Residential Housing Market – Page 13

MIL-OSI: First Commerce Bancorp, Inc. Reports First Quarter 2025 Results

Source: GlobeNewswire (MIL-OSI)

LAKEWOOD, N.J., April 25, 2025 (GLOBE NEWSWIRE) — First Commerce Bancorp, Inc. (the “Company”), (OTC: CMRB), the holding company for First Commerce Bank (the “Bank”), today reported net income of $1.7 million and basic earnings per common share of $0.08 for the three months ended March 31, 2025, as compared to net income of $1.2 million and basic earnings per common share of $0.05 for the three months ended March 31, 2024.

President & CEO Donald Mindiak commented, “Measured balance sheet growth during the first quarter was highlighted by calculated increases in both loans and investment securities, redeploying excess liquidity into higher yielding assets, with a risk profile consistent with our underwriting standards. While our average yield on interest earning assets and average cost on interest bearing liabilities remained relatively stable as compared to the first quarter of 2024, on a linked quarter basis the average yield on interest earning assets increased by nine basis points and the average cost of interest bearing liabilities decreased by nine basis points resulting in a thirteen basis point increase in our net interest margin and a thirteen basis point increase in our return on average assets in the comparative quarters ended March 31, 2025 and December 31, 2024, respectively. The continued success of our stock repurchase plan, coupled with improving profitability, is reflected in the increase in book value by $0.08/share since year end 2024 and $0.34/share since March 31, 2024.”

Continuing, Mr. Mindiak remarked that, “From an asset quality perspective, one large loan of $21.0 million migrated into non-accrual status during the first quarter, however, a contract is in place to remediate this facility which is anticipated to close during the second quarter of 2025. While a degree of uncertainty has permeated the marketplace as a result of certain prospective economic, regulatory and geopolitical headwinds which remain an on-going challenge to navigate, we will endeavor to continue to execute our strategies with prudence and forethought in an effort to increase franchise and shareholder value.”

Financial Highlights

Total interest income increased by $1.4 million or 7.4% for the first quarter of 2025 compared to the first quarter of 2024 as a result of the growth in average interest-earning assets year over year.
Total interest expense increased by $1.0 million or 9.5% for the first quarter of 2025 compared to the first quarter of 2024 as a result of the growth in interest-bearing liabilities.
Total deposits increased by $96.9 million or 8.8% to $1.20 billion at March 31, 2025, compared to $1.11 billion at March 31, 2024.
The annualized return on average total assets increased by twelve basis points to 0.44% at March 31, 2025, compared to 0.32% at March 31, 2024.
The annualized return on average shareholders’ equity was 3.93% at March 31, 2025, compared to 2.54% at March 31, 2024.
The book value per common share was $8.47 at March 31, 2025, compared to $8.13 at March 31, 2024.
Net interest margin increased thirteen basis points on a linked quarter basis to 2.33% as of March 31, 2025, from 2.20% as of December 31, 2024.

Balance Sheet Review

Total assets increased by $30.9 million or 2.0% to $1.58 billion at March 31, 2025, from $1.55 billion at December 31, 2024. The increase in total assets was primarily related to increases in total investment securities and total loans receivable, partially offset by a decrease in cash and cash equivalents during the three months ended March 31, 2025.

Total cash and cash equivalents decreased by $48.1 million or 36.3% to $84.3 million at March 31, 2025, from $132.5 million at December 31, 2024. This decrease was primarily due to funding of loan closings and the purchases of investment securities during the first quarter of 2025.

Total investment securities increased by $65.6 million or 58.5% to $177.8 million at March 31, 2025, from $112.2 million at December 31, 2024. The increase in investment securities resulted primarily from $69.3 million in purchases of investment securities, partially offset by $1.3 million in redemptions and $2.4 million in mortgage-backed security amortization.

Total loans receivable, net of allowance for credit losses increased by $17.1 million or 1.4% to $1.24 billion at March 31, 2025, from $1.22 billion at December 31, 2024. Commercial mortgage loans, and construction loans increased $8.2 million and $13.5 million, respectively, partially offset by decreases in commercial loans, residential loans and home equity loans of $1.8 million, $1.6 million and $1.4 million, respectively. The allowance for credit losses increased by $78,000 to $14.8 million or 1.18% of gross loans at March 31, 2025, as compared to $14.7 million or 1.19% of gross loans at December 31, 2024.

Total deposits increased $27.1 million or 2.3% to $1.20 billion at March 31, 2025, from $1.17 billion at December 31, 2024. Within the components of total deposits, time deposits increased $33.6 million, savings deposits increased $9.9 million, and non-interest-bearing demand deposits increased $7.0 million, partially offset by decreases of $10.8 million in NOW deposits, $7.9 million in money market account deposits and $4.6 million in brokered deposits.

Stockholders’ equity decreased by $1.8 million or 1.1% to $170.4 million at March 31, 2025, from $172.3 million at December 31, 2024. The decrease in stockholders’ equity was primarily due to $4.1 million in repurchases of common stock, offset by increases of $1.7 million in retained earnings and $713,000 in additional paid-in-capital. During the three months ended March 31, 2025, the Company repurchased 653,000 shares for approximately $4.1 million, or a weighted average price of approximately $6.23 per share.

Three Months of Operations

Net interest income increased by $382,000 or 4.6% to $8.6 million for the three months ended March 31, 2025, from $8.2 million for the three months ended March 31, 2024. The increase in net interest income was primarily due to an increase in total interest income of $1.4 million as a result of an increase in average interest earning assets, partially offset by an increase in total interest expense of $1.0 million as a result of an increase in average interest-bearing liabilities.

Total interest income increased by $1.4 million or 7.4% to $20.5 million for the three months ended March 31, 2025, from $19.1 million for the three months ended March 31, 2024. Interest income on loans, including fees, decreased $289,000 or 1.6% to $17.4 million for the three months ended March 31, 2025, as compared to $17.7 million for the three months ended March 31, 2024. The decrease in interest income on loans, including fees, resulted primarily from a decline in the average balance of loans receivable of $9.9 million or 0.8% to $1.24 billion for the three months ended March 31, 2025, as compared to $1.25 billion for the three months ended March 31, 2024. Average yield on loans receivable was 5.67% for the three months ended March 31, 2025, unchanged year over year. Interest income on interest-bearing deposits with other banks increased by $338,000 or 51.6% to $993,000 for the three months ended March 31, 2025, as compared to $655,000 for the same period in the prior year. This increase resulted from a higher average balance of interest-bearing deposits with banks of $43.7 million or 80.7% to $97.8 million for the three months ended March 31, 2025, as compared to $54.1 million for the same period in the prior year. Interest income on investment securities increased by $1.3 million or 231.0% to $1.9 million for the three months ended March 31, 2025, as compared to $561,000 for the same period in the prior year, as a result of purchasing and replacing paydowns of investment securities with higher yielding investment securities. The average balance of investment securities portfolio increased by $81.8 million or 117.2% to $151.6 million for the three months ended March 31, 2025, as compared to $69.8 million for the same period in the prior year. The average yield on investment securities increased by 168 basis points to 4.90% for the three months ended March 31, 2025, as compared to 3.22% for the same period in the prior year. Dividend income on FHLB stock increased by $63,000 or 40.1% to $220,000 for the three months ended March 31, 2025, as compared to $157,000 for the same period in the prior year, primarily as a result of an increase in average yield of 128 basis points to 9.34% for the three months ended March 31, 2025, as compared to 8.06% for the same period in the prior year.

Total interest expense increased by $1.0 million or 9.5% to $11.8 million for the three months ended March 31, 2025, from $10.8 million for the three months ended March 31, 2024. The increase in interest expense occurred primarily as a result of an increase in average balance of interest-bearing liabilities of $118.6 million or 11.0%, to $1.20 billion for the three months ended March 31, 2025, from $1.08 billion for the three months ended March 31, 2024. Despite the increase in the average balance of interest-bearing liabilities, the average cost of interest-bearing liabilities decreased to 3.99% for the three months ended March 31, 2025, as compared to 4.01% for the three months ended March 31, 2024. The increase in average balance of interest-bearing liabilities included a $85.3 million increase in average interest-bearing deposit liabilities and a $33.3 million increase in average wholesale borrowings for the three months ended March 31, 2025. The increase in interest-bearing liabilities was primarily used to maintain an increased level of liquidity consistent with regulatory guidance.

During the first quarter of 2025, the Company recorded an $83,000 provision for credit losses as compared to a $7,000 provision for credit losses for the same period in the prior year. Based on the results of the CECL model and management’s evaluation of both quantitative and qualitative factors for the first quarter of 2025, the Company recorded a provision for credit losses of $51,000 on corporate securities held-to-maturity, a $19,000 provision for credit losses for unfunded commitments and a $13,000 provision for credit losses on loans. Based upon the aforementioned analyses, management believes that the allowance for credit losses on loans and investment securities at March 31, 2025, and 2024 were appropriate.

Net interest margin decreased by six basis points to 2.33% for the three months ended March 31, 2025, compared to 2.39% for the three months ended March 31, 2024. The decrease in the net interest margin is primarily due to an increase in the average balance of interest bearing liabilities of $118.6 million to $1.20 billion for the three months ended March 31, 2025 from $1.08 billion three months ended March 31, 2024, despite a decrease in the cost of interest-bearing liabilities to 3.99% for the three months ended March 31, 2025 from 4.01% for the three months ended March 31, 2024. This increase was partially offset by an increase in average balance of interest earning assets of $117.3 million to $1.50 billion for the three months ended March 31, 2025, compared to $1.39 billion for the three months ended March 31, 2024.

Non-interest income increased by $872,000 or 167.0% to $1.4 million for the three months ended March 31, 2025, from $522,000 for the three months ended March 31, 2024. The increase in total non-interest income resulted primarily from an increase in other income of $764,000 as a result of a non-recurring gain of $778,000 on the sale of a Company owned property recorded in the first quarter of 2025. Excluding this non-recurring gain, other income would have decreased $14,000 when compared to the same period in the prior year. Service charges and fees increased by $102,000 or 53.4% to $293,000 for the three months ended March 31, 2025, from $191,000 for the same period in the prior year, primarily due to an increase in loan fees of $47,000 and an increase in deposit accounts fees of $51,000.

Non-interest expense increased by $638,000 or 8.8% to $7.8 million for the three months ended March 31, 2025, compared to $7.2 million for the three months ended March 31, 2024. Salaries and employee benefits increased by $238,000 or 5.3% to $4.7 million for the three months ended March 31, 2025, as compared to $4.5 million for the three months ended March 31, 2024. The increase in salaries and employee benefits resulted primarily due to new positions appointed to assist in the growth of the Bank and annual merit increases partially offset by a decrease in health insurance costs year over year. Occupancy and equipment expense increased by $245,000 or 26.9% to $1.2 million for the three months ended March 31, 2025, as compared to $912,000 for the three months ended March 31, 2024, primarily due to additional lease expense related to the Company leasing additional office space to relocate its corporate offices. Advertising and marketing expense decreased by $23,000 or 29.5% to $55,000 for the three months ended March 31, 2025, as compared to $78,000 for the three months ended March 31, 2024, as a result of reduction in marketing consultant services. Data processing expense increased by $57,000 or 20.0% to $342,000 for the three months ended March 31, 2025, compared to $285,000 for the three months ended March 31, 2024, primarily as a result of adding new services and annual cost increases. FDIC insurance assessment increased $26,000 or 13.3% to $221,000 for the three months ended March 31, 2025, from $195,000 for the three months ended March 31, 2024, as a result of an increase in the assessment rate. Other operating expenses increased by $79,000 or 10.5% to $828,000 for the three months ended March 31, 2025, from $749,000 for the three months ended March 31, 2024, primarily due to minor increases in various components of other operating expenses. Other operating expenses are primarily comprised of loan related expenses, dues and subscriptions, digital banking expenses, sponsorships, training and education, software maintenance and depreciation, and miscellaneous expenses. Management’s focus continues to remain on prudently managing its operating expenses.

The income tax provision increased by $22,000 or 5.8% to $403,000 for the three months ended March 31, 2025, from $381,000 for the three months ended March 31, 2024. This increase in the income tax provision resulted primarily from an increase in the pre-tax income year over year. In addition, the effective tax yield declined year over year as a result of a reduction in New York state tax apportionment. The effective tax rate for the quarter ended March 31, 2025, was 19.4% compared to 24.8% for the quarter ended March 31, 2024.

Asset Quality

The allowance for credit losses increased by $78,000 to $14.8 million or 1.18% of gross loans at March 31, 2025, as compared to $14.7 million or 1.19% of gross loans at December 31, 2024, and $14.6 million or 1.18% at March 31, 2024. During the first quarter of 2025, the Company added a $13,000 provision to the allowance for credit losses and had net recoveries of $65,000. Based on the results of the CECL model and management’s evaluation of both quantitative and qualitative factors during the quarter, changes in the allowance for credit losses are adjusted accordingly.

The Bank had non-accrual loans totaling $37.9 million or 3.02% of gross loans at March 31, 2025, as compared to $16.6 million or 1.34% of gross loans at December 31, 2024. Non-accrual loans increased by $21.3 million or 128.0% from December 31, 2024, as a result of one commercial real estate loan in the amount of approximately $21.0 million which was placed on non-accrual status during the first quarter of 2025. A contract is in place to remediate this facility which is anticipated to close during the second quarter of 2025. The allowance for credit losses was 39.1% of non-accrual loans at March 31, 2025, compared to 88.7%, at December 31, 2024.

About First Commerce Bancorp, Inc.

First Commerce Bancorp, Inc, is a financial services organization headquartered in Lakewood, New Jersey. The Bank, the Company’s wholly owned subsidiary, provides businesses and individuals a wide range of loans, deposit products and retail and commercial banking services through its branch network located in Allentown, Bordentown, Closter, Englewood, Fairfield, Freehold, Jackson, Lakewood, Robbinsville and Teaneck, New Jersey. For more information, please visit our website https://www.firstcommercebk.com/ or contact our offices at 732-364-0032.

Forward-Looking Statements

This release, like many written and oral communications presented by First Commerce Bancorp Inc., and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies 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. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of said safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “could,” “may,” “should,” “will,” “would,” or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.

In addition to the factors previously disclosed in prior Bank communications and those identified elsewhere, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the impact of changes in interest rates and in the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Commerce Bank’s investment securities portfolio; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Commerce Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; inflation; customer acceptance of the Bank’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with certain corporate initiatives; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and actions of governmental agencies and legislative and regulatory actions and reforms.


First Commerce Bancorp, Inc.
Consolidated Statements of Financial Condition
(Unaudited)

							March 31, 2025 vs.
							December 31, 2024
*(dollars in thousands, except percentages and share data)*	March 31, 2025			December 31, 2024			Amount			%
Assets
Cash and cash equivalents:
Cash on hand	$	2,052		$	1,790		$	262			14.6	%
Interest-bearing deposits in other banks		82,285			130,690			(48,405	)		-37.0	%
Total cash and cash equivalents		84,337			132,480			(48,143	)		-36.3	%
Investment securities:
Available-for-sale, at fair value		26,789			300			26,489			8829.7	%
Held-to-maturity (“HTM”), at amortized cost		151,258			112,107			39,151			34.9	%
Less: Allowance for credit losses – HTM securities		(249	)		(198	)		(51	)		25.8	%
Held-to-maturity, net of allowance for credit losses		151,009			111,909			39,100			34.9	%
Total investment securities		177,798			112,209			65,589			58.5	%
Restricted stock		9,483			9,348			135			1.4	%
Loans receivable		1,256,247			1,239,031			17,216			1.4	%
Less: Allowance for credit losses		(14,834	)		(14,756	)		(78	)		0.5	%
Net loans receivable		1,241,413			1,224,275			17,138			1.4	%
Premises and equipment, net		10,338			17,059			(6,721	)		-39.4	%
Right-of-use asset		18,201			16,085			2,116			13.2	%
Accrued interest receivable		6,541			5,829			712			12.2	%
Bank owned life insurance		26,951			26,711			240			0.9	%
Deferred tax asset, net		3,031			3,076			(45	)		-1.5	%
Other assets		3,890			4,053			(163	)		-4.0	%
Total assets	$	1,581,983		$	1,551,125		$	30,858			2.0	%
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Non-interest bearing	$	164,686		$	157,684		$	7,002			4.4	%
Interest-bearing		1,037,393			1,017,254			20,139			2.0	%
Total Deposits		1,202,079			1,174,938			27,141			2.3	%
Borrowings		178,000			175,000			3,000			1.7	%
Accrued interest payable		1,970			1,913			57			3.0	%
Lease liability		18,968			16,773			2,195			13.1	%
Other liabilities		10,544			10,232			312			3.1	%
Total liabilities		1,411,561			1,378,856			32,705			2.4	%
Commitments and contingencies		–			–			–			–
Stockholders’ equity
Preferred stock; authorized 5,000,000 shares; none issued		–			–			–			N/A
Common stock, par value of $0; 30,000,000 authorized		–			–			–			N/A
Additional paid-in capital		90,270			89,557			713			0.8	%
Retained earnings		106,641			104,965			1,676			1.6	%
Treasury stock		(26,360	)		(22,253	)		(4,107	)		18.5	%
Accumulated other comprehensive loss		(129	)		–			(129	)		-100.0	%
Total stockholders’ equity		170,422			172,269			(1,847	)		-1.1	%
Total liabilities and stockholders’ equity	$	1,581,983		$	1,551,125		$	30,858			2.0	%

Shares issued		24,243,030			23,995,390
Shares outstanding		20,130,474			20,536,214
Treasury shares		4,112,556			3,459,176


First Commerce Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)

		Three Months Ended					Variance
*(dollars in thousands, except percentages and share data)*	March 31, 2025		March 31, 2024			Amount			%
Interest and Dividend Income
Loans, including fees	$	17,388	$	17,677		$	(289	)		-1.6	%
Investment securities:
Available-for-sale		182		68			114			167.6	%
Held-to-maturity		1,675		493			1,182			239.8	%
Interest-bearing deposits with other banks		993		655			338			51.6	%
Restricted stock dividends		220		157			63			40.1	%
Total interest and dividend income		20,458		19,050			1,408			7.4	%
Interest expense:
Deposits		9,731		9,052			679			7.5	%
Borrowings		2,106		1,759			347			19.7	%
Total interest expense		11,837		10,811			1,026			9.5	%
Net interest income		8,621		8,239			382			4.6	%
Provision for credit losses		13		124			(111	)		-89.5	%
Provision for (reversal of) unfunded commitments for credit losses		19		(119	)		138			-116.0	%
Provision for credit losses – HTM securities		51		2			49			2450.0	%
Total provision for credit losses		83		7			76			1085.7	%
Net interest income after provision for (reversal of) credit losses		8,538		8,232			306			3.7	%
Non-interest Income:
Service charges and fees		293		191			102			53.4	%
Bank owned life insurance income		240		234			6			2.6	%
Other income		861		97			764			787.6	%
Total non-interest income		1,394		522			872			167.0	%
Non-Interest Expenses:
Salaries and employee benefits		4,740		4,502			238			5.3	%
Occupancy and equipment expense		1,157		912			245			26.9	%
Advertising and marketing		55		78			(23	)		-29.5	%
Professional fees		512		496			16			3.2	%
Data processing expense		342		285			57			20.0	%
FDIC insurance assessment		221		195			26			13.3	%
Other operating expenses		828		749			79			10.5	%
Total non-interest expenses		7,855		7,217			638			8.8	%
Income before income taxes		2,077		1,537			540			35.1	%
Income tax provision		403		381			22			5.8	%
Net income	$	1,674	$	1,156		$	518			44.8	%

Earnings per common share – Basic	$	0.08	$	0.05		$	0.03			60.0	%
Earnings per common share – Diluted		0.08		0.05			0.03			60.0	%
Weighted average shares outstanding – Basic		20,392		22,600			(2,208	)		-9.8	%
Weighted average shares outstanding – Diluted		20,435		22,930			(2,495	)		-10.9	%


First Commerce Bancorp, Inc.
Net Interest Margin Analysis
(Unaudited)

	Three months ended March 31, 2025								Three months ended March 31, 2024
	Average					Average			Average					Average
(dollars in thousands)	Balance			Interest		Yield/Cost			Balance			Interest		Yield/Cost
Assets:
Interest-earning assets:
Interest-bearing deposits in other banks	$	97,808		$	993		4.12	%	$	54,138		$	655		4.86	%
Investment securities:
Available-for-sale		11,672			182		6.25	%		9,054			68		2.99	%
Held-to-maturity		139,935			1,675		4.79	%		60,731			493		3.25	%
Total investment securities		151,607			1,857		4.90	%		69,785			561		3.22	%
Restricted stock		9,433			220		9.34	%		7,779			157		8.06	%
Loans receivable:
Consumer loans		881			7		3.16	%		372			2		2.42	%
Home equity loans		2,384			50		8.52	%		2,948			59		8.11	%
Construction loans		104,991			2,057		7.84	%		115,401			2,529		8.67	%
Commercial loans		42,935			845		7.87	%		36,192			736		8.04	%
Commercial mortgage loans		1,060,105			13,936		5.26	%		1,056,058			13,664		5.12	%
Residential mortgage loans		11,598			136		4.76	%		14,873			174		4.71	%
SBA loans		21,131			357		6.75	%		28,037			513		7.24	%
Total loans receivable		1,244,025			17,388		5.67	%		1,253,881			17,677		5.67	%
Total interest-earning assets		1,502,873			20,458		5.52	%		1,385,583			19,050		5.53	%
Non-interest-earning assets:
Allowance for credit losses		(14,800	)							(14,485	)
Cash on hand		1,927								1,906
Other assets		67,951								59,935
Total non-interest-earning assets		55,078								47,356
Total assets	$	1,557,951							$	1,432,939
Liabilities and stockholders’ equity:
Interest-bearing liabilities:
Interest-bearing checking accounts	$	77,377		$	404		2.12	%	$	53,428		$	225		1.69	%
NOW accounts		8,629			62		2.91	%		38,092			322		3.40	%
Money market accounts		258,121			2,107		3.31	%		210,400			1,748		3.34	%
Savings accounts		39,467			195		2.00	%		29,145			29		0.40	%
Certificates of deposit		486,298			5,125		4.27	%		506,261			5,465		4.34	%
Brokered CDs		154,957			1,838		4.81	%		102,213			1,263		4.97	%
Borrowings		176,878			2,106		4.83	%		143,553			1,759		4.93	%
Total interest-bearing liabilities		1,201,727		$	11,837		3.99	%		1,083,092		$	10,811		4.01	%
Non-interest-bearing liabilities:
Demand deposits		154,448								143,325
Other liabilities		29,196								23,291
Total non-interest-bearing liabilities		183,644								166,616
Stockholders’ equity		172,580								183,231
Total liabilities and stockholders’ equity	$	1,557,951							$	1,432,939
Net interest spread							1.53	%							1.52	%
Net interest margin				$	8,621		2.33	%				$	8,239		2.39	%


First Commerce Bancorp, Inc.
Selected Financial Data
(Unaudited)

	As of and for the quarters ended
(In thousands, except per share data)	3/31/2025			12/31/2024			9/30/2024			6/30/2024			3/31/2024
Summary earnings:
Interest income	$	20,458		$	19,672		$	20,149		$	19,793		$	19,050
Interest expense		11,837			11,706			11,785			11,451			10,811
Net interest income		8,621			7,966			8,364			8,342			8,239
Provision for (reversal of) credit losses		83			(55	)		54			300			7
Net interest income after provision for (reversal of) credit losses		8,538			8,021			8,310			8,042			8,232
Non-interest income		1,394			412			582			562			522
Non-interest expense		7,855			7,117			7,524			7,230			7,217
Income before income tax expense		2,077			1,316			1,368			1,374			1,537
Income tax expense		403			167			240			287			381
Net income	$	1,674		$	1,149		$	1,128		$	1,087		$	1,156
Per share data:
Earnings per share – basic	$	0.08		$	0.06		$	0.05		$	0.05		$	0.05
Earnings per share – diluted		0.08			0.06			0.05			0.05			0.05
Cash dividends declared		–			–			–			–			0.04
Book value at period end		8.47			8.39			8.31			8.19			8.13
Shares outstanding at period end		20,130			20,536			20,780			21,489			22,146
Basic weighted average shares outstanding		20,392			20,552			21,164			21,641			22,600
Fully diluted weighted average shares outstanding		20,435			20,612			21,387			21,898			22,930
Balance sheet data (at period end):
Total assets	$	1,581,983		$	1,551,125		$	1,476,252		$	1,467,517		$	1,452,419
Investment securities, available-for-sale		26,789			300			7,748			8,337			8,758
Investment securities, held-to-maturity		151,009			111,909			73,977			74,109			61,483
Total loans		1,256,247			1,239,031			1,262,481			1,260,236			1,244,357
Allowance for credit losses		(14,834	)		(14,756	)		(14,869	)		(14,922	)		(14,628	)
Total deposits		1,202,079			1,174,938			1,097,165			1,107,159			1,105,161
Stockholders’ equity		170,422			172,269			172,642			175,933			179,963
Common cash dividends		–			–			–			–			904
Selected performance ratios:
Return on average total assets		0.44	%		0.31	%		0.31	%		0.30	%		0.32	%
Return on average stockholders’ equity		3.93	%		2.65	%		2.56	%		2.47	%		2.54	%
Dividend payout ratio		N/A			N/A			N/A			N/A			78.21	%
Average yield on earning assets		5.52	%		5.43	%		5.66	%		5.64	%		5.53	%
Average cost of funding liabilities		3.99	%		4.08	%		4.18	%		4.12	%		4.01	%
Net interest margin		2.33	%		2.20	%		2.35	%		2.38	%		2.39	%
Efficiency ratio		78.43	%		84.95	%		84.10	%		81.19	%		82.37	%
Non-interest income to average assets		0.36	%		0.11	%		0.16	%		0.16	%		0.15	%
Non-interest expenses to average assets		2.04	%		1.90	%		2.04	%		1.99	%		2.03	%
Asset quality ratios:
Non-performing loans to total loans		3.02	%		1.34	%		1.15	%		1.21	%		1.53	%
Non-performing assets to total assets		2.40	%		1.07	%		0.98	%		1.04	%		1.31	%
Allowance for credit losses to non-performing loans		39.12	%		88.71	%		102.67	%		97.76	%		76.77	%
Allowance for credit losses to total loans		1.18	%		1.19	%		1.18	%		1.18	%		1.18	%
Net recoveries (charge-offs) to average loans		0.02	%		-0.01	%		-0.03	%		0.01	%		0.01	%
Liquidity and capital ratios:
Net loans to deposits		103.27	%		104.20	%		113.71	%		112.48	%		111.27	%
Average loans to average deposits		105.49	%		111.83	%		114.54	%		113.30	%		115.79	%
Total stockholders’ equity to total assets		10.77	%		11.11	%		11.69	%		11.99	%		12.39	%
Total capital to risk-weighted assets		13.29	%		14.45	%		14.30	%		14.67	%		15.33	%
Tier 1 capital to risk-weighted assets		12.16	%		13.26	%		13.13	%		13.48	%		15.15	%
Common equity tier 1 capital ratio to risk-weighted assets		12.16	%		13.26	%		13.13	%		13.48	%		15.15	%
Tier 1 leverage ratio		10.74	%		11.56	%		11.80	%		12.08	%		12.58	%

The MIL Network –

April 26, 2025

MIL-OSI: Pacific Financial Corp Earns $2.4 Million, or $0.24 per Diluted Share for First Quarter 2025; Board of Directors Approves 5% Stock Buyback Plan; Declares Quarterly Cash Dividend of $0.14 per Share

Source: GlobeNewswire (MIL-OSI)

ABERDEEN, Wash., April 25, 2025 (GLOBE NEWSWIRE) — Pacific Financial Corporation (OTCQX: PFLC), (“Pacific Financial”) or the (“Company”), the holding company for Bank of the Pacific (the “Bank”), reported net income of $2.4 million, or $0.24 per diluted share for the first quarter of 2025, compared to $2.2 million, or $0.21 per diluted share for the fourth quarter of 2024, and $2.7 million, or $0.26 per diluted share for the first quarter of 2024. Current quarter net income includes a provision for credit losses of $83,000, compared to the recapture of $103,000 from the allowance for credit losses for the fourth quarter of 2024, and a provision for credit losses of $33,000 for the first quarter of 2024. Except for year-end December 31, 2024 financials, all results are unaudited.

The Board of Directors of Pacific Financial declared a quarterly cash dividend of $0.14 per share on April 23, 2025. The dividend will be payable on May 23, 2025 to shareholders of record on May 9, 2025. Additionally, the Board of Directors has authorized an additional $5.3 million toward future stock repurchases, or approximately 5.0% of total shares outstanding.

“We are pleased with our first quarter results; operating earnings were solid and benefitted from strong core deposit growth, margin expansion and a lower cost of deposits as well as the closure of the residential mortgage division in late 2024. During the quarter, we saw good progress with our deposit growth initiative with core deposit growth of $61.2 million or 7%. We continue to benefit from our strong core deposit base, with non-interest bearing accounts representing 36% of total deposits. The expansion in our net interest margin was fueled by higher rates on loan production and on investment purchases, as well as a declining cost of funds. Cost of funds declined 7 basis points to 1.10%, despite continued rate pressure. Demand for lending continues to be tempered by the current level of interest rates and economic uncertainty.” said Denise Portmann, President and Chief Executive Officer.

“Our business model and strategies continue to be built on a culture of relationship banking with a strong foundation of sound credit quality lending standards. At quarter-end, our asset quality metrics remained strong, allowance for credit loss levels were solid and capital levels also remained strong. We believe the combination of our strong balance sheet, and prudent risk management will allow us to achieve sustainable growth and continue delivering results that benefit our stakeholders for the long term,” said Portmann.

First Quarter 2025 Financial Highlights:

Return on average assets (“ROAA”) improved to 0.81%, compared to 0.74% for the fourth quarter 2024, and decreased from 0.95% for the first quarter 2024.
Return on average equity (“ROAE”) was 8.48%, compared to 7.27% from the preceding quarter, and 9.32% from the first quarter a year earlier.
Net interest income was $11.3 million, compared to $10.9 million for the fourth quarter of 2024, and $11.4 million for the first quarter of 2024.
Net interest margin (“NIM”) increased to 4.12%, compared to 3.99% from the preceding quarter, and 4.38% for the first quarter a year ago.
Provision for credit losses was $83,000 for the first quarter ended March 31, 2025, compared to a recapture of $103,000 for the preceding quarter and a provision of $33,000 in the first quarter a year ago.
Gross portfolio loan balances increased to $707.0 million at March 31, 2025, compared to $704.9 million at December 31, 2024, and increased 2%, or $12.8 million from $694.2 million one year earlier.
Total deposits increased $59.9 million, or 6%, to $1.07 billion at March 31, 2025 compared to the previous quarter and increased $78.9 million, or 8%, from one year earlier. Non-interest bearing deposits represent 36% of total deposits at March 31, 2025, and support a lower cost core deposits portfolio. Core deposits were 88% of total deposits at March 31, 2025.
Non-performing assets to total assets ratio remained low at 0.10%, or $1.2 million for the current quarter end and were 0.09% and $1.1 million three months earlier. Substandard loans decreased $41,000 to $2.7 million at March 31, 2025 and special mention assets declined $680,000 to $10.1 million at March 31, 2025.
Shareholder equity increased $3.1 million during the quarter largely due to net income and lower accumulated other comprehensive loss marks on the investment portfolio, offset by stock repurchases and dividend payments. Tangible book value per share was $10.33 at March 31, 2025, an increase from $9.80 at March 31, 2024.
Pacific Financial and Bank of the Pacific continue to exceed regulatory well-capitalized requirements. At March 31, 2025, Pacific Financial’s estimated leverage ratio was 10.9% and its estimated total risk-based capital ratio was 17.4%.

Balance Sheet Review

Total assets increased to $1.22 billion at March 31, 2025, compared to $1.15 billion at December 31, 2024, and $1.13 billion one year earlier.

Cash and cash equivalents increased $63.7 million to $143.8 million at March 31, 2025 from $80.2 million at December 31, 2024 and $91.3 million one year earlier. The increase largely relates to deposit growth during the first quarter.

Liquidity metrics continue to be strong and are managed to ensure adequate funding resources are available to meet customer demand. At March 31, 2025, the Company’s on and off-balance sheet sources totaled $549.7 million. This represents a coverage ratio of short-term funds available to uninsured and uncollateralized deposits of 212%. Included in available sources are collateralized credit lines the Company has established with the Federal Home Loan Bank of Des Moines (FHLB) and the Federal Reserve Bank of San Francisco, as well as unsecured borrowing lines from various correspondent banks. There were no balance outstanding on any of these facilities at quarter-end. Uninsured or uncollateralized deposits were 24% of total deposits at March 31, 2025.

Investment securities increased $0.9 million to $305.4 million, compared to $304.5 million at December 31, 2024 and increased $16.9 million compared to the like period a year ago. The largest investment category was collateralized mortgage obligations which accounted for 51% of the investment portfolio at March 31, 2025, compared to 48% at December 31, 2024 and 45% one year earlier. The yield on the investment portfolio increased 15 basis points during the current quarter to 3.60% from 3.45% for both the prior quarter and the first quarter a year ago. During the quarter, the bank implemented a $9.0 million restructure with a loss of $165,000; improving yields by over 200 basis points on those investment funds. The adjusted duration of the portfolio was 4.31 years at March 31, 2025 compared to 4.35 years at March 31, 2024.

Gross loans balances increased $2.1 million, to $707.0 million at March 31, 2025, compared to $704.9 million at December 31, 2024. During the first quarter of 2025, growth in new owner-occupied commercial real estate and multi-family loans more than offset the decline in commercial & agriculture, construction & development and residential 1-4 family loans. Year-over-year loan growth was 2%, or $12.8 million, with the largest increases in multi-family loans and owner-occupied commercial real estate increasing $17.9 million and $9.2 million, respectively. Loans classified as commercial real estate for regulatory concentration purposes totaled $263.4 million at March 31, 2025, or 189% of total risk-based capital.

The Company continues to manage concentration limits that establish maximum exposure levels by certain industry segments, loan product types, geography and single borrower limits. In addition, the loan portfolio continues to be well-diversified and is collateralized with assets predominantly within the Company’s Western Washington and Oregon markets.

Credit quality: Nonperforming assets remain minimal at $1.2 million, or 0.10% of total assets at March 31, 2025, compared to $1.1 million, or 0.09% at December 31, 2024. Accruing loans past due more than 30 days represent only 0.04% of total loans. Total loans designated as special mention decreased to $10.1 million at March 31, 2025 compared to $10.8 million at December 31, 2024. The Company has zero other real estate owned as of March 31, 2025.

Allowance for credit losses (“ACL”) remained at $8.9 million, or 1.26% of gross loans at March 31, 2025. A provision for credit losses of $83,000 was recorded in the current quarter resulting from $75,000 in net charge-offs and loan growth. This compares to a recapture for credit losses of $103,000 in the fourth quarter of 2024 and a provision for credit losses of $33,000 for the first quarter one year earlier.

Total deposits increased to $1.07 billion at March 31, 2025 from $1.01 billion the prior quarter and $995.8 million one year earlier. The company’s strong core deposit base continues to positively impact the Bank’s net interest margin and operating results. Non-interest bearing deposits continued to remain the largest category of deposits and represented 36% of deposits at March 31, 2025. Additionally, interest-bearing demand and money market deposits represented 23% and 18% of total deposits, respectively, at March 31, 2025, and CDs as a percentage of deposits declined during the quarter, after increasing since fourth quarter 2022. CD balances were 12% of total deposits for the current quarter compared to 13% at the prior quarter.

Shareholders’ equity was $116.9 million at March 31, 2025, compared to $113.9 million at December 31, 2024, and $114.7 million at March 31, 2024. The increase in shareholders’ equity during the current quarter was primarily due to net income and a decrease in unrealized losses on available-for-sale securities with dividend payments and stock repurchases partially offsetting those increases. Net unrealized losses (after-tax) included in shareholders’ equity on available-for-sale securities were $14.2 million at March 31, 2025 compared to $17.5 million at December 31, 2024 and $16.6 million at March 31, 2024. During the quarter, the Company completed its repurchase of shares under the stock repurchase plan announced in October 2024.

Book value per common share was $11.67 at March 31, 2025, compared to $11.26 at December 31, 2024, and $11.10 at March 31, 2024. The Company’s tangible common equity ratio declined to 8.6% at March 31, 2025 relative to 8.8% the prior quarter and 9.0% at March 31, 2024. Regulatory capital ratios of both the Company and the Bank continue to exceed the well-capitalized regulatory thresholds, with the Company’s leverage ratio at 10.9% and total risk-based capital ratio at 17.4% as of March 31, 2025. These regulatory capital ratios are estimates, pending completion and filing of regulatory reports.

Income Statement Review

Net interest income increased $439,000 to $11.3 million for the first quarter of 2025, compared to $10.9 million for the fourth quarter of 2024, and decreased $111,000 compared to $11.4 million for the first quarter a year ago. The change in the current quarter compared to the preceding quarter reflects the impact of higher loan and investment yields, lower deposit and borrowing costs as well as growth in total interest earning assets resulting from core deposit growth during the quarter. The decrease in net interest income compared to the year ago quarter primarily reflects a rise in funding costs and a decrease in yields on interest-bearing cash as the FOMC decreased the federal funds rate 100 basis points in 2024.

