mark Schoeberl, Executive Vice President of Advocacy, American Heart Association.
    “Charitable giving is for everyone, and everyone who donates should have the same opportunity to receive a tax deduction. The Charitable Act expands access to these incentives, ensuring that all Americans—whether they itemize deductions or not—can benefit from a tax break on their contributions. This legislation empowers more people to support the vital work of nonprofits in their communities,” said Heather Iliff, President & CEO of Maryland Nonprofits. 

    MIL OSI USA News –

  • MIL-OSI Security: Michigan Man Charged with Drug Distribution and Loan Fraud

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

    BOSTON – A Michigan man has been charged and has agreed to plead guilty in connection with a conspiracy to import and sell illegal pharmaceuticals, including opioids, and to fund the operation of the scheme by fraudulently obtaining a Covid pandemic relief loan.

    Donald Nchamukong, 37, was charged by Information with conspiracy to smuggle goods into the United States, to commit loan fraud and to distribute controlled substances.  Nchamukong will make an initial appearance in federal court in Boston on a date to be scheduled by the Court.

    According to the charging documents, starting in 2019 and continuing to 2022, Nchamukong and a co-conspirator, Doyal Kalita, conspired to distribute drugs to persons in the United States over the internet and using call centers in India. Nchamukong allegedly used shell companies, including a purported dietary supplements company and an auto parts supplier, and associated bank and merchant accounts to process sales of illegal foreign drugs, including the Schedule IV opioid, tramadol. Nchamukong and Kalita also received shipments of tramadol from India and reshipped the drug to customers across the United States, including in Massachusetts. When the Covid-19 pandemic hit, Nchamukong and Kalita allegedly fraudulently obtained a $200,000 Economic Injury Disaster Loan to fund their illegal drug scheme.  

    Kalita was convicted in 2024 and sentenced to 10 years in prison for orchestrating the online drug distribution scheme and a technical support fraud scheme and related money laundering.

    The charge of conspiracy provides for a sentence of up to five years in prison, three years of supervised release and a fine of up to $250,000, or twice the monetary gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

    United States Attorney Leah B. Foley; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Thomas Demeo, Acting Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office; and Fernando P. McMillan, Special Agent in Charge of the New York Field Office of the U.S. Food and Drug Administration, Office of Criminal Investigations made the announcement today. Valuable assistance was provided by Homeland Security Investigations in New York, Small Business Administration and the United States Attorney’s Office for the Eastern District of New York. Assistant U.S. Attorney Kriss Basil, Deputy Chief of the Securities, Financial, and Cyber Fraud Unit, is prosecuting the case.

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

    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 via the NCDF Web Complaint Form.

    The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
     

    MIL Security OSI –

  • MIL-OSI Canada: Governments of Canada and Saskatchewan Invest in Livestock and Forage Research

    Source: Government of Canada regional news

    Released on January 29, 2025

    Today, Canada’s Minister of Agriculture and Agri-Food Lawrence MacAulay and Saskatchewan’s Minister of Agriculture Daryl Harrison announced $6.9 million to jointly support livestock and forage-related scientific research in Saskatchewan in 2025, combined with co-funding from industry partners for a total of $7.2 million.

    The investment is part of Saskatchewan’s 2024-25 Budget of $37 million for agriculture research and is delivered through the province’s Agriculture Development Fund (ADF) under the Sustainable Canadian Agricultural Partnership (Sustainable CAP). The ADF is supporting 30 livestock and forage-related research projects this year which focus on a variety of topics.

    “We are working with the provinces and territories to deliver vitally important programming through Sustainable CAP,” MacAulay said. “Our shared investment with the Government of Saskatchewan in these Agriculture Development Fund research projects will help create growth and make sure our great sector remains on the cutting edge.”

    “Innovation is the key to staying competitive and allowing Saskatchewan to remain a global leader when it comes to new and best practices in agriculture,” Harrison said. “We continue to support this and help Saskatchewan’s livestock producers to keep doing what they do best through investments of this nature, which enables the kind of world-class scientific work that constantly moves the industry forward.”

    The selection and approval of projects supported by the ADF is based on an annual competitive process to identify research with the potential to help Saskatchewan’s livestock producers and agriculture industry remain innovative, profitable and competitive. This year’s livestock and forage-related projects include a range of topics such as enhancing the capacity to research pathogens and manufacture vaccines and therapeutics to help control infectious diseases, including those that cause pandemics; evaluating the combined impact of prescribed fire and post-fire herbicide applications to control woody plants (snowberry) in rangelands; and investigating how trace-mineral supplementation could help feeder calves respond better to vaccines.

    The Governments of Canada and Saskatchewan work closely with industry partners to leverage funding to support research that aligns with industry priorities. This year’s ADF projects were supported by an additional $216,000 contributed to 10 projects by the following industry partners:

    • Saskatchewan Cattlemen’s Association
    • Saskatchewan Forage Seed Development Commission
    • SaskPork
    • Western Dairy Research Collaboration (BC Dairy, Alberta Milk, SaskMilk, and Dairy Farmers of Manitoba)

    “Investment in research is critical for our industry,” Saskatchewan Cattlemen’s Association Chair Keith Day said. “We appreciate both levels of government recognizing its value and investing in our research priorities, which focused on animal health and forage production this year.”

    The ADF is supported through Sustainable CAP, a five-year, $3.5 billion investment by Canada’s federal, provincial and territorial governments that supports Canada’s agri-food and agri-product sectors. This includes $1 billion in federal programs and activities and a $2.5 billion commitment that is cost-shared 60 per cent federally and 40 per cent provincially/territorially for programs that are designed and delivered by provinces and territories.

    For more information, including a full list of the above projects, please visit:
    https://www.saskatchewan.ca/business/agriculture-natural-resources-and-industry/agribusiness-farmers-and-ranchers/sustainable-canadian-agricultural-partnership/programs-for-research/agriculture-development-fund.