The Bank’s net interest margin improved to 4.12% for the quarter ended March 31, 2025 from 3.99% the prior quarter and declined from 4.38% one year earlier. The increase from the prior quarter resulted from both a 7 basis points decrease in costs of funds combined with a 13 basis point increase in loan yields and a 15 basis point increase in investment yields which was partially offset by a 34 basis point decrease in yields on interest-earning cash balances. Loan yields improved as longer term fixed and variable rate loans (originated in a lower rate environment) were renewed at higher rates. In addition, average loan yields on new originations were at higher yields than the current loan portfolio yield. Investment yields improved partially due to $32.3 million of investment purchases at higher yields over the last 6 months including a $9.0 million restructure that replaced lower yielding investments with higher yielding investments. The Bank continues to actively monitor and manage its costs of funds and even in a competitive environment was able to decrease rates on specific deposit categories during the first quarter. In addition, the high percentage of non-interest bearing deposits at 36% continues to help reduce volatility in deposit costs.

Noninterest income decreased to $1.2 million for the current quarter, compared to $1.8 million for the linked quarter and $1.4 million a year earlier. The decrease compared to the linked quarter was primarily due to a loss on the sale of investment securities of $165,000 during the current quarter and a reduction in gain on sale of loans compared to the prior quarter as a result of closing the mortgage division during late 2024. In addition, a death benefit from a bank-owned life insurance policy realized in the fourth quarter of 2024 also contributed to the variance. Fee and service charge income decreased in the first quarter of 2025 to $1.1 million compared to $1.3 million in the previous quarter and $1.1 million in the first quarter of 2024.

Noninterest expenses decreased to $9.4 million for the first quarter of 2025 compared to $10.1 million for the prior quarter and $9.5 million for the first quarter of 2024. The decrease from the prior quarter was primarily related to reductions in mortgage lending salary and employee benefit costs and other mortgage lending costs resulting from the closure of the mortgage division in late 2024. The prior quarter included $773,000 in costs associated with severance and retention payments, lease termination costs and software contract termination expenses related to closing the mortgage division and $602,000 in other mortgage division costs.

The company’s efficiency ratio decreased to 75.86% for the first quarter of 2025, compared to 79.80% in the preceding quarter and increased from 74.21% in the same quarter a year ago.

Income tax expense: Federal and Oregon state income tax expenses totaled $544,000 for the current quarter, and $492,000 for the preceding quarter, resulting in effective tax rates of 18.6% and 18.5%, respectively. These income tax expenses reflect the benefits of tax exempt income on tax-exempt loans and investments, affordable housing tax credit financing, and investments in bank-owned life insurance.

FINANCIAL HIGHLIGHTS (unaudited)	Quarter Ended								Change From
FINANCIAL HIGHLIGHTS (unaudited)	Quarter Ended								Change From
(In 000s, except per share data)
		Mar 31,			Dec 31,			Mar 31,		Dec 31, 2024					Mar 31, 2024
		2025			2024			2024		$		%			$		%
Earnings Ratios & Data
Net Income	$	2,377		$	2,162		$	2,650	$	215		10	%	$	(273	)	-10	%
Return on average assets		0.81%			0.74%			0.95%		0.07%					-0.14	%
Return on average equity		8.48%			7.27%			9.32%		1.21%					-0.84	%
Efficiency ratio ⁽¹⁾		75.86%			79.80%			74.21%		-3.94	%				1.65	%
Net-interest margin %⁽²⁾		4.12%			3.99%			4.38%		0.13%					-0.26	%

Share Ratios & Data
Basic earnings per share	$	0.24		$	0.21		$	0.26	$	0.03		14	%	$	(0.02	)	-8	%
Diluted earning per share	$	0.24		$	0.21		$	0.26	$	0.03		14	%	$	(0.02	)	-8	%
Book value per share⁽³⁾	$	11.67		$	11.26		$	11.10	$	0.41		4	%	$	0.57		5	%
Tangible book value per share⁽⁴⁾	$	10.33		$	9.93		$	9.80	$	0.40		4	%	$	0.53		5	%
Common shares outstanding		10,020			10,110			10,336		(90	)	-1	%		(316	)	-3	%
PFLC stock price	$	10.90		$	12.45		$	10.15	$	(1.55	)	-12	%	$	0.75		7	%
Dividends paid per share	$	0.14		$	0.14		$	0.14	$	–		0	%	$	–		0	%

Balance Sheet Data
Assets	$	1,218,969		$	1,153,563		$	1,134,586	$	65,406		6	%	$	84,383		7	%
Portfolio Loans	$	707,034		$	704,865		$	694,229	$	2,169		0	%	$	12,805		2	%
Deposits	$	1,074,646		$	1,014,731		$	995,756	$	59,915		6	%	$	78,890		8	%
Investments	$	305,377		$	304,502		$	288,439	$	875		0	%	$	16,938		6	%
Shareholders equity	$	116,949		$	113,856		$	114,725	$	3,093		3	%	$	2,224		2	%

Liquidity Ratios
Short-term funding to uninsured
and uncollateralized deposits		212%			217%			251%		-5	%				-39	%
Uninsured and uncollateralized
deposits to total deposits		24%			25%			22%		-1	%				2	%
Portfolio loans to deposits ratio		66%			69%			69%		-3	%				-3	%

Asset Quality Ratios
Non-performing assets to assets		0.10%			0.09%			0.13%		0.01%					-0.03	%
Non-accrual loans to portfolio loans		0.17%			0.16%			0.22%		0.01%					-0.05	%
Loan losses to avg portfolio loans		0.04%			-0.04	%		0.02%		0.08%					0.02	%
ACL to portfolio loans		1.26%			1.26%			1.24%		0.00%					0.02	%

Capital Ratios (PFC)
Total risk-based capital ratio		17.4%			17.5%			17.6%		-0.1	%				-0.2	%
Tier 1 risk-based capital ratio		16.3%			16.3%			16.5%		0.0%					-0.2	%
Common equity tier 1 ratio		14.7%			14.7%			14.8%		0.0%					-0.1	%
Leverage ratio		10.9%			11.3%			11.6%		-0.4	%				-0.7	%
Tangible common equity ratio		8.6%			8.8%			9.0%		-0.2	%				-0.4	%

⁽¹⁾ Non-interest expense divided by net interest income plus noninterest income.
⁽²⁾ Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.
⁽³⁾ Book value per share is calculated as the total common shareholders’ equity divided by the period ending number of common stock shares outstanding.
⁽⁴⁾ Tangible book value per share is calculated as the total common shareholders’ equity less total intangible assets and liabilities, divided by the period ending number of common stock shares outstanding.


INCOME STATEMENT (unaudited)	Quarter Ended								Change From
INCOME STATEMENT (unaudited)	Quarter Ended								Change From
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,		Dec 31, 2024					Mar 31, 2024
		2025			2024			2024		$		%			$		%
Interest Income
Loan interest & fee income	$	10,304		$	10,340		$	10,224	$	(36	)	0	%	$	80		1	%
Interest earning cash income		1,208			942			935		266		28	%		273		29	%
Investment income		2,678			2,590			2,475		88		3	%		203		8	%
Interest Income		14,190			13,872			13,634		318		2	%		556		4	%

Interest Expense
Deposits interest expense		2,694			2,796			1,991		(102	)	-4	%		703		35	%
Other borrowings interest expense		206			225			242		(19	)	-8	%		(36	)	-15	%
Interest Expense		2,900			3,021			2,233		(121	)	-4	%		667		30	%
Net Interest Income		11,290			10,851			11,401		439		4	%		(111	)	-1	%
Provision(recapture) for credit losses		83			(103	)		33		186		-181	%		50		152	%
Net Interest Income after provision		11,207			10,954			11,368		253		2	%		(161	)	-1	%

Non-Interest Income
Fees and service charges		1,117			1,267			1,101		(150	)	-12	%		16		1	%
Gain on sale of investments, net		(165	)		–			–		(165	)	-100	%		(165	)	-100	%
Gain on sale of loans, net		(2	)		267			152		(269	)	-101	%		(154	)	-101	%
Income on bank-owned insurance		191			250			180		(59	)	-24	%		11		6	%
Other non-interest income		12			(9	)		11		21		-233	%		1		9	%
Non-Interest Income		1,153			1,775			1,444		(622	)	-35	%		(291	)	-20	%

Non-Interest Expense
Salaries and employee benefits		5,969			6,288			5,994		(319	)	-5	%		(25	)	0	%
Occupancy		592			768			641		(176	)	-23	%		(49	)	-8	%
Furniture, Fixtures & Equipment		302			289			284		13		4	%		18		6	%
Marketing & donations		153			149			154		4		3	%		(1	)	-1	%
Professional services		299			267			336		32		12	%		(37	)	-11	%
Data Processing & IT		1,218			1,380			1,191		(162	)	-12	%		27		2	%
Other		906			934			933		(28	)	-3	%		(27	)	-3	%
Non-Interest Expense		9,439			10,075			9,533		(636	)	-6	%		(94	)	-1	%
Income before income taxes		2,921			2,654			3,279		267		10	%		(358	)	-11	%
Provision for income taxes		544			492			629		52		11	%		(85	)	-14	%
Net Income	$	2,377		$	2,162		$	2,650	$	215		10	%		(273	)	-10	%

Effective tax rate		18.6%			18.5%			19.2%		0.1%					-0.6	%

BALANCE SHEET (unaudited)	Period Ended									Change from										% of Total
($ in 000s)	Period Ended									Change from										% of Total

		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024				Mar 31,		Dec 31,		Mar 31,
		2025			2024			2024			$		%			$		%		2025		2024		2024
Assets
Cash on hand and in banks	$	18,975		$	18,136		$	15,597		$	839		5	%	$	3,378		22	%	2	%	2	%	1	%
Interest earning deposits		124,854			62,015			75,705			62,839		101	%		49,149		65	%	10	%	5	%	7	%
Investment securities		305,377			304,502			288,439			875		0	%		16,938		6	%	25	%	26	%	25	%
Loans held-for-sale		–			–			–			–		-100	%		–		-100	%	0	%	0	%	0	%
Portfolio Loans, net of deferred fees		706,439			704,248			693,461			2,191		0	%		12,978		2	%	58	%	61	%	61	%
Allowance for credit losses		(8,890	)		(8,851	)		(8,580	)		(39	)	0	%		(310	)	4	%	-1	%	-1	%	-1	%
Net loans		697,549			695,397			684,881			2,152		0	%		12,668		2	%	57	%	60	%	60	%
Premises & equipment		16,702			16,952			15,283			(250	)	-1	%		1,419		9	%	1	%	1	%	1	%
Goodwill & Other Intangibles		13,435			13,435			13,435			–		0	%		–		0	%	1	%	1	%	1	%
Bank-owned life Insurance		28,204			28,333			27,678			(129	)	0	%		526		2	%	2	%	2	%	2	%
Other assets		13,873			14,793			13,568			(920	)	-6	%		305		2	%	2	%	3	%	3	%
Total Assets	$	1,218,969		$	1,153,563		$	1,134,586		$	65,406		6	%	$	84,383		7	%	100	%	100	%	100	%

Liabilities & Shareholders’ Equity
Deposits	$	1,074,646		$	1,014,731		$	995,756		$	59,915		6	%	$	78,890		8	%	88	%	88	%	88	%
Borrowings		13,403			13,403			13,403			–		0	%		–		0	%	1	%	1	%	1	%
Other liabilities		13,971			11,573			10,702			2,398		21	%		3,269		31	%	1	%	1	%	1	%
Shareholders’ equity		116,949			113,856			114,725			3,093		3	%		2,224		2	%	10	%	10	%	10	%
Liabilities & Shareholders’ Equity	$	1,218,969		$	1,153,563		$	1,134,586		$	65,406		6	%	$	84,383		7	%	100	%	100	%	100	%


INVESTMENT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended									Change from										% of Total
INVESTMENT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended									Change from										% of Total
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024				Mar 31,		Dec 31,		Mar 31,
		2025			2024			2024			$		%			$		%		2025		2024		2024
Investment Securities
Collateralized mortgage obligations	$	156,105		$	147,262		$	129,213		$	8,843		6	%	$	26,892		21	%	51	%	48	%	45	%
Mortgage backed securities		40,396			46,112			37,753			(5,716	)	-12	%		2,643		7	%	13	%	15	%	13	%
U.S. Government and agency securities		68,392			67,716			77,826			676		1	%		(9,434	)	-12	%	22	%	22	%	27	%
Municipal securities		40,484			43,412			43,647			(2,928	)	-7	%		(3,163	)	-7	%	14	%	15	%	15	%
Investment Securities	$	305,377		$	304,502		$	288,439		$	875		0	%	$	16,938		6	%	100	%	100	%	100	%

Held to maturity securities	$	40,718		$	41,442		$	49,132		$	(724	)	-2	%	$	(8,414	)	-17	%	13	%	14	%	17	%
Available for sale securities	$	264,659		$	263,060		$	239,307		$	1,599		1	%	$	25,352		11	%	87	%	86	%	83	%

Government & Agency securities	$	264,866		$	261,063		$	244,762		$	3,803		1	%	$	20,104		8	%	87	%	86	%	85	%
AAA, AA, A rated securities	$	39,822		$	42,773		$	43,008		$	(2,951	)	-7	%	$	(3,186	)	-7	%	13	%	14	%	15	%
Non-rated securities	$	689		$	666		$	669		$	23		3	%	$	20		3	%	0	%	0	%	0	%

AFS Unrealized Gain (Loss)	$	(18,284	)	$	(22,437	)	$	(21,464	)	$	4,153		-19	%	$	3,180		-15	%	-6	%	-7	%	-7	%


LIQUIDITY (unaudited)	Period Ended									Change from										% of Deposits
($ in 000s)	Period Ended									Change from										% of Deposits

		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024				Mar 31,		Dec 31,		Mar 31,
		2025			2024			2024			$		%			$		%		2025		2024		2024
Short-term Funding
Cash and cash equivalents	$	129,616		$	67,951		$	80,052		$	61,665		91	%	$	49,564		62	%	12	%	7	%	8	%
Unencumbered AFS Securities		104,237			158,472			139,144			(54,235	)	-34	%		(34,907	)	-25	%	10	%	16	%	14	%
Secured lines of Credit (FHLB, FRB)		315,876			324,187			337,553			(8,311	)	-3	%		(21,677	)	-6	%	29	%	32	%	34	%
Short-term Funding	$	549,729		$	550,610		$	556,749		$	(881	)	0	%	$	(7,020	)	-1	%	51	%	54	%	56	%


PORTFOLIO LOAN COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended									Change from										% of Total
PORTFOLIO LOAN COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended									Change from										% of Total
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024				Mar 31,		Dec 31,		Mar 31,
		2025			2024			2024			$		%			$		%		2025		2024		2024
Portfolio Loans
Commercial & agriculture	$	70,209		$	75,240		$	71,320		$	(5,031	)	-7	%	$	(1,111	)	-2	%	10	%	11	%	10	%
Real estate:
Construction and development		34,669			42,725			51,978			(8,056	)	-19	%		(17,309	)	-33	%	5	%	6	%	7	%
Residential 1-4 family		101,810			103,489			99,808			(1,679	)	-2	%		2,002		2	%	14	%	15	%	14	%
Multi-family		72,313			68,978			54,430			3,335		5	%		17,883		33	%	10	%	10	%	8	%
CRE — owner occupied		176,850			165,120			167,631			11,730		7	%		9,219		5	%	25	%	23	%	24	%
CRE — non owner occupied		160,022			159,582			157,322			440		0	%		2,700		2	%	23	%	23	%	23	%
Farmland		27,411			26,864			26,752			547		2	%		659		2	%	4	%	4	%	4	%
Consumer		63,750			62,867			64,988			883		1	%		(1,238	)	-2	%	9	%	8	%	10	%
Portfolio Loans		707,034			704,865			694,229			2,169		0	%		12,805		2	%	100	%	100	%	100	%
Less: ACL		(8,890	)		(8,851	)		(8,580	)
Less: deferred fees		(595	)		(617	)		(768	)
Net loans	$	697,549		$	695,397		$	684,881

Regulatory Commercial Real Estate	$	263,424		$	267,857		$	261,155		$	(4,433	)	-2	%	$	2,269		1	%	37	%	38	%	38	%
Total Risk Based Capital⁽¹⁾	$	139,133		$	139,458		$	139,255		$	(325	)	0	%	$	(122	)	0	%
CRE to Risk Based Capital⁽¹⁾		189%			192%			188%					-3	%				1	%


CRE–MULTI-FAMILY & NON OWNER OCCUPIED COMPOSITION (unaudited)	Period Ended									Change from										% of Total
	Period Ended									Change from										% of Total
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024				Mar 31,		Dec 31,		Mar 31,
		2025			2024			2024			$		%			$		%		2025		2024		2024
Collateral Composition⁽²⁾
Multifamily	$	76,421		$	73,575		$	61,085		$	2,846		4	%	$	15,336		25	%	31	%	30	%	27	%
Retail		36,616			36,813			36,192			(197	)	-1	%		424		1	%	15	%	15	%	16	%
Hospitality		31,772			31,369			32,468			403		1	%		(696	)	-2	%	13	%	13	%	14	%
Office		23,975			23,921			23,730			54		0	%		245		1	%	10	%	10	%	10	%
Mixed Use		22,706			22,662			22,204			44		0	%		502		2	%	9	%	9	%	10	%
Mini Storage		22,654			25,028			23,438			(2,374	)	-9	%		(784	)	-3	%	9	%	10	%	10	%
Industrial		15,230			14,723			13,348			507		3	%		1,882		14	%	6	%	6	%	6	%
Warehouse		8,146			7,531			7,483			615		8	%		663		9	%	3	%	3	%	3	%
Special Purpose		6,874			6,921			7,058			(47	)	-1	%		(184	)	-3	%	3	%	3	%	3	%
Other		2,648			3,155			3,259			(507	)	-16	%		(611	)	-19	%	1	%	1	%	1	%
Total	$	247,042		$	245,698		$	230,265		$	1,344		1	%	$	16,777		7	%	100	%	100	%	100	%

⁽¹⁾ Bank of the Pacific
⁽²⁾ Includes loans in process of construction


CREDIT QUALITY (unaudited)	Period Ended									Change from
CREDIT QUALITY (unaudited)	Period Ended									Change from
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024
		2025			2024			2024			$		%			$		%
Risk Rating Distribution
Pass	$	694,240		$	691,350		$	684,779		$	2,890		0	%	$	9,461		1	%
Special Mention		10,131			10,811			4,771			(680	)	-6	%		5,360		112	%
Substandard		2,663			2,704			4,679			(41	)	-2	%		(2,016	)	-43	%
Portfolio Loans	$	707,034		$	704,865		$	694,229		$	2,169		0	%	$	12,805		2	%

Nonperforming Assets
Nonaccruing loans		1,225			1,094			1,526		$	131		12	%		(301	)	-20	%
Other real estate owned		–			–			–			–		0	%		–		0	%
Nonperforming Assets	$	1,225		$	1,094		$	1,526		$	131		12	%		(301	)	-20	%

Credit Metrics
Classified loans¹ to portfolio loans		0.38%			0.38%			0.67%			0.00%					-0.29	%
ACL to classified loans¹		333.83%			327.33%			183.37%			6.50%					150.46	%
Loans past due 30+ days to portfolio loans²		0.04%			0.14%			0.10%			-0.10%					-0.06	%
Nonperforming assets to total assets		0.10%			0.09%			0.13%			0.01%					-0.03	%
Nonaccruing loans to portfolio loans		0.17%			0.16%			0.22%			0.01%					-0.05	%

⁽¹⁾ Classified loans include loans rated substandard or worse and are defined as loans having a well-defined weakness or weaknesses related to the borrower’s financial capacity or to pledged collateral that may jeopardize the repayment of the debt. They are characterized by the possibility that the Bank may sustain some loss if the deficiencies giving rise to the substandard classification are not corrected.
⁽²⁾ Excludes non-accrual loans


DEPOSIT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended									Change from										% of Total
DEPOSIT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended									Change from										% of Total
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024				Mar 31,		Dec 31,		Mar 31,
		2025			2024			2024			$		%			$		%		2025		2024		2024
Deposits
Interest-bearing demand	$	243,363		$	194,526		$	177,735		$	48,837		25	%	$	65,628		37	%	23	%	19	%	18	%
Money market		197,184			193,324			169,095			3,860		2	%		28,089		17	%	18	%	19	%	17	%
Savings		117,130			115,520			129,796			1,610		1	%		(12,666	)	-10	%	11	%	11	%	13	%
Time deposits (CDs)		134,226			135,485			114,644			(1,259	)	-1	%		19,582		17	%	12	%	13	%	12	%
Total interest-bearing deposits		691,903			638,855			591,270			53,048		8	%		100,633		17	%	64	%	62	%	60	%
Non-interest bearing demand		382,743			375,876			404,486			6,867		2	%		(21,743	)	-5	%	36	%	38	%	40	%
Total deposits	$	1,074,646		$	1,014,731		$	995,756		$	59,915		6	%	$	78,890		8	%	100	%	100	%	100	%

Insured Deposits	$	630,940		$	629,600		$	645,784		$	1,340		0	%	$	(385,920	)	-60	%	59	%	62	%	65	%
Collateralized Deposits		183,842			131,327			127,733			52,515		40	%		56,109		44	%	17	%	13	%	13	%
Uninsured Deposits		259,864			253,804			222,239			6,060		2	%		408,701		184	%	24	%	25	%	22	%
Total Deposits	$	1,074,646		$	1,014,731		$	995,756		$	59,915		6	%	$	78,890		8	%	100	%	100	%	100	%

Consumer Deposits	$	472,839		$	466,826		$	470,442		$	6,013		1	%	$	2,397		1	%	44	%	46	%	47	%
Business Deposits		407,974			406,308			387,917			1,666		0	%		20,057		5	%	38	%	40	%	39	%
Public Deposits		193,833			141,597			137,397			52,236		37	%		56,436		41	%	18	%	14	%	14	%
Total Deposits	$	1,074,646		$	1,014,731		$	995,756		$	59,915		6	%	$	78,890		8	%	100	%	100	%	100	%

NET INTEREST MARGIN (unaudited)	Quarter Ended									Change From
NET INTEREST MARGIN (unaudited)	Quarter Ended									Change From
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024
		2025			2024			2024			$		%			$		%

Average Interest Bearing Balances
Portfolio loans	$	701,071		$	703,811		$	688,918		$	(2,740	)	0	%	$	12,153		2	%
Loans held for sale	$	–		$	1,033		$	595		$	(1,033	)	-100	%	$	(595	)	-100	%
Investment securities	$	305,074		$	302,501		$	292,375		$	2,573		1	%	$	12,699		4	%
Interest earning cash	$	110,007		$	78,296		$	68,873		$	31,711		41	%	$	41,134		60	%
Total interest-earning assets	$	1,116,152		$	1,085,641		$	1,050,761		$	30,511		3	%	$	65,391		6	%
Non-interest bearing deposits	$	378,470		$	388,227		$	395,004		$	(9,757	)	-3	%	$	(16,534	)	-4	%
Interest-bearing deposits	$	675,122		$	628,475		$	590,410		$	46,647		7	%	$	84,712		14	%
Total Deposits	$	1,053,592		$	1,016,702		$	985,414		$	36,890		4	%	$	68,178		7	%
Borrowings	$	13,403		$	13,403		$	13,403		$	–		0	%	$	–		0	%
Total interest-bearing liabilities	$	688,525		$	641,878		$	603,813		$	46,647		7	%	$	84,712		14	%

Yield / Cost $⁽¹⁾
Portfolio loans	$	10,316		$	10,336		$	10,233		$	(20	)	0	%	$	83		1	%
Loans held for sale	$	–		$	16		$	5		$	(16	)	-100	%	$	(5	)	-100	%
Investment securities	$	2,710		$	2,622		$	2,507		$	88		3	%	$	203		8	%
Interest-bearing cash	$	1,208		$	942		$	935		$	266		28	%	$	273		29	%
Total interest-earning assets	$	14,234		$	13,916		$	13,680		$	318		2	%	$	554		4	%
Interest-bearing deposits	$	2,694		$	2,796		$	1,991		$	(102	)	-4	%	$	703		35	%
Borrowings	$	206		$	225		$	242		$	(19	)	-8	%	$	(36	)	-15	%
Total interest-bearing liabilities	$	2,900		$	3,021		$	2,233		$	(121	)	-4	%	$	667		30	%
Net interest income	$	11,334		$	10,895		$	11,447		$	439		4	%	$	(113	)	-1	%

Yield / Cost %⁽¹⁾
Yield on portfolio loans		5.97	%		5.84	%		5.97	%		0.13	%				0.00	%
Yield on investment securities		3.60	%		3.45	%		3.45	%		0.15	%				0.15	%
Yield on interest-bearing cash		4.45	%		4.79	%		5.45	%		-0.34	%				-1.00	%
Cost of interest-bearing deposits		1.62	%		1.77	%		1.36	%		-0.15	%				0.26	%
Cost of borrowings		6.23	%		6.68	%		7.26	%		-0.45	%				-1.03	%
Cost of deposits and borrowings		1.10	%		1.17	%		0.90	%		-0.07	%				0.20	%

Yield on interest-earning assets		5.17	%		5.10	%		5.24	%		0.07	%				-0.07	%
Cost of interest-bearing liabilities		1.71	%		1.87	%		1.49	%		-0.16	%				0.22	%
Net interest spread		3.46	%		3.23	%		3.75	%		0.23	%				-0.29	%
Net interest margin		4.12	%		3.99	%		4.38	%		0.13	%				-0.26	%

⁽¹⁾ Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.


ALLOWANCE FOR CREDIT LOSSES (ACL) (unaudited)	Quarter Ended									Change From
ALLOWANCE FOR CREDIT LOSSES (ACL) (unaudited)	Quarter Ended									Change From
($ in 000s)
		Mar 31,			Dec 31,			Mar 31,			Dec 31, 2024					Mar 31, 2024
		2025			2024			2024			$		%			$		%
Allowance for Credit Losses
Beginning of period balance	$	8,851		$	8,897		$	8,530		$	(46	)	-1	%	$	321		4	%
Impact of CECL Adoption (ASC 326)		–			–			–			–		-100	%		–		-100	%
Charge-offs		(75	)		(32	)		(35	)		(43	)	134	%		(40	)	114	%
Recoveries		–			105			2			(105	)	-100	%		(2	)	-100	%
Net (charge-off) recovery		(75	)		73			(33	)		(148	)	-203	%		(42	)	127	%
Provision (recapture)		114			(119	)		83			233		-196	%		31		37	%
End of period balance	$	8,890		$	8,851		$	8,580		$	39		0	%	$	310		4	%

Net charge-off (recovery) to
average portfolio loans		0.04	%		-0.04	%		0.02	%		0.08	%				0.02	%
ACL to portfolio loans		1.26	%		1.26	%		1.24	%		0.00	%				0.02	%

Allowance for unfunded loans
Beginning of period balance	$	540		$	524		$	698		$	16		3	%	$	(158	)	-23	%
Impact of CECL Adoption (ASC 326)		–			–			–			–		-100	%		–		-100	%
Provision (recapture)		(31	)		16			(50	)		(47	)	-294	%		19		-38	%
End of period balance	$	509		$	540		$	648		$	(31	)	-6	%	$	(139	)	-21	%

ABOUT PACIFIC FINANCIAL CORPORATION

Pacific Financial Corporation of Aberdeen, Washington, is the bank holding company for Bank of the Pacific, a state chartered and federally insured commercial bank. Bank of the Pacific offers banking products and services to small-to-medium sized businesses and professionals in western Washington and Oregon. At March 31, 2025, the Company had total assets of $1.22 billion and operated fifteen branches in the communities of Grays Harbor, Pacific, Thurston, Whatcom, Skagit, Clark and Wahkiakum counties in the State of Washington, and three branches in the communities of Clatsop and Clackamas counties in Oregon. The Company also operated loan production offices in the communities of Burlington, Washington and Salem, Oregon. Visit the Company’s website at www.bankofthepacific.com. Member FDIC.

Cautions Concerning Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other laws, including all statements in this release that are not historical facts or that relate to future plans or events or projected results of Pacific Financial Corporation and its wholly-owned subsidiary, Bank of the Pacific. Such statements are based on information available at the time of communication and are based on current beliefs and expectations of the Company’s management and are subject to risks and uncertainties, many of which are beyond our control, which could cause actual events or results to differ materially from those projected, anticipated or implied, and could negatively impact the Company’s operating and stock price performance. These risks and uncertainties include various risks associated with growing the Bank and expanding the services it provides, development of new business lines and markets, competition in the marketplace, general economic conditions, changes in interest rates, extensive and evolving regulation of the banking industry, and many other risks. Any forward-looking statements in this communication are based on information at the time the statement is made. We undertake no obligation to update or revise any forward-looking statement. Readers of this release are cautioned not to put undue reliance on forward-looking statements.

Contacts:
Denise Portmann, President & CEO
Carla Tucker, EVP & CFO
360.533.8873

The MIL Network –

April 26, 2025

MIL-OSI: Preferred Bank Reports First Quarter Results

Source: GlobeNewswire (MIL-OSI)

LOS ANGELES, April 25, 2025 (GLOBE NEWSWIRE) — Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended March 31, 2025. Preferred Bank (“the Bank”) reported net income of $30.0 million or $2.23 per diluted share for the first quarter of 2025. This represents a small decrease in net income of $197,000 from the prior quarter and a decrease of $3.4 million from the same quarter last year. The decrease compared to both periods was mainly due to a decrease in net interest income. In the first quarter of 2025, the incremental impact to interest income from loans placed on nonaccrual status was approximately $2.8 million. In addition, a property securing one of our loans was damaged in the Palisades fire in January and as a result, the Bank has reversed out the $208,000 interest receivable on this loan although we expect to recoup this amount after the property is sold. In addition to a lowering of overall interest rates, these were the main factors in the decrease in net interest income.

Net interest income was $62.7 million, a decrease of $6.5 million from the previous quarter and a decrease of $5.8 million compared to the same quarter last year. Noninterest income was $4.0 million, an increase of $361,000 over the prior quarter and an increase of $933,000 over the same quarter last year. Noninterest expense was $23.4 million, a decrease of $4.9 million from the previous quarter and an increase of $3.3 million over the same quarter last year.

Highlights for the Quarter:

Return on average assets was 1.76%
Return on beginning equity of 15.96%
Total deposits increased by $155.9 million or 2.6%, linked quarter
Efficiency ratio was 35.1%

Li Yu, Chairman and CEO, commented, “Preferred Bank’s net income for the first quarter, 2025 was $30.0 million or $2.23 per fully diluted share. This quarter, there was an outsized impact to interest income of approximately $2.8 million on nonaccrual loans. We have also written down the value of our one OREO property by $1.3 million.

Non-accrual loans totaled $78.9 million as of March 31, 2025 and are mostly comprised of two loans totaling $65.6 million. These two loans are well-secured, and we do not anticipate any losses associated with these two credits. Overall criticized loans have decreased to $129.2 million from $158.2 million at year-end. There were very few new migrations into the criticized loan category.

The large interest reversal of $2.8 million significantly affected the reported net interest margin, which was 3.75% for the quarter. Without that, the margin would have been much closer to the 4.06% reported in the fourth quarter of 2024. Deposit growth for the quarter was $155.9 million or 2.6% on a linked quarter basis. However, total loans reduced slightly from December 31, 2024. We do not feel there will be material changes in the loan demand in the near future under the shadow of the import tariff uncertainty.

The import tariff impositions and threats are truly unprecedented. At this time, we are still completely uncertain as to the size of the tariffs and which countries will ultimately be tariffed. In short, every American’s economic well-being will likely be impacted. Even if an agreement can be reached within the “90 days”, there seems to be no certainty that the issue will be completely resolved and this uncertainty may persist for a year or possibly more. We at Preferred Bank will stay alert and constantly monitoring our activities.

As a starting point, we have began a “deep-dive” within our relatively small “trade finance” portfolio and will continue to widen the scope of our credit monitoring activities related to trade.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $62.7 million for the first quarter of 2025. This represents a $6.5 million decrease from the $69.2 million recorded in the prior quarter and a $5.8 million decrease from the same quarter last year. The decrease compared to both comparable quarters was primarily due to the reversal of interest income of $2.8 million associated with the nonaccrual loans. In addition, there was a property in the Palisades fire that secured a construction loan financed by the Bank. As part of that restructuring, the Bank elected to reverse $208,000 out of interest income that had accrued on that loan. Interest expense decreased compared to both comparable periods despite growth in deposits during the quarter. The Bank’s net interest margin came in at 3.75% for the quarter, this is down from the 4.06% recorded last quarter and from the 4.19% margin achieved in the first quarter of the prior year. The loan interest reversals played a major role in the decrease of the net interest margin in the first quarter. Management believes that efforts to reduce the Bank’s deposit costs have been largely effective as evidenced by the decreases in interest expense.

Noninterest Income. For the first quarter of 2025, noninterest income was $4.0 million compared with $3.1 million for the same quarter last year and compared to $3.6 million for the fourth quarter of 2024. The increase over the prior quarter was primarily due to letter of credit (LC) fee income which was up by $268,000 and gains on sales of SBA loans which increased by $163,000. In comparing to the same quarter last year, fee income was down but LC fee income increased by $741,000 and gains on sales of SBA loans increased by $172,000.

Noninterest Expense. Total noninterest expense was $23.4 million for the first quarter of 2025 compared to $28.2 million for the fourth quarter of 2024 and compared to the $20.0 million recorded in the same period last year. The primary reason for the decrease over the prior quarter was the $8.1 million occupancy expense adjustment recorded in the fourth quarter of 2024. This was related to accounting pronouncement ASC 842, accounting for leases. Partially offsetting that was an increase in personnel expense of $1.6 million and an increase in OREO expense of $1.4 million. In the first quarter of 2025, the Bank recorded a valuation charge of $1.3 million related to the OREO property in Santa Barbara. In comparing to the same quarter last year; personnel expense was up by $939,000, occupancy expense was up by $583,000 and OREO expense was up by $1.4 million due to the aforementioned OREO valuation charge recorded in the first quarter of 2025. Salary expense increased over the same quarter last year due mainly to an increase in personnel and merit increases. The increase in personnel expense over the prior quarter was primarily due to employer paid taxes as during the first quarter, incentive compensation is paid out to employees.

Income Taxes. The Bank recorded a provision for income taxes of $12.6 million for the first quarter of 2025. This represents an effective tax rate (“ETR”) of 29.5% which is up from the 29.0% ETR for last quarter and up from the 29.0% ETR recorded in the same period last year. The Bank’s ETR will fluctuate slightly from quarter to quarter within a fairly small range due to the timing of taxable events throughout the year.

Balance Sheet Summary

Total gross loans at March 31, 2025 were $5.63 billion, a decrease of $6.2 million from the total of $5.64 billion as of December 31, 2024. Total deposits were $6.07 billion, an increase of $155.9 million from the $5.92 billion as of December 31, 2024. Total assets were $7.1 billion, an increase of $176.7 million over the total of $6.92 billion as of December 31, 2024.

Asset Quality

Non-accrual loans and loans 90 days past due and still accruing totaled $78.9 million as of March 31, 2025. The bulk of the nonaccrual loans comprised of two loans totaling $65.6 million. One of the loans is a multi-family loan which is well-secured and the other loan is now vacant, entitled land in a prime area of Orange County. Again, this loan is also well-secured. The loans were part of the same relationship and one is now working its way through the bankruptcy court while the other loan is in the process of being sold, at par. Management is confident that there will be no loss associated with these two loans. Total net charge-offs (recoveries) for the quarter were ($97,000) compared to net charge-offs of $6.6 million in the prior quarter. In addition to that, the Bank wrote down the value of its OREO property in Santa Barbara by $1.34 million, reflecting the proposed net proceeds of the most recent sales contract that the Bank was involved in, which sale did not materialize.

Total criticized loans decreased to $129.2 million from $158.1 million reported in the prior quarter.

Allowance for Credit Losses

The provision for credit losses for the first quarter of 2025 was $700,000 compared to $2.0 million last quarter and compared to $4.4 million in the same quarter last year. The Bank’s allowance coverage ratio increased to 1.28% of loans as compared to 1.27% in the prior quarter.

Capitalization

As of March 31, 2025, the Bank’s tangible capital ratio was 10.96%, the leverage ratio was 11.52%, the common equity tier 1 capital ratio was 11.86% and the total capital ratio stood at 15.15%. As of December 31, 2024, the Bank’s tangible capital ratio was 11.02%, the Bank’s leverage ratio was 11.33%, the common equity tier 1 ratio was 11.80% and the total capital ratio was 15.11%.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank’s first quarter 2025 financial results will be held this afternoon April 25, 2025 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank’s website at www.preferredbank.com.

Preferred Bank’s Chairman and CEO Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu will discuss Preferred Bank’s financial results, business highlights and outlook. After the live webcast, a replay will be available at the Investor Relations section of Preferred Bank’s website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through May 2, 2025; the passcode is 8939265.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)), two branches in New York (Manhattan and Flushing, Queens) and a branch office in the Houston, Texas suburb of Sugar Land. In addition, the Bank also operates a loan production office in Sunnyvale, California. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy
shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank’s results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2024 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.

AT THE COMPANY:	AT FINANCIAL PROFILES:
Edward J. Czajka	Jeffrey Haas
Executive Vice President	General Information
Chief Financial Officer	(310) 622-8240
(213) 891-1188	PFBC@finprofiles.com

Financial Tables to Follow


PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)


	For the Quarter Ended
	March 31,		December 31,		March 31,
		2025		2024		2024
Interest income:
Loans, including fees	$	101,491	$	111,596	$	109,980
Investment securities		12,810		14,013		16,257
Fed funds sold		228		249		283
Total interest income		114,529		125,858		126,520

Interest expense:
Interest-bearing demand		16,590		18,245		22,290
Savings		69		85		75
Time certificates		33,887		37,030		34,330
Subordinated debt		1,325		1,325		1,325
Total interest expense		51,871		56,685		58,020
Net interest income		62,658		69,173		68,500
Provision for credit losses		700		2,000		4,400
Net interest income after provision for credit losses		61,958		67,173		64,100

Noninterest income:
Fees & service charges on deposit accounts		716		761		845
Letters of credit fee income		2,244		1,977		1,503
BOLI income		103		102		105
Net gain on sale of loans		275		112		103
Other income		660		685		509
Total noninterest income		3,998		3,637		3,065

Noninterest expense:
Salary and employee benefits		14,839		13,279		13,900
Net occupancy expense		2,294		10,110		1,711
Business development and promotion expense		462		340		266
Professional services		1,651		1,606		1,457
Office supplies and equipment expense		386		396		473
OREO valuation allowance and related expense		1,531		155		135
Other		2,206		2,360		2,086
Total noninterest expense		23,369		28,246		20,028
Income before provision for income taxes		42,587		42,564		47,137
Income tax expense		12,563		12,343		13,671
Net income	$	30,024	$	30,221	$	33,466

Income per share available to common shareholders
Basic	$	2.27	$	2.29	$	2.48
Diluted	$	2.23	$	2.25	$	2.44

Weighted-average common shares outstanding
Basic		13,226,582		13,190,696		13,508,878
Diluted		13,453,176		13,442,294		13,736,986

Cash dividends per common share	$	0.75	$	0.75	$	0.70

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)


	March 31,			December 31,
		2025			2024
	(Unaudited)			(Audited)
Assets
Cash and due from banks	$	905,183		$	765,515
Fed funds sold		20,000			20,000
Cash and cash equivalents		925,183			785,515

Securities held-to-maturity, at amortized cost		19,745			20,021
Securities available-for-sale, at fair value		390,096			348,706

Loans held for sale, at lower of cost or fair value		–			2,214

Loans		5,634,413			5,640,615
Less allowance for credit losses		(72,274	)		(71,477	)
Less amortized deferred loan fees, net		(9,652	)		(9,234	)
Loans, net		5,552,487			5,559,904

Other real estate owned and repossessed assets		13,650			14,991
Bank furniture and fixtures, net		8,276			8,462
Bank-owned life insurance		10,502			10,433
Accrued interest receivable		31,775			33,561
Investment in affordable housing partnerships		63,612			58,346
Federal Home Loan Bank stock, at cost		15,000			15,000
Deferred tax assets		46,280			47,402
Income tax receivable		–			2,195
Operating lease right-of-use assets		20,281			13,182
Other assets		3,205			3,497
Total assets	$	7,100,092		$	6,923,429

Liabilities and Shareholders’ Equity
Deposits:
Noninterest bearing demand deposits	$	730,270		$	704,859
Interest bearing deposits:		2,099,987			2,026,965
Savings		32,631			30,150
Time certificates of $250,000 or more		1,531,715			1,477,931
Other time certificates		1,678,132			1,676,943
Total deposits		6,072,735			5,916,848

Subordinated debt issuance, net		148,529			148,469
Commitments to fund investment in affordable housing partnerships		20,956			21,623
Operating lease liabilities		24,021			16,990
Accrued interest payable		14,634			16,517
Other liabilities		40,613			39,830
Total liabilities		6,321,488			6,160,277

Shareholders’ equity		778,604			763,152
Total liabilities and shareholders’ equity	$	7,100,092		$	6,923,429

Book value per common share	$	59.30		$	57.86
Number of common shares outstanding		13,130,296			13,188,776

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)


	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Unaudited historical quarterly operations data:
Interest income	$	114,529		$	125,858		$	129,424		$	127,294		$	126,520
Interest expense		51,871			56,685			60,576			61,187			58,020
Interest income before provision for credit losses		62,658			69,173			68,848			66,107			68,500
Provision for credit losses		700			2,000			3,200			2,500			4,400
Noninterest income		3,998			3,637			3,459			3,404			3,065
Noninterest expense		23,369			28,246			22,089			19,697			20,028
Income tax expense		12,563			12,343			13,635			13,722			13,671
Net income	$	30,024		$	30,221		$	33,383		$	33,592		$	33,466

Earnings per share
Basic	$	2.27		$	2.29		$	2.50		$	2.51		$	2.48
Diluted	$	2.23		$	2.25		$	2.46		$	2.48		$	2.44

Ratios for the period:
Return on average assets		1.76	%		1.74	%		1.95	%		1.97	%		2.00	%
Return on beginning equity		15.96	%		16.03	%		18.37	%		19.31	%		19.36	%
Net interest margin (Fully-taxable equivalent)		3.75	%		4.06	%		4.10	%		3.96	%		4.19	%
Noninterest expense to average assets		1.37	%		1.62	%		1.29	%		1.15	%		1.20	%
Efficiency ratio		35.06	%		38.79	%		30.55	%		28.34	%		27.99	%
Net (recoveries) charge-offs to average loans (annualized)		-0.01	%		0.47	%		-0.00	%		0.68	%		0.26	%

Ratios as of period end:
Tangible common equity ratio		10.96	%		11.02	%		10.92	%		10.55	%		10.35	%
Tier 1 leverage capital ratio		11.52	%		11.33	%		11.28	%		10.89	%		10.80	%
Common equity tier 1 risk-based capital ratio		11.86	%		11.80	%		11.66	%		11.52	%		11.50	%
Tier 1 risk-based capital ratio		11.86	%		11.80	%		11.66	%		11.52	%		11.50	%
Total risk-based capital ratio		15.15	%		15.11	%		15.06	%		14.93	%		15.08	%
Allowances for credit losses to loans at end of period		1.28	%		1.27	%		1.36	%		1.34	%		1.49	%
Allowance for credit losses to non-performing loans	0.91		x	1.89		x		3.92	x		1.79	x		4.33	x

Average balances:
Total securities	$	402,754		$	350,732		$	356,590		$	353,357		$	348,961
Total loans		5,555,010			5,542,558			5,458,613			5,320,360			5,263,562
Total earning assets		6,780,438			6,788,487			6,684,766			6,728,498			6,585,853
Total assets		6,905,249			6,920,325			6,817,979			6,863,829			6,718,018
Total time certificate of deposits		3,164,766			3,144,523			2,874,985			2,884,259			2,852,860
Total interest bearing deposits		5,244,243			5,220,655			5,124,245			5,203,034			5,004,834
Total deposits		5,886,163			5,905,127			5,828,227			5,901,976			5,761,488
Total interest bearing liabilities		5,392,735			5,369,092			5,272,617			5,351,347			5,153,089
Total equity		779,339			760,345			747,222			715,190			704,996

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)


				As of
				March 31,			December 31,			September 30,			June 30,			March 31,
				2025			2024			2024			2024			2024
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	925,183		$	785,515		$	804,994		$	917,677		$	936,600
	Securities held-to-maturity, at amortized cost				19,745			20,021			20,311			20,605			20,904
	Securities available-for-sale, at fair value				390,096			348,706			337,363			331,909			333,411
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	779,462		$	790,069		$	753,453		$	732,251		$	724,101
			Real estate—Commercial		2,897,956			2,840,771			2,882,506			2,833,430			2,777,608
			Total Real Estate – Mortgage		3,677,418			3,630,840			3,635,959			3,565,681			3,501,709
		Real estate – Construction:
			R/E Construction — Residential		306,283			296,580			274,214			238,062			236,596
			R/E Construction — Commercial		269,065			287,185			290,308			247,582			213,727
			Total real estate construction loans		575,348			583,765			564,522			485,644			450,323
		Commercial and industrial			1,374,379			1,418,930			1,365,550			1,371,694			1,369,529
		SBA			7,104			6,833			5,424			5,463			3,914
		Consumer and others			164			247			124			118			379
			Gross loans		5,634,413			5,640,615			5,571,579			5,428,600			5,325,854
	Allowance for credit losses on loans				(72,274	)		(71,477	)		(76,051	)		(72,848	)		(79,311	)
	Net deferred loan fees				(9,652	)		(9,234	)		(10,414	)		(10,502	)		(10,460	)
		Net loans, excluding loans held for sale		$	5,552,487		$	5,559,904		$	5,485,114		$	5,345,250		$	5,236,083
	Loans held for sale			$	–		$	2,214		$	225		$	955		$	605
		Net loans		$	5,552,487		$	5,562,118		$	5,485,339		$	5,346,205		$	5,236,688

	Other real estate owned and repossessed assets			$	13,650		$	14,991		$	15,082		$	16,716		$	16,716
	Investment in affordable housing partnerships				63,612			58,346			58,009			60,432			62,854
	Federal Home Loan Bank stock, at cost				15,000			15,000			15,000			15,000			15,000
	Other assets				120,319			118,732			136,246			138,036			134,040
		Total assets		$	7,100,092		$	6,923,429		$	6,872,344		$	6,846,580		$	6,756,213

Liabilities:
	Deposits:
		Demand		$	730,270		$	704,859		$	682,859		$	675,767		$	709,767
		Interest bearing demand			2,099,987			2,026,965			1,994,288			2,326,214			2,159,948
		Savings			32,631			30,150			29,793			28,251			29,261
		Time certificates of $250,000 or more			1,531,715			1,477,931			1,478,500			1,406,149			1,349,927
		Other time certificates			1,678,132			1,676,943			1,682,324			1,442,381			1,552,805
		Total deposits		$	6,072,735		$	5,916,848		$	5,867,764		$	5,878,762		$	5,801,708

	Subordinated debt issuance, net				148,529			148,469			148,410			148,351			148,292
	Commitments to fund investment in affordable housing partnerships				20,956			21,623			23,617			27,946			29,647
	Other liabilities				79,268			73,337			82,436			68,394			77,008
		Total liabilities		$	6,321,488		$	6,160,277		$	6,122,227		$	6,123,453		$	6,056,655

Equity:
	Net common stock, no par value			$	96,079		$	105,501		$	109,928		$	113,509		$	115,915
	Retained earnings				705,360			685,108			664,808			640,675			616,417
	Accumulated other comprehensive income				(22,835	)		(27,457	)		(24,619	)		(31,057	)		(32,774	)
		Total shareholders’ equity		$	778,604		$	763,152		$	750,117		$	723,127		$	699,558
		Total liabilities and shareholders’ equity		$	7,100,092		$	6,923,429		$	6,872,344		$	6,846,580		$	6,756,213

PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates
(Unaudited)


			Three months ended March 31,							Three months ended December 31,							Three months ended March 31,
			2025							2024							2024
						Interest		Average					Interest		Average					Interest		Average
			Average			Income or		Yield/		Average			Income or		Yield/		Average			Income or		Yield/
			Balance			Expense		Rate		Balance			Expense		Rate		Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest earning assets:
	Loans ^(1,2)		$	5,556,521		$	101,491	7.41	%	$	5,543,215		$	111,596	8.01	%	$	5,265,940		$	109,980	8.40	%
	Investment securities ⁽³⁾			402,754			4,093	4.12	%		350,732			3,566	4.04	%		348,961			3,430	3.95	%
	Federal funds sold			20,222			228	4.57	%		20,172			249	4.91	%		20,390			283	5.58	%
	Other earning assets			800,941			8,816	4.46	%		874,368			10,546	4.80	%		950,562			12,928	5.47	%
		Total interest earning assets		6,780,438			114,628	6.86	%		6,788,487			125,957	7.38	%		6,585,853			126,621	7.73	%
	Deferred loan fees, net			(9,189	)						(9,808	)						(10,694	)
	Allowance for credit losses on loans			(71,550	)						(75,474	)						(78,349	)
Noninterest earning assets:
	Cash and due from banks			11,513							10,626							11,244
	Bank furniture and fixtures			8,439							8,866							10,084
	Right of use assets			15,201							28,570							22,003
	Other assets			170,397							169,058							177,877
		Total assets	$	6,905,249						$	6,920,325						$	6,718,018

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,079,477		$	16,659	3.25	%	$	2,076,132		$	18,330	3.51	%	$	2,151,974		$	22,365	4.18	%
		TCD $250K or more		1,482,324			15,640	4.28	%		1,481,219			17,514	4.70	%		1,341,298			16,501	4.95	%
		Other time certificates		1,682,442			18,247	4.40	%		1,663,304			19,516	4.67	%		1,511,562			17,829	4.74	%
		Total interest bearing deposits		5,244,243			50,546	3.91	%		5,220,655			55,360	4.22	%		5,004,834			56,695	4.56	%
Short-term borrowings				–			–	0.00	%		3			0	3.31	%		–			–	0.00	%
Subordinated debt, net				148,492			1,325	3.62	%		148,434			1,325	3.55	%		148,255			1,325	3.59	%
		Total interest bearing liabilities		5,392,735			51,871	3.90	%		5,369,092			56,685	4.20	%		5,153,089			58,020	4.53	%
Noninterest bearing liabilities:
	Demand deposits			641,920							684,472							756,654
	Lease liability			18,963							25,486							19,500
	Other liabilities			72,292							80,930							83,779
		Total liabilities		6,125,910							6,159,980							6,013,022
Shareholders’ equity				779,339							760,345							704,996
		Total liabilities and shareholders’ equity	$	6,905,249						$	6,920,325						$	6,718,018
Net interest income						$	62,757						$	69,272						$	68,601
Net interest spread								2.96	%						3.18	%						3.20	%
Net interest margin								3.75	%						4.06	%						4.19	%

Cost of Deposits:
	Noninterest bearing demand deposits		$	641,920						$	684,472						$	756,654
	Interest bearing deposits			5,244,243			50,546	3.91	%		5,220,655			55,360	4.22	%		5,004,834			56,695	4.56	%
		Total Deposits	$	5,886,163		$	50,546	3.48	%	$	5,905,127		$	55,360	3.73	%	$	5,761,488		$	56,695	3.96	%

⁽¹⁾	Includes non-accrual loans and loans held for sale
⁽²⁾	Net loan fee income of $865,000, $1.2 million, and $1.1 million for the quarter ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively, are included in the yield computations
⁽³⁾	Yields on securities have been adjusted to a tax-equivalent basis

Preferred Bank
Loan and Credit Quality Information

Allowance For Credit Losses History
			Quarter Ended			Year Ended
			March 31, 2025			December 31, 2024
			(Dollars in 000’s)
Allowance For Credit Losses
Balance at Beginning of Period			$	71,477		$	78,355
	Charge-Offs
		Commercial & Industrial		–			19,028
		Total Charge-Offs		–			19,028

	Recoveries
		Commercial & Industrial		97			50
		Total Recoveries		97			50

	Net (Recoveries) Charge-Offs			(97	)		18,978
	Provision for Credit Losses:			700			12,100
Balance at End of Period			$	72,274		$	71,477

Average Loans Held for Investment			$	5,555,010		$	5,396,844
Loans Held for Investment at End of Period			$	5,634,413		$	5,640,615
Net (Recoveries) Charge-Offs to Average Loans				-0.01%			0.35%
Allowances for Credit Losses to Loans at End of Period				1.28%			1.27%

The MIL Network –

April 26, 2025

MIL-OSI: Lakeland Financial Reports a 12% Increase in Net Interest Income and Organic Loan Growth of 4%

Source: GlobeNewswire (MIL-OSI)

WARSAW, Ind., April 25, 2025 (GLOBE NEWSWIRE) — Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported net income of $20.1 million for the three months ended March 31, 2025, which represents a decrease of $3.3 million, or 14%, compared with net income of $23.4 million for the three months ended March 31, 2024. Diluted earnings per share were $0.78 for the first quarter of 2025 and decreased $0.13, or 14%, compared to $0.91 for the first quarter of 2024. On a linked quarter basis, net income decreased $4.1 million, or 17%, to $24.2 million. Diluted earnings per share decreased $0.16, or 17%, from $0.94 on a linked quarter basis.

Pretax pre-provision earnings, which is a non-GAAP measure, were $31.0 million for the three months ended March 31, 2025, an increase of $1.7 million, or 6%, compared to $29.3 million for the three months ended March 31, 2024.

“Our first quarter results are highlighted by double digit growth in net interest income and strong net interest margin expansion,” stated David M. Findlay, Chairman and CEO. “Further, we continued to experience healthy loan growth that was funded with equally positive deposit growth. The Lake City Bank team delivered encouraging operating results in the quarter.”

Quarterly Financial Performance

First Quarter 2025 versus First Quarter 2024 highlights:

Tangible book value per share grew by $1.80, or 7%, to $26.85
Average loans grew by $214.9 million, or 4%, to $5.19 billion
Core deposits grew by $402.5 million, or 7%, to $5.83 billion
Net interest margin improved 25 basis points to 3.40% versus 3.15%
Net interest income increased by $5.5 million, or 12%
Revenue grew by 6% from $60.0 million to $63.8 million
Provision expense of $6.8 million, compared to $1.5 million
Watch list loans as a percentage of total loans increased to 4.13% from 3.67%
Pretax, pre-provision earnings increased by $1.7 million, or 6%
Common equity tier 1 capital improved to 14.51%, compared to 14.21%
Tangible capital ratio improved to 10.09%, compared to 9.80%
Average equity increased by $51.0 million, or 8%

First Quarter 2025 versus Fourth Quarter 2024 highlights:

Tangible book value per share grew by $0.38, or 1%, to $26.85
Average loans grew by $99.3 million, or 2%, to $5.19 billion
Net interest margin improved 15 basis points to 3.40% versus 3.25%
Net interest income increased by $1.2 million, or 2%
Provision expense of $6.8 million, compared to $3.7 million
Watch list loans as a percentage of total loans remained at 4.13%
Pretax, pre-provision earnings decreased $1.9 million, or 6%
Common equity tier 1 capital of 14.51%, compared to 14.64%
Tangible capital ratio of 10.09%, compared to 10.19%

Capital Strength

The company’s total capital as a percentage of risk-weighted assets improved to 15.77% at March 31, 2025, compared to 15.46% at March 31, 2024, and down from 15.90% at December 31, 2024. These capital levels significantly exceeded the 10.00% regulatory threshold required to be characterized as “well capitalized” and reflect the company’s robust capital base.

The company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, improved to 10.09% at March 31, 2025, compared to 9.80% at March 31, 2024, and down from 10.19% at December 31, 2024. Unrealized losses from available-for-sale investment securities were $188.3 million at March 31, 2025, compared to $189.9 million at March 31, 2024 and $191.1 million at December 31, 2024. Excluding the impact of accumulated other comprehensive income (loss) on tangible common equity and tangible assets, the company’s ratio of adjusted tangible common equity to adjusted tangible assets, a non-GAAP financial measure, improved to 12.19% at March 31, 2025, compared to 12.03% at March 31, 2024, and down from 12.37% at December 31, 2024.

As announced on April 8, 2025, the board of directors approved a cash dividend for the first quarter of $0.50 per share, payable on May 5, 2025, to shareholders of record as of April 25, 2025. The first quarter dividend per share represents a 4% increase from the $0.48 dividend per share paid for the first quarter of 2024.

The board of directors also reauthorized and extended the company’s share repurchase program through April 30, 2027 with remaining aggregate purchase price authority of $30.0 million. The company anticipates activating the share repurchase program during the second quarter of 2025.

Kristin L. Pruitt, President commented, “We believe that the recent stock price performance, driven by the impact of tariff activity, provides us with an opportunity to return capital to shareholders at attractive prices through our repurchase plan. Further, our strong capital levels continue to provide capacity for organic loan growth in our Indiana markets. Our capital position also supports our continued growth in the dividend paid to shareholders.”

Loan Portfolio

Average total loans of $5.19 billion in the first quarter of 2025 increased $214.9 million, or 4%, from $4.97 billion for the first quarter of 2024, and increased $99.3 million, or 2%, from $5.09 billion for the fourth quarter of 2024. Total loans, net of deferred loan fees, increased by $224.8 million, or 4%, from $5.00 billion as of March 31, 2024, to $5.23 billion as of March 31, 2025. The increase in loans occurred across much of the portfolio with our commercial real estate and multi-family residential loan portfolio growing by $143.4 million, or 6%, our commercial and industrial loan portfolio growing by $46.3 million, or 3%, our consumer 1-4 family mortgage loans portfolio growing by $39.7 million, or 9%, and our agri-business and agricultural loan portfolio growing by $15.9 million, or 4%. These increases were offset by a decrease to other commercial loans of $25.4 million, or 21%. On a linked quarter basis, total loans, net of deferred loan fees, increased by $104.9 million, or 2%, from $5.12 billion at December 31, 2024. The linked quarter increase was primarily a result of growth in total commercial and industrial loans of $72.7 million, or 5%, growth in total commercial real estate and multi-family residential loans of $28.3 million, or 1%, and growth in our consumer 1-4 family mortgage loans portfolio of $10.0 million, or 2%.

Commercial loan originations for the first quarter included approximately $365.0 million in loan originations, offset by approximately $268.0 million in commercial loan pay downs. Line of credit usage increased to 43% as of March 31, 2025, compared to 39% at March 31, 2024 and 41% as of December 31, 2024. Total available lines of credit contracted by $153.0 million, or 3%, as compared to a year ago, and line usage increased by $122.0 million, or 7%, over that period. The company has limited exposure to commercial office space borrowers, all of which are in the bank’s Indiana markets. Loans totaling $100.6 million for this sector represented 2% of total loans at March 31, 2025, a decrease of $1.1 million, or 1%, from December 31, 2024. Commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 214% of total risk-based capital at March 31, 2025.

“We are encouraged by the continued organic loan growth during the quarter. In particular, we are pleased to see the upward trend in commercial line utilization, which reached 43% in the first quarter compared to 39% a year ago. Commercial and Industrial loan growth was a highlight this quarter and positively impacted our commercial line utilization,” added Findlay. “Linked quarter loan growth was largely driven by expansion in working capital lines of credit loans and construction and land development loans.”

Diversified Deposit Base

The bank’s diversified deposit base has grown on a year over year basis and on a linked quarter basis.

DEPOSIT DETAIL (unaudited, in thousands)

	March 31, 2025				December 31, 2024				March 31, 2024
Retail	$	1,787,992	30.0	%	$	1,780,726	30.2	%	$	1,770,007	31.5	%
Commercial		2,336,910	39.2			2,269,049	38.4			2,117,536	37.7
Public funds		1,709,883	28.7			1,809,631	30.7			1,544,775	27.5
Core deposits		5,834,785	97.9			5,859,406	99.3			5,432,318	96.7
Brokered deposits		125,409	2.1			41,560	0.7			185,767	3.3
Total	$	5,960,194	100.0	%	$	5,900,966	100.0	%	$	5,618,085	100.0	%

Total deposits increased $342.1 million, or 6%, from $5.62 billion as of March 31, 2024, to $5.96 billion as of March 31, 2025. The increase in total deposits was driven by an increase in core deposits (which excludes brokered deposits) of $402.5 million, or 7%. Total core deposits at March 31, 2025 were $5.83 billion and represented 98% of total deposits, as compared to $5.43 billion and 97% of total deposits at March 31, 2024. Brokered deposits were $125.4 million, or 2% of total deposits, at March 31, 2025, compared to $185.8 million, or 3% of total deposits, at March 31, 2024.

The increase in core deposits since March 31, 2024, reflects growth in all three core deposit components. Commercial deposits grew annually by $219.4 million, or 10%, to $2.34 billion. Commercial deposits as a percentage of total deposits expanded to 39%, up from 38%. Public funds deposits grew annually by $165.1 million, or 11%, to $1.71 billion. Public funds deposits as a percentage of total deposits was 29%, up from 28%. Growth in public funds was positively impacted by the addition of new public funds customers in the Lake City Bank footprint, including their operating accounts. Retail deposits expanded by $18.0 million, or 1%, to $1.79 billion. Retail deposits as a percentage of total deposits was 30% of total deposits, down from 32%.

On a linked quarter basis, total deposits increased $59.2 million, or 1%, from $5.90 billion at December 31, 2024, to $5.96 billion at March 31, 2025. Core deposits decreased by $24.6 million, or less than 1%, while brokered deposits increased by $83.8 million, or 202%. The linked quarter reduction in core deposits resulted primarily from a seasonal decrease in public funds deposits of $99.7 million, or 6%. Offsetting this increase was an increase in commercial deposits of $67.9 million, or 3%, and an increase in retail deposits of $7.3 million, or less than 1%.

“Annual core deposit growth of 7% continues to provide liquidity to fund loan growth. We continue to see opportunities to gain market share in our Indiana footprint,” noted Lisa M. O’Neill, Executive Vice President and Chief Financial Officer. “Our diversified funding base is stable, and average checking account balances continue to maintain liquidity in excess of pre-pandemic levels.”

Average total deposits were $5.87 billion for the first quarter of 2025, an increase of $244.3 million, or 4%, from $5.63 billion for the first quarter of 2024. Average interest-bearing deposits drove the increase in average total deposits and increased by $260.1 million, or 6%. Contributing to the overall growth of interest-bearing deposits was an increase to average interest-bearing checking accounts of $439.5 million, or 14%. Offsetting this increase was a reduction in average time deposits of $167.7 million, or 17%, and a decrease to average savings deposits of $11.8 million, or 4%. Average noninterest-bearing demand deposits decreased by $15.8 million, or 1%.

On a linked quarter basis, average total deposits decreased by $136.4 million, or 2%, from $6.01 billion for the fourth quarter of 2024 to $5.87 billion for the first quarter of 2025. Average interest bearing deposits drove the decrease to total average deposits, which decreased by $112.8 million, or 2%. Driving the decrease to average interest bearing deposits were decreases to total average time deposits of $102.7 million, or 11%, and interest bearing checking accounts of $19.0 million, or 1%. Average noninterest bearing demand deposits decreased by $23.6 million, or 2%.

Checking account trends as of March 31, 2025 compared to March 31, 2024, include growth of $222.5 million, or 17%, in aggregate public fund checking account balances, growth of $212.3 million, or 11%, in aggregate commercial checking account balances, and growth of $35.5 million, or 4%, in aggregate retail checking account balances. The number of accounts has also grown for all three segments, with growth of 7% for public funds accounts, 2% for commercial accounts and 1% for retail accounts during the prior twelve months.

Deposits not covered by FDIC deposit insurance as a percentage of total deposits were 57% as of March 31, 2025, compared to 62% at December 31, 2024, and 54% at March 31, 2024, reflecting changes in core deposits and growth in public fund deposits over those periods. Deposits not covered by FDIC deposit insurance or the Indiana Public Deposit Insurance Fund (which insures public funds deposits in Indiana), were 29% of total deposits at March 31, 2025, compared to 32% at December 31, 2024, and 27% at March 31, 2024. At March 31, 2025, 98% of deposit accounts had deposit balances less than $250,000.

Net Interest Margin

Net interest margin was 3.40% for the first quarter of 2025, representing a 25 basis point increase from 3.15% for the first quarter of 2024. This improvement was driven by a reduction in the company’s funding costs, with interest expense as a percentage of average earning assets falling by 45 basis points from 2.82% for the first quarter of 2024 to 2.37% for the first quarter of 2025. Offsetting the decrease in funding costs was a decrease to earning asset yields of 20 basis points from 5.97% for the first quarter of 2024 to 5.77% for the first quarter of 2025.

Linked quarter net interest margin expanded by 15 basis points to 3.40% for the first quarter of 2025, compared to 3.25% for the fourth quarter of 2024. Interest expense as a percentage of average earning assets decreased 19 basis points from 2.56% to 2.37% on a linked quarter basis. Average earning asset yields decreased by 4 basis points from 5.81% to 5.77% on a linked quarter basis. The easing of monetary policy by the Federal Reserve Bank, which began in September of 2024, drove the reduction in funding costs that provided for the net interest margin expansion through deposit repricing. Notably, the deposit mix shift from noninterest bearing deposits to interest bearing deposits experienced by the company during the previous monetary tightening cycle has stabilized with noninterest bearing deposits representing 22% of total deposits at March 31, 2025, March 31, 2024 and December 31, 2024.

“We continue to see improvements in net interest margin due to the Federal Reserve Bank’s rate easing cycle. Our deposit costs have declined more than loan yields resulting in year over year improvements in net interest margin of 25 basis points and linked quarter improvements of 15 basis points,” stated O’Neill. “Net interest margin expansion combined with healthy loan growth has contributed to double digit growth in net interest income.”

The loan beta for the current rate-easing cycle is 37% compared to the deposit beta of 55%. The cumulative loan beta, which measures the sensitivity of a bank’s average loan yield to changes in short-term interest rates, was 56% for the recent rate-tightening cycle. The cumulative deposit beta, which measures the sensitivity of a bank’s deposit cost to changes in short-term interest rates, was 54% for the recent rate-tightening cycle.

Net interest income was $52.9 million for the first quarter of 2025, representing an increase of $5.5 million, or 12%, as compared to the first quarter of 2024. Net interest income for the first quarter of 2025 benefited from a decrease in deposit interest expense of $4.7 million and a decrease in borrowings interest expense of $1.3 million. Offsetting these effects on net interest income was a decrease in loan interest of $910,000. On a linked quarter basis, net interest income increased $1.2 million, or 2%, from $51.7 million for the fourth quarter of 2024. On a linked quarter basis, the increase to net interest income was driven by a reduction in interest expense of $4.1 million and offset by a reduction in interest income of $2.9 million.

Asset Quality

The company recorded a provision for credit losses of $6.8 million in the first quarter of 2025, an increase of $5.3 million, as compared to $1.5 million in the first quarter of 2024. On a linked quarter basis, the provision expense increased by $3.1 million, from $3.7 million for the fourth quarter of 2024. Provision expense during the first quarter of 2025 was primarily attributable to an increase in the specific allocation for the previously disclosed $43.3 million nonperforming credit to an industrial company in Northern Indiana.

The allowance for credit loss reserve to total loans was 1.77% at March 31, 2025, up from 1.46% at March 31, 2024, and 1.68% at December 31, 2024. Net charge offs in the first quarter of 2025 were $327,000 compared to $312,000 in the first quarter of 2024 and $1.4 million during the linked fourth quarter of 2024. Annualized net charge offs to average loans were 0.03% for the first quarter of 2025, compared to 0.03% for the first quarter of 2024, and 0.11% for the linked fourth quarter of 2024.

Nonperforming assets increased $42.6 million, or 280%, to $57.9 million as of March 31, 2025, versus $15.2 million as of March 31, 2024. On a linked quarter basis, nonperforming assets increased $1.0 million, or 2%, compared to $56.9 million as of December 31, 2024. The ratio of nonperforming assets to total assets at March 31, 2025 increased to 0.84% from 0.23% at March 31, 2024, and decreased from 0.85% at December 31, 2024. The increase in nonperforming assets was primarily driven by the aforementioned credit.

Total individually analyzed and watch list loans increased by $32.3 million, or 18%, to $215.6 million as of March 31, 2025, versus $183.3 million as of March 31, 2024. On a linked quarter basis, total individually analyzed and watch list loans increased by $4.4 million, or 2%, from $211.1 million at December 31, 2024. The linked quarter increase in total individually analyzed and watch list loans was primarily driven by the addition of five commercial relationships to the watch list with aggregate balances of $11.5 million and offset by watch list removals of two relationships with aggregate balances of $8.0 million. Watch list loans as a percentage of total loans were 4.13% at March 31, 2025, an increase of 46 basis points compared to 3.67% at March 31, 2024, and unchanged from December 31, 2024.

“Asset quality remains stable with watch list loans as a percentage of total loans at 4.13%,” commented Findlay. “It is premature to comment on the impact of the tariff activity on our borrowers’ businesses and we are actively talking with our clients to understand the impact of this trade policy activity. As part of our internal credit administration and loan review process, we initiated a detailed plan to identify and analyze specific industries and clients that may be more sensitive to the effects of tariffs. As part of this process, our credit team is aggregating and segmenting direct and indirect exposure that our commercial and industrial borrowers have with international trading partners.”

Investment Portfolio Overview

Total investment securities were $1.13 billion at March 31, 2025, reflecting a decrease of $12.0 million, or 1%, as compared to $1.14 billion at March 31, 2024. On a linked quarter basis, investment securities increased $9.9 million, or 1%, due primarily to security purchases of $22.2 million, offset by improvement in the fair market value of available-for-sale securities of $2.8 million, and cash flows from calls, paydowns and maturities of $14.7 million. Investment securities represented 17% of total assets on March 31, 2025, March 31, 2024 and December 31, 2024. The company anticipates receiving principal and interest cash flows of approximately $82.3 million during the remainder of 2025 from the investment securities portfolio and plans to use that liquidity to fund loan growth and reinvestment of investment securities cash flows. Tax equivalent adjusted effective duration for the investment portfolio was 5.9 years at March 31, 2025, compared to 6.6 years at March 31, 2024 and 6.0 years December 31, 2024.

Noninterest Income

The company’s noninterest income decreased $1.7 million, or 13%, to $10.9 million for the first quarter of 2025, compared to $12.6 million for the first quarter of 2024. Adjusted core noninterest income, a non-GAAP financial measure that excludes the effect of the insurance recovery recorded during the first quarter of 2024, was $11.6 million for the first quarter of 2024, a decrease of $684,000, or 6%, compared to $10.9 million for the first quarter of 2025. Wealth advisory fees increased $412,000, or 17%, driven by growth in customers and assets under management. Deposit fees increased $83,000, or 3% driven primarily by growth in our treasury management services. Other income decreased $1.3 million, or 61%. Other income during the first quarter of 2024 benefited from a $1.0 million insurance recovery related to the wire fraud loss from 2023 and death benefits received from the company’s bank owned life insurance program. Bank owned life insurance income decreased $714,000, or 69%, primarily due to a reduction in the market performance of the company’s variable bank owned life insurance policies, which are tied to the equity markets.

Noninterest income for the first quarter of 2025 decreased by $948,000, or 8%, on a linked quarter basis from $11.9 million during the fourth quarter of 2024. Wealth advisory fees increased by $168,000, or 6%. The linked quarter decrease in noninterest income was impacted by a decrease in bank owned life insurance income, which decreased $894,000, or 74%, due to market performance of the company’s variable bank owned life insurance policies.

“The growth of our wealth advisory business continues to positively impact revenue growth with 17% improvement in fees on a year over year basis,” added Findlay, “We continue to focus on our fee-based businesses that contribute to noninterest income and revenue growth.”

Noninterest Expense

Noninterest expense increased $2.1 million, or 7%, to $32.8 million for the first quarter of 2025, compared to $30.7 million during the first quarter of 2024. Salaries and benefits expense increased by $1.1 million, or 6%, driven by performance-based incentive compensation expense of $1.3 million and salary expense of $524,000. These increases were offset by reduced deferred compensation expense of $687,000, which moves in tandem with the market performance of the company’s variable bank owned life insurance. Other expense increased by $400,000, or 18%, from increased customer reimbursements for counterfeit checks and account takeover wire fraud losses. Data processing fees and supplies expense increased $426,000, or 11%, from continued investment in customer-facing and operational technology solutions.

On a linked quarter basis, noninterest expense increased by $2.1 million, or 7%, from $30.7 million during the fourth quarter of 2024. Salaries and employee benefits increased by $641,000, or 4%, due to merit-based increases for salaries, incentive pay, and annual health insurance benefits that are funded at the beginning of each year. Data processing fees and supplies expense increased $523,000, or 14%. Corporate and business development expense increased by $456,000, or 48%, which was primarily driven by an increase in advertising expense of $462,000 during the quarter from the company’s seasonal promotional campaigns. Other expense increased $228,000, or 9%.

The company’s efficiency ratio was 51.4% for the first quarter of 2025, compared to 51.2% for the first quarter of 2024 and 48.2% for the linked fourth quarter of 2024.

Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at lakecitybank.com. The company’s common stock is traded on the Nasdaq Global Select Market under “LKFN.” Lake City Bank, a $6.9 billion bank headquartered in Warsaw, Indiana, was founded in 1872 and serves Central and Northern Indiana communities with 54 branch offices and a robust digital banking platform. Lake City Bank’s community banking model prioritizes building in-market long-term customer relationships while delivering technology-forward solutions for retail and commercial clients.