    -30-

    For more information, contact:

    MIL OSI Canada News –

  • MIL-OSI USA: Attorney General James Warns Businesses Against Price Gouging of Eggs and Poultry Amid Bird Flu Outbreak

    Source: US State of New York

    NEW YORK – New York Attorney General Letitia James today issued an alert warning businesses against price gouging of eggs and poultry amid a national bird flu outbreak. The bird flu has affected poultry and dairy farms across the country, causing shortages and driving up prices. New York’s price gouging statute prevents businesses from taking advantage of consumers by selling essential goods or services at an excessively higher price during market disruptions resulting from emergencies like the bird flu outbreak. Attorney General James urges New Yorkers who see significantly increased prices on eggs or poultry to report the issue to her office. 

    “Eggs are an essential grocery staple in households across the state, and New Yorkers should not pay ludicrous amounts just to feed their families,” said Attorney General James. “The bird flu is affecting poultry farms and causing a national shortage, but this should not be an excuse for businesses to dramatically raise prices. My office is monitoring the situation, and I am urging New Yorkers to report excessive prices to my office.” 

    In 2021, Attorney General James secured a settlement with one of the country’s largest producers and wholesalers of eggs, Hillandale Farms Corporation, for illegally price gouging eggs during the COVID-19 pandemic. As a result of the settlement, Attorney General James delivered 1.2 million eggs to New Yorkers.

    New York law prohibits businesses from taking unfair advantage of consumers by selling goods or services that are vital to health, safety, or welfare for an unconscionably excessive price during emergencies. The price gouging statute covers New York vendors, retailers, and suppliers, and includes essential goods and services that are necessary for the health, safety, and welfare of consumers or the general public. These goods and services include food, water, medicine, gasoline, generators, batteries, flashlights, hotel lodging, and transportation options. 

    When reporting price gouging to the Office of the Attorney General (OAG), consumers should:

    • Report the specific increased prices, dates, and places that they saw the increased prices; and,
    • Provide copies of their sales receipts and photos of the advertised prices, if available.

    Price gouging violations can carry penalties of up to $25,000 per violation. New Yorkers should report potential concerns about price gouging to OAG by filing a complaint online or calling 800-771-7755.

    MIL OSI USA News –

  • MIL-OSI Global: Robert F. Kennedy Jr.’s nomination signals a new era of anti-intellectualism in American politics

    Source: The Conversation – USA – By Dominik Stecuła, Assistant Professor of Communication and Political Science, The Ohio State University

    Donald Trump’s nominee for secretary of the Department of Health and Human Services, Robert Kennedy Jr., on Capitol Hill on Jan. 9, 2025. Jon Cherry/Getty Images

    The many controversial people appointed to the Trump administration, from Elon Musk to Robert F. Kennedy Jr., have at least one thing in common: They dislike and distrust experts.

    While anti-intellectualism and populism are nothing new in American life, there has hardly been an administration as seemingly committed to these worldviews.

    Take President Donald Trump’s decision to nominate Kennedy, a well-known vaccine skeptic, to lead the Department of Health and Human Services. Kennedy, whose Senate confirmation hearing is Jan. 29, 2025, epitomizes the new American political ethos of populism and anti-intellectualism, or the idea that people hold negative feelings toward not just scientific research but those who produce it.

    Anti-intellectual attacks on the scientific community have been increasing, and have become more partisan, in recent years.

    For instance, Trump denigrated scientific experts on the campaign trail and in his first term in office. He called climate science a “hoax” and public health officials in his administration “idiots.”

    Skepticism, false assertions

    This rhetoric filtered into public discussion, as seen in viral social media posts mocking and attacking scientists like Dr. Anthony Fauci, or anti-mask protesters confronting health officials at public meetings and elsewhere.

    Trump and Kennedy have cast doubt on vaccine safety and the medical scientific establishment. As far back as the Republican primary debates in 2016, Trump falsely asserted that childhood vaccines cause autism, in defiance of scientific consensus on the issue.

    Kennedy’s long-term vaccine skepticism has also been well documented, though he himself denies it. More recently, he has been presenting himself as “pro-vaccine safety,” as one Republican senator put it, on the eve of Kennedy’s confirmation hearing.

    A researcher works in the National Institute of Arthritis and Musculoskeletal and Skin Diseases, part of the National Institutes of Health.
    National Institute of Arthritis and Musculoskeletal and Skin Diseases, National Institutes of Health

    Kennedy has mirrored Trump’s anti-intellectual rhetoric by referring to government health agency culture as “corrupt” and the agencies themselves as “sock puppets.”

    If confirmed, Kennedy has vowed to turn this anti-intellectual rhetoric into action. He wants to replace over 600 employees in the National Institutes of Health with his own hires. He has also suggested cutting entire departments.

    During one interview, Kennedy said, “In some categories, there are entire departments, like the nutrition department at the FDA, that are – that have to go.”

    Populism across political spectrum

    In lockstep with this anti-intellectual movement is a version of populism that people like RFK Jr. and Trump both espouse.

    Populism is a worldview that pits average citizens against “the elites.” Who the elites are varies depending on the context, but in the contemporary political climate in the U.S., establishment politicians, scientists and organizations like pharmaceutical companies or the Centers for Disease Control and Prevention are frequently portrayed as such.

    For instance, right-wing populists often portray government health agencies as colluding with multinational pharmaceutical companies to impose excessive regulations, mandate medical interventions and restrict personal freedoms.

    Left-wing populists expose how Big Pharma manipulates the health care system, using their immense wealth and political influence to put profits over people, deliberately keeping lifesaving medications overpriced and out of reach – all of which has been said by politicians like Bernie Sanders.

    The goal of a populist is to portray these elites as the enemy of the people and to root out the perceived “corruption” of the elites.

    This worldview doesn’t just appeal to the far right. Historically in the United States, populism has been more of a force on the political left. To this day, it is present on the left through Sanders and similar politicians who rail against wealth inequality and the interests of the “millionaire class.”

    In short, the Trump administration’s populist and anti-intellectual worldview does not map cleanly onto the liberal-conservative ideological divide in the U.S. That is why Kennedy, a lifelong Democrat and nephew of a Democratic president, might become a Cabinet member for a Republican president.

    The cross-ideological appeal of populism and anti-intellectualism also partly explains why praise for Trump’s selection of Kennedy to head the Department of Health and Human Services came from all corners of society. Republican senators Ron Johnson and Josh Hawley lauded the move, as did basketball star Rudy Gobert and Colorado’s Democratic governor, Jared Polis.