This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. The company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Numerous factors could cause the company’s actual results to differ from those reflected in forward-looking statements, including the effects of economic, business and market conditions and changes, particularly in our Indiana market area, including prevailing interest rates and the rate of inflation; governmental trade, monetary and fiscal policies; the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand and the values and liquidity of loan collateral, securities and other interest sensitive assets and liabilities; and changes in borrowers’ credit risks and payment behaviors, as well as those identified in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

LAKELAND FINANCIAL CORPORATION FIRSTQUARTER2025FINANCIAL HIGHLIGHTS

	Three Months Ended
(Unaudited – Dollars in thousands, except per share data)	March 31,			December 31,			March 31,
END OF PERIOD BALANCES		2025			2024			2024
Assets	$	6,851,178		$	6,678,374		$	6,566,861
Investments		1,132,854			1,122,994			1,144,816
Loans		5,223,221			5,117,948			4,997,559
Allowance for Credit Losses		92,433			85,960			73,180
Deposits		5,960,194			5,900,966			5,618,085
Brokered Deposits		125,409			41,560			185,767
Core Deposits (1)		5,834,785			5,859,406			5,432,318
Total Equity		694,509			683,911			647,009
Goodwill Net of Deferred Tax Assets		3,803			3,803			3,803
Tangible Common Equity (2)		690,706			680,108			643,206
Adjusted Tangible Common Equity (2)		854,585			846,040			809,395
AVERAGE BALANCES
Total Assets	$	6,762,970		$	6,795,596		$	6,554,468
Earning Assets		6,430,804			6,470,920			6,216,929
Investments		1,136,404			1,134,011			1,158,503
Loans		5,185,918			5,086,614			4,971,020
Total Deposits		5,874,725			6,011,122			5,630,431
Interest Bearing Deposits		4,616,381			4,729,201			4,356,328
Interest Bearing Liabilities		4,716,465			4,729,206			4,532,137
Total Equity		696,053			693,744			645,007
INCOME STATEMENT DATA
Net Interest Income	$	52,875		$	51,694		$	47,416
Net Interest Income-Fully Tax Equivalent		53,983			52,804			48,683
Provision for Credit Losses		6,800			3,691			1,520
Noninterest Income		10,928			11,876			12,612
Noninterest Expense		32,763			30,653			30,705
Net Income		20,085			24,190			23,401
Pretax Pre-Provision Earnings (2)		31,040			32,917			29,323
PER SHARE DATA
Basic Net Income Per Common Share	$	0.78		$	0.94		$	0.91
Diluted Net Income Per Common Share		0.78			0.94			0.91
Cash Dividends Declared Per Common Share		0.50			0.48			0.48
Dividend Payout		64.10	%		51.06	%		52.75	%
Book Value Per Common Share (equity per share issued)	$	26.99		$	26.62		$	25.20
Tangible Book Value Per Common Share (2)		26.85			26.47			25.05
Market Value – High	$	71.77		$	78.61		$	73.22
Market Value – Low		58.24			61.10			60.56
Basic Weighted Average Common Shares Outstanding		25,714,818			25,686,276			25,657,063
Diluted Weighted Average Common Shares Outstanding		25,802,865			25,792,460			25,747,643


	Three Months Ended
(Unaudited – Dollars in thousands, except per share data)	March 31,			December 31,			March 31,
KEY RATIOS		2025			2024			2024
Return on Average Assets		1.20	%		1.42	%		1.44	%
Return on Average Total Equity		11.70			13.87			14.59
Average Equity to Average Assets		10.29			10.21			9.84
Net Interest Margin		3.40			3.25			3.15
Efficiency (Noninterest Expense/Net Interest Income plus Noninterest Income)		51.35			48.22			51.15
Loans to Deposits		87.64			86.73			88.95
Investment Securities to Total Assets		16.54			16.82			17.43
Tier 1 Leverage (3)		12.30			12.15			12.01
Tier 1 Risk-Based Capital (3)		14.51			14.64			14.21
Common Equity Tier 1 (CET1) (3)		14.51			14.64			14.21
Total Capital (3)		15.77			15.90			15.46
Tangible Capital (2)		10.09			10.19			9.80
Adjusted Tangible Capital (2)		12.19			12.37			12.03
ASSET QUALITY
Loans Past Due 30 – 89 Days	$	4,288		$	4,273		$	3,177
Loans Past Due 90 Days or More		7			28			7
Nonaccrual Loans		57,392			56,431			14,762
Nonperforming Loans		57,399			56,459			14,769
Other Real Estate Owned		284			284			384
Other Nonperforming Assets		193			143			78
Total Nonperforming Assets		57,876			56,886			15,231
Individually Analyzed Loans		81,346			78,647			15,181
Non-Individually Analyzed Watch List Loans		134,218			132,499			168,133
Total Individually Analyzed and Watch List Loans		215,564			211,146			183,314
Gross Charge Offs		508			1,657			504
Recoveries		181			299			192
Net Charge Offs/(Recoveries)		327			1,358			312
Net Charge Offs/(Recoveries) to Average Loans		0.03	%		0.11	%		0.03	%
Credit Loss Reserve to Loans		1.77			1.68			1.46
Credit Loss Reserve to Nonperforming Loans		161.04			152.25			495.51
Nonperforming Loans to Loans		1.10			1.10			0.30
Nonperforming Assets to Assets		0.84			0.85			0.23
Total Individually Analyzed and Watch List Loans to Total Loans		4.13	%		4.13	%		3.67	%
OTHER DATA
Full Time Equivalent Employees		647			643			628
Offices		54			54			53

__________________________________________________

(1)		Core deposits equals deposits less brokered deposits.
(2)		Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures”.
(3)		Capital ratios for March 31, 2025 are preliminary until the Call Report is filed.

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
	March 31, 2025			December 31, 2024
	(Unaudited)
ASSETS
Cash and due from banks	$	89,325		$	71,733
Short-term investments		145,899			96,472
Total cash and cash equivalents		235,224			168,205

Securities available-for-sale, at fair value		1,000,875			991,426
Securities held-to-maturity, at amortized cost (fair value of $109,481 and $113,107, respectively)		131,979			131,568
Real estate mortgage loans held-for-sale		1,295			1,700

Loans, net of allowance for credit losses of $92,433 and $85,960		5,130,788			5,031,988

Land, premises and equipment, net		60,797			60,489
Bank owned life insurance		113,826			113,320
Federal Reserve and Federal Home Loan Bank stock		21,420			21,420
Accrued interest receivable		28,818			28,446
Goodwill		4,970			4,970
Other assets		121,186			124,842
Total assets	$	6,851,178		$	6,678,374


LIABILITIES
Noninterest bearing deposits	$	1,296,907		$	1,297,456
Interest bearing deposits		4,663,287			4,603,510
Total deposits		5,960,194			5,900,966

Borrowings – Federal Home Loan Bank advances		108,200			0
Accrued interest payable		14,699			15,117
Other liabilities		73,576			78,380
Total liabilities		6,156,669			5,994,463

STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value
26,016,494 shares issued and 25,556,904 outstanding as of March 31, 2025
25,978,831 shares issued and 25,509,592 outstanding as of December 31, 2024		130,243			129,664
Retained earnings		743,650			736,412
Accumulated other comprehensive income (loss)		(163,879	)		(166,500	)
Treasury stock, at cost (459,590 shares and 469,239 shares as of March 31, 2025 and December 31, 2024, respectively)		(15,594	)		(15,754	)
Total stockholders’ equity		694,420			683,822
Noncontrolling interest		89			89
Total equity		694,509			683,911
Total liabilities and equity	$	6,851,178		$	6,678,374

CONSOLIDATED STATEMENTS OF INCOME (unaudited – in thousands, except share and per share data)
	Three Months Ended March 31,
		2025			2024
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	81,740		$	82,042
Tax exempt		292			900
Interest and dividends on securities
Taxable		3,389			3,039
Tax exempt		3,910			3,947
Other interest income		1,124			1,106
Total interest income		90,455			91,034

Interest on deposits		36,458			41,164
Interest on short-term borrowings		1,122			2,454
Total interest expense		37,580			43,618

NET INTEREST INCOME		52,875			47,416

Provision for credit losses		6,800			1,520

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		46,075			45,896

NONINTEREST INCOME
Wealth advisory fees		2,867			2,455
Investment brokerage fees		452			522
Service charges on deposit accounts		2,774			2,691
Loan and service fees		2,884			2,852
Merchant and interchange fee income		822			863
Bank owned life insurance income		322			1,036
Mortgage banking income (loss)		(51	)		52
Net securities gains (losses)		0			(46	)
Other income		858			2,187
Total noninterest income		10,928			12,612

NONINTEREST EXPENSE
Salaries and employee benefits		17,902			16,833
Net occupancy expense		1,980			1,740
Equipment costs		1,382			1,412
Data processing fees and supplies		4,265			3,839
Corporate and business development		1,406			1,381
FDIC insurance and other regulatory fees		800			789
Professional fees		2,380			2,463
Other expense		2,648			2,248
Total noninterest expense		32,763			30,705

INCOME BEFORE INCOME TAX EXPENSE		24,240			27,803
Income tax expense		4,155			4,402
NET INCOME	$	20,085		$	23,401

BASIC WEIGHTED AVERAGE COMMON SHARES		25,714,818			25,657,063

BASIC EARNINGS PER COMMON SHARE	$	0.78		$	0.91

DILUTED WEIGHTED AVERAGE COMMON SHARES		25,802,865			25,747,643

DILUTED EARNINGS PER COMMON SHARE	$	0.78		$	0.91

LAKELAND FINANCIAL CORPORATION LOAN DETAIL (unaudited, in thousands)

	March 31, 2025					December 31, 2024					March 31, 2024
Commercial and industrial loans:
Working capital lines of credit loans	$	716,522		13.7	%	$	649,609		12.7	%	$	646,459		12.9	%
Non-working capital loans		807,048		15.5			801,256		15.6			830,817		16.6
Total commercial and industrial loans		1,523,570		29.2			1,450,865		28.3			1,477,276		29.5

Commercial real estate and multi-family residential loans:
Construction and land development loans		623,905		12.0			567,781		11.1			659,712		13.2
Owner occupied loans		804,933		15.4			807,090		15.8			833,410		16.7
Nonowner occupied loans		852,033		16.3			872,671		17.0			744,346		14.9
Multifamily loans		339,946		6.5			344,978		6.7			239,974		4.8
Total commercial real estate and multi-family residential loans		2,620,817		50.2			2,592,520		50.6			2,477,442		49.6

Agri-business and agricultural loans:
Loans secured by farmland		156,112		3.0			156,609		3.1			167,271		3.3
Loans for agricultural production		227,659		4.3			230,787		4.5			200,581		4.0
Total agri-business and agricultural loans		383,771		7.3			387,396		7.6			367,852		7.3

Other commercial loans		94,927		1.8			95,584		1.9			120,302		2.4
Total commercial loans		4,623,085		88.5			4,526,365		88.4			4,442,872		88.8

Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		265,855		5.1			259,286		5.1			260,633		5.2
Open end and junior lien loans		217,981		4.2			214,125		4.2			188,927		3.8
Residential construction and land development loans		16,359		0.3			16,818		0.3			10,956		0.2
Total consumer 1-4 family mortgage loans		500,195		9.6			490,229		9.6			460,516		9.2

Other consumer loans		102,254		1.9			104,041		2.0			97,369		2.0
Total consumer loans		602,449		11.5			594,270		11.6			557,885		11.2
Subtotal		5,225,534		100.0	%		5,120,635		100.0	%		5,000,757		100.0	%
Less: Allowance for credit losses		(92,433	)				(85,960	)				(73,180	)
Net deferred loan fees		(2,313	)				(2,687	)				(3,198	)
Loans, net	$	5,130,788				$	5,031,988				$	4,924,379

LAKELAND FINANCIAL CORPORATION DEPOSITS AND BORROWINGS (unaudited, in thousands)

	March 31, 2025		December 31, 2024		March 31, 2024
Noninterest bearing demand deposits	$	1,296,907	$	1,297,456	$	1,254,200
Savings and transaction accounts:
Savings deposits		293,768		276,179		296,671
Interest bearing demand deposits		3,554,310		3,471,455		3,041,025
Time deposits:
Deposits of $100,000 or more		602,577		642,776		805,832
Other time deposits		212,632		213,100		220,357
Total deposits	$	5,960,194	$	5,900,966	$	5,618,085
FHLB advances and other borrowings		108,200		0		200,000
Total funding sources	$	6,068,394	$	5,900,966	$	5,818,085

LAKELAND FINANCIAL CORPORATION AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS (UNAUDITED)

	Three Months Ended March 31, 2025							Three Months Ended December 31, 2024							Three Months Ended March 31, 2024
(fully tax equivalent basis, dollars in thousands)	Average Balance			Interest Income		Yield (1)/ Rate		Average Balance			Interest Income		Yield (1)/ Rate		Average Balance			Interest Income		Yield (1)/ Rate
Earning Assets
Loans:
Taxable (2)(3)	$	5,160,031		$	81,740	6.42	%	$	5,060,397		$	83,253	6.54	%	$	4,916,943		$	82,042	6.71	%
Tax exempt (1)		25,887			361	5.66			26,217			364	5.52			54,077			1,118	8.31
Investments: (1)
Securities		1,136,404			8,338	2.98			1,134,011			7,953	2.79			1,158,503			8,035	2.79
Short-term investments		2,964			28	3.83			2,765			29	4.17			2,710			33	4.90
Interest bearing deposits		105,518			1,096	4.21			247,530			2,881	4.63			84,696			1,073	5.10
Total earning assets	$	6,430,804		$	91,563	5.77	%	$	6,470,920		$	94,480	5.81	%	$	6,216,929		$	92,301	5.97	%
Less: Allowance for credit losses		(87,477	)						(84,687	)						(72,433	)
Nonearning Assets
Cash and due from banks		71,004							67,994							68,584
Premises and equipment		60,523							60,325							57,883
Other nonearning assets		288,116							281,044							283,505
Total assets	$	6,762,970						$	6,795,596						$	6,554,468

Interest Bearing Liabilities
Savings deposits	$	283,888		$	42	0.06	%	$	274,960		$	43	0.06	%	$	295,650		$	49	0.07	%
Interest bearing checking accounts		3,486,447			28,075	3.27			3,505,470			31,562	3.58			3,046,958			30,365	4.01
Time deposits:
In denominations under $100,000		212,934			1,832	3.49			214,429			1,921	3.56			224,139			1,918	3.44
In denominations over $100,000		633,112			6,509	4.17			734,342			8,150	4.42			789,581			8,832	4.50
Miscellaneous short-term borrowings		99,830			1,122	4.56			5			0	5.30			175,809			2,454	5.61
Long-term borrowings		254			0	0.00			0			0	0.00			0			0	0.00
Total interest bearing liabilities	$	4,716,465		$	37,580	3.23	%	$	4,729,206		$	41,676	3.51	%	$	4,532,137		$	43,618	3.87	%
Noninterest Bearing Liabilities
Demand deposits		1,258,344							1,281,921							1,274,103
Other liabilities		92,108							90,725							103,221
Stockholders’ Equity		696,053							693,744							645,007
Total liabilities and stockholders’ equity	$	6,762,970						$	6,795,596						$	6,554,468
Interest Margin Recap
Interest income/average earning assets					91,563	5.77	%					94,480	5.81	%					92,301	5.97	%
Interest expense/average earning assets					37,580	2.37						41,676	2.56						43,618	2.82
Net interest income and margin				$	53,983	3.40	%				$	52,804	3.25	%				$	48,683	3.15	%

(1)		Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax-exempt securities acquired after January 1, 1983, included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $1.11 million, $1.11 million and $1.27 million in the three-month periods ended March 31, 2025, December 31, 2024, and March 31, 2024, respectively.
(2)		Loan fees, which are immaterial in relation to total taxable loan interest income for the three-month periods ended March 31, 2025, December 31, 2024, and March 31, 2024, are included as taxable loan interest income.
(3)		Nonaccrual loans are included in the average balance of taxable loans.

Reconciliation of Non-GAAP Financial Measures

Tangible common equity, adjusted tangible common equity, tangible assets, adjusted tangible assets, tangible book value per common share, tangible common equity to tangible assets, adjusted tangible common equity to adjusted tangible assets, and pretax pre-provision earnings are non-GAAP financial measures calculated based on GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Adjusted tangible assets and adjusted tangible common equity remove the fair market value adjustment impact of the available-for-sale investment securities portfolio in accumulated other comprehensive income (loss) (“AOCI”). Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding less true treasury stock. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company’s value meaningful to understanding of the company’s financial information and performance.

A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).

	Three Months Ended
	Mar. 31, 2025			Dec. 31, 2024			Mar. 31, 2024
Total Equity	$	694,509		$	683,911		$	647,009
Less: Goodwill		(4,970	)		(4,970	)		(4,970	)
Plus: DTA Related to Goodwill		1,167			1,167			1,167
Tangible Common Equity		690,706			680,108			643,206
Market Value Adjustment in AOCI		163,879			165,932			166,189
Adjusted Tangible Common Equity		854,585			846,040			809,395

Assets	$	6,851,178		$	6,678,374		$	6,566,861
Less: Goodwill		(4,970	)		(4,970	)		(4,970	)
Plus: DTA Related to Goodwill		1,167			1,167			1,167
Tangible Assets		6,847,375			6,674,571			6,563,058
Market Value Adjustment in AOCI		163,879			165,932			166,189
Adjusted Tangible Assets		7,011,254			6,840,503			6,729,247

Ending Common Shares Issued		25,727,393			25,689,730			25,677,399

Tangible Book Value Per Common Share	$	26.85		$	26.47		$	25.05

Tangible Common Equity/Tangible Assets		10.09	%		10.19	%		9.80	%
Adjusted Tangible Common Equity/Adjusted Tangible Assets		12.19	%		12.37	%		12.03	%

Net Interest Income	$	52,875		$	51,694		$	47,416
Plus: Noninterest Income		10,928			11,876			12,612
Minus: Noninterest Expense		(32,763	)		(30,653	)		(30,705	)

Pretax Pre-Provision Earnings	$	31,040		$	32,917		$	29,323

Adjusted core noninterest income, adjusted earnings before income taxes, core operational profitability, core operational diluted earnings per common share and adjusted core efficiency ratio are non-GAAP financial measures calculated based on GAAP amounts. These adjusted amounts are calculated by excluding the impact of insurance recoveries related to the 2023 wire fraud loss for the periods presented below. Management considers these measures of financial performance to be meaningful to understanding the company’s core business performance for these periods.

A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).

	Three Months Ended
	Mar. 31, 2025			Dec. 31, 2024			Mar. 31, 2024
Noninterest Income	$	10,928		$	11,876		$	12,612
Less: Insurance Recovery		0			0			(1,000	)
Adjusted Core Noninterest Income	$	10,928		$	11,876		$	11,612

Earnings Before Income Taxes	$	24,240		$	29,226		$	27,803
Adjusted Core Impact:
Noninterest Income		0			0			(1,000	)
Total Adjusted Core Impact		0			0			(1,000	)
Adjusted Earnings Before Income Taxes		24,240			29,226			26,803
Tax Effect		(4,155	)		(5,036	)		(4,153	)
Core Operational Profitability (1)	$	20,085		$	24,190		$	22,650

Diluted Earnings Per Common Share	$	0.78		$	0.94		$	0.91
Impact of Adjusted Core Items		0.00			0.00			(0.03	)
Core Operational Diluted Earnings Per Common Share	$	0.78		$	0.94		$	0.88

Adjusted Core Efficiency Ratio		51.35	%		48.22	%		52.02	%

(1)

Core operational profitability was $751,000 lower than reported net income for the three months ended March 31, 2024.

Contact
Lisa M. O’Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
lisa.oneill@lakecitybank.com

The MIL Network –

April 25, 2025

MIL-OSI: Apollo Commercial Real Estate Finance, Inc. Reports First Quarter 2025 Results

Source: GlobeNewswire (MIL-OSI)

NEW YORK, April 24, 2025 (GLOBE NEWSWIRE) — Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today reported results for the quarter ended March 31, 2025.

Net income attributable to common stockholders per diluted share of common stock was $0.16 for the quarter ended March 31, 2025. Distributable Earnings per diluted share of common stock (a non-GAAP financial measure defined below) was $0.24 for the quarter ended March 31, 2025.

Commenting on first quarter 2025 performance, Stuart Rothstein, Chief Executive Officer and President of the Company, said:

“ARI’s first quarter earnings reflect the impact of elevated repayments at the end of fourth quarter of 2024 and the timing of our first quarter capital deployment, which totaled $650 million,” said Stuart Rothstein, Chief Executive Officer and President of ARI. “We continue to make progress with our focus assets and remain focused on redeploying the capital into newly originated loans.”

ARI issued a detailed presentation of the Company’s quarter ended March 31, 2025 results, which can be viewed at www.apollocref.com.

Conference Call and Webcast
The Company will hold a conference call to review first quarter results on April 25, 2025 at 10am ET. To register for the call, please use the following link:

https://register-conf.media-server.com/register/BI9d454c5338474977930d8dafd9ec06d9

After you register, you will receive a dial-in number and unique pin. The Company will also post a link in the Stockholders’ section on ARI’s website for a live webcast. For those unable to listen to the live call or webcast, there will be a webcast replay link posted in the Stockholders’ section on ARI’s website approximately two hours after the call.

Distributable Earnings
“Distributable Earnings,” a non-GAAP financial measure, is defined as net income available to common stockholders, computed in accordance with GAAP, adjusted for (i) equity-based compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding), (ii) any unrealized gains or losses or other non-cash items (including depreciation and amortization related to real estate owned) included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains (losses), other than (a) realized gains/(losses) related to interest income, and (b) forward point gains/(losses) realized on the Company’s foreign currency hedges, and (v) provision for current expected credit losses.

As a REIT, U.S. federal income tax law generally requires the Company to distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that the Company pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. Given these requirements and the Company’s belief that dividends are generally one of the principal reasons shareholders invest in a REIT, the Company generally intends over time to pay dividends to its stockholders in an amount equal to its net taxable income, if and to the extent authorized by the Company’s board of directors. Distributable Earnings is a key factor considered by the Company’s board of directors in setting the dividend and as such the Company believes Distributable Earnings is useful to investors.

The Company believes it is useful to its investors to also present Distributable Earnings prior to net realized loss on investments, in applicable periods, to reflect its operating results because (i) the Company’s operating results are primarily comprised of earning interest income on its investments net of borrowing and administrative costs, which comprise the Company’s ongoing operations and (ii) it has been a useful factor related to the Company’s dividend per share because it is one of the considerations when a dividend is determined. The Company believes that its investors use Distributable Earnings and Distributable Earnings prior to net realized loss on investments or a comparable supplemental performance measure, to evaluate and compare the performance of the Company and its peers.

During the three months ended March 31, 2025, the Company recorded no realized losses in the consolidated statement of operations.

A significant limitation associated with Distributable Earnings as a measure of the Company’s financial performance over any period is that it excludes unrealized gains (losses) from investments. In addition, the Company’s presentation of Distributable Earnings may not be comparable to similarly titled measures of other companies, that use different calculations. As a result, Distributable Earnings should not be considered as a substitute for the Company’s GAAP net income as a measure of its financial performance or any measure of its liquidity under GAAP. Distributable Earnings are reduced for realized losses on loans which include losses that management believes are near certain to be realized.

A reconciliation of Distributable Earnings to GAAP net income (loss) available to common stockholders is included in the detailed presentation of the Company’s quarter ended March 31, 2025 results, which can be viewed at www.apollocref.com.

About Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a real estate investment trust that primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings and other commercial real estate-related debt investments. The Company is externally managed and advised by ACREFI Management, LLC, a Delaware limited liability company and an indirect subsidiary of Apollo Global Management, Inc., a high-growth, global alternative asset manager with approximately $751 billion of assets under management at December 31, 2024.

Additional information can be found on the Company’s website at www.apollocref.com.

Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. These forward-looking statements include information about possible or assumed future results of the Company’s business, financial condition, liquidity, results of operations, plans and objectives. When used in this release, the words believe, expect, anticipate, estimate, plan, continue, intend, should, may or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: higher interest rates and inflation; market trends in the Company’s industry, real estate values, the debt securities markets or the general economy; the timing and amounts of expected future fundings of unfunded commitments; the return on equity; the yield on investments; the ability to borrow to finance assets; the Company’s ability to deploy the proceeds of its capital raises or acquire its target assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

CONTACT:	Hilary Ginsberg
	Investor Relations
	(212) 822-0767

The MIL Network –

April 25, 2025

MIL-OSI: South Plains Financial, Inc. Reports First Quarter 2025 Financial Results

Source: GlobeNewswire (MIL-OSI)

LUBBOCK, Texas, April 24, 2025 (GLOBE NEWSWIRE) — South Plains Financial, Inc. (NASDAQ:SPFI) (“South Plains” or the “Company”), the parent company of City Bank (“City Bank” or the “Bank”), today reported its financial results for the quarter ended March 31, 2025.

First Quarter 2025 Highlights

Net income for the first quarter of 2025 was $12.3 million, compared to $16.5 million for the fourth quarter of 2024 and $10.9 million for the first quarter of 2024.
Diluted earnings per share for the first quarter of 2025 was $0.72, compared to $0.96 for the fourth quarter of 2024 and $0.64 for the first quarter of 2024.
Average cost of deposits for the first quarter of 2025 was 219 basis points, compared to 229 basis points for the fourth quarter of 2024 and 241 basis points for the first quarter of 2024.
Net interest margin, on a tax-equivalent basis, was 3.81% for the first quarter of 2025, compared to 3.75% for the fourth quarter of 2024 and 3.56% for the first quarter of 2024.
Nonperforming assets to total assets were 0.16% at March 31, 2025, compared to 0.58% at December 31, 2024 and 0.10% at March 31, 2024.
Return on average assets for the first quarter of 2025 was 1.16%, compared to 1.53% for the fourth quarter of 2024 and 1.04% for the first quarter of 2024.
Tangible book value (non-GAAP) per share was $26.05 as of March 31, 2025, compared to $25.40 as of December 31, 2024 and $23.56 as of March 31, 2024.
The consolidated total risk-based capital ratio, common equity tier 1 risk-based capital ratio, and tier 1 leverage ratio at March 31, 2025 were 17.93%, 13.59%, and 12.04%, respectively.

Curtis Griffith, South Plains’ Chairman and Chief Executive Officer, commented, “We delivered strong first quarter results highlighted by solid deposit growth, healthy margin expansion as our cost of funds continued to improve, and loan growth that was in line with our expectations. Additionally, the credit quality of our loan portfolio continued to strengthen in the quarter which is a testament to our conservative culture and proactive approach to managing credit. While the outlook is uncertain, we believe that we are in an advantageous position relative to our peers and are actively looking to expand in both our metropolitan and rural markets. We have the liquidity, capital, and team to take advantage of opportunities that come our way. While the economy may slow and businesses may reduce their risk appetites, we will be ready to meet the needs of our customers in these uncertain times. We will also continue to add experienced lenders who fit our culture and want to bring their customers to a better, more stable bank. However, we will maintain our conservative credit culture and will never sacrifice credit quality for growth as we work to maintain the strong credit quality of our loan portfolio. While we see many opportunities to continue growing the Bank, we believe our share price does not reflect the value that we are creating. As a result, we spent $8.3 million to repurchase 250,000 shares in the first quarter, leaving approximately $7 million under our previously announced share repurchase program.”

Results of Operations, Quarter Ended March 31, 2025

Net Interest Income

Net interest income was $38.5 million for the first quarter of 2025, compared to $38.5 million for the fourth quarter of 2024 and $35.4 million for the first quarter of 2024. Net interest margin, calculated on a tax-equivalent basis, was 3.81% for the first quarter of 2025, compared to 3.75% for the fourth quarter of 2024 and 3.56% for the first quarter of 2024. The average yield on loans was 6.67% for the first quarter of 2025, compared to 6.69% for the fourth quarter of 2024 and 6.53% for the first quarter of 2024. The average cost of deposits was 219 basis points for the first quarter of 2025, which is 10 basis points lower than the fourth quarter of 2024 and 22 basis points lower than the first quarter of 2024.

Interest income was $59.9 million for the first quarter of 2025, compared to $61.3 million for the fourth quarter of 2024 and $58.7 million for the first quarter of 2024. Interest income decreased $1.4 million in the first quarter of 2025 from the fourth quarter of 2024, which was primarily comprised of a decrease of $692 thousand in loan interest income and a decrease of $408 thousand in interest income on other earning assets. The decline in interest income was due primarily to fewer days in the first quarter as compared to the fourth quarter of 2024. Interest income increased $1.2 million in the first quarter of 2025 compared to the first quarter of 2024. This increase was primarily due to an increase of average loans of $60.0 million and higher loan interest rates during the period, resulting in growth of $1.6 million in loan interest income.

Interest expense was $21.4 million for the first quarter of 2025, compared to $22.8 million for the fourth quarter of 2024 and $23.4 million for the first quarter of 2024. Interest expense decreased $1.4 million compared to the fourth quarter of 2024 and decreased $2.0 million compared to the first quarter of 2024. The $1.4 million decrease was primarily as a result of a 19 basis point decline in the cost of interest-bearing deposits and fewer days in the quarter, partially offset by an increase of $50.0 million in average interest-bearing deposits in the first quarter of 2025 as compared to the fourth quarter of 2024. The $2.0 million decrease was primarily as a result of a 34 basis point decline in the cost of interest-bearing deposits, partially offset by an increase of $83.4 million in average interest-bearing deposits in the first quarter of 2025 as compared to the first quarter of 2024.

Noninterest Income and Noninterest Expense

Noninterest income was $10.6 million for the first quarter of 2025, compared to $13.3 million for the fourth quarter of 2024 and $11.4 million for the first quarter of 2024. The decrease from the fourth quarter of 2024 was primarily due to a decrease of $2.8 million in mortgage banking revenues, mainly as a result of a decrease of $3.0 million in the fair value adjustment of the mortgage servicing rights assets as interest rates that affect the value decreased in the first quarter of 2025. The decrease in noninterest income for the first quarter of 2025 as compared to the first quarter of 2024 was primarily due to a decrease of $1.8 million in mortgage banking activities revenue mainly from a decrease of $1.6 million in the fair value adjustment of the mortgage servicing rights assets as interest rates that affect the value decreased in the first quarter of 2025. This decrease in mortgage banking activities revenue was partially offset by growth in service charges on deposits revenue and bank card services and interchange revenue.

Noninterest expense was $33.0 million for the first quarter of 2025, compared to $29.9 million for the fourth quarter of 2024 and $31.9 million for the first quarter of 2024. The $3.1 million increase from the fourth quarter of 2024 was largely the result of an increase of $2.1 million in personnel expenses, primarily from annual salary adjustments, increased health insurance costs as the fourth quarter of 2024 included annual rebates received, and increased annual incentive compensation expense. There were also increases in net occupancy expense, professional service expenses, and the ineffectiveness related to fair value hedges on municipal securities. The increase in noninterest expense for the first quarter of 2025 as compared to the first quarter of 2024 was largely the result of an increase of $453 thousand in personnel expenses, largely a result of annual salary adjustments.

Loan Portfolio and Composition

Loans held for investment were $3.08 billion as of March 31, 2025, compared to $3.06 billion as of December 31, 2024 and $3.01 billion as of March 31, 2024. The increase of $20.8 million, or 2.7% annualized, during the first quarter of 2025 as compared to the fourth quarter of 2024 occurred primarily as a result of organic loan growth experienced in commercial owner-occupied real estate loans and commercial goods and services loans, partially offset by a seasonal decrease in agricultural production loans. As of March 31, 2025, loans held for investment increased $64.1 million, or 2.1%, from March 31, 2024, primarily attributable to organic loan growth, occurring broadly across the real estate and commercial loan segments, partially offset by decreases in auto loans and other consumer loans.

Deposits and Borrowings

Deposits totaled $3.79 billion as of March 31, 2025, compared to $3.62 billion as of December 31, 2024 and $3.64 billion as of March 31, 2024. Deposits increased by $171.6 million, or 4.7%, in the first quarter of 2025 from December 31, 2024. Deposits increased by $153.9 million, or 4.2%, at March 31, 2025 as compared to March 31, 2024. Noninterest-bearing deposits were $966.5 million as of March 31, 2025, compared to $935.5 million as of December 31, 2024 and $974.2 million as of March 31, 2024. Noninterest-bearing deposits represented 25.5% of total deposits as of March 31, 2025. The quarterly change in total deposits was mainly due to a seasonal increase of $70.2 million in public fund deposits and strong organic growth in retail and commercial deposits. The year-over-year increase in total deposits was primarily the result of continued organic growth in retail and commercial deposits.

Asset Quality

The Company recorded a provision for credit losses in the first quarter of 2025 of $420 thousand, compared to $1.2 million in the fourth quarter of 2024 and $830 thousand in the first quarter of 2024. The provision during the first quarter of 2025 was largely attributable to net charge-off activity and increased loan balances, partially offset by improved credit quality as noted below in the nonperforming assets to total assets ratio.

The ratio of allowance for credit losses to loans held for investment was 1.40% as of March 31, 2025, compared to 1.42% as of December 31, 2024 and 1.40% as of March 31, 2024.

The ratio of nonperforming assets to total assets was 0.16% as of March 31, 2025, compared to 0.58% as of December 31, 2024 and 0.10% as of March 31, 2024. A $19.0 million credit was placed back on accrual status at the end of the first quarter of 2025, based on sustained payment performance and improved credit structure. This credit was repaid in full subsequent to March 31, 2025. Annualized net charge-offs were 0.07% for the first quarter of 2025, compared to 0.11% for the fourth quarter of 2024 and 0.13% for the first quarter of 2024.

Capital

Book value per share increased to $27.33 at March 31, 2025, compared to $26.67 at December 31, 2024. The change was primarily driven by $9.8 million of net income after dividends paid and by an increase in accumulated other comprehensive income of $2.7 million, partially offset by stock repurchases of $8.3 million. The tangible common equity to tangible assets ratio (non-GAAP) decreased 28 basis points to 9.64% in the first quarter of 2025, largely due to growth of $173.0 million in tangible assets.

Conference Call

South Plains will host a conference call to discuss its first quarter 2025 financial results today, April 24, 2025, at 5:00 p.m., Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-877-407-9716 (international callers please dial 1-201-493-6779) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call and conference materials will be available on the Company’s website at https://www.spfi.bank/news-events/events.

A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed on the investor section of the Company’s website as well as by dialing 1-844-512-2921 (international callers please dial 1-412-317-6671). The pin to access the telephone replay is 13752910. The replay will be available until May 8, 2025.

About South Plains Financial, Inc.

South Plains is the bank holding company for City Bank, a Texas state-chartered bank headquartered in Lubbock, Texas. City Bank is one of the largest independent banks in West Texas and has additional banking operations in the Dallas, El Paso, Greater Houston, the Permian Basin, and College Station, Texas markets, and the Ruidoso, New Mexico market. South Plains provides a wide range of commercial and consumer financial services to small and medium-sized businesses and individuals in its market areas. Its principal business activities include commercial and retail banking, along with investment, trust and mortgage services. Please visit https://www.spfi.bank for more information.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include Tangible Book Value Per Share, Tangible Common Equity to Tangible Assets, and Pre-Tax, Pre-Provision Income. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.

We classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

A reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this press release.

Available Information

The Company routinely posts important information for investors on its web site (under www.spfi.bank and, more specifically, under the News & Events tab at www.spfi.bank/news-events/press-releases). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD (Fair Disclosure) promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, investors should monitor the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company’s web site is not incorporated by reference into, and is not a part of, this document.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect South Plains’ current views with respect to future events and South Plains’ financial performance. Any statements about South Plains’ expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. South Plains cautions that the forward-looking statements in this press release are based largely on South Plains’ expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond South Plains’ control. Factors that could cause such changes include, but are not limited to, the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; potential recession in the United States and our market areas; the impacts related to or resulting from uncertainty in the banking industry as a whole; increased competition for deposits in our market areas and related changes in deposit customer behavior; the impact of changes in market interest rates, whether due to a continuation of the elevated interest rate environment or further reductions in interest rates and a resulting decline in net interest income; the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas; the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; increases in unemployment rates in the United States and our market areas; adverse changes in customer spending and savings habits; declines in commercial real estate values and prices; a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainty regarding United States fiscal debt, deficit and budget matters; cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events, including as a result of changes in U.S. presidential administrations or Congress; the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts and the resulting impact on the Company and its customers; competition and market expansion opportunities; changes in non-interest expenditures or in the anticipated benefits of such expenditures; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; potential costs related to the impacts of climate change; current or future litigation, regulatory examinations or other legal and/or regulatory actions; and changes in applicable laws and regulations. Additional information regarding these risks and uncertainties to which South Plains’ business and future financial performance are subject is contained in South Plains’ most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of such documents, and other documents South Plains files or furnishes with the SEC from time to time, which are available on the SEC’s website, www.sec.gov. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements due to additional risks and uncertainties of which South Plains is not currently aware or which it does not currently view as, but in the future may become, material to its business or operating results. Due to these and other possible uncertainties and risks, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. Any forward-looking statements presented herein are made only as of the date of this press release, and South Plains does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, new information, the occurrence of unanticipated events, or otherwise, except as required by applicable law. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.

Contact:	Mikella Newsom, Chief Risk Officer and Secretary
	(866) 771-3347
	investors@city.bank

Source: South Plains Financial, Inc.