    Even former President Barack Obama once considered Kennedy for a Cabinet post in 2008.

    Republican presidential nominee Donald Trump is greeted by Robert F. Kennedy Jr. on stage during a campaign event on Aug. 23, 2024, in Glendale, Ariz.
    Tom Brenner for The Washington Post via Getty Images

    Anger at elites

    Why, then, is disdain for scientific experts appealing to so many Americans?

    Much of the public supports this worldview because of perceived ineffectiveness and moral wrongs made by the elites. Factors such as the opioid crisis encouraged by predatory pharmaceutical companies, public confusion and dissatisfaction with changing health guidance in the early stages of the COVID-19 pandemic, and the frequently prohibitive cost of health care and medicine have given some Americans reason to question their trust in science and medicine.

    Populists have embraced popular and science-backed policies that align with an anti-elite stance. Kennedy, for example, supports decreasing the amount of ultra-processed foods in public school lunches and reducing toxic chemicals in the food supply and natural environment. These stances are backed by scientific evidence about how to improve public health. At the same time, they point to the harmful actions of a perceived corrupt elite – the profit-driven food industry.

    It is, of course, reasonable to want to hold accountable both public officials for their policy decisions and scientists and pharmaceutical companies who engage in unethical behavior. Scientists should by no means be immune from scrutiny.

    Examining, for example, what public health experts got wrong during the COVID-19 pandemic would be tremendously helpful from the standpoint of preparing for future public health crises, but also from the standpoint of rebuilding public trust in science, experts and institutions.

    However, the Trump administration does not appear to be interested in pursuing good faith assessments. And Trump’s victory means he gets to implement his vision and appoint people he wants to carry it out. But words have consequences, and we have seen the impact of anti-vaccine rhetoric during the COVID-19 pandemic, where “red” counties and states had significantly lower vaccine intent and uptake compared with the “blue” counterparts.

    Therefore, despite sounding appealing, Kennedy’s signature slogan, “Make America Healthy Again,” could – in discouraging policies and behaviors that have been proven effective against diseases and their crippling or deadly outcomes – bring about a true public health crisis.

    Dominik Stecuła receives funding from the National Science Foundation.

    Kristin Lunz Trujillo receives funding from the National Science Foundation.

    Matt Motta receives funding from the National Science Foundation.

    – ref. Robert F. Kennedy Jr.’s nomination signals a new era of anti-intellectualism in American politics – https://theconversation.com/robert-f-kennedy-jr-s-nomination-signals-a-new-era-of-anti-intellectualism-in-american-politics-246016

    MIL OSI – Global Reports –

  • MIL-OSI Global: Fake papers are contaminating the world’s scientific literature, fueling a corrupt industry and slowing legitimate lifesaving medical research

    Source: The Conversation – USA – By Frederik Joelving, Contributing editor, Retraction Watch

    Assistant professor Frank Cackowski, left, and researcher Steven Zielske at Wayne State University in Detroit became suspicious of a paper on cancer research that was eventually retracted. Amy Sacka, CC BY-ND

    Over the past decade, furtive commercial entities around the world have industrialized the production, sale and dissemination of bogus scholarly research, undermining the literature that everyone from doctors to engineers rely on to make decisions about human lives.

    It is exceedingly difficult to get a handle on exactly how big the problem is. Around 55,000 scholarly papers have been retracted to date, for a variety of reasons, but scientists and companies who screen the scientific literature for telltale signs of fraud estimate that there are many more fake papers circulating – possibly as many as several hundred thousand. This fake research can confound legitimate researchers who must wade through dense equations, evidence, images and methodologies only to find that they were made up.

    Even when the bogus papers are spotted – usually by amateur sleuths on their own time – academic journals are often slow to retract the papers, allowing the articles to taint what many consider sacrosanct: the vast global library of scholarly work that introduces new ideas, reviews other research and discusses findings.

    These fake papers are slowing down research that has helped millions of people with lifesaving medicine and therapies from cancer to COVID-19. Analysts’ data shows that fields related to cancer and medicine are particularly hard hit, while areas like philosophy and art are less affected. Some scientists have abandoned their life’s work because they cannot keep pace given the number of fake papers they must bat down.

    The problem reflects a worldwide commodification of science. Universities, and their research funders, have long used regular publication in academic journals as requirements for promotions and job security, spawning the mantra “publish or perish.”

    But now, fraudsters have infiltrated the academic publishing industry to prioritize profits over scholarship. Equipped with technological prowess, agility and vast networks of corrupt researchers, they are churning out papers on everything from obscure genes to artificial intelligence in medicine.

    These papers are absorbed into the worldwide library of research faster than they can be weeded out. About 119,000 scholarly journal articles and conference papers are published globally every week, or more than 6 million a year. Publishers estimate that, at most journals, about 2% of the papers submitted – but not necessarily published – are likely fake, although this number can be much higher at some publications.

    While no country is immune to this practice, it is particularly pronounced in emerging economies where resources to do bona fide science are limited – and where governments, eager to compete on a global scale, push particularly strong “publish or perish” incentives.

    As a result, there is a bustling online underground economy for all things scholarly publishing. Authorship, citations, even academic journal editors, are up for sale. This fraud is so prevalent that it has its own name: paper mills, a phrase that harks back to “term-paper mills”, where students cheat by getting someone else to write a class paper for them.

    The impact on publishers is profound. In high-profile cases, fake articles can hurt a journal’s bottom line. Important scientific indexes – databases of academic publications that many researchers rely on to do their work – may delist journals that publish too many compromised papers. There is growing criticism that legitimate publishers could do more to track and blacklist journals and authors who regularly publish fake papers that are sometimes little more than artificial intelligence-generated phrases strung together.

    To better understand the scope, ramifications and potential solutions of this metastasizing assault on science, we – a contributing editor at Retraction Watch, a website that reports on retractions of scientific papers and related topics, and two computer scientists at France’s Université Toulouse III–Paul Sabatier and Université Grenoble Alpes who specialize in detecting bogus publications – spent six months investigating paper mills.

    This included, by some of us at different times, trawling websites and social media posts, interviewing publishers, editors, research-integrity experts, scientists, doctors, sociologists and scientific sleuths engaged in the Sisyphean task of cleaning up the literature. It also involved, by some of us, screening scientific articles looking for signs of fakery.