South Plains Financial, Inc.
Consolidated Financial Highlights – (Unaudited)
(Dollars in thousands, except share data)

	As of and for the quarter ended
	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Selected Income Statement Data:
Interest income	$	59,922		$	61,324		$	61,640		$	59,208		$	58,727
Interest expense		21,395			22,776			24,346			23,320			23,359
Net interest income		38,527			38,548			37,294			35,888			35,368
Provision for credit losses		420			1,200			495			1,775			830
Noninterest income		10,625			13,319			10,635			12,709			11,409
Noninterest expense		33,030			29,948			33,128			32,572			31,930
Income tax expense		3,408			4,222			3,094			3,116			3,143
Net income		12,294			16,497			11,212			11,134			10,874
Per Share Data (Common Stock):
Net earnings, basic	$	0.75		$	1.01		$	0.68		$	0.68		$	0.66
Net earnings, diluted		0.72			0.96			0.66			0.66			0.64
Cash dividends declared and paid		0.15			0.15			0.14			0.14			0.13
Book value		27.33			26.67			27.04			25.45			24.87
Tangible book value (non-GAAP)		26.05			25.40			25.75			24.15			23.56
Weighted average shares outstanding, basic		16,415,862			16,400,361			16,386,079			16,425,360			16,429,919
Weighted average shares outstanding, dilutive		17,065,599			17,161,646			17,056,959			16,932,077			16,938,857
Shares outstanding at end of period		16,235,647			16,455,826			16,386,627			16,424,021			16,431,755
Selected Period End Balance Sheet Data:
Cash and cash equivalents	$	536,300		$	359,082		$	471,167		$	298,006		$	371,939
Investment securities		571,527			577,240			606,889			591,031			599,869
Total loans held for investment		3,075,860			3,055,054			3,037,375			3,094,273			3,011,799
Allowance for credit losses		42,968			43,237			42,886			43,173			42,174
Total assets		4,405,209			4,232,239			4,337,659			4,220,936			4,218,993
Interest-bearing deposits		2,826,055			2,685,366			2,720,880			2,672,948			2,664,397
Noninterest-bearing deposits		966,464			935,510			998,480			951,565			974,174
Total deposits		3,792,519			3,620,876			3,719,360			3,624,513			3,638,571
Borrowings		110,400			110,354			110,307			110,261			110,214
Total stockholders’ equity		443,743			438,949			443,122			417,985			408,712
Summary Performance Ratios:
Return on average assets (annualized)		1.16	%		1.53	%		1.05	%		1.07	%		1.04	%
Return on average equity (annualized)		11.30	%		14.88	%		10.36	%		10.83	%		10.72	%
Net interest margin⁽¹⁾		3.81	%		3.75	%		3.65	%		3.63	%		3.56	%
Yield on loans		6.67	%		6.69	%		6.68	%		6.60	%		6.53	%
Cost of interest-bearing deposits		2.93	%		3.12	%		3.36	%		3.33	%		3.27	%
Efficiency ratio		66.90	%		57.50	%		68.80	%		66.72	%		67.94	%
Summary Credit Quality Data:
Nonperforming loans	$	6,467		$	24,023		$	24,693		$	23,452		$	3,380
Nonperforming loans to total loans held for investment		0.21	%		0.79	%		0.81	%		0.76	%		0.11	%
Other real estate owned	$	600		$	530		$	973		$	755		$	862
Nonperforming assets to total assets		0.16	%		0.58	%		0.59	%		0.57	%		0.10	%
Allowance for credit losses to total loans held for investment		1.40	%		1.42	%		1.41	%		1.40	%		1.40	%
Net charge-offs to average loans outstanding (annualized)		0.07	%		0.11	%		0.11	%		0.10	%		0.13	%

	As of and for the quarter ended
	March 31 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Capital Ratios:
Total stockholders’ equity to total assets		10.07	%		10.37	%		10.22	%		9.90	%		9.69	%
Tangible common equity to tangible assets (non-GAAP)		9.64	%		9.92	%		9.77	%		9.44	%		9.22	%
Common equity tier 1 to risk-weighted assets		13.59	%		13.53	%		13.25	%		12.61	%		12.67	%
Tier 1 capital to average assets		12.04	%		12.04	%		11.76	%		11.81	%		11.51	%
Total capital to risk-weighted assets		17.93	%		17.86	%		17.61	%		16.86	%		17.00	%

(1) Net interest margin is calculated as the annual net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.

South Plains Financial, Inc.
Average Balances and Yields – (Unaudited)
(Dollars in thousands)

	For the Three Months Ended
	March 31, 2025							March 31, 2024

	Average Balance		Interest		Yield/Rate			Average Balance		Interest		Yield/Rate
Assets
Loans	$	3,074,568	$	50,577		6.67	%	$	3,014,537	$	48,940		6.53	%
Debt securities – taxable		510,354		4,692		3.73	%		554,081		5,511		4.00	%
Debt securities – nontaxable		153,229		1,014		2.68	%		156,254		1,024		2.64	%
Other interest-bearing assets		386,979		3,859		4.04	%		298,969		3,475		4.67	%

Total interest-earning assets		4,125,130		60,142		5.91	%		4,023,841		58,950		5.89	%
Noninterest-earning assets		171,683							184,293

Total assets	$	4,296,813						$	4,208,134

Liabilities & stockholders’ equity
NOW, Savings, MMDA’s	$	2,302,344		15,511		2.73	%	$	2,285,981		17,997		3.17	%
Time deposits		441,895		4,316		3.96	%		374,852		3,666		3.93	%
Short-term borrowings		3		–		0.00	%		3		–		0.00	%
Notes payable & other long-term borrowings		–		–		0.00	%		–		–		0.00	%
Subordinated debt		63,984		835		5.29	%		63,798		835		5.26	%
Junior subordinated deferrable interest debentures		46,393		733		6.41	%		46,393		861		7.46	%

Total interest-bearing liabilities		2,854,619		21,395		3.04	%		2,771,027		23,359		3.39	%
Demand deposits		934,775							958,334
Other liabilities		66,073							70,860
Stockholders’ equity		441,346							407,913

Total liabilities & stockholders’ equity	$	4,296,813						$	4,208,134

Net interest income			$	38,747						$	35,591
Net interest margin⁽²⁾						3.81	%						3.56	%

(1) Average loan balances include nonaccrual loans and loans held for sale.
(2) Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.

South Plains Financial, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)

	As of
	March 31, 2025			December 31, 2024

Assets
Cash and due from banks	$	56,006		$	54,114
Interest-bearing deposits in banks		480,294			304,968
Securities available for sale		571,527			577,240
Loans held for sale		13,931			20,542
Loans held for investment		3,075,860			3,055,054
Less: Allowance for credit losses		(42,968	)		(43,237	)
Net loans held for investment		3,032,892			3,011,817
Premises and equipment, net		50,873			52,951
Goodwill		19,315			19,315
Intangible assets		1,569			1,720
Mortgage servicing rights		24,906			26,292
Other assets		153,896			163,280
Total assets	$	4,405,209		$	4,232,239

Liabilities and Stockholders’ Equity
Noninterest-bearing deposits	$	966,464		$	935,510
Interest-bearing deposits		2,826,055			2,685,366
Total deposits		3,792,519			3,620,876
Subordinated debt		64,007			63,961
Junior subordinated deferrable interest debentures		46,393			46,393
Other liabilities		58,547			62,060
Total liabilities		3,961,466			3,793,290
Stockholders’ Equity
Common stock		16,236			16,456
Additional paid-in capital		89,799			97,287
Retained earnings		395,652			385,827
Accumulated other comprehensive income (loss)		(57,944	)		(60,621	)
Total stockholders’ equity		443,743			438,949
Total liabilities and stockholders’ equity	$	4,405,209		$	4,232,239

South Plains Financial, Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands)

	Three Months Ended
	March 31, 2025		March 31, 2024

Interest income:
Loans, including fees	$	50,570	$	48,932
Other		9,352		9,795
Total interest income		59,922		58,727
Interest expense:
Deposits		19,827		21,663
Subordinated debt		835		835
Junior subordinated deferrable interest debentures		733		861
Other		–		–
Total interest expense		21,395		23,359
Net interest income		38,527		35,368
Provision for credit losses		420		830
Net interest income after provision for credit losses		38,107		34,538
Noninterest income:
Service charges on deposits		2,141		1,813
Income from insurance activities		28		34
Mortgage banking activities		2,113		3,945
Bank card services and interchange fees		3,379		3,061
Other		2,964		2,556
Total noninterest income		10,625		11,409
Noninterest expense:
Salaries and employee benefits		19,441		18,988
Net occupancy expense		4,027		3,920
Professional services		1,730		1,483
Marketing and development		905		754
Other		6,927		6,785
Total noninterest expense		33,030		31,930
Income before income taxes		15,702		14,017
Income tax expense		3,408		3,143
Net income	$	12,294	$	10,874

South Plains Financial, Inc.
Loan Composition
(Unaudited)
(Dollars in thousands)

	As of
	March 31, 2025		December 31, 2024

Loans:
Commercial Real Estate	$	1,126,800	$	1,119,063
Commercial – Specialized		366,796		388,955
Commercial – General		584,705		557,371
Consumer:
1-4 Family Residential		569,799		566,400
Auto Loans		261,629		254,474
Other Consumer		64,090		64,936
Construction		102,041		103,855
Total loans held for investment	$	3,075,860	$	3,055,054

South Plains Financial, Inc.
Deposit Composition
(Unaudited)
(Dollars in thousands)

	As of
	March 31, 2025		December 31, 2024

Deposits:
Noninterest-bearing deposits	$	966,464	$	935,510
NOW & other transaction accounts		1,302,642		498,718
MMDA & other savings		1,082,596		1,741,988
Time deposits		440,817		444,660
Total deposits	$	3,792,519	$	3,620,876

South Plains Financial, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands)

	For the quarter ended
	March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024
Pre-tax, pre-provision income
Net income	$	12,294	$	16,497	$	11,212	$	11,134	$	10,874
Income tax expense		3,408		4,222		3,094		3,116		3,143
Provision for credit losses		420		1,200		495		1,775		830
Pre-tax, pre-provision income	$	16,122	$	21,919	$	14,801	$	16,025	$	14,847

	As of
	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Tangible common equity
Total common stockholders’ equity	$	443,743		$	438,949		$	443,122		$	417,985		$	408,712
Less: goodwill and other intangibles		(20,884	)		(21,035	)		(21,197	)		(21,379	)		(21,562	)

Tangible common equity	$	422,859		$	417,914		$	421,925		$	396,606		$	387,150

Tangible assets
Total assets	$	4,405,209		$	4,232,239		$	4,337,659		$	4,220,936		$	4,218,993
Less: goodwill and other intangibles		(20,884	)		(21,035	)		(21,197	)		(21,379	)		(21,562	)

Tangible assets	$	4,384,325		$	4,211,204		$	4,316,462		$	4,199,557		$	4,197,431

Shares outstanding		16,235,647			16,455,826			16,386,627			16,424,021			16,431,755

Total stockholders’ equity to total assets		10.07	%		10.37	%		10.22	%		9.90	%		9.69	%
Tangible common equity to tangible assets		9.64	%		9.92	%		9.77	%		9.44	%		9.22	%
Book value per share	$	27.33		$	26.67		$	27.04		$	25.45		$	24.87
Tangible book value per share	$	26.05		$	25.40		$	25.75		$	24.15		$	23.56

The MIL Network –

April 25, 2025

MIL-OSI: Middlefield Banc Corp. Reports 2025 Three-Month Financial Results

Source: GlobeNewswire (MIL-OSI)

MIDDLEFIELD, Ohio, April 24, 2025 (GLOBE NEWSWIRE) — Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three months ended March 31, 2025.

2025 Three-Month Financial Highlights (on a year-over-year basis):

	●	Earnings per share increased 17.6% year-over-year to $0.60 per diluted share
	●	Net interest margin expanded 15 basis points to 3.69%
	●	Return on average assets (annualized) increased 12 basis points year-over-year to 1.04%
	●	Asset quality improved from the 2024 fourth quarter with nonperforming assets to total assets decreasing by 6 basis points to 1.56%
	●	First quarter dividend payment increased 5% to $0.21 per share

“The first quarter of 2025 was a strong period of growth, profitability and value creation for Middlefield,” stated Ronald L. Zimmerly, Jr., President and Chief Executive Officer. “Total loans increased by 4% year-over-year to a record $1.55 billion, driven by stable economic trends within our Ohio markets, the strength of our balance sheet, and the continued execution of our strategic initiatives. The 15-basis point expansion in our net interest margin is encouraging, reflecting our disciplined approach to pricing and ongoing efforts to reduce our cost of funds. As a result, net income expanded by 15.9% year-over-year to $4.8 million, delivering a strong return on average assets of 1.04% and supporting a 5.5% increase in tangible book value per share⁽¹⁾, which reached $21.29 as of March 31, 2025.” ⁽¹⁾ See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

“During the quarter, we made significant upgrades to our infrastructure to support our multi-year technology road map. Additional investments in our physical footprint and back-office capabilities are planned throughout the year as we continue to strengthen Middlefield’s platform and support our long-term growth. We believe 2025 will be another good year of profitable expansion, reflecting our commitment to disciplined underwriting, community banking values, and ongoing reinvestment in the business,” concluded Mr. Zimmerly.

Income Statement
Net interest income for the three months ended March 31, 2025, increased $1.1 million to $16.1 million, compared to $15.0 million for the same period last year. The increase was driven by strong loan growth and the impact of rate cuts on our short-term borrowings. The net interest margin for the three months ended March 31, 2025, was 3.69%, compared to 3.54% last year.

For the three months ended March 31, 2025, noninterest income increased $148,000 to $1.9 million, compared to $1.8 million for the same period in 2024.

Noninterest expense for the three months ended March 31, 2025, was $12.2 million, compared to $12.0 million for the same period in 2024.

Net income for the three months ended March 31, 2025, was $4.8 million, or $0.60 per diluted share, compared to $4.2 million, or $0.51 per diluted share, for the same period last year.

For the three months ended March 31, 2025, pre-tax, pre-provision net income was $5.8 million, compared to $4.8 million for the same period last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.)

Balance Sheet
Total assets at March 31, 2025, increased 3.9% to $1.89 billion, compared to $1.82 billion at March 31, 2024. Total loans at March 31, 2025, were $1.55 billion, compared to $1.49 billion at March 31, 2024. The 4.0% year-over-year increase in total loans was primarily due to higher residential real estate loans, home equity lines of credit, and non-owner occupied loans, partially offset by a reduction in construction and other loans.

The investment securities available-for-sale portfolio was $165.0 million at March 31, 2025, compared with $167.9 million at March 31, 2024.

Total liabilities at March 31, 2025, increased 3.9% to $1.67 billion, compared to $1.61 billion at March 31, 2024. Total deposits at March 31, 2025, were $1.54 billion, compared to $1.45 billion at March 31, 2024. The 6.4% year-over-year increase in deposits was primarily due to growth in money market and interest-bearing demand deposits, partially offset by declines in time and noninterest-bearing demand deposit accounts. Noninterest-bearing demand deposits were 24.0% of total deposits at March 31, 2025, compared to 27.0% at March 31, 2024. At March 31, 2025, the Company had brokered deposits of $92.4 million, compared to $90.4 million at March 31, 2024.

Michael C. Ranttila, Chief Financial Officer, stated, “We remain focused on proactively managing our funding sources to support loan growth, while optimizing our cost of funds. At March 31, 2025, we reduced our balance of Federal Home Loan Bank advances by $62.4 million from December 31, 2024, and ended the first quarter with $346.9 million in additional borrowing capacity. The combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity continues to provide us with excellent liquidity levels to support our long-term growth strategies and our legacy of returning excess capital to shareholders.”

Middlefield’s CRE portfolio included the following categories at March 31, 2025:

			Percent of			Percent of			Weighted Average
(Dollar amounts in thousands)	Balance		CRE Portfolio			Loan Portfolio			Loan-to-Value

Multi-Family	$	88,737		12.9	%		5.7	%		61.3	%
Owner Occupied
Real Estate and Rental and Leasing		61,835		9.0	%		4.0	%		55.7	%
Other Services (except Public Administration)		32,815		4.8	%		2.1	%		54.1	%
Manufacturing		18,397		2.7	%		1.2	%		44.7	%
Agriculture, Forestry, Fishing and Hunting		12,628		1.8	%		0.8	%		36.4	%
Other		59,737		8.6	%		3.9	%		54.0	%
Total Owner Occupied	$	185,412		26.9	%		12.0	%
Non-Owner Occupied
Real Estate and Rental and Leasing		343,169		49.9	%		22.1	%		55.5	%
Accommodation and Food Services		40,039		5.8	%		2.6	%		55.9	%
Health Care and Social Assistance		19,328		2.8	%		1.2	%		65.5	%
Manufacturing		7,428		1.1	%		0.5	%		49.5	%
Other		3,657		0.6	%		0.2	%		85.4	%
Total Non-Owner Occupied	$	413,621		60.2	%		26.6	%
Total CRE	$	687,770		100.0	%		44.3	%

Stockholders’ Equity and Dividends
At March 31, 2025, stockholders’ equity was $213.8 million, compared to $205.6 million at March 31, 2024. The 4.0% year-over-year increase in stockholders’ equity was primarily from higher retained earnings, partially offset by an increase in the unrealized losses on the available-for-sale investment portfolio. On a per-share basis, shareholders’ equity at March 31, 2025, was $26.46, compared to $25.48 at March 31, 2024.

At March 31, 2025, tangible stockholders’ equity⁽¹⁾ was $172.1 million, compared to $162.8 million at March 31, 2024. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $21.29 at March 31, 2025, compared to $20.18 at March 31, 2024. ⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

For the three months ended March 31, 2025, the Company declared cash dividends of $0.21 per share, totaling $1.7 million. Beginning in the first quarter of 2025, the Company increased the quarterly cash dividend by $0.01 or 5% from the previous quarter’s $0.20 per share cash dividend.

For the three months ended March 31, 2025, the Company did not repurchase any shares of its common stock. The Company repurchased 43,858 shares of its common stock, at an average price of $24.00 per share during the same period in 2024.

At March 31, 2025, the Company’s equity-to-assets ratio was 11.32%, compared to 11.32% at March 31, 2024.

Asset Quality

For the 2025 first quarter, the Company recorded a provision for credit losses of $95,000, compared to a recovery of credit losses of $136,000 for the same period of 2024.

Net recoveries were $209,000, or (0.06%) of average loans, annualized, for the 2025 first quarter, compared to net recoveries of $68,000, or (0.02%) of average loans, annualized, for the same period of 2024.

Nonperforming loans at March 31, 2025, were $29.6 million, compared to $10.8 million at March 31, 2024. The increase in nonperforming assets is primarily the result of a $12.4 million loan moved to nonaccrual in the 2024 third quarter. The allowance for credit losses at March 31, 2025, stood at $22.4 million, or 1.44% of total loans, compared to $21.1 million, or 1.41% of total loans at March 31, 2024. The increase in the allowance for credit losses was mainly from changes in projected loss drivers, prepayment assumptions, curtailment expectations over the reasonable and supportable forecast period, and geographic footprint of unemployment data, as well as an overall increase in total loans.

Mr. Ranttila continued, “Asset quality remains stable, with nonperforming assets to total assets of 1.56% at March 31, 2025, compared to 1.62% at December 31, 2024. Nonperforming assets at March 31, 2025, included two relationships that moved into nonaccrual status in the second quarter of 2024 and one that moved into nonaccrual status in the third quarter of 2024. We remain well reserved for potential credit losses with an allowance for credit losses to total loans of 1.44% at March 31, 2025, compared to 1.48% at December 31, 2024, and 1.41% at March 31, 2024. We continue to expect stable economic activity across our Central, Western, and Northeast Ohio markets that will support loan demand and asset quality throughout 2025.”

About Middlefield Banc Corp.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the Bank holding Company of The Middlefield Banking Company, with total assets of $1.89 billion at March 31, 2025. The Bank operates 21 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.

Additional information is available at www.middlefieldbank.bank.

NON-GAAP FINANCIAL MEASURES

This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts required to be disclosed by GAAP. Middlefield Banc Corp. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Middlefield Banc Corp.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the following Consolidated Financial Highlights tables below.

FORWARD-LOOKING STATEMENTS
This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain “forward-looking statements” relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are several important factors that could cause Middlefield Banc Corp.’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.’s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.

Company Contact:	Investor and Media Contact:
Ronald L. Zimmerly, Jr. President and Chief Executive Officer Middlefield Banc Corp. (419) 673-1217 rzimmerly@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)

	March 31,		December 31,		September 30,		June 30,		March 31,
Balance Sheets (period end)	2025		2024		2024		2024		2024
ASSETS
Cash and due from banks	$	56,150	$	46,037	$	61,851	$	50,496	$	44,816
Federal funds sold		10,720		9,755		12,022		1,762		1,438
Cash and cash equivalents		66,870		55,792		73,873		52,258		46,254
Investment securities available for sale, at fair value		165,014		165,802		169,895		166,424		167,890
Other investments		1,021		855		895		881		907
Loans held for sale		–		–		249		–		–
Loans:
Commercial real estate:
Owner occupied		185,412		181,447		187,313		182,809		178,543
Non-owner occupied		413,621		412,291		407,159		385,648		398,845
Multifamily		88,737		89,849		94,798		86,951		81,691
Residential real estate		351,274		353,442		345,748		337,121		331,480
Commercial and industrial		235,547		229,034		213,172		234,702		227,433
Home equity lines of credit		147,154		143,379		137,761		131,047		129,287
Construction and other		122,653		103,608		111,550		132,530		135,716
Consumer installment		5,951		6,564		7,030		6,896		7,131
Total loans		1,550,349		1,519,614		1,504,531		1,497,704		1,490,126
Less allowance for credit losses		22,401		22,447		22,526		21,795		21,069
Net loans		1,527,948		1,497,167		1,482,005		1,475,909		1,469,057
Premises and equipment, net		22,339		20,565		20,528		20,744		21,035
Goodwill		36,356		36,356		36,356		36,356		36,356
Core deposit intangibles		5,361		5,611		5,869		6,126		6,384
Bank-owned life insurance		34,866		35,259		35,049		34,802		34,575
Accrued interest receivable and other assets		28,581		35,952		32,916		34,686		34,210
TOTAL ASSETS	$	1,888,356	$	1,853,359	$	1,857,635	$	1,828,186	$	1,816,668

	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
LIABILITIES
Deposits:
Noninterest-bearing demand	$	369,492		$	377,875		$	390,933		$	387,024		$	390,185
Interest-bearing demand		222,953			208,291			218,002			206,542			209,015
Money market		481,664			414,074			376,619			355,630			318,823
Savings		189,943			197,749			199,984			192,472			196,721
Time		275,673			247,704			327,231			327,876			332,165
Total deposits		1,539,725			1,445,693			1,512,769			1,469,544			1,446,909
Federal Home Loan Bank advances		110,000			172,400			106,000			125,000			137,000
Other borrowings		11,609			11,660			11,711			11,762			11,812
Accrued interest payable and other liabilities		13,229			13,044			16,450			15,092			15,372
TOTAL LIABILITIES		1,674,563			1,642,797			1,646,930			1,621,398			1,611,093
STOCKHOLDERS’ EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,960,503
shares issued, 8,081,193 shares outstanding as of March 31, 2025		162,195			161,999			161,916			161,823			161,823
Additional paid-in capital		515			246			108			–			–
Retained earnings		112,432			109,299			106,067			105,342			102,791
Accumulated other comprehensive loss		(20,440	)		(20,073	)		(16,477	)		(19,468	)		(18,130	)
Treasury stock, at cost; 1,879,310 shares as of March 31, 2025		(40,909	)		(40,909	)		(40,909	)		(40,909	)		(40,909	)
TOTAL STOCKHOLDERS’ EQUITY		213,793			210,562			210,705			206,788			205,575

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,888,356		$	1,853,359		$	1,857,635		$	1,828,186		$	1,816,668

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)

	For the Three Months Ended
	March 31,			December 31,			September 30,		June 30,			March 31,
Statements of Income	2025			2024			2024		2024			2024

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	23,387		$	23,308		$	23,441	$	23,422		$	22,395
Interest-earning deposits in other institutions		291			320			348		386			437
Federal funds sold		155			151			143		122			152
Investment securities:
Taxable interest		530			528			528		505			467
Tax-exempt interest		960			961			962		966			972
Dividends on stock		150			170			191		198			189
Total interest and dividend income		25,473			25,438			25,613		25,599			24,612
INTEREST EXPENSE
Deposits		7,885			8,582			8,792		8,423			7,466
Short-term borrowings		1,347			1,128			1,575		1,920			1,993
Other borrowings		143			173			173		173			184
Total interest expense		9,375			9,883			10,540		10,516			9,643
NET INTEREST INCOME		16,098			15,555			15,073		15,083			14,969
Provision for (recovery of) credit losses		95			(177	)		2,234		87			(136	)
NET INTEREST INCOME AFTER PROVISION
FOR (RECOVERY OF) CREDIT LOSSES		16,003			15,732			12,839		14,996			15,105
NONINTEREST INCOME
Service charges on deposit accounts		989			1,068			959		971			909
Gain (Loss) on equity securities		(34	)		56			14		(27	)		(52	)
Earnings on bank-owned life insurance		493			230			246		227			227
Gain on sale of loans		24			64			56		69			10
Revenue from investment services		268			237			206		269			204
Gross rental income		–			1			–		–			67
Other income		204			258			262		251			431
Total noninterest income		1,944			1,914			1,743		1,760			1,796

NONINTEREST EXPENSE
Salaries and employee benefits		6,557			5,996			6,201		6,111			6,333
Occupancy expense		687			596			627		601			552
Equipment expense		225			221			203		261			240
Data processing costs		1,271			1,174			1,214		1,135			1,217
Ohio state franchise tax		399			390			399		397			397
Federal deposit insurance expense		267			293			255		256			251
Professional fees		598			611			539		557			558
Advertising expense		364			371			283		508			419
Software amortization expense		90			83			74		21			22
Core deposit intangible amortization		249			258			257		258			258
Gross other real estate owned expenses		–			–			–		–			99
Other expense		1,486			1,810			1,819		1,797			1,619
Total noninterest expense		12,193			11,803			11,871		11,902			11,965

Income before income taxes		5,754			5,843			2,711		4,854			4,936
Income taxes		924			995			371		690			769

NET INCOME	$	4,830		$	4,848		$	2,340	$	4,164		$	4,167

PTPP ⁽¹⁾	$	5,849		$	5,666		$	4,945	$	4,941		$	4,800

⁽¹⁾ See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, except per share and share amounts, unaudited)

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Per common share data
Net income per common share – basic	$	0.60		$	0.60		$	0.29		$	0.52		$	0.52
Net income per common share – diluted	$	0.60		$	0.60		$	0.29		$	0.52		$	0.51
Dividends declared per share	$	0.21		$	0.20		$	0.20		$	0.20		$	0.20
Book value per share (period end)	$	26.46		$	26.08		$	26.11		$	25.63		$	25.48
Tangible book value per share (period end) (1) (2)	$	21.29		$	20.88		$	20.87		$	20.37		$	20.18
Dividends declared	$	1,697		$	1,616		$	1,615		$	1,613		$	1,613
Dividend yield		3.05	%		2.84	%		2.76	%		3.34	%		3.37	%
Dividend payout ratio		35.13	%		33.33	%		69.02	%		38.74	%		38.71	%
Average shares outstanding – basic		8,078,805			8,071,905			8,071,032			8,067,144			8,091,203
Average shares outstanding – diluted		8,097,545			8,092,357			8,086,872			8,072,499			8,096,317
Period ending shares outstanding		8,081,193			8,073,708			8,071,032			8,067,144			8,067,144

Selected ratios
Return on average assets (Annualized)		1.04	%		1.04	%		0.50	%		0.91	%		0.92	%
Return on average equity (Annualized)		9.22	%		9.19	%		4.45	%		8.15	%		8.16	%
Return on average tangible common equity (1) (3)		11.48	%		11.50	%		5.58	%		10.29	%		10.30	%
Efficiency (4)		65.22	%		65.05	%		67.93	%		67.97	%		68.68	%
Equity to assets at period end		11.32	%		11.36	%		11.34	%		11.31	%		11.32	%
Noninterest expense to average assets		0.65	%		0.63	%		0.66	%		0.64	%		0.66	%

⁽¹⁾ See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.

⁽²⁾ Calculated by dividing tangible common equity by shares outstanding.

⁽³⁾ Calculated by dividing annualized net income for each period by average tangible common equity.

⁽⁴⁾ The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus noninterest income.

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Yields	2025			2024			2024			2024			2024
Interest-earning assets:
Loans receivable (1)		6.17	%		6.12	%		6.19	%		6.27	%		6.11	%
Investment securities (1) (2)		3.69	%		3.63	%		3.62	%		3.59	%		3.52	%
Interest-earning deposits with other banks		3.57	%		4.23	%		4.27	%		4.59	%		4.88	%
Total interest-earning assets		5.81	%		5.78	%		5.84	%		5.92	%		5.77	%
Deposits:
Interest-bearing demand deposits		2.13	%		2.07	%		2.16	%		1.93	%		1.86	%
Money market deposits		3.38	%		3.81	%		3.93	%		3.95	%		3.81	%
Savings deposits		0.82	%		0.75	%		0.71	%		0.64	%		0.58	%
Certificates of deposit		3.93	%		4.21	%		4.49	%		4.57	%		4.06	%
Total interest-bearing deposits		2.82	%		3.05	%		3.17	%		3.15	%		2.88	%
Non-Deposit Funding:
Borrowings		4.58	%		4.93	%		5.54	%		5.60	%		5.61	%
Total interest-bearing liabilities		3.01	%		3.21	%		3.41	%		3.45	%		3.23	%
Cost of deposits		2.10	%		2.24	%		2.33	%		2.30	%		2.08	%
Cost of funds		2.30	%		2.41	%		2.58	%		2.61	%		2.42	%
Net interest margin (3)		3.69	%		3.56	%		3.46	%		3.51	%		3.54	%

⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.

⁽²⁾ Yield is calculated on the basis of amortized cost.

⁽³⁾ Net interest margin represents net interest income as a percentage of average interest-earning assets.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(unaudited)

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Asset quality data	2025			2024			2024			2024			2024
(Dollar amounts in thousands, unaudited)
Nonperforming assets ⁽¹⁾	$	29,550		$	29,984		$	30,078		$	15,961		$	10,831

Allowance for credit losses	$	22,401		$	22,447		$	22,526		$	21,795		$	21,069
Allowance for credit losses/total loans		1.44	%		1.48	%		1.50	%		1.46	%		1.41	%
Net charge-offs (recoveries):
Quarter-to-date	$	(209	)	$	151		$	1,382		$	(29	)	$	(68	)
Year-to-date		(209	)		1,436			1,285			(97	)		(68	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		(0.06	%)		0.04	%		0.36	%		(0.01	%)		(0.02	%)
Year-to-date		(0.06	%)		0.10	%		0.11	%		(0.01	%)		(0.02	%)

Nonperforming loans/total loans		1.91	%		1.97	%		2.00	%		1.07	%		0.73	%
Allowance for credit losses/nonperforming loans		75.81	%		74.86	%		74.89	%		136.55	%		194.52	%
Nonperforming assets/total assets		1.56	%		1.62	%		1.62	%		0.87	%		0.60	%

(1) Nonperforming assets consist of nonperforming loans.

MIDDLEFIELD BANC CORP.
GAAP to Non-GAAP Reconciliations

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity	For the Three Months Ended
(Dollar amounts in thousands, unaudited)	March 31,		December 31,		September 30,		June 30,		March 31,
	2025		2024		2024		2024		2024

Stockholders’ equity	$	213,793	$	210,562	$	210,705	$	206,788	$	205,575
Less goodwill and other intangibles		41,717		41,967		42,225		42,482		42,740
Tangible common equity	$	172,076	$	168,595	$	168,480	$	164,306	$	162,835

Shares outstanding		8,081,193		8,073,708		8,071,032		8,067,144		8,067,144
Tangible book value per share	$	21.29	$	20.88	$	20.87	$	20.37	$	20.18

Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended

	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024

Average stockholders’ equity	$	212,465		$	209,864		$	209,096		$	205,379		$	205,342
Less average goodwill and other intangibles		41,839			42,092			42,350			42,607			42,654
Average tangible common equity	$	170,626		$	167,772		$	166,746		$	162,772		$	162,688

Net income	$	4,830		$	4,848		$	2,340		$	4,164		$	4,167
Return on average tangible common equity (annualized)		11.48	%		11.50	%		5.58	%		10.29	%		10.30	%

Reconciliation of Pre-Tax Pre-Provision Income (PTPP)	For the Three Months Ended

	March 31,		December 31,			September 30,		June 30,		March 31,
	2025		2024			2024		2024		2024

Net income	$	4,830	$	4,848		$	2,340	$	4,164	$	4,167
Add income taxes		924		995			371		690		769
Add provision for (recovery of) credit losses		95		(177	)		2,234		87		(136	)
PTPP	$	5,849	$	5,666		$	4,945	$	4,941	$	4,800

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)

	For the Three Months Ended
	March 31,							March 31,
	2025							2024
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable (1)	$	1,537,337	$	23,387		6.17	%	$	1,476,543	$	22,395		6.11	%
Investment securities (1) (2)		191,996		1,490		3.69	%		191,851		1,439		3.56	%
Interest-earning deposits with other banks (3)		67,661		596		3.57	%		64,139		778		4.88	%
Total interest-earning assets		1,796,994		25,473		5.81	%		1,732,533		24,612		5.78	%
Noninterest-earning assets		84,542							90,151
Total assets	$	1,881,536						$	1,822,684
Interest-bearing liabilities:
Interest-bearing demand deposits	$	220,192	$	1,154		2.13	%	$	211,009	$	978		1.86	%
Money market deposits		458,446		3,816		3.38	%		298,479		2,827		3.81	%
Savings deposits		192,931		388		0.82	%		201,080		290		0.58	%
Certificates of deposit		261,006		2,527		3.93	%		333,871		3,371		4.06	%
Short-term borrowings		120,238		1,347		4.54	%		144,357		1,993		5.55	%
Other borrowings		11,639		143		4.98	%		11,840		184		6.25	%
Total interest-bearing liabilities		1,264,452		9,375		3.01	%		1,200,636		9,643		3.23	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		390,354							400,209
Other liabilities		14,265							16,497
Stockholders’ equity		212,465							205,342
Total liabilities and stockholders’ equity	$	1,881,536						$	1,822,684
Net interest income			$	16,098						$	14,969
Interest rate spread (4)						2.80	%						2.55	%
Net interest margin (5)						3.69	%						3.54	%
Ratio of average interest-earning assets to average interest-bearing liabilities						142.12	%						144.30	%

⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $272 and $281 for the three months ended March 31, 2025 and 2024, respectively.

⁽²⁾ Yield is calculated on the basis of amortized cost.

⁽³⁾ Includes dividends received on restricted stock.

⁽⁴⁾ Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

⁽⁵⁾ Net interest margin represents net interest income as a percentage of average interest-earning assets.

	For the Three Months Ended
	March 31,							December 31,
	2025							2024
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable (1)	$	1,537,337	$	23,387		6.17	%	$	1,517,051	$	23,308		6.12	%
Investment securities (1) (2)		191,996		1,490		3.69	%		191,390		1,489		3.63	%
Interest-earning deposits with other banks (3)		67,661		596		3.57	%		60,241		641		4.23	%
Total interest-earning assets		1,796,994		25,473		5.81	%		1,768,682		25,438		5.78	%
Noninterest-earning assets		84,542							88,205
Total assets	$	1,881,536						$	1,856,887
Interest-bearing liabilities:
Interest-bearing demand deposits	$	220,192	$	1,154		2.13	%	$	216,492	$	1,126		2.07	%
Money market deposits		458,446		3,816		3.38	%		393,298		3,768		3.81	%
Savings deposits		192,931		388		0.82	%		197,257		373		0.75	%
Certificates of deposit		261,006		2,527		3.93	%		313,582		3,315		4.21	%
Short-term borrowings		120,238		1,347		4.54	%		93,200		1,128		4.81	%
Other borrowings		11,639		143		4.98	%		11,690		173		5.89	%
Total interest-bearing liabilities		1,264,452		9,375		3.01	%		1,225,519		9,883		3.21	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		390,354							404,428
Other liabilities		14,265							17,076
Stockholders’ equity		212,465							209,864
Total liabilities and stockholders’ equity	$	1,881,536						$	1,856,887
Net interest income			$	16,098						$	15,555
Interest rate spread (4)						2.80	%						2.57	%
Net interest margin (5)						3.69	%						3.56	%
Ratio of average interest-earning assets to average interest-bearing liabilities						142.12	%						144.32	%

⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $272 and $280 for the three months ended March 31, 2025 and December 31, 2024, respectively.

⁽²⁾ Yield is calculated on the basis of amortized cost.

⁽³⁾ Includes dividends received on restricted stock.

⁽⁴⁾ Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

⁽⁵⁾ Net interest margin represents net interest income as a percentage of average interest-earning assets.

The MIL Network –

April 25, 2025

MIL-OSI: Business First Bancshares, Inc., Announces Financial Results for Q1 2025

Source: GlobeNewswire (MIL-OSI)

BATON ROUGE, La., April 24, 2025 (GLOBE NEWSWIRE) — Business First Bancshares, Inc. (NASDAQ: BFST) (Business First), parent company of b1BANK, today announced its unaudited results for the quarter ended March 31, 2025. Business First reported net income available to common shareholders of $19.2 million or $0.65 per diluted common share, increases of $4.1 million and $0.14, respectively, compared to the linked quarter ended Dec. 31, 2024. On a non-GAAP basis, core net income for the quarter ended March 31, 2025, which excludes certain income and expenses, was $19.3 million or $0.65 per diluted common share, a decrease of $0.2 million and $0.01, from the linked quarter.

“We are excited to start the year off with solid earnings,” said Jude Melville, chairman, president and CEO of Business First Bancshares. “We increased our capital, our reserves, and our per share tangible book value at healthy rates, while demonstrating diversity of our revenue streams and growth of margins in our core spread business. We are also proud of our less tangible development, continuing to integrate our latest acquisition and implementing a number of technological initiatives including preparation for our core conversion in the second quarter, investments that will enable us to provide high quality and more efficient service for our client base into the future.”