    Problematic Paper Screener: Trawling for fraud in the scientific literature

    What emerged is a deep-rooted crisis that has many researchers and policymakers calling for a new way for universities and many governments to evaluate and reward academics and health professionals across the globe.

    Just as highly biased websites dressed up to look like objective reporting are gnawing away at evidence-based journalism and threatening elections, fake science is grinding down the knowledge base on which modern society rests.

    As part of our work detecting these bogus publications, co-author Guillaume Cabanac developed the Problematic Paper Screener, which filters 130 million new and old scholarly papers every week looking for nine types of clues that a paper might be fake or contain errors. A key clue is a tortured phrase – an awkward wording generated by software that replaces common scientific terms with synonyms to avoid direct plagiarism from a legitimate paper.

    Problematic Paper Screener: Trawling for fraud in the scientific literature

    An obscure molecule

    Frank Cackowski at Detroit’s Wayne State University was confused.

    The oncologist was studying a sequence of chemical reactions in cells to see if they could be a target for drugs against prostate cancer. A paper from 2018 from 2018 in the American Journal of Cancer Research piqued his interest when he read that a little-known molecule called SNHG1 might interact with the chemical reactions he was exploring. He and fellow Wayne State researcher Steven Zielske began a series of experiments to learn more about the link. Surprisingly, they found there wasn’t a link.

    Meanwhile, Zielske had grown suspicious of the paper. Two graphs showing results for different cell lines were identical, he noticed, which “would be like pouring water into two glasses with your eyes closed and the levels coming out exactly the same.” Another graph and a table in the article also inexplicably contained identical data.

    Zielske described his misgivings in an anonymous post in 2020 at PubPeer, an online forum where many scientists report potential research misconduct, and also contacted the journal’s editor. Shortly thereafter, the journal pulled the paper, citing “falsified materials and/or data.”

    “Science is hard enough as it is if people are actually being genuine and trying to do real work,” says Cackowski, who also works at the Karmanos Cancer Institute in Michigan. “And it’s just really frustrating to waste your time based on somebody’s fraudulent publications.”

    Wayne State scientists Frank Cackowski and Steven Zielske carried out experiments based on a paper they later found to contain false data.
    Amy Sacka, CC BY-ND

    He worries that the bogus publications are slowing down “legitimate research that down the road is going to impact patient care and drug development.”

    The two researchers eventually found that SNHG1 did appear to play a part in prostate cancer, though not in the way the suspect paper suggested. But it was a tough topic to study. Zielske combed through all the studies on SNHG1 and cancer – some 150 papers, nearly all from Chinese hospitals – and concluded that “a majority” of them looked fake. Some reported using experimental reagents known as primers that were “just gibberish,” for instance, or targeted a different gene than what the study said, according to Zielske. He contacted several of the journals, he said, but received little response. “I just stopped following up.”

    The many questionable articles also made it harder to get funding, Zielske said. The first time he submitted a grant application to study SNHG1, it was rejected, with one reviewer saying “the field was crowded,” Zielske recalled. The following year, he explained in his application how most of the literature likely came from paper mills. He got the grant.

    Today, Zielske said, he approaches new research differently than he used to: “You can’t just read an abstract and have any faith in it. I kind of assume everything’s wrong.”

    Legitimate academic journals evaluate papers before they are published by having other researchers in the field carefully read them over. This peer review process is designed to stop flawed research from being disseminated, but is far from perfect.

    Reviewers volunteer their time, typically assume research is real and so don’t look for signs of fraud. And some publishers may try to pick reviewers they deem more likely to accept papers, because rejecting a manuscript can mean losing out on thousands of dollars in publication fees.

    “Even good, honest reviewers have become apathetic” because of “the volume of poor research coming through the system,” said Adam Day, who directs Clear Skies, a company in London that develops data-based methods to help spot falsified papers and academic journals. “Any editor can recount seeing reports where it’s obvious the reviewer hasn’t read the paper.”

    With AI, they don’t have to: New research shows that many reviews are now written by ChatGPT and similar tools.

    To expedite the publication of one another’s work, some corrupt scientists form peer review rings. Paper mills may even create fake peer reviewers impersonating real scientists to ensure their manuscripts make it through to publication. Others bribe editors or plant agents on journal editorial boards.

    María de los Ángeles Oviedo-García, a professor of marketing at the University of Seville in Spain, spends her spare time hunting for suspect peer reviews from all areas of science, hundreds of which she has flagged on PubPeer. Some of these reviews are the length of a tweet, others ask authors to cite the reviewer’s work even if it has nothing to do with the science at hand, and many closely resemble other peer reviews for very different studies – evidence, in her eyes, of what she calls “review mills.”

    PubPeer comment from María de los Ángeles Oviedo-García pointing out that a peer review report is very similar to two other reports. She also points out that authors and citations for all three are either anonymous or the same person – both hallmarks of fake papers.
    Screen capture by The Conversation, CC BY-ND

    “One of the demanding fights for me is to keep faith in science,” says Oviedo-García, who tells her students to look up papers on PubPeer before relying on them too heavily. Her research has been slowed down, she adds, because she now feels compelled to look for peer review reports for studies she uses in her work. Often there aren’t any, because “very few journals publish those review reports,” Oviedo-García says.

    An ‘absolutely huge’ problem

    It is unclear when paper mills began to operate at scale. The earliest article retracted due to suspected involvement of such agencies was published in 2004, according to the Retraction Watch Database, which contains details about tens of thousands of retractions. (The database is operated by The Center for Scientific Integrity, the parent nonprofit of Retraction Watch.) Nor is it clear exactly how many low-quality, plagiarized or made-up articles paper mills have spawned.

    But the number is likely to be significant and growing, experts say. One Russia-linked paper mill in Latvia, for instance, claims on its website to have published “more than 12,650 articles” since 2012.

    An analysis of 53,000 papers submitted to six publishers – but not necessarily published – found the proportion of suspect papers ranged from 2% to 46% across journals. And the American publisher Wiley, which has retracted more than 11,300 compromised articles and closed 19 heavily affected journals in its erstwhile Hindawi division, recently said its new paper-mill detection tool flags up to 1 in 7 submissions.