On Thursday, April 24, 2025, Business First’s board of directors declared a quarterly preferred dividend in the amount of $18.75 per share, which is the full quarterly dividend of 1.875% based on the per annum rate of 7.50%. Additionally, the board of directors declared a quarterly common dividend based upon financial performance for the first quarter in the amount of $0.14 per share of common stock. The preferred and common dividends will be paid on May 31, 2025, or as soon thereafter as practicable, to the shareholders of record as of May 15, 2025.

Quarterly Highlights

Solid Core Performance. Return to common shareholders on average assets, on an annualized basis, was 1.00% for the quarter ended March 31, 2025, or 1.01% on a non-GAAP basis, compared to 0.78% or 1.00% on a non-GAAP basis for the linked quarter.

Net Interest Margin (NIM) Expansion. Net interest income totaled $66.0 million and net interest margin and net interest spread were 3.68% and 2.91%, respectively, compared to $65.7 million, 3.61% and 2.77% for the linked quarter. Non-GAAP net interest margin and net interest spread (excluding loan discount accretion of $0.8 million) were 3.64% and 2.86% for the quarter ended March 31, 2025, compared to 3.56% and 2.72% (excluding loan discount accretion of $1.0 million) for the linked quarter. The increases of 8 basis points (bps) and 14 bps were driven by a reduction in Business First’s overall cost of funding.

Noninterest Income Investments. Various noninterest income channels produced solid aggregate returns. Loan sales, mostly attributable to Small Business Administration (SBA) loans, produced income of $1.3 million, an increase of $1.0 million when compared to the linked quarter, along with continued consistent performance in the swap business with revenue of $739,000. Appreciation and income from our equity investments also produced income of $751,000 for the quarter.

Capital Growth. Common equity to total assets increased from 9.26% to 9.69% compared to the linked quarter. Tangible common equity to tangible assets increased from 7.63% to 8.06%, 5.64% or 22.89% annualized, compared to the linked quarter. The increase was largely driven by quarterly earnings, which accounted for approximately 69.9%, or 32 bps. On a non-GAAP basis, tangible book value per common share increased from $19.92 at Dec. 31, 2024, to $20.84 at March 31, 2025, 4.62% or 18.73% annualized.

Statement of Financial Condition

Loans

Loans held for investment were flat compared to the linked quarter with a decrease of $480,000 or .01%, .03% annualized. Real estate construction loans decreased $36.8 million from the linked quarter, compared to an increase of $49.8 million from the linked quarter in real estate residential loans, largely due to the conversion of multi- family construction to permanent financing. Based on unpaid principal balances, Texas- based loans represented approximately 41% of the overall loan portfolio as of March 31, 2025, no change from the linked quarter.

Credit Quality

Credit quality metrics regressed with isolated credit migration occurring during the quarter. The ratio of nonperforming loans compared to loans held for investment increased 27 bps to 0.69% at March 31, 2025, while the ratio of nonperforming assets compared to total assets increased 16 bps to 0.55% compared to the linked quarter.

The increase in loans past due 90 days and accruing is attributable to a single $4.6 million relationship. The increase in nonaccrual loans is largely attributable to two relationships with outstanding balances of $8.4 million for which Business First reserved a total of $2.3 million during the quarter.

Securities

The securities portfolio increased $27.0 million, or 3.02%, from the linked quarter, impacted by $12.9 million in positive fair value adjustments and the remainder of the increase was primarily attributed to purchases of mortgage-backed securities. The securities portfolio, based on estimated fair value, represented 11.83% of total assets as of March 31, 2025.

Deposits

Deposits decreased $53.1 million or 0.82%, 3.31% annualized, for the quarter ended March 31, 2025, compared to the linked quarter. Noninterest bearing deposits decreased $48.7 million, with the decline driven primarily by customer withdrawals as opposed to full account closures. New account openings continued in the quarter led by our Houston, Dallas, and Southwest Louisiana regions. Business First generated approximately $379.9 million from new deposit accounts during the quarter.

Borrowings

Borrowings decreased $49.2 million or 10.17%, from the linked quarter due primarily to a reduction in short-term Federal Home Loan Bank advances and a $7.0 million redemption of subordinated debt by Business First.

Shareholders’ Equity

Shareholders’ equity increased $26.8 million during the quarter ended March 31, 2025. Accumulated other comprehensive income (AOCI) increased $10.1 million or 16.12%, during the quarter due to positive after-tax fair value adjustments in the securities portfolio. Book value per common share increased to $25.51 at March 31, 2025, compared to $24.62 at Dec. 31, 2024 due to strong earnings and positive fair value adjustments attributable to the securities portfolio. On a non-GAAP basis, tangible book value per common share increased from $19.92 at Dec. 31, 2024, to $20.84 at March 31, 2025, 4.62% or 18.73% annualized.

Results of Operations

Net Interest Income

For the quarter ended March 31, 2025, net interest income totaled $66.0 million, compared to $65.7 million from the linked quarter. Loan and interest-earning asset yields of 6.99% and 6.35%, decreased 6 and 3 bps, respectively, compared to 7.05% and 6.38% from the linked quarter. However, net interest margin and net interest spread were 3.68% and 2.91% compared to 3.61% and 2.77% for the linked quarter. The overall cost of funds, which included noninterest-bearing deposits, declined 11 bps from 2.93% from the linked quarter to 2.82% for the quarter ended March 31, 2025, through continued management of deposit costs.

Non-GAAP net interest income (excluding loan discount accretion of $0.8 million) totaled $65.2 million for the quarter ended March 31, 2025, compared to $64.7 million (excluding loan discount accretion of $1.0 million) for the linked quarter. Non-GAAP net interest margin and net interest spread (excluding loan discount accretion of $0.8 million) were 3.64% and 2.86%, respectively, for the quarter ended March 31, 2025, compared to 3.56% and 2.72% (excluding loan discount accretion of $1.0 million) for the linked quarter. Excluding loan discount accretion, loan yields decreased 4 bps to 6.94% from 6.98%, and interest earnings asset yields decreased 3 bps to 6.30% from 6.33%, compared to the linked quarter.

Provision for Credit Losses

During the quarter ended March 31, 2025, Business First recorded a provision for credit losses of $2.8 million, compared to $6.7 million from the linked quarter. The linked quarter’s reserve was primarily associated with the Oakwood acquisition on October 1, 2024. The current quarter’s reserve was largely associated with $2.3 million in additional individual reserves for two commercial lending relationships, resulting in a 30.7% coverage ratio of their remaining book balances as of March 31, 2025.

Other Income

For the quarter ended March 31, 2025, other income increased $1.4 million or 11.55%, compared to the linked quarter. The net increase was largely attributable to a $1.0 million increase in gain on sales of loans, attributable to SBA sales, a $630,000 gain on extinguishment of debt related to an early redemption of $7.0 million in subordinated debt, and a $565,000 increase in pass-through income on equity investments, offset by a $549,000 reduction in swap fee income.

Other Expenses

For the quarter ended March 31, 2025, other expenses increased by $1.0 million or 2.03%, compared to the linked quarter. The increase was largely attributable to a $1.4 million increase in salaries and benefits, of which $430,000 were associated with acquisition-related expenses attributable to retention, severance, and stay payments, and the remainder largely associated with merit increases and annual reset in FICA taxes and bonus accruals.

Return on Assets and Common Equity

Return to common shareholders on average assets and common equity, each on an annualized basis, were 1.00% and 10.48% for the quarter ended March 31, 2025, compared to 0.78% and 8.23%, respectively, for the linked quarter. Non-GAAP return to common shareholders on average assets and common equity, each on an annualized basis, were 1.01% and 10.53% for the quarter ended March 31, 2025, compared to 1.00% and 10.58%, for the linked quarter.

Conference Call and Webcast

Executive management will host a conference call and webcast to discuss results on Thursday, April 24, 2025, at 4:00 p.m. Central Time. Interested parties may attend the call by dialing toll-free 1-800-715-9871 (North America only), conference ID 8825623, or asking for the Business First Bancshares conference call. The live webcast can be found at https://edge.media-server.com/mmc/p/ziae6qsd. On the day of the presentation, the corresponding slide presentation will be available to view on the b1BANK website at https://www.b1bank.com/shareholder-info.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., (Nasdaq: BFST) through its banking subsidiary b1BANK, has $7.8 billion in assets, $7.1 billion in assets under management through b1BANK’s affiliate Smith Shellnut Wilson, LLC (SSW) (excludes $0.9 billion of b1BANK assets managed by SSW) and operates Banking Centers and Loan Production Offices in markets across Louisiana and Texas providing commercial and personal banking products and services. b1BANK is a 2024 Mastercard “Innovation Award” winner and multiyear winner of American Banker Magazine’s “Best Banks to Work For.” Visit b1BANK.com for more information.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures (e.g., referenced as “core” or “tangible”) intended to supplement, not substitute for, comparable GAAP measures. “Core” measures typically adjust income available to common shareholders for certain significant activities or transactions that, in management’s opinion, can distort period-to-period comparisons of Business First’s performance. Transactions that are typically excluded from non-GAAP “core” measures include realized and unrealized gains/losses on former bank premises and equipment, investment sales, acquisition- related expenses (including, but not limited to, legal costs, system conversion costs, severance and retention payments, etc.). “Tangible” measures adjust common equity by subtracting goodwill, core deposit intangibles, and customer intangibles, net of accumulated amortization. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of Business First’s core business. These non- GAAP disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of the tables below.

Special Note Regarding Forward-Looking Statements

Certain statements contained in this release may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “would,” “could,” or “intend.” We caution you not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors, including those factors specified in our Annual Report on Form 10-K and other public filings. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release.

Additional Information

For additional information about Business First, you may obtain Business First’s reports that are filed with the Securities and Exchange Commission (SEC) free of charge by using the SEC’s EDGAR service on the SEC’s website at www.SEC.gov or by contacting the SEC for further information at 1-800-SEC-0330. Alternatively, these documents can be obtained free of charge from Business First by directing a request to: Business First Bancshares, Inc., 500 Laurel Street, Suite 101, Baton Rouge, Louisiana 70801, Attention: Corporate Secretary.

No Offer or Solicitation

This release does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of Business First. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Business First Bancshares, Inc.
Selected Financial Information
(Unaudited)
	Three Months Ended
	March 31,			December 31,			March 31,
(Dollars in thousands)		2025			2024			2024

Balance Sheet Ratios

Loans (HFI) to Deposits		92.61	%		91.86	%		91.32	%
Shareholders’ Equity to Assets Ratio		10.61	%		10.18	%		9.69	%

Loans Receivable Held for Investment (HFI)

Commercial	$	1,862,176		$	1,868,675		$	1,426,957
Real Estate:
Commercial		2,472,121			2,483,223			2,215,889
Construction		633,698			670,502			662,013
Residential		934,357			884,533			717,007
Total Real Estate		4,040,176			4,038,258			3,594,909
Consumer and Other		78,567			74,466			66,973
Total Loans (Held for Investment)	$	5,980,919		$	5,981,399		$	5,088,839

Allowance for Loan Losses

Balance, Beginning of Period	$	54,840		$	42,154		$	40,414
Oakwood – PCD ALLL		–			8,410			–
Charge-offs – Quarterly		(1,648	)		(2,290	)		(533	)
Recoveries – Quarterly		671			654			141
Provision for Loan Losses – Quarterly		3,000			5,912			1,143
Balance, End of Period	$	56,863		$	54,840		$	41,165

Allowance for Loan Losses to Total Loans (HFI)		0.95	%		0.92	%		0.81	%
Allowance for Credit Losses to Total Loans (HFI) (1)		1.01	%		0.98	%		0.88	%
Net Charge-offs (Recoveries) to Average Quarterly Total Loans		0.02	%		0.03	%		0.01	%

Remaining Loan Purchase Discount	$	11,322		$	12,121		$	11,411

Nonperforming Assets

Nonperforming Loans:
Nonaccrual Loans	$	35,915		$	24,147		$	20,778
Loans Past Due 90 Days or More		5,635			860			855
Total Nonperforming Loans		41,550			25,007			21,633
Other Nonperforming Assets:
Other Real Estate Owned		1,282			5,529			1,339
Other Nonperforming Assets		–			–			–
Total Other Nonperforming Assets		1,282			5,529			1,339
Total Nonperforming Assets	$	42,832		$	30,536		$	22,972

Nonperforming Loans to Total Loans (HFI)		0.69	%		0.42	%		0.43	%
Nonperforming Assets to Total Assets		0.55	%		0.39	%		0.34	%

(1) Allowance for Credit Losses includes the Allowance for Loan Loss and Reserve for Unfunded Commitments.

Business First Bancshares, Inc.
Selected Financial Information
(Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
(Dollars in thousands, except per share data)		2025			2024			2024

Per Share Data

Basic Earnings per Common Share	$	0.65		$	0.52		$	0.49
Diluted Earnings per Common Share		0.65			0.51			0.48
Dividends per Common Share		0.14			0.14			0.14
Book Value per Common Share		25.51			24.62			22.64


Average Common Shares Outstanding		29,329,668			29,311,111			25,127,187
Average Diluted Common Shares Outstanding		29,545,921			29,520,781			25,429,194
End of Period Common Shares Outstanding		29,572,297			29,552,358			25,485,383


Annualized Performance Ratios

Return to Common Shareholders on Average Assets (1)		1.00	%		0.78	%		0.74	%
Return to Common Shareholders on Average Common Equity (1)		10.48	%		8.23	%		8.51	%
Net Interest Margin (1)		3.68	%		3.61	%		3.32	%
Net Interest Spread (1)		2.91	%		2.77	%		2.36	%
Efficiency Ratio (2)		63.85	%		63.91	%		69.80	%

Total Quarterly/Year-to-Date Average Assets	$	7,750,982		$	7,721,338		$	6,667,527
Total Quarterly/Year-to-Date Average Common Equity		742,930			731,820			577,643

Other Expenses

Salaries and Employee Benefits	$	29,497		$	28,101		$	25,416
Occupancy and Bank Premises		3,401			3,166			2,514
Depreciation and Amortization		2,152			2,278			1,676
Data Processing		3,236			3,856			2,579
FDIC Assessment Fees		1,184			1,009			828
Legal and Other Professional Fees		1,013			975			866
Advertising and Promotions		1,291			1,710			1,145
Utilities and Communications		733			775			674
Ad Valorem Shares Tax		1,125			1,357			900
Directors’ Fees		279			290			282
Other Real Estate Owned Expenses and Write-Downs		23			182			37
Merger and Conversion-Related Expenses		250			168			340
Other		6,394			5,703			5,265
Total Other Expenses	$	50,578		$	49,570		$	42,522

Other Income

Service Charges on Deposit Accounts	$	2,860		$	2,878		$	2,439
Gain (Loss) on Sales of Securities		(1	)		21			(1	)
Debit Card and ATM Fee Income		1,858			2,069			1,776
Bank-Owned Life Insurance Income		808			990			579
Gain on Sales of Loans		1,256			252			139
Mortgage Origination Income		110			36			69
Fees and Brokerage Commission		2,148			2,063			1,937
Gain (Loss) on Sales of Other Real Estate Owned		(268	)		40			63
Loss on Disposal of Other Assets		155			–			–
Gain on Extinguishment of Debt		630			–			–
Swap Fee Income		739			1,288			229
Pass-Through Income (Loss) from Other Investments		751			186			294
Other		2,180			2,034			1,862
Total Other Income	$	13,226		$	11,857		$	9,386


(1) Average outstanding balances are determined utilizing daily averages and average yield/rate is calculated utilizing an actual day count convention.
(2) Noninterest expense (excluding provision for loan losses) divided by noninterest income plus net interest income less gain/loss on sales of securities.

Business First Bancshares, Inc.
Consolidated Balance Sheets
(Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
(Dollars in thousands)		2025			2024			2024

Assets

Cash and Due From Banks	$	312,887		$	319,098		$	185,906
Federal Funds Sold		117,422			197,669			211,292
Securities Purchased under Agreements to Resell		50,589			50,835			–
Securities Available for Sale, at Fair Values		920,573			893,549			872,903
Mortgage Loans Held for Sale		–			717			77
Loans and Lease Receivable		5,980,919			5,981,399			5,088,839
Allowance for Loan Losses		(56,863	)		(54,840	)		(41,165	)
Net Loans and Lease Receivable		5,924,056			5,926,559			5,047,674
Premises and Equipment, Net		81,582			81,953			68,716
Accrued Interest Receivable		33,741			35,872			29,326
Other Equity Securities		40,947			41,100			34,940
Other Real Estate Owned		1,282			5,529			1,339
Cash Value of Life Insurance		117,950			117,645			100,056
Deferred Taxes, Net		25,289			29,591			26,800
Goodwill		121,691			121,572			91,527
Core Deposit and Customer Intangibles		16,538			17,252			11,372
Other Assets		20,181			18,149			13,630

Total Assets	$	7,784,728		$	7,857,090		$	6,695,558

Liabilities

Deposits
Noninterest-Bearing	$	1,308,312		$	1,357,045		$	1,295,050
Interest-Bearing		5,149,869			5,154,286			4,277,700
Total Deposits		6,458,181			6,511,331			5,572,750

Securities Sold Under Agreements to Repurchase		19,046			22,621			17,207
Federal Home Loan Bank Borrowings		317,352			355,875			308,206
Subordinated Debt		92,702			99,760			99,933
Subordinated Debt – Trust Preferred Securities		5,000			5,000			5,000
Accrued Interest Payable		5,356			5,969			3,930
Other Liabilities		60,779			57,068			39,498

Total Liabilities		6,958,416			7,057,624			6,046,524

Shareholders’ Equity

Preferred Stock		71,930			71,930			71,930
Common Stock		29,572			29,552			25,485
Additional Paid-In Capital		501,609			500,024			398,511
Retained Earnings		276,045			260,958			224,742
Accumulated Other Comprehensive Loss		(52,844	)		(62,998	)		(71,634	)

Total Shareholders’ Equity		826,312			799,466			649,034

Total Liabilities and Shareholders’ Equity	$	7,784,728		$	7,857,090		$	6,695,558

Business First Bancshares, Inc.
Consolidated Statements of Income
(Unaudited)

	Three Months Ended
	March 31,			December 31,		March 31,
(Dollars in thousands)		2025			2024		2024

Interest Income:
Interest and Fees on Loans	$	102,992		$	104,697	$	85,947
Interest and Dividends on Securities		7,265			7,310		5,599
Interest on Federal Funds Sold and Due From Banks		3,436			4,135		4,465
Total Interest Income		113,693			116,142		96,011

Interest Expense:
Interest on Deposits		42,439			44,862		38,029
Interest on Borrowings		5,271			5,551		6,451
Total Interest Expense		47,710			50,413		44,480

Net Interest Income		65,983			65,729		51,531

Provision for Credit Losses		2,812			6,712		1,186

Net Interest Income After Provision for Credit Losses		63,171			59,017		50,345

Other Income:
Service Charges on Deposit Accounts		2,860			2,878		2,439
(Loss) Gain on Sales of Securities		(1	)		21		(1	)
Gain on Sales of Loans		1,256			252		139
Other Income		9,111			8,706		6,809
Total Other Income		13,226			11,857		9,386

Other Expenses:
Salaries and Employee Benefits		29,497			28,101		25,416
Occupancy and Equipment Expense		7,356			7,087		5,357
Merger and Conversion-Related Expense		250			168		340
Other Expenses		13,475			14,214		11,409
Total Other Expenses		50,578			49,570		42,522

Income Before Income Taxes		25,819			21,304		17,209

Provision for Income Taxes		5,276			4,816		3,639

Net Income		20,543			16,488		13,570

Preferred Stock Dividends		1,350			1,350		1,350

Net Income Available to Common Shareholders	$	19,193		$	15,138	$	12,220

Business First Bancshares, Inc.
Consolidated Net Interest Margin
(Unaudited)

	Three Months Ended
	March 31, 2025								December 31, 2024								March 31, 2024
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate			Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate			Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate

Assets

Interest-Earning Assets:
Total Loans	$	5,972,120		$	102,992		6.99	%	$	5,911,183		$	104,697		7.05	%	$	5,026,937		$	85,947		6.88	%
Securities		924,693			6,614		2.90	%		936,314			6,707		2.85	%		888,933			5,599		2.53	%
Securities Purchased under Agreements to Resell		50,836			651		5.19	%		44,252			603		5.42	%		–			–		0.00	%
Interest-Bearing Deposit in Other Banks		315,750			3,436		4.41	%		346,035			4,135		4.75	%		330,260			4,465		5.44	%
Total Interest-Earning Assets		7,263,399			113,693		6.35	%		7,237,784			116,142		6.38	%		6,246,130			96,011		6.18	%
Allowance for Loan Losses		(54,711	)			.				(52,130	)							(40,526	)
Noninterest-Earning Assets		542,294								535,684								461,923
Total Assets	$	7,750,982		$	113,693				$	7,721,338		$	116,142				$	6,667,527		$	96,011


Liabilities and Shareholders’ Equity

Interest-Bearing Liabilities:
Interest-Bearing Deposits	$	5,141,498		$	42,439		3.35	%	$	5,053,759		$	44,862		3.53	%	$	4,072,600		$	38,029		3.76	%
Subordinated Debt		97,251			1,262		5.26	%		99,797			1,331		5.31	%		99,972			1,356		5.46	%
Subordinated Debt – Trust Preferred Securities		5,000			99		8.03	%		5,000			107		8.51	%		5,000			113		9.09	%
Bank Term Funding Program		–			–		0.00	%		–			–		0.00	%		260,440			2,788		4.31	%
Advances from Federal Home Loan Bank (FHLB)		362,092			3,796		4.25	%		373,236			3,975		4.24	%		223,501			2,094		3.77	%
Other Borrowings		18,321			114		2.52	%		21,569			138		2.55	%		16,116			100		2.50	%
Total Interest-Bearing Liabilities		5,624,162			47,710		3.44	%		5,553,361			50,413		3.61	%		4,677,629			44,480		3.82	%

Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits		1,244,793							$	1,292,623							$	1,282,815
Other Liabilities		67,167								71,604								57,510
Total Noninterest-Bearing Liabilities		1,311,960								1,364,227								1,340,325
Shareholders’ Equity:
Common Shareholders’ Equity		742,930								731,820								577,643
Preferred Equity		71,930								71,930								71,930
Total Shareholders’ Equity		814,860								803,750								649,573
Total Liabilities and Shareholders’ Equity	$	7,750,982							$	7,721,338							$	6,667,527

Net Interest Spread							2.91	%							2.77	%							2.36	%
Net Interest Income				$	65,983							$	65,729							$	51,531
Net Interest Margin							3.68	%							3.61	%							3.32	%
Overall Cost of Funds							2.82	%							2.93	%							3.00	%

NOTE: Average outstanding balances are determined utilizing daily averages and average yield/rate is calculated utilizing an Actual/365/366 day count convention.

Business First Bancshares, Inc.
Non-GAAP Measures
(Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
(Dollars in thousands, except per share data)		2025			2024			2024

Interest Income:
Interest income	$	113,693		$	116,142		$	96,011
Core interest income		113,693			116,142			96,011
Interest Expense:
Interest expense		47,710			50,413			44,480
Core interest expense		47,710			50,413			44,480
Provision for Credit Losses: (b)
Provision for credit losses		2,812			6,712			1,186
CECL Oakwood impact (3)		–			(4,824	)		–
Core provision expense		2,812			1,888			1,186

Other Income:
Other income		13,226			11,857			9,386
Gain on former bank premises and equipment		(155	)		–			(50	)
Loss (gain) on sale of securities		1			(21	)		1
Gain on extinguishment of debt		(630	)		–			–
Core other income		12,442			11,836			9,337

Other Expense:
Other expense		50,578			49,570			42,522
Acquisition-related expenses (2)		(679	)		(168	)		(715	)
Core conversion expenses		(216	)		(463	)		–
Core other expense		49,683			48,939			41,807

Pre-Tax Income: (a)
Pre-tax income		25,819			21,304			17,209
CECL Oakwood impact (3)		–			4,824			–
Gain on former bank premises and equipment		(155	)		–			(50	)
Loss (gain) on sale of securities		1			(21	)		1
Gain on extinguishment of debt		(630	)		–			–
Acquisition-related expenses (2)		679			168			715
Core conversion expenses		216			463			–
Core pre-tax income		25,930			26,738			17,875

Provision for Income Taxes: (1)
Provision for income taxes		5,276			4,816			3,639
Tax on CECL Oakwood impact (3)		–			1,019			–
Tax on gain on former bank premises and equipment		(33	)		–			(11	)
Tax on loss (gain) on sale of securities		0			(4	)		–
Tax on gain on extinguishment of debt		(133	)		–			–
Tax on acquisition-related expenses (2)		143			6			89
Tax on core conversion expenses		46			97			–
Core provision for income taxes		5,299			5,934			3,717

Preferred Dividends:
Preferred dividends		1,350			1,350			1,350
Core preferred dividends		1,350			1,350			1,350

Net Income Available to Common Shareholders:
Net income available to common shareholders		19,193			15,138			12,220
CECL Oakwood impact (3), net of tax		–			3,805			–
Gain on former bank premises and equipment, net of tax		(122	)		–			(39	)
Loss (gain) on sale of securities, net of tax		1			(17	)		1
Gain on extinguishment of debt, net of tax		(497	)		–			–
Acquisition-related expenses (2), net of tax		536			162			626
Core conversion expenses, net of tax		170			366			–
Core net income available to common shareholders	$	19,281		$	19,454		$	12,808

Pre-tax, pre-provision earnings available to common shareholders (a+b)	$	28,631		$	28,016		$	18,395
CECL Oakwood impact (3)		–			4,824			–
Gain on former bank premises and equipment		(155	)		–			(50	)
Loss (gain) on sale of securities		1			(21	)		1
Gain on extinguishment of debt		(630	)		–			–
Acquisition-related expenses (2)		679			168			715
Core conversion expenses		216			463			–
Core pre-tax, pre-provision earnings	$	28,742		$	33,450		$	19,061

Average Diluted Common Shares Outstanding		29,545,921			29,520,781			25,429,194

Diluted Earnings Per Common Share:
Diluted earnings per common share	$	0.65		$	0.51		$	0.48
CECL Oakwood impact (3), net of tax		–			0.13			–
Gain on former bank premises and equipment, net of tax		–			–			(0.00	)
Loss (gain) on sale of securities, net of tax		0.00			(0.00	)		–
Gain on extinguishment of debt, net of tax		(0.02	)		–			–
Acquisition-related expenses (2), net of tax		0.02			0.01			0.02
Core conversion expenses, net of tax		–			0.01			–
Core diluted earnings per common share	$	0.65		$	0.66		$	0.50

Pre-tax, pre-provision profit diluted earnings per common share	$	0.97		$	0.95		$	0.72
CECL Oakwood impact (3)		–			0.16			–
Gain on former bank premises and equipment		(0.01	)		–			(0.00	)
Loss (gain) on sale of securities		0.00			(0.00	)		–
Gain on extinguishment of debt		(0.02	)		–			–
Acquisition-related expenses (2)		0.02			0.01			0.03
Core conversion expenses		0.01			0.02			–
Core pre-tax, pre-provision diluted earnings per common share	$	0.97		$	1.14		$	0.75

(1) Tax rates, exclusive of certain nondeductible merger-related expenses and goodwill, utilized were 21.129% for 2025 and 2024. These rates approximated the marginal tax rates.
(2) Includes merger and conversion-related expenses and salary and employee benefits.
(3) CECL non-purchased credit deteriorated (PCD) provision/unfunded commitment expense attributable to Oakwood.

Business First Bancshares, Inc.
Non-GAAP Measures
(Unaudited)


	March 31,			December 31,			March 31,
(Dollars in thousands, except per share data)		2025			2024			2023

Total Shareholders’ (Common) Equity:
Total shareholders’ equity	$	826,312		$	799,466		$	649,034
Preferred stock		(71,930	)		(71,930	)		(71,930	)
Total common shareholders’ equity		754,382			727,536			577,104
Goodwill		(121,691	)		(121,572	)		(91,527	)
Core deposit and customer intangible		(16,538	)		(17,252	)		(11,372	)
Total tangible common equity	$	616,153		$	588,712		$	474,205


Total Assets:
Total assets	$	7,784,728		$	7,857,090		$	6,695,558
Goodwill		(121,691	)		(121,572	)		(91,527	)
Core deposit and customer intangible		(16,538	)		(17,252	)		(11,372	)
Total tangible assets	$	7,646,499		$	7,718,266		$	6,592,659

Common shares outstanding		29,572,297			29,552,358			25,485,383

Book value per common share	$	25.51		$	24.62		$	22.64
Tangible book value per common share	$	20.84		$	19.92		$	18.61
Common equity to total assets		9.69	%		9.26	%		8.62	%
Tangible common equity to tangible assets		8.06	%		7.63	%		7.19	%

Business First Bancshares, Inc.
Non-GAAP Measures
(Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
(Dollars in thousands, except per share data)		2025			2024			2024


Total Quarterly Average Assets	$	7,750,982		$	7,721,338		$	6,667,527
Total Quarterly Average Common Equity	$	742,930		$	731,820		$	577,643

Net Income Available to Common Shareholders:
Net income available to common shareholders	$	19,193		$	15,138		$	12,220
CECL Oakwood impact (3), net of tax		–			3,805			–
Gain on former bank premises and equipment, net of tax		(122	)		–			(39	)
Loss (gain) on sale of securities, net of tax		1			(17	)		1
Gain on extinguishment of debt, net of tax		(497	)		–			–
Acquisition-related expenses, net of tax		536			162			626
Core conversion expenses, net of tax		170			366			–
Core net income available to common shareholders	$	19,281		$	19,455		$	12,808

Return to common shareholders on average assets (annualized) (2)		1.00	%		0.78	%		0.74	%
Core return on average assets (annualized) (2)		1.01	%		1.00	%		0.77	%
Return to common shareholders on average common equity (annualized) (2)		10.48	%		8.23	%		8.51	%
Core return on average common equity (annualized) (2)		10.53	%		10.58	%		8.92	%

Interest Income:
Interest income	$	113,693		$	116,142		$	96,011
Core interest income		113,693			116,142			96,011
Interest Expense:
Interest expense		47,710			50,413			44,480
Core interest expense		47,710			50,413			44,480
Other Income:
Other income		13,226			11,857			9,386
Gain on former bank premises and equipment		(155	)		–			(50	)
Loss (gain) on sale of securities		1			(21	)		1
Gain on extinguishment of debt		(630	)		–			–
Core other income		12,442			11,836			9,337
Other Expense:
Other expense		50,578			49,570			42,522
Acquisition-related expenses		(679	)		(168	)		(715	)
Core conversion expenses		(216	)		(463	)		–
Core other expense	$	49,683		$	48,939		$	41,807

Efficiency Ratio:
Other expense (a)	$	50,578		$	49,570		$	42,522
Core other expense (c)	$	49,683		$	48,939		$	41,807
Net interest and other income (1) (b)	$	79,210		$	77,565		$	60,918
Core net interest and other income (1) (d)	$	78,425		$	77,565		$	60,868
Efficiency ratio (a/b)		63.85	%		63.91	%		69.80	%
Core efficiency ratio (c/d)		63.35	%		63.09	%		68.68	%

Total Average Interest-Earnings Assets	$	7,263,399		$	7,237,784		$	6,246,130

Net Interest Income:
Net interest income	$	65,983		$	65,729		$	51,531
Loan discount accretion		(793	)		(997	)		(785	)
Net interest income excluding loan discount accretion	$	65,190		$	64,732		$	50,746

Net interest margin (2)		3.68	%		3.61	%		3.32	%
Net interest margin excluding loan discount accretion (2)		3.64	%		3.56	%		3.27	%
Net interest spread (2)		2.91	%		2.77	%		2.36	%
Net interest spread excluding loan discount accretion (2)		2.86	%		2.72	%		2.31	%

(1) Excludes gains/losses on sales of securities.
(2) Calculated utilizing an actual day count convention.
(3) CECL non-PCD provision/unfunded commitment expense attributable to Oakwood.

The MIL Network –

April 25, 2025

MIL-OSI Global: What 2,000 years of Chinese history reveals about today’s AI-driven technology panic – and the future of inequality

Source: The Conversation – UK – By Peng Zhou, Professor of Economics, Cardiff University

In the sweltering summer of AD18, a desperate chant echoed across China’s sun-scorched plains: “Heaven has gone blind!” Thousands of starving farmers, their faces smeared with ox blood, marched toward the opulent vaults held by the Han dynasty’s elite rulers.

As recorded in the ancient text Han Shu (the book of Han), these farmers’ calloused hands held bamboo scrolls – ancient “tweets” accusing the bureaucrats of hoarding grain while the farmers’ children gnawed tree bark. The rebellion’s firebrand warlord leader, Chong Fan, roared: “Drain the paddies!”

Within weeks, the Red Eyebrows, as the protesters became known, had toppled local regimes, raided granaries and – for a fleeting moment – shattered the empire’s rigid hierarchy.

The Han dynasty of China (202BC-AD220) was one of the most developed civilisations of its time, alongside the Roman empire. Its development of cheaper and sharper iron ploughs enabled the gathering of unprecedented harvests of grain.

But instead of uplifting the farmers, this technological revolution gave rise to agrarian oligarchs who hired ever-more officials to govern their expanding empire. Soon, bureaucrats earned 30 times more than those tilling the soil.

Revolutionary iron ploughs from the Han dynasty.
Windmemories via Wikimedia, CC BY-NC-SA

And when droughts struck, the farmers and their families starved while the empire’s elites maintained their opulence. As a famous poem from the subsequent Tang dynasty put it: “While meat and wine go to waste behind vermilion gates, the bones of the frozen dead lie by the roadside.”

Two millennia later, the role of technology in increasing inequality around the world remains a major political and societal issue. AI-driven “technology panic” – exacerbated by the disruptive efforts of Donald Trump’s new administration in the US – gives the feeling that everything has been upended. New tech is destroying old certainties; populist revolt is shredding the political consensus.

And yet, as we stand at the edge of this technological cliff, seemingly peering into a future of AI-induced job apocalypses, history whispers: “Calm down. You’ve been here before.”

The link between technology and inequality

Technology is humanity’s cheat code to break free from scarcity. The Han dynasty’s iron plough didn’t just till soil; it doubled crop yields, enriching landlords and swelling tax coffers for emperors while – initially, at least – leaving peasants further behind. Similarly, Britain’s steam engine didn’t just spin cotton; it built coal barons and factory slums. Today, AI isn’t just automating tasks; it’s creating trillion-dollar tech fiefdoms while destroying myriads of routine jobs.

Technology amplifies productivity by doing more with less. Over centuries, these gains compound, raising economic output and increasing incomes and lifespans. But each innovation reshapes who holds power, who gets rich – and who gets left behind.

As the Austrian economist Joseph Schumpeter warned during the second world war, technological progress is never a benign rising tide that lifts all boats. It’s more like a tsunami that drowns some and deposits others on golden shores, amid a process he called “creative destruction”.

The Kuznets curve.
Wikimedia Commons, CC BY

A decade later, Russian-born US economist Simon Kuznets proposed his “inverted-U of inequality”, the Kuznets curve. For decades, this offered a reassuring narrative for citizens of democratic nations seeking greater fairness: inequality was an inevitable – but temporary – price of technological progress and the economic growth that comes with it.

In recent years, however, this analysis has been sharply questioned. Most notably, French economist Thomas Piketty, in a reappraisal of more than three centuries of data, argued in 2013 that Kuznets had been misled by historical fluke. The postwar fall in inequality he had observed was not a general law of capitalism, but a product of exceptional events: two world wars, economic depression, and massive political reforms.

In normal times, Piketty warned, the forces of capitalism will always tend to make the rich richer, pushing inequality ever higher unless checked by aggressive redistribution.

So, who’s correct? And where does this leave us as we ponder the future in this latest, AI-driven industrial revolution? In fact, both Kuznets and Piketty were working off quite narrow timeframes in modern human history. Another country, China, offers the chance to chart patterns of growth and inequality over a much longer period – due to its historical continuity, cultural stability, and ethnic uniformity.

The Insights section is committed to high-quality longform journalism. Our editors work with academics from many different backgrounds who are tackling a wide range of societal and scientific challenges.

Unlike other ancient civilisations such as the Egyptians and Mayans, China has maintained a unified identity and unique language for more than 5,000 years, allowing modern scholars to trace thousand-year-old economic records. So, with colleagues Qiang Wu and Guangyu Tong, I set out to reconcile the ideas of Kuznets and Piketty by studying technological growth and wage inequality in imperial China over 2,000 years – back beyond the birth of Jesus.

To do this, we scoured China’s extraordinarily detailed dynastic archives, including the Book of Han (AD111) and Tang Huiyao (AD961), in which meticulous scribes recorded the salaries of different ranking officials. And here is what we learned about the forces – good and bad, corrupt and selfless – that most influenced the rise and fall of inequality in China over the past two millennia.

Chinese dynasties and their most influential technologies:

Black text denotes historical events in the west; grey text denotes important interactions between China and the west.
Peng Zhou, CC BY-NC-SA

China’s cycles of growth and inequality

One of the challenges of assessing wage inequality over thousands of years is that people were paid different things at different times – such as grain, silk, silver and even labourers.

The Book of Han records that “a governor’s annual grain salary could fill 20 oxcarts”. Another entry describes how a mid-ranking Han official’s salary included ten servants tasked solely with polishing his ceremonial armour. Ming dynasty officials had their meagre wages supplemented with gifts of silver, while Qing elites hid their wealth in land deals.

Map of the Han dynasty in AD2.
Yeu Ninje via Wikimedia, CC BY-NC-SA

To enable comparison over two millennia, we invented a “rice standard” – akin to the gold standard that was the basis of the international monetary system for a century from the 1870s. Rice is not just a staple of Chinese diets, it has been a stable measure of economic life for thousands of years.

While rice’s dominion began around 7,000BC in the Yangtze river’s fertile marshes, it was not until the Han dynasty that it became the soul of Chinese life. Farmers prayed to the “Divine Farmer” for bountiful harvests, and emperors performed elaborate ploughing rituals to ensure cosmic harmony. A Tang dynasty proverb warned: “No rice in the bowl, bones in the soil.”

Using price records, we converted every recorded salary – whether paid in silk, silver, rent or servants – into its rice equivalent. We could then compare the “real rice wages” of two categories of people we called either “officials” or “peasants” (including farmers), as a way of tracking levels of inequality over the two millennia since the start of the Han dynasty in 202BC. This chart shows how real-wage inequality in China rose and fell over the past 2,000 years, according to our rice-based analysis.

Official-peasant wage ratio in imperial China over 2,000 years:

The ratio describes the multiple by which the ‘real rice wage’ of the average ‘official’ exceeds that of the average ‘peasant’, giving an indication of changing inequality levels over two millennia.
Peng Zhou, CC BY-SA

The chart’s black line describes a tug-of-war between growth and inequality over the past two millennia. We found that, across each major dynasty, there were four key factors driving levels of inequality in China: technology (T), institutions (I), politics (P), and social norms (S). These followed the following cycle with remarkable regularity.

1. Technology triggers an explosion of growth and inequality

During the Han dynasty, new iron-working techniques led to better ploughs and irrigation tools. Harvests boomed, enabling the Chinese empire to balloon in both territory and population. But this bounty mostly went to those at the top of society. Landlords grabbed fields, bureaucrats gained privileges, while ordinary farmers saw precious little reward. The empire grew richer – but so did the gap between high officials and the peasant majority.

Even when the Han fell around AD220, the rise of wage inequality was barely interrupted. By the time of the Tang dynasty (AD618–907), China was enjoying a golden age. Silk Road trade flourished as two more technological leaps had a profound impact on the country’s fortunes: block printing and refined steelmaking.

Block printing enabled the mass production of books – Buddhist texts, imperial exam guides, poetry anthologies – at unprecedented speed and scale. This helped spread literacy and standardise administration, as well as sparking a bustling market in bookselling.

Meanwhile, refined steelmaking boosted everything from agricultural tools to weaponry and architectural hardware, lowering costs and raising productivity. With a more literate populace and an abundance of stronger metal goods, China’s economy hit new heights. Chang’an, then China’s cosmopolitan capital, boasted exotic markets, lavish temples, and a swirl of foreign merchants enjoying the Tang dynasty’s prosperity.

While the Tang dynasty marked the high-water mark for levels of inequality in Chinese history, subsequent dynasties would continue to wrestle with the same core dilemma: how do you reap the benefits of growth without allowing an overly privileged – and increasingly corrupt – bureaucratic class to push everyone else into peril?

2. Institutions slow the rise of inequality

Throughout the two millennia, some institutions played an important role in stabilising the empire after each burst of growth. For example, to alleviate tensions between emperors, officials and peasants, imperial exams known as “Ke Ju” were introduced during the Sui dynasty (AD581-618). And by the time of the Song dynasty (AD960-1279) that followed the demise of the Tang, these exams played a dominant role in society.

They addressed high levels of inequality by promoting social mobility: ordinary civilians were granted greater opportunities to ascend the income ladder by achieving top marks. This induced greater competition among officials – and strengthened emperors’ authority over them in the later dynasties. As a result, both the wages of officials and wage inequality went down as their bargaining power gradually diminished.

However, the rise of each new dynasty was also marked by a growth of bureaucracy that led to inefficiencies, favouritism and bribery. Over time, corrupt practices took root, eroding trust in officialdom and heightening wage inequality as many officials commanded informal fees or outright bribes to sustain their lifestyles.

As a result, while the emergence of certain institutions was able to put a break on rising inequality, it typically took another powerful – and sometimes highly destructive – factor to start reducing it.

3. Political infighting and external wars reduce inequality

Eventually, the rampant rise in inequality seen in almost every major Chinese dynasty bred deep tensions – not only between the upper and lower classes, but even between the emperor and their officials.

These pressures were heightened by the pressures of external conflict, as each dynasty waged wars in pursuit of further growth. The Tang’s three century-rule featured conflicts such as the Eastern Turkic-Tang war (AD626), the Baekje-Goguryeo-Silla war (666), and the Arab-Tang battle of Talas (751).

The resulting demand for more military spending drained imperial coffers, forcing salary cuts for soldiers and tax hikes on the peasants – breeding resentment among both that sometimes led to popular uprisings. In a desperate bid for survival, the imperial court then slashed officials’ pay and stripped away their bureaucratic perks.

The result? Inequality plummeted during these times of war and rebellion – but so did stability. Famine was rife, frontier garrisons mutinied, and for decades, warlords carved out territories while the imperial centre floundered.

So, this shrinking wage gap cannot be said to have resulted in a happier, more stable society. Rather, it reflected the fact that everyone – rich and poor – was worse off in the chaos. During the final imperial dynasty, the Qing (from the end of the 17th century), real-terms GDP per person was dropping to levels that had last been seen at the start of the Han dynasty, 2,000 years earlier.

4. Social norms emphasise harmony, preserve privilege

One other common factor influencing the rise and fall of inequality across China’s dynasties was the shared rules and expectations that developed within each society.

A striking example is the social norms rooted in the philosophy of Neo-Confucianism, which emerged in the Song dynasty at the end of the first millennium – a period sometimes described as China’s version of the Renaissance. It blended the moral philosophy of classical Confucianism – created by the philosopher and political theorist Confucius during the Zhou dynasty (1046-256BC) – with metaphysical elements drawn from both Buddhism and Daoism.

Neo-Confucianism emphasised social harmony, hierarchical order and personal virtue – values that reinforced imperial authority and bureaucratic discipline. Unsurprisingly, it quickly gained the support of emperors keen to ensure control of their people, and became the mainstream school of thought in the Ming and Qing dynasties.

However, Neo-Confucianist thinking proved a double-edged sword. Local gentry hijacked this moral authority to fortify their own power. Clan leaders set up Confucian schools and performed elaborate ancestral rites, projecting themselves as guardians of tradition.

Over time, these social norms became rigid. What had once fostered order and legitimacy became brittle dogma, more useful for preserving privilege than guiding reform. Neo-Confucian ideals evolved into a protective veil for entrenched elites. When the weight of crisis eventually came, they offered little resilience.

The last dynasty

China’s final imperial dynasty, the Qing, collapsed under the weight of multiple uprisings both from within and without. Despite achieving impressive economic growth during the 18th century – fuelled by agricultural innovation, a population boom, and the roaring global trade in tea and porcelain – levels of inequality exploded, in part due to widespread corruption.

The infamous government official Heshen, widely regarded as the most corrupt figure in the Qing dynasty, amassed a personal fortune reckoned to exceed the empire’s entire annual revenue (one estimate suggests he amassed 1.1 billion taels of silver, equivalent to around US$270 billion (£200bn), during his lucrative career).

Imperial institutions failed to restrain the inequality and moral decay that the Qing’s growth had initially masked. The mechanisms that once spurred prosperity – technological advances, centralised bureaucracy and Confucian moral authority – eventually ossified, serving entrenched power rather than adaptive reform.

When shocks like natural disasters and foreign invasions struck, the system could no longer respond. The collapse of the empire became inevitable – and this time there was no groundbreaking technology to enable a new dynasty to take the Qing’s place. Nor were there fresh social ideals or revitalised institutions capable of rebooting the imperial model. As foreign powers surged ahead with their own technological breakthroughs, China’s imperial system collapsed under its own weight. The age of emperors was over.

The world had turned. As China embarked on two centuries of technological and economic stagnation – and political humiliation at the hands of Great Britain and Japan – other nations, led first by Britain and then the US, would step up to build global empires on the back of new technological leaps.

In these modern empires, we see the same four key influences on their cycles of growth and inequality – technology, institutions, politics and social norms – but playing out at an ever-faster rate. As the saying goes: history does not repeat itself, but it often rhymes.

Rule Britannia

If imperial China’s inequality saga was written in rice and rebellions, Britain’s industrial revolution featured steam and strikes. In Lancashire’s “satanic mills”, steam engines and mechanised looms created industrialists so rich that their fortunes dwarfed small nations.

In 1835, social observer Andrew Ure enthused: “Machinery is the grand agent of civilisation.” Yet for many decades, the steam engines, spinning jennies and railways disproportionately enriched the new industrial class, just as in the Han dynasty of China 2,000 years earlier. The workers? They inhaled soot, lived in slums – and staged Europe’s first symbolic protest when the Luddites began smashing their looms in 1811.

A spinning jenny.
Wikimedia Commons, CC BY-SA

During the 19th century, Britain’s richest 1% hoarded as much as 70% of the nation’s wealth, while labourers toiled 16-hour days in mills. In cities like Manchester, child workers earned pennies while industrialists built palaces.

But as inequality peaked in Britain, the backlash brewed. Trade unions formed (and became legal in 1824) to demand fair wages. Reforms such as the Factory Acts (1833–1878) banned child labour and capped working hours.

Although government forces intervened to suppress the uprisings, unrest such as the 1830 Swing Riots and 1842 General Strike exposed deep social and economic inequalities. By 1900, child labour was banned and pensions had been introduced. The 1900 Labour Representation Committee (later the Labour Party) vowed to “promote legislation in the direct interests of labour” – a striking echo of how China’s imperial exams had attempted to open paths to power.

Slowly, the working class saw some improvement: real wages for Britain’s poorest workers gradually increased over the latter half of the 19th century, as mass production lowered the cost of goods and expanding factory employment provided a more stable livelihood than subsistence farming.

And then, two world wars flattened Britain’s elite – the Blitz didn’t discriminate between rich and poor neighbourhoods. When peace finally returned, the Beveridge Report gave rise to the welfare state: the NHS, social housing, and pensions.

Income inequality plummeted as a result. The top 1%’s share fell from 70% to 15% by 1979. While China’s inequality fell via dynastic collapse, Britain’s decline resulted from war-driven destruction, progressive taxation, and expansive social reforms.

Wealth share of top 1% in the UK

Evidence for UK inequality before 1895 is not well documented; dotted curve is conjectured based on Kuznets curve. Sources: Alvaredo et al (2018), World Inequality Database.
Peng Zhou, CC BY-SA

However, from the 1980s onwards, inequality in Britain has begun to rise again. This new cycle of inequality has coincided with another technological revolution: the emergence of personal computers and information technology — innovations that fundamentally transformed how wealth was created and distributed.

The era was accelerated by deregulation, deindustrialisation and privatisation — policies associated with former prime minister Margaret Thatcher, that favoured capital over labour. Trade unions were weakened, income taxes on the highest earners were slashed, and financial markets were unleashed. Today, the richest 1% of UK adults own more 20% of the country’s total wealth.

The UK now appears to be in the worst of both worlds – wrestling with low growth and rising inequality. Yet renewal is still within reach. The current UK government’s pledge to streamline regulation and harness AI could spark fresh growth – provided it is coupled with serious investment in skills, modern infrastructure, and inclusive institutions geared to benefit all workers.

At the same time, history reminds us that technology is a lever, not a panacea. Sustained prosperity comes only when institutional reform and social attitudes evolve in step with innovation.

The American century

While China’s growth-and-inequality cycles unfolded over millennia and Britain’s over centuries, America’s story is a fast-forward drama of cycles lasting mere decades. In the early 20th century, several waves of new technology widened the gap between rich and poor dramatically.

By 1929, as the world teetered on the edge of the Great Depression, John D. Rockefeller had amassed such a vast fortune – valued at roughly 1.5% of America’s entire GDP – that newspapers hailed him the world’s first billionaire. His wealth stemmed largely from pioneering petroleum and petrochemical ventures including Standard Oil, which dominated oil refining in an age when cars and mechanised transport were exploding in popularity.

Yet this period of unprecedented riches for a handful of magnates coincided with severe imbalances in the broader US economy. The “roaring Twenties” had boosted consumerism and stock speculation, but wage growth for many workers lagged behind skyrocketing corporate profits. By 1929, the top 1% of Americans owned more than a third of the nation’s income, creating a precariously narrow base of prosperity.

When the US stock market crashed in October 1929, it laid bare how vulnerable the system was to the fortunes of a tiny elite. Millions of everyday Americans – living without adequate savings or safeguards – faced immediate hardship, ushering in the Great Depression. Breadlines snaked through city streets, and banks collapsed under waves of withdrawals they could not meet.

Unemployed men queued outside a Great Depression soup kitchen in Chicago, 1931.
National Archives at College Park via Wikimedia

In response, President Franklin D. Roosevelt’s New Deal reshaped American institutions. It introduced unemployment insurance, minimum wages, and public works programmes to support struggling workers, while progressive taxation – with top rates exceeding 90% during the second world war. Roosevelt declared: “The test of our progress is not whether we add more to the abundance of those who have much – it is whether we provide enough for those who have too little.”

In a different way to the UK, the second world war proved a great leveller for the US – generating millions of jobs and drawing women and minorities into industries they’d long been excluded from. After 1945, the GI Bill expanded education and home ownership for veterans, helping to build a robust middle class. Although access remained unequal, especially along racial lines, the era marked a shift toward the norm that prosperity should be shared.

Meanwhile, grassroots movements led by figures like Martin Luther King Jr. reshaped social norms about justice. In his lesser-quoted speeches, King warned that “a dream deferred is a dream denied” and launched the Poor People’s Campaign, which demanded jobs, healthcare and housing for all Americans. This narrowing of income distribution during the post-war era was dubbed the “Great Compression” – but it did not last.

As oil crises of the 1970s marked the end of the preceding cycle of inequality, another cycle began with the full-scale emergence of the third industrial revolution, powered by computers, digital networks and information technology.

The first personal computer, made by IBM.
Wikimedia Commons, CC BY-ND

As digitalisation transformed business models and labour markets, wealth flowed to those who owned the algorithms, patents and platforms – not those operating the machines. Hi-tech entrepreneurs and Wall Street financiers became the new oligarchs. Stock options replaced salaries as the true measure of success, and companies increasingly rewarded capital over labour.

By the 2000s, the wealth share of the richest 1% climbed to 30% in the US. The gap between the elite minority and working majority widened with every company stock market launch, hedge fund bonus and quarterly report tailored to shareholder returns.

But this wasn’t just a market phenomenon – it was institutionally engineered. The 1980s ushered in the age of (Ronald) Reaganomics, driven by the conviction that “government is not the solution to our problem; government is the problem”. Following this neoliberalist philosophy, taxes on high incomes were slashed, capital gains were shielded, and labour unions were weakened.

Deregulation gave Wall Street free rein to innovate and speculate, while public investment in housing, healthcare and education was curtailed. The consequences came to a head in 2008 when the US housing market collapsed and the financial system imploded.

The Global Financial Crisis that followed exposed the fragility of a deregulated economy built on credit bubbles and concentrated risk. Millions of people lost their homes and jobs, while banks were rescued with public money. It marked an economic rupture and a moral reckoning – proof that decades of pro-market policies had produced a system that privatised gain and socialised loss.

Inequality, long growing in the background, now became a glaring, undeniable fault line in American life – and it has remained that way ever since.

Fig 5. Wealth share and income share of top 1% in the US

Sources: wealth inequality: World Inequality Database; income share: Picketty & Saez (2003). Dotted curves are conjectured based on Kuznets curve.
Peng Zhou, CC BY-SA

So is the US proof that the Kuznets model of inequality is indeed wrong? While the chart above shows inequality has flattened in the US since the 2008 financial crisis, there is little evidence of it actually declining. And in the short term, while Donald Trump’s tariffs are unlikely to do much for growth in the US, his low-tax policies won’t do anything to raise working-class incomes either.

The story of “the American century” is a dizzying sequence of technological revolutions – from transport and manufacturing to the internet and now AI – crashing one atop the other before institutions, politics or social norms could catch up. In my view, the result is not a broken cycle but an interrupted one. Like a wheel that never completes its turn, inequality rises, reform stutters – and a new wave of disruption begins.

Our unequal AI future?

Like any technological explosion, AI’s potential is dual-edged. Like the Tang dynasty’s bureaucrats hoarding grain, today’s tech giants monopolise data, algorithms and computing power. Management consultant firm McKinsey has predicted that algorithms could automate 30% of jobs by 2030, from lorry drivers to radiologists.

Yet AI also democratises: ChatGPT tutors students in Africa while open-source models such as DeepSeek empower worldwide startups to challenge Silicon Valley’s oligarchy.

The rise of AI isn’t just a technological revolution – it’s a political battleground. History’s empires collapsed when elites hoarded power; today’s fight over AI mirrors the same stakes. Will it become a tool for collective uplift like Britain’s post-war welfare state? Or a weapon of control akin to Han China’s grain-hoarding bureaucrats?

The answer hinges on who wins these political battles. In 19th-century Britain, factory owners bribed MPs to block child labour laws. Today, Big Tech spends billions lobbying to neuter AI regulation.

Meanwhile, grassroots movements like the Algorithmic Justice League demand bans on facial recognition in policing, echoing the Luddites who smashed looms not out of technophobia but to protest exploitation. The question is not if AI will be regulated but who will write the rules: corporate lobbyists or citizen coalitions.

The real threat has never been the technology itself, but the concentration of its spoils. When elites hoard tech-driven wealth, social fault-lines crack wide open – as happened more than 2,000 years ago when the Red Eyebrows marched against Han China’s agricultural monopolies.

To be human is to grow – and to innovate. Technological progress raises inequality faster than incomes, but the response depends on how people band together. Initiatives like “Responsible AI” and “Data for All” reframe digital ethics as a civil right, much like Occupy Wall Street exposed wealth gaps. Even memes – like TikTok skits mocking ChatGPT’s biases – shape public sentiment.

There is no simple path between growth and inequality. But history shows our AI future isn’t preordained in code: it’s written, as always, by us.

For you: more from our Insights series:

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Peng Zhou 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. What 2,000 years of Chinese history reveals about today’s AI-driven technology panic – and the future of inequality – https://theconversation.com/what-2-000-years-of-chinese-history-reveals-about-todays-ai-driven-technology-panic-and-the-future-of-inequality-254505

MIL OSI – Global Reports –

April 25, 2025

MIL-OSI: PSB Holdings, Inc. Reports Earnings of $0.60 Per Share for Q1 2025; Net Interest Margin Improves For Fourth Consecutive Quarter

Source: GlobeNewswire (MIL-OSI)

WAUSAU, Wis., April 24, 2025 (GLOBE NEWSWIRE) — PSB Holdings, Inc. (“PSB”) (OTCQX: PSBQ), the holding company for Peoples State Bank (“Peoples”) serving Northcentral and Southeastern Wisconsin reported first quarter earnings ending March 31, 2025 of $0.60 per common share on net income of $2.4 million, compared to $0.73 per common share on net income of $3.0 million during the fourth quarter ending December 31, 2024, and $0.39 per common share on net income of $1.6 million during the first quarter ending March 31, 2024.

PSB’s first quarter 2025 operating results reflected the following changes from the fourth quarter of 2024: (1) a stronger net interest margin as asset yields rose and funding costs declined; (2) the addition of a provision for loan losses due to loan growth; (3) higher non-interest income due to lower losses on the sale of securities and an increase in investment and insurance sale commissions; (4) higher non-interest expenses due to higher salaries and employee benefit expenses associated with commercial loan growth incentives and the addition of wealth management personnel; and (5) loan growth of 2% during the quarter.

“We are encouraged with the steady improvements in our net interest margin while also continuing solid loan growth as customers are seeing value in our relationship. We expect operating expenses to decline in the coming quarter and are cautiously optimistic for earnings growth for the remainder of 2025,” stated Scott Cattanach, President and CEO.

March 31, 2025, Highlights:

Net interest income decreased $121,000 to $10.3 million for the quarter ended March 31, 2025, from $10.4 million for the quarter ended December 31, 2024, due in part to two fewer days during the quarter. Meanwhile, asset and loan yields increased while funding costs declined slightly.

Noninterest income increased $589,000 to $1.9 million for the quarter ended March 31, 2025, compared to $1.3 million the prior quarter due to a smaller loss on the sale of securities and an increase in investment and insurance sales commissions.

Noninterest expenses increased to $967,000 to $9.0 million during the quarter ended March 31, 2025 from $8.0 million for the quarter ended December 31, 2024, reflecting higher salary and benefit expenses associated with growth incentive payments and the addition of wealth management personnel in the purchase of the Larson Financial Group, LLC.

Loans increased $18.2 million, or 2% in the first quarter ended March 31, 2025, to $1.10 billion largely due to new commercial & industrial, commercial real estate and construction and development loans. Allowance for credit losses was 1.12% of gross loans.

Non-performing assets increased $2.6 million to $13.0 million, or 0.89% of total assets at March 31, 2025 compared to the previous quarter, from addition of commercial rental real estate units undergoing a sale process.

Total deposits decreased $17.3 million to $1.13 billion at March 31, 2025 from $1.15 billion at December 31, 2024, with the decrease largely consisting of normal commercial money market deposit outflows and seasonal municipal deposit outflows.

Return on average tangible common equity was 9.21% for the quarter ended March 31, 2025, compared to 11.07% the prior quarter and 6.57% in the year ago quarter.

Tangible book value per common share was up 11.3% over the past year to $26.94 at March 31, 2025, compared to $24.21 at March 31, 2024. Additionally, PSB paid dividends totaling $0.64 per share during the past year.

On January 21, 2025, the Bank acquired Larson Financial Group, LLC, a financial advisory company based in Wausau, WI.

Balance Sheet and Asset Quality Review

Total assets decreased $6.2 million during the first quarter to $1.46 billion at March 31, 2025, compared to $1.47 billion at December 31, 2024. Cash and cash equivalents decreased $17.8 million to $22.7 million at March 31, 2025 from $40.5 million at December 31, 2024 as funds were used to originate new loans and fund the outflow of seasonal municipal deposits and normal commercial customer treasury management operations. Cash and cash equivalents increased $6.8 million from one year earlier. Investment securities available for sale decreased $6.5 million to $182.6 million at March 31, 2025, from $189.1 million one quarter earlier. Total collateralized liquidity available to meet cash demands was approximately $323 million at March 31, 2025, with an additional $323 million that could be raised in a short time frame from the brokered CDs market.

Gross loans receivable increased $19.3 million to $1.14 billion at March 31, 2025, compared to one quarter earlier, due primarily to increased commercial real estate, construction & development and commercial & industrial lending. Commercial real estate loans increased $11.3 million to $562.9 million at March 31, 2025 and gross construction and development lending increased $7.7 million to $87.1 million at March 31, 2025, compared to one quarter earlier. Commercial & industrial loans increased $7.2 million to $124.1 million at March 31, 2025. Offsetting gross loan growth, residential real estate loans decreased $3.7 million from the prior quarter to $333.7 million, municipal loans decreased $2.8 million to $12.9 million and consumer installment loans decreased $0.4 million to $4.7 million. The loan portfolio remains well diversified with commercial real estate and construction loans totaling 57.2% of gross loans, followed by residential real estate loans at 29.3% of gross loans, commercial non-real estate loans at 13.1% and consumer loans at 0.4%.

The allowance for credit losses decreased slightly to 1.12% of gross loans at March 31, 2025, from 1.13% the prior quarter. Annualized net charge-offs to average loans were 0.02% for the quarter ended March 31, 2025. Non-performing assets increased $2.6 million to $13.0 million, or 0.89% of total assets at March 31, 2025 from 0.71% at December 31, 2024. The increase reflects a loan relationship we expect to have $1.5 million in repayment in the next 6 months as collateral undergoes a sales process. No specific reserves have been established on the loan as ample collateral currently appears available. Approximately 80% of the non-performing assets consisted of four loan relationships.

Goodwill and other intangibles increased slightly during the quarter ended March 31, 2025 to $3.8 million from $2.7 million one quarter earlier. The increase in intangibles relates to the acquisition of Larson Financial Group, LLC in January 2025.

Total deposits decreased $17.3 million to $1.13 billion at March 31, 2025, from $1.15 billion at December 31, 2024. The decrease in deposits reflects a $22.9 million decrease in uninsured deposits during the first quarter composed primarily of money market deposits, consisting of normal commercial customer operation outflows, particularly with one customer accounting for $18 million of the decline who reinvested following the sale of their business in 2024. Meanwhile, brokered deposits increased $22.9 million and insured and collateralized deposits increased $5.6 million in the quarter ended March 31, 2025.

At March 31, 2025, non-interest bearing demand deposits decreased to 21.8% of total deposits from 22.6% the prior quarter, while interest-bearing demand and savings deposits remained at 29.4% of deposits.

FHLB advances increased $8.0 million to $170.3 million at March 31, 2025, compared to $162.3 million at December 31, 2024.

Tangible stockholder equity as a percentage of total tangible assets increased to 8.05% at March 31, 2025, compared to 7.76% at December 31, 2024, and 7.60% at March 31, 2024.

Tangible net book value per common share increased $2.73 to $26.94, at March 31, 2025, compared to $24.21 one year earlier, an increase of 11.3% after dividends of $0.64 were paid to shareholders. Relative to the prior quarter’s tangible book value per common share of $25.98, tangible net book value per common share increased primarily due to earnings and an increase in the fair market value in the investment portfolios. The accumulated other comprehensive loss on the investment portfolio was $16.7 million at March 31, 2025, compared to $19.3 million one quarter earlier.

Operations Review

Net interest income decreased to $10.3 million (on a net margin of 3.03%) for the first quarter of 2025, from $10.4 million (on a net margin of 2.96%) for the fourth quarter of 2024, and increased from $9.3 million (on a net margin of 2.80%) for the first quarter of 2024. The lower net interest income in the current period while net margin also increased primarily relates to a lower level of earnings assets during the quarter. Meanwhile, earning asset yields increased to 5.35% during the first quarter of 2025 from 5.29% the prior period and interest bearing deposit and borrowing costs decreased four basis points to 3.02% compared to 3.06% during the fourth quarter of 2024. Relative to one year earlier, earning asset yields were up 23 basis points while interest bearing deposit and borrowing costs increased two basis points.

The increase in earning asset yields was due to higher yields on loan originations, loan renewals, security purchases and security repricing. Loan yields increased during the first quarter of 2025 to 5.82% from 5.80% for the fourth quarter of 2024. Taxable security yields were 3.35% for the quarter ended March 31, 2025, compared to 3.16% for the quarter ended December 31, 2024, while tax-exempt security yields increased to 3.35% for the quarter ended March 31, 2025 from 3.31% the previous quarter. The increase in taxable security yields reflects some security restructuring activity from security sales in the prior quarter more fully realized in the current quarter.

The cost of all deposits increased slightly to 2.09% for the quarter ended March 31, 2025, compared to 2.08% the prior quarter, while the overall cost of funds decreased four basis points to 3.02% from 3.06% during the same time period. Deposit costs for time deposits decreased during the first quarter with time deposits decreasing five basis points to 3.97% and money market deposits decreasing 12 basis points to 2.44%. Savings and demand deposits increased three basis points to 1.87%. FHLB advances increased one basis point to 4.41% for the quarter ended March 31, 2025.

Total noninterest income increased $589,000 during the first quarter of 2025 to $1.9 million, from $1.3 million for the fourth quarter of 2024 due primarily to a lower net loss on sale of securities and increased investment and insurance sales commissions of $100,000. Mortgage banking income decreased to $250,000 in the first quarter from $414,000 the prior quarter while various increases in nominal revenue sources accounted for the remaining increase in noninterest income. At March 31, 2025, the Bank serviced $373.4 million in secondary market residential mortgage loans for others which provide fee income.

Noninterest expenses increased $967,000 to $9.0 million for the first quarter of 2025, compared to $8.0 million for the fourth quarter of 2024, and increased $644,000 from $8.3 million for the first quarter of 2024. On a linked quarter basis, December 2024 quarter salary and benefits expense was reduced from year-end final adjustments to incentive estimates, while March 2025 quarterly salary and benefits increased as commercial growth, and related incentives, were greater than budgeted. The LFG acquisition also increased wage and benefit expense. Intangible amortization increased slightly during the first quarter related to the acquisition. Occupancy and facilities costs increased $95,000, data processing and other office operation expenses increased $90,000 and various other noninterest expenses increased $177,000 during the first quarter ended March 31, 2025.

Taxes decreased $51,000 during the first quarter to $473,000, from $524,000 one quarter earlier. The effective tax rate for the quarter ended March 31, 2025, was 15.6% compared to 14.4% for the fourth quarter ended December 31, 2024.

About PSB Holdings, Inc.

PSB Holdings, Inc. is the parent company of Peoples State Bank. Peoples is a community bank headquartered in Wausau, Wisconsin, serving northcentral and southeastern Wisconsin from twelve full-service banking locations in Marathon, Oneida, Vilas, Portage, Milwaukee and Waukesha counties and a loan production office in Dane County. Peoples also provides investment and insurance products, along with retirement planning services, through Peoples Wealth Management, a division of Peoples. PSB Holdings, Inc. is traded under the stock symbol PSBQ on the OTCQX Market. More information about PSB, its management, and its financial performance may be found at www.psbholdingsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about PSB’s business based, in part, on assumptions made by management and include, without limitation, statements with respect to the potential growth of PSB, its future profits, expected stock repurchase levels, future dividend rates, future interest rates, and the adequacy of its capital position. Forward-looking statements can be affected by known and unknown risks, uncertainties, and other factors, including, but not limited to, strength of the economy, the effects of government policies, including interest rate policies, risks associated with the execution of PSB’s vision and growth strategy, including with respect to current and future M&A activity, and risks associated with global economic instability. The forward-looking statements in this press release speak only as of the date on which they are made and PSB does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.


PSB Holdings, Inc.
Consolidated Balance Sheets
March 31, 2025, September 30, June 30, and March 31, 2024, unaudited, December 31, 2024 derived from audited financial statements

	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
(dollars in thousands, except per share data)		2025			2024			2024			2024			2024

Assets

Cash and due from banks	$	19,628		$	21,414		$	23,554		$	16,475		$	13,340
Interest-bearing deposits		702			3,724			5,126			251			105
Federal funds sold		2,351			15,360			58,434			69,249			2,439

Cash and cash equivalents		22,681			40,498			87,114			85,975			15,884
Securities available for sale (at fair value)		182,594			189,086			174,911			165,177			165,566
Securities held to maturity (fair values of $77,375, $79,654, $82,389, $79,993 and $81,234 respectively)		85,373			86,748			86,847			86,825			87,104
Equity securities		2,847			2,782			1,752			1,661			1,474
Loans held for sale		734			217			–			2,268			865
Loans receivable, net (allowance for credit losses of $12,392, $12,342, $12,598, $12,597 and $12,494 respectively)		1,096,422			1,078,204			1,057,974			1,074,844			1,081,394
Accrued interest receivable		5,184			5,042			4,837			5,046			5,467
Foreclosed assets		300			–			–			–			–
Premises and equipment, net		13,522			13,805			14,065			14,048			13,427
Mortgage servicing rights, net		1,717			1,742			1,727			1,688			1,657
Federal Home Loan Bank stock (at cost)		8,825			8,825			8,825			8,825			7,006
Cash surrender value of bank-owned life insurance		24,897			24,732			24,565			24,401			24,242
Other intangibles		353			195			212			229			249
Goodwill		3,495			2,541			2,541			2,541			2,541
Other assets		10,828			11,539			10,598			12,111			11,682

TOTAL ASSETS	$	1,459,772		$	1,465,956		$	1,475,968		$	1,485,639		$	1,418,558

Liabilities

Non-interest-bearing deposits	$	245,672		$	259,515		$	265,078		$	250,435		$	247,608
Interest-bearing deposits		884,364			887,834			874,035			901,886			865,744

Total deposits		1,130,036			1,147,349			1,139,113			1,152,321			1,113,352

Federal Home Loan Bank advances		170,250			162,250			181,250			184,900			158,250
Other borrowings		6,343			6,872			6,128			5,775			8,096
Senior subordinated notes		4,783			4,781			4,779			4,778			4,776
Junior subordinated debentures		13,049			13,023			12,998			12,972			12,947
Allowance for credit losses on unfunded commitments		672			672			477			477			477
Accrued expenses and other liabilities		13,554			14,723			12,850			13,069			10,247

Total liabilities		1,338,687			1,349,670			1,357,595			1,374,292			1,308,145

Stockholders’ equity

Preferred stock – no par value:
Authorized – 30,000 shares; Issued – 7,200 shares
Outstanding – 7,200 shares, respectively		7,200			7,200			7,200			7,200			7,200
Common stock – no par value with a stated value of $1.00 per share:
Authorized – 18,000,000 shares; Issued – 5,490,798 shares
Outstanding – 4,084,708, 4,092,977, 4,105,594, 4,128,382 and 4,147,649 shares, respectively		1,830			1,830			1,830			1,830			1,830
Additional paid-in capital		8,608			8,610			8,567			8,527			8,466
Retained earnings		142,277			139,838			138,142			135,276			134,271
Accumulated other comprehensive income (loss), net of tax		(16,692	)		(19,314	)		(15,814	)		(20,503	)		(20,775	)
Treasury stock, at cost – 1,406,090, 1,397,821, 1,385,204, 1,362,416 and 1,343,149 shares, respectively		(22,138	)		(21,878	)		(21,552	)		(20,983	)		(20,579	)

Total stockholders’ equity		121,085			116,286			118,373			111,347			110,413

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,459,772		$	1,465,956		$	1,475,968		$	1,485,639		$	1,418,558

PSB Holdings, Inc.
Consolidated Statements of Income

	Quarter Ended
	Mar. 31,			Dec. 31,			Sep. 30,		Jun. 30,		Mar. 31,
(dollars in thousands, except per share data – unaudited)		2025			2024			2024		2024		2024

Interest and dividend income:
Loans, including fees	$	15,782		$	15,646		$	15,634	$	15,433	$	15,109
Securities:
Taxable		1,641			1,545			1,345		1,295		1,197
Tax-exempt		517			522			522		521		526
Other interest and dividends		345			948			699		265		343

Total interest and dividend income		18,285			18,661			18,200		17,514		17,175

Interest expense:
Deposits		5,884			6,027			5,905		5,838		6,082
FHLB advances		1,792			1,890			2,038		1,860		1,450
Other borrowings		47			57			57		58		60
Senior subordinated notes		59			59			59		58		59
Junior subordinated debentures		248			252			252		255		251

Total interest expense		8,030			8,285			8,311		8,069		7,902

Net interest income		10,255			10,376			9,889		9,445		9,273
Provision for credit losses		117			–			–		100		95

Net interest income after provision for credit losses		10,138			10,376			9,889		9,345		9,178

Noninterest income:
Service fees		358			362			367		350		336
Mortgage banking income		250			414			433		433		308
Investment and insurance sales commissions		326			226			230		222		121
Net loss on sale of securities		(1	)		(511	)		–		–		(495	)
Increase in cash surrender value of life insurance		163			166			165		159		157
Other noninterest income		770			620			648		742		617

Total noninterest income		1,866			1,277			1,843		1,906		1,044

Noninterest expense:
Salaries and employee benefits		5,302			4,691			4,771		5,167		5,123
Occupancy and facilities		786			691			757		733		721
Loss (gain) on foreclosed assets		–			–			1		–		–
Data processing and other office operations		1,201			1,111			1,104		1,047		1,022
Advertising and promotion		129			141			164		171		129
Amortization of intangibles		23			17			17		20		24
Other noninterest expenses		1,528			1,351			1,337		1,257		1,306

Total noninterest expense		8,969			8,002			8,151		8,395		8,325

Income before provision for income taxes		3,035			3,651			3,581		2,856		1,897
Provision for income taxes		473			524			593		410		169

Net income	$	2,562		$	3,127		$	2,988	$	2,446	$	1,728
Preferred stock dividends declared	$	122		$	122		$	122	$	122	$	122

Net income available to common shareholders	$	2,440		$	3,005		$	2,866	$	2,324	$	1,606
Basic earnings per common share	$	0.60		$	0.73		$	0.69	$	0.56	$	0.39
Diluted earnings per common share	$	0.60		$	0.73		$	0.69	$	0.56	$	0.39

PSB Holdings, Inc.
Quarterly Financial Summary
(dollars in thousands, except per share data)	Quarter ended
	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
Earnings and dividends:		2025			2024			2024			2024			2024

Interest income	$	18,285		$	18,661		$	18,200		$	17,514		$	17,175
Interest expense	$	8,030		$	8,285		$	8,311		$	8,069		$	7,902
Net interest income	$	10,255		$	10,376		$	9,889		$	9,445		$	9,273
Provision for credit losses	$	117		$	–		$	–		$	100		$	95
Other noninterest income	$	1,866		$	1,277		$	1,843		$	1,906		$	1,044
Other noninterest expense	$	8,969		$	8,002		$	8,151		$	8,395		$	8,325
Net income available to common shareholders	$	2,440		$	3,005		$	2,866		$	2,324		$	1,606

Basic earnings per common share (3)	$	0.60		$	0.73		$	0.69		$	0.56		$	0.39
Diluted earnings per common share (3)	$	0.60		$	0.73		$	0.69		$	0.56		$	0.39
Dividends declared per common share (3)	$	–		$	0.32		$	–		$	0.32		$	–
Tangible net book value per common share (4)	$	26.94		$	25.98		$	26.41		$	24.55		$	24.21