    Day, of Clear Skies, estimates that as many as 2% of the several million scientific works published in 2022 were milled. Some fields are more problematic than others. The number is closer to 3% in biology and medicine, and in some subfields, like cancer, it may be much larger, according to Day. Despite increased awareness today, “I do not see any significant change in the trend,” he said. With improved methods of detection, “any estimate I put out now will be higher.”

    The paper-mill problem is “absolutely huge,” said Sabina Alam, director of Publishing Ethics and Integrity at Taylor & Francis, a major academic publisher. In 2019, none of the 175 ethics cases that editors escalated to her team was about paper mills, Alam said. Ethics cases include submissions and already published papers. In 2023, “we had almost 4,000 cases,” she said. “And half of those were paper mills.”

    Jennifer Byrne, an Australian scientist who now heads up a research group to improve the reliability of medical research, submitted testimony for a hearing of the U.S. House of Representatives’ Committee on Science, Space, and Technology in July 2022. She noted that 700, or nearly 6%, of 12,000 cancer research papers screened had errors that could signal paper mill involvement. Byrne shuttered her cancer research lab in 2017 because the genes she had spent two decades researching and writing about became the target of an enormous number of fake papers. A rogue scientist fudging data is one thing, she said, but a paper mill could churn out dozens of fake studies in the time it took her team to publish a single legitimate one.

    “The threat of paper mills to scientific publishing and integrity has no parallel over my 30-year scientific career …. In the field of human gene science alone, the number of potentially fraudulent articles could exceed 100,000 original papers,” she wrote to lawmakers, adding, “This estimate may seem shocking but is likely to be conservative.”

    In one area of genetics research – the study of noncoding RNA in different types of cancer – “We’re talking about more than 50% of papers published are from mills,” Byrne said. “It’s like swimming in garbage.”

    In 2022, Byrne and colleagues, including two of us, found that suspect genetics research, despite not having an immediate impact on patient care, still informs the work of other scientists, including those running clinical trials. Publishers, however, are often slow to retract tainted papers, even when alerted to obvious signs of fraud. We found that 97% of the 712 problematic genetics research articles we identified remained uncorrected within the literature.

    When retractions do happen, it is often thanks to the efforts of a small international community of amateur sleuths like Oviedo-García and those who post on PubPeer.

    Jillian Goldfarb, an associate professor of chemical and biomolecular engineering at Cornell University and a former editor of the Elsevier journal Fuel, laments the publisher’s handling of the threat from paper mills.

    “I was assessing upwards of 50 papers every day,” she said in an email interview. While she had technology to detect plagiarism, duplicate submissions and suspicious author changes, it was not enough. “It’s unreasonable to think that an editor – for whom this is not usually their full-time job – can catch these things reading 50 papers at a time. The time crunch, plus pressure from publishers to increase submission rates and citations and decrease review time, puts editors in an impossible situation.”

    In October 2023, Goldfarb resigned from her position as editor of Fuel. In a LinkedIn post about her decision, she cited the company’s failure to move on dozens of potential paper-mill articles she had flagged; its hiring of a principal editor who reportedly “engaged in paper and citation milling”; and its proposal of candidates for editorial positions “with longer PubPeer profiles and more retractions than most people have articles on their CVs, and whose names appear as authors on papers-for-sale websites.”

    “This tells me, our community, and the public, that they value article quantity and profit over science,” Goldfarb wrote.

    In response to questions about Goldfarb’s resignation, an Elsevier spokesperson told The Conversation that it “takes all claims about research misconduct in our journals very seriously” and is investigating Goldfarb’s claims. The spokesperson added that Fuel’s editorial team has “been working to make other changes to the journal to benefit authors and readers.”

    That’s not how it works, buddy

    Business proposals had been piling up for years in the inbox of João de Deus Barreto Segundo, managing editor of six journals published by the Bahia School of Medicine and Public Health in Salvador, Brazil. Several came from suspect publishers on the prowl for new journals to add to their portfolios. Others came from academics suggesting fishy deals or offering bribes to publish their paper.

    In one email from February 2024, an assistant professor of economics in Poland explained that he ran a company that worked with European universities. “Would you be interested in collaboration on the publication of scientific articles by scientists who collaborate with me?” Artur Borcuch inquired. “We will then discuss possible details and financial conditions.”

    A university administrator in Iraq was more candid: “As an incentive, I am prepared to offer a grant of $500 for each accepted paper submitted to your esteemed journal,” wrote Ahmed Alkhayyat, head of the Islamic University Centre for Scientific Research, in Najaf, and manager of the school’s “world ranking.”

    “That’s not how it works, buddy,” Barreto Segundo shot back.

    In email to The Conversation, Borcuch denied any improper intent. “My role is to mediate in the technical and procedural aspects of publishing an article,” Borcuch said, adding that, when working with multiple scientists, he would “request a discount from the editorial office on their behalf.” Informed that the Brazilian publisher had no publication fees, Borcuch said a “mistake” had occurred because an “employee” sent the email for him “to different journals.”

    Academic journals have different payment models. Many are subscription-based and don’t charge authors for publishing, but have hefty fees for reading articles. Libraries and universities also pay large sums for access.

    A fast-growing open-access model – where anyone can read the paper – includes expensive publication fees levied on authors to make up for the loss of revenue in selling the articles. These payments are not meant to influence whether or not a manuscript is accepted.

    The Bahia School of Medicine and Public Health, among others, doesn’t charge authors or readers, but Barreto Segundo’s employer is a small player in the scholarly publishing business, which brings in close to $30 billion a year on profit margins as high as 40%. Academic publishers make money largely from subscription fees from institutions like libraries and universities, individual payments to access paywalled articles, and open-access fees paid by authors to ensure their articles are free for anyone to read.

    The industry is lucrative enough that it has attracted unscrupulous actors eager to find a way to siphon off some of that revenue.

    Ahmed Torad, a lecturer at Kafr El Sheikh University in Egypt and editor-in-chief of the Egyptian Journal of Physiotherapy, asked for a 30% kickback for every article he passed along to the Brazilian publisher. “This commission will be calculated based on the publication fees generated by the manuscripts I submit,” Torad wrote, noting that he specialized “in connecting researchers and authors with suitable journals for publication.”

    Excerpt from Ahmed Torad’s email suggesting a kickback.
    Screenshot by The Conversation, CC BY-ND

    Apparently, he failed to notice that Bahia School of Medicine and Public Health doesn’t charge author fees.

    Like Borcuch, Alkhayyat denied any improper intent. He said there had been a “misunderstanding” on the editor’s part, explaining that the payment he offered was meant to cover presumed article-processing charges. “Some journals ask for money. So this is normal,” Alkhayyat said.

    Torad explained that he had sent his offer to source papers in exchange for a commission to some 280 journals, but had not forced anyone to accept the manuscripts. Some had balked at his proposition, he said, despite regularly charging authors thousands of dollars to publish. He suggested that the scientific community wasn’t comfortable admitting that scholarly publishing has become a business like any other, even if it’s “obvious to many scientists.”

    The unwelcome advances all targeted one of the journals Barreto Segundo managed, The Journal of Physiotherapy Research, soon after it was indexed in Scopus, a database of abstracts and citations owned by the publisher Elsevier.

    Along with Clarivate’s Web of Science, Scopus has become an important quality stamp for scholarly publications globally. Articles in indexed journals are money in the bank for their authors: They help secure jobs, promotions, funding and, in some countries, even trigger cash rewards. For academics or physicians in poorer countries, they can be a ticket to the global north.

    Consider Egypt, a country plagued by dubious clinical trials. Universities there commonly pay employees large sums for international publications, with the amount depending on the journal’s impact factor. A similar incentive structure is hardwired into national regulations: To earn the rank of full professor, for example, candidates must have at least five publications in two years, according to Egypt’s Supreme Council of Universities. Studies in journals indexed in Scopus or Web of Science not only receive extra points, but they also are exempt from further scrutiny when applicants are evaluated. The higher a publication’s impact factor, the more points the studies get.

    With such a focus on metrics, it has become common for Egyptian researchers to cut corners, according to a physician in Cairo who requested anonymity for fear of retaliation. Authorship is frequently gifted to colleagues who then return the favor later, or studies may be created out of whole cloth. Sometimes an existing legitimate paper is chosen from the literature, and key details such as the type of disease or surgery are then changed and the numbers slightly modified, the source explained.

    It affects clinical guidelines and medical care, “so it’s a shame,” the physician said.

    Ivermectin, a drug used to treat parasites in animals and humans, is a case in point. When some studies showed that it was effective against COVID-19, ivermectin was hailed as a “miracle drug” early in the pandemic. Prescriptions surged, and along with them calls to U.S. poison centers; one man spent nine days in the hospital after downing an injectable formulation of the drug that was meant for cattle, according to the Centers for Disease Control and Prevention. As it turned out, nearly all of the research that showed a positive effect on COVID-19 had indications of fakery, the BBC and others reported – including a now-withdrawn Egyptian study. With no apparent benefit, patients were left with just side effects.

    Research misconduct isn’t limited to emerging economies, having recently felled university presidents and top scientists at government agencies in the United States. Neither is the emphasis on publications. In Norway, for example, the government allocates funding to research institutes, hospitals and universities based on how many scholarly works employees publish, and in which journals. The country has decided to partly halt this practice starting in 2025.

    “There’s a huge academic incentive and profit motive,” says Lisa Bero, a professor of medicine and public health at the University of Colorado Anschutz Medical Campus and the senior research-integrity editor at the Cochrane Collaboration, an international nonprofit organization that produces evidence reviews about medical treatments. “I see it at every institution I’ve worked at.”

    But in the global south, the publish-or-perish edict runs up against underdeveloped research infrastructures and education systems, leaving scientists in a bind. For a Ph.D., the Cairo physician who requested anonymity conducted an entire clinical trial single-handedly – from purchasing study medication to randomizing patients, collecting and analyzing data and paying article-processing fees. In wealthier nations, entire teams work on such studies, with the tab easily running into the hundreds of thousands of dollars.

    “Research is quite challenging here,” the physician said. That’s why scientists “try to manipulate and find easier ways so they get the job done.”

    Institutions, too, have gamed the system with an eye to international rankings. In 2011, the journal Science described how prolific researchers in the United States and Europe were offered hefty payments for listing Saudi universities as secondary affiliations on papers. And in 2023, the magazine, in collaboration with Retraction Watch, uncovered a massive self-citation ploy by a top-ranked dental school in India that forced undergraduate students to publish papers referencing faculty work.

    The root – and solutions

    Such unsavory schemes can be traced back to the introduction of performance-based metrics in academia, a development driven by the New Public Management movement that swept across the Western world in the 1980s, according to Canadian sociologist of science Yves Gingras of the Université du Québec à Montréal. When universities and public institutions adopted corporate management, scientific papers became “accounting units” used to evaluate and reward scientific productivity rather than “knowledge units” advancing our insight into the world around us, Gingras wrote.

    This transformation led many researchers to compete on numbers instead of content, which made publication metrics poor measures of academic prowess. As Gingras has shown, the controversial French microbiologist Didier Raoult, who now has more than a dozen retractions to his name, has an h-index – a measure combining publication and citation numbers – that is twice as high as that of Albert Einstein – “proof that the index is absurd,” Gingras said.

    Worse, a sort of scientific inflation, or “scientometric bubble,” has ensued, with each new publication representing an increasingly small increment in knowledge. “We publish more and more superficial papers, we publish papers that have to be corrected, and we push people to do fraud,” said Gingras.

    In terms of career prospects of individual academics, too, the average value of a publication has plummeted, triggering a rise in the number of hyperprolific authors. One of the most notorious cases is Spanish chemist Rafael Luque, who in 2023 reportedly published a study every 37 hours.

    In 2024, Landon Halloran, a geoscientist at the University of Neuchâtel, in Switzerland, received an unusual job application for an opening in his lab. A researcher with a Ph.D. from China had sent him his CV. At 31, the applicant had amassed 160 publications in Scopus-indexed journals, 62 of them in 2022 alone, the same year he obtained his doctorate. Although the applicant was not the only one “with a suspiciously high output,” according to Halloran, he stuck out. “My colleagues and I have never come across anything quite like it in the geosciences,” he said.

    According to industry insiders and publishers, there is more awareness now of threats from paper mills and other bad actors. Some journals routinely check for image fraud. A bad AI-generated image showing up in a paper can either be a sign of a scientist taking an ill-advised shortcut, or a paper mill.

    The Cochrane Collaboration has a policy excluding suspect studies from its analyses of medical evidence. The organization also has been developing a tool to help its reviewers spot problematic medical trials, just as publishers have begun to screen submissions and share data and technologies among themselves to combat fraud.

    This image, generated by AI, is a visual gobbledygook of concepts around transporting and delivering drugs in the body. For instance, the upper left figure is a nonsensical mix of a syringe, an inhaler and pills. And the pH-sensitive carrier molecule on the lower left is huge, rivaling the size of the lungs. After scientist sleuths pointed out that the published image made no sense, the journal issued a correction.
    Screen capture by The Conversation, CC BY-ND
    This graphic is the corrected image that replaced the AI image above. In this case, according to the correction, the journal determined that the paper was legitimate but the scientists had used AI to generate the image describing it.
    Screen capture by The Conversation, CC BY-ND

    “People are realizing like, wow, this is happening in my field, it’s happening in your field,” said the Cochrane Collaboration’s Bero”. “So we really need to get coordinated and, you know, develop a method and a plan overall for stamping these things out.”

    What jolted Taylor & Francis into paying attention, according to Alam, the director of Publishing Ethics and Integrity, was a 2020 investigation of a Chinese paper mill by sleuth Elisabeth Bik and three of her peers who go by the pseudonyms Smut Clyde, Morty and Tiger BB8. With 76 compromised papers, the U.K.-based company’s Artificial Cells, Nanomedicine, and Biotechnology was the most affected journal identified in the probe.

    “It opened up a minefield,” says Alam, who also co-chairs United2Act, a project launched in 2023 that brings together publishers, researchers and sleuths in the fight against paper mills. “It was the first time we realized that stock images essentially were being used to represent experiments.”

    Taylor & Francis decided to audit the hundreds of articles in its portfolio that contained similar types of images. It doubled Alam’s team, which now has 14.5 positions dedicated to doing investigations, and also began monitoring submission rates. Paper mills, it seemed, weren’t picky customers.

    “What they’re trying to do is find a gate, and if they get in, then they just start kind of slamming in the submissions,” Alam said. Seventy-six fake papers suddenly seemed like a drop in the ocean. At one Taylor & Francis journal, for instance, Alam’s team identified nearly 1,000 manuscripts that bore all the marks of coming from a mill, she said.

    And in 2023, it rejected about 300 dodgy proposals for special issues. “We’ve blocked a hell of a lot from coming through,” Alam said.

    Fraud checkers

    A small industry of technology startups has sprung up to help publishers, researchers and institutions spot potential fraud. The website Argos, launched in September 2024 by Scitility, an alert service based in Sparks, Nevada, allows authors to check if new collaborators are trailed by retractions or misconduct concerns. It has flagged tens of thousands of “high-risk” papers, according to the journal Nature.

    Fraud-checker tools sift through papers to point to those that should be manually checked and possibly rejected.
    solidcolours/iStock via Getty Images

    Morressier, a scientific conference and communications company based in Berlin, “aims to restore trust in science by improving the way scientific research is published”, according to its website. It offers integrity tools that target the entire research life cycle. Other new paper-checking tools include Signals, by London-based Research Signals, and Clear Skies’ Papermill Alarm.

    The fraudsters have not been idle, either. In 2022, when Clear Skies released the Papermill Alarm, the first academic to inquire about the new tool was a paper miller, according to Day. The person wanted access so he could check his papers before firing them off to publishers, Day said. “Paper mills have proven to be adaptive and also quite quick off the mark.”

    Given the ongoing arms race, Alam acknowledges that the fight against paper mills won’t be won as long as the booming demand for their products remains.

    According to a Nature analysis, the retraction rate tripled from 2012 to 2022 to close to .02%, or around 1 in 5,000 papers. It then nearly doubled in 2023, in large part because of Wiley’s Hindawi debacle. Today’s commercial publishing is part of the problem, Byrne said. For one, cleaning up the literature is a vast and expensive undertaking with no direct financial upside. “Journals and publishers will never, at the moment, be able to correct the literature at the scale and in the timeliness that’s required to solve the paper-mill problem,” Byrne said. “Either we have to monetize corrections such that publishers are paid for their work, or forget the publishers and do it ourselves.”

    But that still wouldn’t fix the fundamental bias built into for-profit publishing: Journals don’t get paid for rejecting papers. “We pay them for accepting papers,” said Bodo Stern, a former editor of the journal Cell and chief of Strategic Initiatives at Howard Hughes Medical Institute, a nonprofit research organization and major funder in Chevy Chase, Maryland. “I mean, what do you think journals are going to do? They’re going to accept papers.”

    With more than 50,000 journals on the market, even if some are trying hard to get it right, bad papers that are shopped around long enough eventually find a home, Stern added. “That system cannot function as a quality-control mechanism,” he said. “We have so many journals that everything can get published.”

    In Stern’s view, the way to go is to stop paying journals for accepting papers and begin looking at them as public utilities that serve a greater good. “We should pay for transparent and rigorous quality-control mechanisms,” he said.

    Peer review, meanwhile, “should be recognized as a true scholarly product, just like the original article, because the authors of the article and the peer reviewers are using the same skills,” Stern said. By the same token, journals should make all peer-review reports publicly available, even for manuscripts they turn down. “When they do quality control, they can’t just reject the paper and then let it be published somewhere else,” Stern said. “That’s not a good service.”

    Better measures

    Stern isn’t the first scientist to bemoan the excessive focus on bibliometrics. “We need less research, better research, and research done for the right reasons,” wrote the late statistician Douglas G. Altman in a much-cited editorial from 1994. “Abandoning using the number of publications as a measure of ability would be a start.”

    Nearly two decades later, a group of some 150 scientists and 75 science organizations released the San Francisco Declaration on Research Assessment, or DORA, discouraging the use of the journal impact factor and other measures as proxies for quality. The 2013 declaration has since been signed by more than 25,000 individuals and organizations in 165 countries.

    Despite the declaration, metrics remain in wide use today, and scientists say there is a new sense of urgency.

    “We’re getting to the point where people really do feel they have to do something” because of the vast number of fake papers, said Richard Sever, assistant director of Cold Spring Harbor Laboratory Press, in New York, and co-founder of the preprint servers bioRxiv and medRxiv.

    Stern and his colleagues have tried to make improvements at their institution. Researchers who wish to renew their seven-year contract have long been required to write a short paragraph describing the importance of their major results. Since the end of 2023, they also have been asked to remove journal names from their applications.

    That way, “you can never do what all reviewers do – I’ve done it – look at the bibliography and in just one second decide, ‘Oh, this person has been productive because they have published many papers and they’re published in the right journals,’” says Stern. “What matters is, did it really make a difference?”

    Shifting the focus away from convenient performance metrics seems possible not just for wealthy private institutions like Howard Hughes Medical Institute, but also for large government funders. In Australia, for example, the National Health and Medical Research Council in 2022 launched the “top 10 in 10” policy, aiming, in part, to “value research quality rather than quantity of publications.”

    Rather than providing their entire bibliography, the agency, which assesses thousands of grant applications every year, asked researchers to list no more than 10 publications from the past decade and explain the contribution each had made to science. According to an evaluation report from April, 2024 close to three-quarters of grant reviewers said the new policy allowed them to concentrate more on research quality than quantity. And more than half said it reduced the time they spent on each application.

    Gingras, the Canadian sociologist, advocates giving scientists the time they need to produce work that matters, rather than a gushing stream of publications. He is a signatory to the Slow Science Manifesto: “Once you get slow science, I can predict that the number of corrigenda, the number of retractions, will go down,” he says.

    At one point, Gingras was involved in evaluating a research organization whose mission was to improve workplace security. An employee presented his work. “He had a sentence I will never forget,” Gingras recalls. The employee began by saying, “‘You know, I’m proud of one thing: My h-index is zero.’ And it was brilliant.” The scientist had developed a technology that prevented fatal falls among construction workers. “He said, ‘That’s useful, and that’s my job.’ I said, ‘Bravo!’”

    Learn more about how the Problematic Paper Screener uncovers compromised papers.

    Labbé receives funding from the European Research Council.
    He has also received funding from the French National Research Agency (ANR), and the U.S. Office of Research Integrity.
    Labbé has been in touch with most of the major publishers and their integrity officers, offering pro-bono consulting regarding detection tools to various actors in the field including STM-Hub and Morressier.

    Cabanac receives funding from the European Research Council (ERC) and the Institut Universitaire de France (IUF). He is the administrator of the Problematic Paper Screener, a public platform that uses metadata from Digital Science and PubPeer via no-cost agreements. Cabanac has been in touch with most of the major publishers and their integrity officers, offering pro bono consulting regarding detection tools to various actors in the field including ClearSkies, Morressier, River Valley, Signals, and STM.

    Frederik Joelving does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. Fake papers are contaminating the world’s scientific literature, fueling a corrupt industry and slowing legitimate lifesaving medical research – https://theconversation.com/fake-papers-are-contaminating-the-worlds-scientific-literature-fueling-a-corrupt-industry-and-slowing-legitimate-lifesaving-medical-research-246224

    MIL OSI – Global Reports –

  • MIL-OSI Security: Two Cousins Sentenced for Pandemic-Related Fraud

    Source: Office of United States Attorneys

    ATLANTA – Johnny Narcisse, and his cousin Johnson Dieujuste, have been sentenced to prison for their scheme to defraud the Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) program of more than $2 million. 

    “These defendants brazenly stole funds from programs designed to help individuals and businesses suffering during the COVID-19 pandemic,” said Acting U.S. Attorney Richard S. Moultrie, Jr. “We are grateful to our law enforcement partners for identifying and investigating these individuals which led to their successful prosecution.”

    According to Acting U.S. Attorney Moultrie, Jr., the charges and other information presented in court: In July 2021, federal agents investigating a Florida resident for suspected tax crimes obtained and executed a search warrant for the home, computer and cellular phone of Johnny Narcisse in Georgia. The search of the computer and phone revealed a large volume of evidence showing that Narcisse and his cousin, Johnson Dieujuste, had been engaged in an extensive conspiracy with each other to recruit small business owners and then file fraudulent applications for COVID-19 relief loans, including both PPP and EIDL loans, on their behalf.

    Narcisse and Dieujuste, after obtaining the names, business names, and employer identification numbers from the would-be borrowers, simply invented the rest of the information needed to apply for the fraudulent loans. If the loan was approved, the borrowers kicked back a percentage of the loan proceeds to Narcisse and/or Dieujuste. Dozens of loans were applied for as part of the scheme, with over $2 million dispersed.

    Johnny Narcisse, 46, of Atlanta, Georgia, was sentenced by U.S. District Judge Eleanor L. Ross to two years, four months in prison followed by three years of supervised release. He was also ordered to pay restitution in the amount of $2,000,332. Narcisse was convicted on October 21, 2024, after he pleaded guilty to one count of conspiracy to commit wire fraud.

    Johnson Dieujuste, 37, of Loganville, Georgia, was sentenced by Judge Ross on January 8, 2025, to two years, eight months in prison followed by three years of supervised release. He was also ordered to pay restitution in the amount of $2,081,559. Dieujuste was convicted on September 24, 2024, after he pleaded guilty to one count of conspiracy to commit wire fraud.

    In addition to their conspiracy to file fraudulent loan applications on behalf of others, the evidence showed that Narcisse and Diejuste each independently filed for fraudulent COVID-19 loans for themselves. Both men were held accountable for those loans as well during the sentencing process, and the losses that resulted from this additional conduct were included in each defendant’s restitution order.

    This case was investigated by the U.S. Treasury Inspector General for Tax Administration and Small Business Administration, Office of Inspector General.

    Assistant U.S Attorney Alana R. Black, and Trial Attorneys Jennifer Bilinkas and David A. Peters of the Department of Justice Criminal Division’s Fraud Section, prosecuted the case.

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

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

    MIL Security OSI –