Semi-annual dividend payout ratio		n/a			23.27	%		n/a			33.61	%		n/a
Average common shares outstanding		4,088,824			4,094,360			4,132,218			4,139,456			4,154,702

Balance sheet – average balances:
Loans receivable, net of allowances for credit loss	$	1,091,533		$	1,064,619		$	1,066,795		$	1,088,013		$	1,081,936
Assets	$	1,462,862		$	1,479,812		$	1,445,613		$	1,433,749		$	1,429,437
Deposits	$	1,140,397		$	1,151,450		$	1,110,854		$	1,111,240		$	1,138,010
Stockholders’ equity	$	118,576		$	118,396		$	114,458		$	110,726		$	109,473

Performance ratios:
Return on average assets (1)		0.71	%		0.84	%		0.82	%		0.69	%		0.49	%
Return on average common stockholders’ equity (1)		8.88	%		10.75	%		10.63	%		9.03	%		6.32	%
Return on average tangible common stockholders’ equity (1)(4)		9.21	%		11.07	%		10.96	%		9.34	%		6.57	%
Net loan charge-offs to average loans (1)		0.02	%		0.02	%		0.00	%		0.00	%		0.00	%
Nonperforming loans to gross loans		1.15	%		0.95	%		0.97	%		1.15	%		1.08	%
Nonperforming assets to total assets		0.89	%		0.71	%		0.71	%		0.84	%		0.83	%
Allowance for credit losses to gross loans		1.12	%		1.13	%		1.18	%		1.16	%		1.14	%
Nonperforming assets to tangible equity plus the allowance for credit losses (4)		10.71	%		8.85	%		8.71	%		11.09	%		10.59	%
Net interest rate margin (1)(2)		3.03	%		2.96	%		2.90	%		2.84	%		2.80	%
Net interest rate spread (1)(2)		2.33	%		2.23	%		2.16	%		2.15	%		2.12	%
Service fee revenue as a percent of average demand deposits (1)		0.58	%		0.53	%		0.56	%		0.56	%		0.54	%
Noninterest income as a percent of gross revenue		9.26	%		6.40	%		9.20	%		9.81	%		5.73	%
Efficiency ratio (2)		72.88	%		67.59	%		68.43	%		72.52	%		78.93	%
Noninterest expenses to average assets (1)		2.49	%		2.15	%		2.24	%		2.35	%		2.34	%
Average stockholders’ equity less accumulated other comprehensive income (loss) to average assets		9.22	%		9.08	%		9.06	%		9.03	%		8.98	%
Tangible equity to tangible assets (4)		8.05	%		7.76	%		7.85	%		7.32	%		7.60	%

Stock price information:

High	$	26.50		$	27.90		$	25.00		$	21.40		$	22.50
Low	$	25.60		$	25.00		$	20.30		$	19.75		$	20.05
Last trade value at quarter-end	$	25.70		$	26.50		$	25.00		$	20.40		$	21.25

^{(1) Annualized}
^{(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.}
^{(3) Due to rounding, cumulative quarterly per share performance may not equal annual per share totals.}
^{(4) Tangible stockholders’ equity excludes goodwill and other intangibles.}

PSB Holdings, Inc.
Consolidated Statements of Comprehensive Income

	Quarter Ended
	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
(dollars in thousands – unaudited)		2025			2024			2024			2024			2024

Net income	$	2,562		$	3,127		$	2,988		$	2,446		$	1,728

Other comprehensive income, net of tax:

Unrealized gain (loss) on securities available for sale		2,551			(3,955	)		4,738			184			(615	)

Reclassification adjustment for security loss included in net income		1			404			–			–			391

Accretion of unrealized loss included in net income on securities available for sale deferred tax adjustment for Wisconsin Act 19		–			(76	)		–			–			(35	)

Amortization of unrealized loss included in net income on securities available for sale transferred to securities held to maturity		89			90			90			89			91

Unrealized gain (loss) on interest rate swap		(6	)		65			(101	)		39			122

Reclassification adjustment of interest rate swap settlements included in earnings		(13	)		(27	)		(38	)		(40	)		(41	)


Other comprehensive income (loss)		2,622			(3,499	)		4,689			272			(87	)

Comprehensive income (loss)	$	5,184		$	(372	)	$	7,677		$	2,718		$	1,641

PSB Holdings, Inc.
Nonperforming Assets as of:
	Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,
(dollars in thousands)		2025			2024			2024			2024			2024

Nonaccrual loans (excluding restructured loans)	$	12,404		$	10,109		$	10,116		$	12,184		$	11,498
Nonaccrual restructured loans		17			18			25			28			30
Restructured loans not on nonaccrual		280			286			292			299			304
Accruing loans past due 90 days or more		–			–			–			–			–

Total nonperforming loans		12,701			10,413			10,433			12,511			11,832
Other real estate owned		300			–			–			–			–

Total nonperforming assets	$	13,001		$	10,413		$	10,433		$	12,511		$	11,832

Nonperforming loans as a % of gross loans receivable		1.15	%		0.95	%		0.97	%		1.15	%		1.08	%
Total nonperforming assets as a % of total assets		0.89	%		0.71	%		0.71	%		0.84	%		0.83	%
Allowance for credit losses as a % of nonperforming loans		97.57	%		118.52	%		120.75	%		100.69	%		105.59	%

PSB Holdings, Inc.
Nonperforming Assets >= $500,000 net book value before specific reserves
At March 31, 2025
(dollars in thousands)
		Gross			Specific
Collateral Description	Asset Type	Principal			Reserves

Real estate – Recreational Facility	Nonaccrual		4,051			148
Real estate – Independent Auto Repair	Nonaccrual		514			0
Real estate – Dealership	Nonaccrual		2,708			560
Real estate – Rental Units	Nonaccrual		3,077			0


Total listed nonperforming assets		$	10,350		$	708
Total bank wide nonperforming assets		$	13,001		$	1,055
Listed assets as a % of total nonperforming assets			80	%		67	%

PSB Holding, Inc.
Loan Composition by Collateral Type
Quarter-ended (dollars in thousands)	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024

Commercial:
Commercial and industrial	$	124,074		$	116,864		$	115,234		$	125,508		$	118,821
Agriculture		11,632			11,568			11,203			11,480			12,081
Municipal		12,878			15,733			12,596			11,190			28,842

Total Commercial		148,584			144,165			139,033			148,178			159,744

Commercial Real Estate:
Commercial real estate		562,901			551,641			541,577			544,171			546,257
Construction and development		87,080			79,377			60,952			70,540			63,375

Total Commercial Real Estate		649,981			631,018			602,529			614,711			609,632

Residential real estate:
Residential		268,490			271,643			269,954			270,944			274,300
Construction and development		26,884			28,959			34,655			36,129			34,158
HELOC		38,364			36,887			36,734			33,838			31,357

Total Residential Real Estate		333,738			337,489			341,343			340,911			339,815

Consumer installment		4,683			5,060			4,770			4,423			4,867

Subtotals – Gross loans		1,136,986			1,117,732			1,087,675			1,108,223			1,114,058
Loans in process of disbursement		(28,752	)		(27,791	)		(17,836	)		(21,484	)		(20,839	)

Subtotals – Disbursed loans		1,108,234			1,089,941			1,069,839			1,086,739			1,093,219
Net deferred loan costs		580			605			733			702			669
Allowance for credit losses		(12,392	)		(12,342	)		(12,598	)		(12,597	)		(12,494	)

Total loans receivable	$	1,096,422		$	1,078,204		$	1,057,974		$	1,074,844		$	1,081,394

PSB Holding, Inc.
Selected Commercial Real Estate Loans by Purpose

	Mar 31,				Dec 31,				Sept 30,				June 30,				Mar 31,
(dollars in thousands)	2025				2024				2024				2024				2024

	Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)		Total Exposure		% of Portfolio (1)
Multi Family	$	143,674	13.9	%	$	140,087	14.0	%	$	140,307	14.7	%	$	146,873	15.2	%	$	142,001	14.4	%
Industrial and Warehousing		100,494	9.7			88,297	8.8			86,818	9.1			86,025	8.9			85,409	8.6
Retail		40,779	3.9			33,991	3.4			33,020	3.5			34,846	3.6			33,177	3.4
Hotels		30,928	3.0			31,101	3.1			31,611	3.3			34,613	3.6			35,105	3.6
Office		7,254	0.7			6,234	0.6			6,378	0.7			6,518	0.7			6,655	0.7

^{(1) Percentage of commercial and commercial real estate portfolio and commitments.}

PSB Holdings, Inc.
Deposit Composition

Insured and Collateralized Deposits	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)	2025				2024				2024				2024				2024
	$		%		$		%		$		%		$		%		$		%

Non-interest bearing demand	$	206,562	18.3	%	$	204,167	17.8	%	$	210,534	18.5	%	$	202,343	17.5	%	$	199,076	17.8	%
Interest-bearing demand and savings		314,957	27.9	%		315,900	27.6	%		305,631	26.8	%		304,392	26.5	%		318,673	28.7	%
Money market deposits		118,047	10.4	%		141,024	12.3	%		138,376	12.2	%		137,637	12.0	%		143,167	12.9	%
Retail and local time deposits <= $250		158,066	14.0	%		155,099	13.5	%		155,988	13.7	%		149,298	13.0	%		148,404	13.3	%

Total core deposits		797,632	70.6	%		816,190	71.2	%		810,529	71.2	%		793,670	69.0	%		809,320	72.7	%
Retail and local time deposits > $250		26,750	2.3	%		25,500	2.2	%		23,500	2.1	%		22,500	2.0	%		24,508	2.3	%
Broker & national time deposits <= $250		1,241	0.1	%		1,241	0.1	%		1,241	0.1	%		1,490	0.1	%		2,229	0.2	%
Broker & national time deposits > $250		79,090	7.0	%		56,164	4.9	%		56,164	4.9	%		56,328	4.9	%		61,752	5.5	%

Totals	$	904,713	80.0	%	$	899,095	78.4	%	$	891,434	78.3	%	$	873,988	76.0	%	$	897,809	80.7	%

PSB Holdings, Inc.
Deposit Composition

Uninsured Deposits	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)	2025				2024				2024				2024				2024
	$		%		$		%		$		%		$		%		$		%

Non-interest bearing demand	$	39,110	3.5	%	$	55,348	4.8	%	$	54,544	4.8	%	$	48,092	4.1	%	$	48,532	4.4	%
Interest-bearing demand and savings		17,262	1.5	%		20,934	1.8	%		18,317	1.6	%		32,674	2.8	%		20,535	1.8	%
Money market deposits		150,222	13.3	%		153,334	13.4	%		157,489	13.8	%		177,954	15.4	%		124,766	11.2	%
Retail and local time deposits <= $250		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%

Total core deposits		206,594	18.3	%		229,616	20.0	%		230,350	20.2	%		258,720	22.3	%		193,833	17.4	%
Retail and local time deposits > $250		18,729	1.7	%		18,638	1.6	%		17,329	1.5	%		19,613	1.7	%		21,710	1.9	%
Broker & national time deposits <= $250		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%
Broker & national time deposits > $250		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%		–	0.0	%

Totals	$	225,323	20.0	%	$	248,254	21.6	%	$	247,679	21.7	%	$	278,333	24.0	%	$	215,543	19.3	%

PSB Holdings, Inc.
Deposit Composition

Total Deposits	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)	2025				2024				2024				2024				2024
	$		%		$		%		$		%		$		%		$		%

Non-interest bearing demand	$	245,672	21.8	%	$	259,515	22.6	%	$	265,078	23.3	%	$	250,435	21.6	%	$	247,608	22.2	%
Interest-bearing demand and savings		332,219	29.4	%		336,834	29.4	%		323,948	28.4	%		337,066	29.3	%		339,208	30.5	%
Money market deposits		268,269	23.7	%		294,358	25.7	%		295,865	26.0	%		315,591	27.4	%		267,933	24.1	%
Retail and local time deposits <= $250		158,066	14.0	%		155,099	13.5	%		155,988	13.7	%		149,298	13.0	%		148,404	13.3	%

Total core deposits		1,004,226	88.9	%		1,045,806	91.2	%		1,040,879	91.4	%		1,052,390	91.3	%		1,003,153	90.1	%
Retail and local time deposits > $250		45,479	4.0	%		44,138	3.8	%		40,829	3.6	%		42,113	3.7	%		46,218	4.2	%
Broker & national time deposits <= $250		1,241	0.1	%		1,241	0.1	%		1,241	0.1	%		1,490	0.1	%		2,229	0.2	%
Broker & national time deposits > $250		79,090	7.0	%		56,164	4.9	%		56,164	4.9	%		56,328	4.9	%		61,752	5.5	%

Totals	$	1,130,036	100.0	%	$	1,147,349	100.0	%	$	1,139,113	100.0	%	$	1,152,321	100.0	%	$	1,113,352	100.0	%

PSB Holdings, Inc.
Average Balances ($000) and Interest Rates
(dollars in thousands)


	Quarter ended March 31, 2025							Quarter ended December 31, 2024							Quarter ended March 31, 2024
	Average					Yield /		Average					Yield /		Average					Yield /
	Balance			Interest		Rate		Balance			Interest		Rate		Balance			Interest		Rate
Assets
Interest-earning assets:
Loans (1)(2)	$	1,103,895		$	15,830	5.82	%	$	1,077,242		$	15,693	5.80	%	$	1,094,321		$	15,199	5.59	%
Taxable securities		198,426			1,641	3.35	%		194,272			1,545	3.16	%		171,788			1,197	2.80	%
Tax-exempt securities (2)		79,282			654	3.35	%		79,475			661	3.31	%		80,434			666	3.33	%
FHLB stock		8,825			241	11.08	%		8,825			227	10.23	%		6,499			165	10.21	%
Other		8,960			104	4.71	%		58,405			721	4.91	%		12,885			178	5.56	%

Total (2)		1,399,388			18,470	5.35	%		1,418,219			18,847	5.29	%		1,365,927			17,405	5.12	%

Non-interest-earning assets:
Cash and due from banks		16,292							15,500							17,367
Premises and equipment, net		13,728							14,001							13,183
Cash surrender value ins		24,795							24,625							24,144
Other assets		21,021							20,090							21,201
Allowance for credit losses		(12,362	)						(12,623	)						(12,385	)

Total	$	1,462,862						$	1,479,812						$	1,429,437

Liabilities & stockholders’ equity
Interest-bearing liabilities:
Savings and demand deposits	$	339,909		$	1,567	1.87	%	$	319,777		$	1,479	1.84	%	$	350,497		$	1,672	1.92	%
Money market deposits		280,396			1,685	2.44	%		304,897			1,961	2.56	%		274,186			1,897	2.78	%
Time deposits		268,821			2,632	3.97	%		256,201			2,587	4.02	%		264,657			2,513	3.82	%
FHLB borrowings		164,968			1,792	4.41	%		170,701			1,890	4.40	%		142,926			1,450	4.08	%
Other borrowings		6,321			47	3.02	%		6,848			57	3.31	%		8,554			60	2.82	%
Senior sub. notes		4,782			59	5.00	%		4,780			59	4.91	%		4,775			59	4.97	%
Junior sub. debentures		13,036			248	7.72	%		13,011			252	7.71	%		12,934			251	7.81	%

Total		1,078,233			8,030	3.02	%		1,076,215			8,285	3.06	%		1,058,529			7,902	3.00	%

Non-interest-bearing liabilities:
Demand deposits		251,271							270,575							248,670
Other liabilities		14,782							14,626							12,765
Stockholders’ equity		118,576							118,396							109,473

Total	$	1,462,862						$	1,479,812						$	1,429,437

Net interest income				$	10,440						$	10,562						$	9,503
Rate spread						2.33	%						2.23	%						2.12	%
Net yield on interest-earning assets						3.03	%						2.96	%						2.80	%

^{(1) Nonaccrual loans are included in the daily average loan balances outstanding.}
^{(2) The yield on federally tax-exempt loans and securities is computed on a tax-equivalent basis using a federal tax rate of 21%.}

Investor Relations Contact
PSB Holdings, Inc.
1905 Stewart Avenue
Wausau, WI 54401
888.929.9902
InvestorRelations@bankpeoples.com

The MIL Network –

April 25, 2025

MIL-OSI: First Merchants Corporation Announces First Quarter 2025 Earnings Per Share

Source: GlobeNewswire (MIL-OSI)

MUNCIE, Ind., April 24, 2025 (GLOBE NEWSWIRE) — First Merchants Corporation (NASDAQ – FRME)

First Quarter 2025 Highlights:

Net income available to common stockholders was $54.9 million and diluted earnings per common share totaled $0.94 compared to adjusted net income and diluted earnings per common share¹of $50.1 million and $0.85 in the first quarter of 2024. Adjusted net income and diluted earnings per common share¹in the fourth quarter of 2024 were $58.1 million and $1.00, respectively.
Robust capital position with Common Equity Tier 1 Capital Ratio of 11.50%.
Repurchased 246,751 shares totaling $10 million year-to-date; Redeemed $30 million of sub debt.
Total loans grew $154.9 million, or 4.8% annualized, on a linked quarter basis, and $547.2 million, or 4.4%, during the last twelve months.
Total deposits declined $59.6 million, or 1.6% annualized, on a linked quarter basis, and declined $422.6 million, or 2.8%, during the last twelve months primarily due to the sale of five Illinois branches with $267.4 million in deposits to Old Second National Bank on December 6, 2024.
Nonperforming assets to total assets were 47 basis points compared to 43 basis points on a linked quarter basis.
The efficiency ratio totaled 54.54% for the quarter.

“The first quarter was a strong start to the year with healthy loan growth and increasing profitability,” said Mark Hardwick, Chief Executive Officer of First Merchants Bank. “Our 2025 priorities continue to focus on organic loan growth funded by low-cost core deposits, margin stabilization, fee income growth, expense management and credit quality. Given the market volatility and headlines, we are closely monitoring our clients and our markets but have yet to see any signs of stress.”

First Quarter Financial Results:

First Merchants Corporation (the “Corporation”) reported first quarter 2025 net income available to common stockholders of $54.9 million compared to adjusted net income available to common stockholders¹ of $50.1 million during the same period in 2024. Diluted earnings per common share for the period totaled $0.94 compared to the first quarter of 2024 adjusted diluted earnings per common share¹ of $0.85 per share.

Total assets equaled $18.4 billion as of quarter-end and loans totaled $13.0 billion. During the past twelve months, total loans grew by $547.2 million, or 4.4%. On a linked quarter basis, loans grew $154.9 million, or 4.8% annualized.

Investment securities, totaling $3.4 billion, decreased $356.5 million, or 9.4%, during the last twelve months and decreased $33.6 million, or 3.9% annualized on a linked quarter basis. The decline in the last twelve months reflected sales of available for sale securities in 2024 totaling $268.5 million.

Total deposits equaled $14.5 billion as of quarter-end and decreased by $422.6 million, or 2.8%, over the past twelve months. The decline reflected the sale of the Illinois branches during the prior quarter which included $267.4 million in deposits. Total deposits decreased $59.6 million, or 1.6% annualized on a linked quarter basis. The loan to deposit ratio increased to 90.1% at period end from 88.6% in the prior quarter.

The Corporation’s Allowance for Credit Losses – Loans (ACL) totaled $192.0 million as of quarter-end, or 1.47% of total loans, a decrease of $0.7 million from prior quarter. Net charge-offs totaled $4.9 million and provision for loans of $4.2 million was recorded during the quarter. Reserves for unfunded commitments totaling $18.0 million remain unchanged from the previous quarter. Non-performing assets to total assets were 0.47% for the first quarter of 2025, an increase of four basis points compared to 0.43% in the prior quarter.

Net interest income totaled $130.3 million for the quarter, a decrease of $4.1 million, or 3.1%, compared to prior quarter and increased $3.2 million, or 2.5%, compared to the first quarter of 2024. Fully taxable equivalent net interest margin was 3.22%, a decrease of six basis points compared to the fourth quarter of 2024 and an increase of 12 basis points compared to the first quarter of 2024. The lower day count in the quarter caused a decline of five basis points in net interest margin from the prior quarter.

Noninterest income totaled $30.0 million for the quarter, a decrease of $12.7 million, compared to the fourth quarter of 2024 and an increase of $3.4 million compared to the first quarter of 2024. Customer-related fees declined by $2.3 million from the previous quarter due to lower derivative hedge fees, gains on sales of mortgage loans and card payment fees. Non-customer-related fees declined $10.4 million from the prior quarter primarily due to the gain on the Illinois branch sale, partially offset by realized losses on the sales of securities recorded in the prior quarter.

Noninterest expense totaled $92.9 million for the quarter, a decrease of $3.4 million from the fourth quarter of 2024 and a decrease of $4.0 million from the first quarter of 2024. The decrease from the fourth quarter of 2024 was due primarily to a decline in marketing expenses, and lower professional fees and employee incentives.

The Corporation’s total risk-based capital ratio totaled 13.22%, common equity tier 1 capital ratio totaled 11.50%, and the tangible common equity ratio totaled 8.90%. These ratios continue to demonstrate the Corporation’s strong capital position.

¹ See “Non-GAAP Financial Information” for reconciliation

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 11:30 a.m. (ET) on Thursday, April 24, 2025.

To access via phone, participants will need to register using the following link where they will be provided a phone number and access code: (https://register-conf.media-server.com/register/BI4ae3a07cb07a47258d30e4f3dba2448b)

To view the webcast and presentation slides, please go to (https://edge.media-server.com/mmc/p/uqvoojku) during the time of the call. A replay of the webcast will be available until April 24, 2026.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

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

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

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

Forward-Looking Statements

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


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	March 31,
	2025			2024
ASSETS
Cash and due from banks	$	86,113		$	100,514
Interest-bearing deposits		331,534			410,497
Investment securities available for sale		1,378,489			1,620,213
Investment securities held to maturity, net of allowance for credit losses		2,048,632			2,163,361
Loans held for sale		23,004			15,118
Loans		13,004,905			12,465,582
Less: Allowance for credit losses – loans		(192,031	)		(204,681	)
Net loans		12,812,874			12,260,901
Premises and equipment		128,749			132,706
Federal Home Loan Bank stock		45,006			41,758
Interest receivable		88,352			92,550
Goodwill		712,002			712,002
Other intangibles		18,302			25,142
Cash surrender value of life insurance		304,918			306,028
Other real estate owned		4,966			4,886
Tax asset, deferred and receivable		87,665			101,121
Other assets		369,181			331,006
TOTAL ASSETS	$	18,439,787		$	18,317,803
LIABILITIES
Deposits:
Noninterest-bearing	$	2,185,057		$	2,338,364
Interest-bearing		12,276,921			12,546,220
Total Deposits		14,461,978			14,884,584
Borrowings:
Federal funds purchased		185,000			—
Securities sold under repurchase agreements		122,947			130,264
Federal Home Loan Bank advances		972,478			612,778
Subordinated debentures and other borrowings		62,619			118,612
Total Borrowings		1,343,044			861,654
Interest payable		13,304			19,262
Other liabilities		289,247			327,500
Total Liabilities		16,107,573			16,093,000
STOCKHOLDERS’ EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 cumulative shares
Issued and outstanding – 125 cumulative shares		125			125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized — 10,000 non-cumulative perpetual shares
Issued and outstanding – 10,000 non-cumulative perpetual shares		25,000			25,000
Common Stock, $.125 stated value:
Authorized — 100,000,000 shares
Issued and outstanding – 57,810,232 and 58,564,819 shares		7,226			7,321
Additional paid-in capital		1,183,263			1,208,447
Retained earnings		1,306,911			1,181,939
Accumulated other comprehensive loss		(190,311	)		(198,029	)
Total Stockholders’ Equity		2,332,214			2,224,803
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,439,787		$	18,317,803


CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended
(Dollars In Thousands, Except Per Share Amounts)	March 31,
	2025			2024
INTEREST INCOME
Loans:
Taxable	$	187,728		$	198,023
Tax-exempt		10,532			8,190
Investment securities:
Taxable		8,372			8,748
Tax-exempt		12,517			13,611
Deposits with financial institutions		2,372			6,493
Federal Home Loan Bank stock		997			835
Total Interest Income		222,518			235,900
INTEREST EXPENSE
Deposits		80,547			98,285
Federal funds purchased		812			—
Securities sold under repurchase agreements		742			1,032
Federal Home Loan Bank advances		9,364			6,773
Subordinated debentures and other borrowings		783			2,747
Total Interest Expense		92,248			108,837
NET INTEREST INCOME		130,270			127,063
Provision for credit losses		4,200			2,000
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		126,070			125,063
NONINTEREST INCOME
Service charges on deposit accounts		8,072			7,907
Fiduciary and wealth management fees		8,644			8,200
Card payment fees		4,526			4,500
Net gains and fees on sales of loans		5,022			3,254
Derivative hedge fees		404			263
Other customer fees		415			427
Earnings on cash surrender value of life insurance		2,179			1,592
Net realized losses on sales of available for sale securities		(7	)		(2	)
Other income		793			497
Total Noninterest Income		30,048			26,638
NONINTEREST EXPENSES
Salaries and employee benefits		54,982			58,293
Net occupancy		7,216			7,312
Equipment		7,008			6,226
Marketing		1,353			1,198
Outside data processing fees		5,929			6,889
Printing and office supplies		347			353
Intangible asset amortization		1,526			1,957
FDIC assessments		3,648			4,287
Other real estate owned and foreclosure expenses		600			534
Professional and other outside services		3,261			3,952
Other expenses		7,032			5,934
Total Noninterest Expenses		92,902			96,935
INCOME BEFORE INCOME TAX		63,216			54,766
Income tax expense		7,877			6,825
NET INCOME		55,339			47,941
Preferred stock dividends		469			469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	54,870		$	47,472
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.95		$	0.80
Diluted Net Income Available to Common Stockholders	$	0.94		$	0.80
Cash Dividends Paid to Common Stockholders	$	0.35		$	0.34
Tangible Common Book Value Per Share	$	27.34		$	25.07
Average Diluted Common Shares Outstanding (in thousands)		58,242			59,273


FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended
	March 31,
	2025			2024
NET CHARGE-OFFS	$	4,926		$	2,253

AVERAGE BALANCES:
Total Assets	$	18,341,738		$	18,430,521
Total Loans		12,941,353			12,477,066
Total Earning Assets		16,960,475			17,123,851
Total Deposits		14,419,338			14,881,205
Total Stockholders’ Equity		2,340,874			2,242,139

FINANCIAL RATIOS:
Return on Average Assets		1.21	%		1.04	%
Return on Average Stockholders’ Equity		9.38			8.47
Return on Tangible Common Stockholders’ Equity		14.12			13.21
Average Earning Assets to Average Assets		92.47			92.91
Allowance for Credit Losses – Loans as % of Total Loans		1.47			1.64
Net Charge-offs as % of Average Loans (Annualized)		0.15			0.07
Average Stockholders’ Equity to Average Assets		12.76			12.17
Tax Equivalent Yield on Average Earning Assets		5.39			5.65
Interest Expense/Average Earning Assets		2.17			2.55
Net Interest Margin (FTE) on Average Earning Assets		3.22			3.10
Efficiency Ratio		54.54			59.21


NONPERFORMING ASSETS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Nonaccrual Loans	$	81,922		$	73,773		$	59,088		$	61,906		$	62,478
Other Real Estate Owned and Repossessions		4,966			4,948			5,247			4,824			4,886
Nonperforming Assets (NPA)		86,888			78,721			64,335			66,730			67,364
90+ Days Delinquent		4,280			5,902			14,105			1,686			2,838
NPAs & 90 Day Delinquent	$	91,168		$	84,623		$	78,440		$	68,416		$	70,202

Allowance for Credit Losses – Loans	$	192,031		$	192,757		$	187,828		$	189,537		$	204,681
Quarterly Net Charge-offs		4,926			771			6,709			39,644			2,253
NPAs / Actual Assets %		0.47	%		0.43	%		0.35	%		0.36	%		0.37	%
NPAs & 90 Day / Actual Assets %		0.49	%		0.46	%		0.43	%		0.37	%		0.38	%
NPAs / Actual Loans and OREO %		0.67	%		0.61	%		0.51	%		0.53	%		0.54	%
Allowance for Credit Losses – Loans / Actual Loans (%)		1.47	%		1.50	%		1.48	%		1.50	%		1.64	%
Net Charge-offs as % of Average Loans (Annualized)		0.15	%		0.02	%		0.21	%		1.26	%		0.07	%


CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
ASSETS
Cash and due from banks	$	86,113		$	87,616		$	84,719		$	105,372		$	100,514
Interest-bearing deposits		331,534			298,891			359,126			168,528			410,497
Investment securities available for sale		1,378,489			1,386,475			1,553,496			1,618,893			1,620,213
Investment securities held to maturity, net of allowance for credit losses		2,048,632			2,074,220			2,108,649			2,134,195			2,163,361
Loans held for sale		23,004			18,663			40,652			32,292			15,118
Loans		13,004,905			12,854,359			12,646,808			12,639,650			12,465,582
Less: Allowance for credit losses – loans		(192,031	)		(192,757	)		(187,828	)		(189,537	)		(204,681	)
Net loans		12,812,874			12,661,602			12,458,980			12,450,113			12,260,901
Premises and equipment		128,749			129,743			129,582			133,245			132,706
Federal Home Loan Bank stock		45,006			41,690			41,716			41,738			41,758
Interest receivable		88,352			91,829			92,055			97,546			92,550
Goodwill		712,002			712,002			712,002			712,002			712,002
Other intangibles		18,302			19,828			21,599			23,371			25,142
Cash surrender value of life insurance		304,918			304,906			304,613			306,379			306,028
Other real estate owned		4,966			4,948			5,247			4,824			4,886
Tax asset, deferred and receivable		87,665			92,387			86,732			107,080			101,121
Other assets		369,181			387,169			348,384			367,845			331,006
TOTAL ASSETS	$	18,439,787		$	18,311,969		$	18,347,552		$	18,303,423		$	18,317,803
LIABILITIES
Deposits:
Noninterest-bearing	$	2,185,057		$	2,325,579		$	2,334,197		$	2,303,313		$	2,338,364
Interest-bearing		12,276,921			12,196,047			12,030,903			12,265,757			12,546,220
Total Deposits		14,461,978			14,521,626			14,365,100			14,569,070			14,884,584
Borrowings:
Federal funds purchased		185,000			99,226			30,000			147,229			—
Securities sold under repurchase agreements		122,947			142,876			124,894			100,451			130,264
Federal Home Loan Bank advances		972,478			822,554			832,629			832,703			612,778
Subordinated debentures and other borrowings		62,619			93,529			93,562			93,589			118,612
Total Borrowings		1,343,044			1,158,185			1,081,085			1,173,972			861,654
Deposits and other liabilities held for sale		—			—			288,476			—			—
Interest payable		13,304			16,102			18,089			18,554			19,262
Other liabilities		289,247			311,073			292,429			329,302			327,500
Total Liabilities		16,107,573			16,006,986			16,045,179			16,090,898			16,093,000
STOCKHOLDERS’ EQUITY
Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized — 600 cumulative shares
Issued and outstanding – 125 cumulative shares		125			125			125			125			125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized — 10,000 non-cumulative perpetual shares
Issued and outstanding – 10,000 non-cumulative perpetual shares		25,000			25,000			25,000			25,000			25,000
Common Stock, $.125 stated value:
Authorized — 100,000,000 shares
Issued and outstanding		7,226			7,247			7,265			7,256			7,321
Additional paid-in capital		1,183,263			1,188,768			1,192,683			1,191,193			1,208,447
Retained earnings		1,306,911			1,272,528			1,229,125			1,200,930			1,181,939
Accumulated other comprehensive loss		(190,311	)		(188,685	)		(151,825	)		(211,979	)		(198,029	)
Total Stockholders’ Equity		2,332,214			2,304,983			2,302,373			2,212,525			2,224,803
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,439,787		$	18,311,969		$	18,347,552		$	18,303,423		$	18,317,803

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
INTEREST INCOME
Loans:
Taxable	$	187,728		$	197,536		$	206,680		$	201,413		$	198,023
Tax-exempt		10,532			9,020			8,622			8,430			8,190
Investment securities:
Taxable		8,372			9,024			9,263			9,051			8,748
Tax-exempt		12,517			12,754			13,509			13,613			13,611
Deposits with financial institutions		2,372			5,350			2,154			2,995			6,493
Federal Home Loan Bank stock		997			958			855			879			835
Total Interest Income		222,518			234,642			241,083			236,381			235,900
INTEREST EXPENSE
Deposits		80,547			89,835			98,856			99,151			98,285
Federal funds purchased		812			26			329			126			—
Securities sold under repurchase agreements		742			680			700			645			1,032
Federal Home Loan Bank advances		9,364			8,171			8,544			6,398			6,773
Subordinated debentures and other borrowings		783			1,560			1,544			1,490			2,747
Total Interest Expense		92,248			100,272			109,973			107,810			108,837
NET INTEREST INCOME		130,270			134,370			131,110			128,571			127,063
Provision for credit losses		4,200			4,200			5,000			24,500			2,000
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		126,070			130,170			126,110			104,071			125,063
NONINTEREST INCOME
Service charges on deposit accounts		8,072			8,124			8,361			8,214			7,907
Fiduciary and wealth management fees		8,644			8,665			8,525			8,825			8,200
Card payment fees		4,526			4,957			5,121			4,739			4,500
Net gains and fees on sales of loans		5,022			5,681			6,764			5,141			3,254
Derivative hedge fees		404			1,594			736			489			263
Other customer fees		415			316			344			460			427
Earnings on cash surrender value of life insurance		2,179			2,188			2,755			1,929			1,592
Net realized losses on sales of available for sale securities		(7	)		(11,592	)		(9,114	)		(49	)		(2	)
Gain on branch sale		—			19,983			—			—			—
Other income		793			2,826			1,374			1,586			497
Total Noninterest Income		30,048			42,742			24,866			31,334			26,638
NONINTEREST EXPENSES
Salaries and employee benefits		54,982			55,437			55,223			52,214			58,293
Net occupancy		7,216			7,335			6,994			6,746			7,312
Equipment		7,008			7,028			6,949			6,599			6,226
Marketing		1,353			2,582			1,836			1,773			1,198
Outside data processing fees		5,929			6,029			7,150			7,072			6,889
Printing and office supplies		347			377			378			354			353
Intangible asset amortization		1,526			1,771			1,772			1,771			1,957
FDIC assessments		3,648			3,744			3,720			3,278			4,287
Other real estate owned and foreclosure expenses		600			227			942			373			534
Professional and other outside services		3,261			3,777			3,035			3,822			3,952
Other expenses		7,032			7,982			6,630			7,411			5,934
Total Noninterest Expenses		92,902			96,289			94,629			91,413			96,935
INCOME BEFORE INCOME TAX		63,216			76,623			56,347			43,992			54,766
Income tax expense		7,877			12,274			7,160			4,067			6,825
NET INCOME		55,339			64,349			49,187			39,925			47,941
Preferred stock dividends		469			469			468			469			469
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	54,870		$	63,880		$	48,719		$	39,456		$	47,472
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.95		$	1.10		$	0.84		$	0.68		$	0.80
Diluted Net Income Available to Common Stockholders	$	0.94		$	1.10		$	0.84		$	0.68		$	0.80
Cash Dividends Paid to Common Stockholders	$	0.35		$	0.35		$	0.35		$	0.35		$	0.34
Tangible Common Book Value Per Share	$	27.34		$	26.78		$	26.64		$	25.10		$	25.07
Average Diluted Common Shares Outstanding (in thousands)		58,242			58,247			58,289			58,328			59,273
FINANCIAL RATIOS:
Return on Average Assets		1.21	%		1.39	%		1.07	%		0.87	%		1.04	%
Return on Average Stockholders’ Equity		9.38			11.05			8.66			7.16			8.47
Return on Tangible Common Stockholders’ Equity		14.12			16.75			13.39			11.29			13.21
Average Earning Assets to Average Assets		92.47			92.48			92.54			92.81			92.91
Allowance for Credit Losses – Loans as % of Total Loans		1.47			1.50			1.48			1.50			1.64
Net Charge-offs as % of Average Loans (Annualized)		0.15			0.02			0.21			1.26			0.07
Average Stockholders’ Equity to Average Assets		12.76			12.51			12.26			12.02			12.17
Tax Equivalent Yield on Average Earning Assets		5.39			5.63			5.82			5.69			5.65
Interest Expense/Average Earning Assets		2.17			2.35			2.59			2.53			2.55
Net Interest Margin (FTE) on Average Earning Assets		3.22			3.28			3.23			3.16			3.10
Efficiency Ratio		54.54			48.48			53.76			53.84			59.21


LOANS
(Dollars In Thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Commercial and industrial loans	$	4,306,597		$	4,114,292		$	4,041,217		$	3,949,817		$	3,722,365
Agricultural land, production and other loans to farmers		243,864			256,312			238,743			239,926			234,431
Real estate loans:
Construction		793,175			792,144			814,704			823,267			941,726
Commercial real estate, non-owner occupied		2,177,869			2,274,016			2,251,351			2,323,533			2,368,360
Commercial real estate, owner occupied		1,214,739			1,157,944			1,152,751			1,174,195			1,137,894
Residential		2,389,852			2,374,729			2,366,943			2,370,905			2,316,490
Home equity		650,499			659,811			641,188			631,104			618,258
Individuals’ loans for household and other personal expenditures		140,954			166,028			158,480			162,089			161,459
Public finance and other commercial loans		1,087,356			1,059,083			981,431			964,814			964,599
Loans		13,004,905			12,854,359			12,646,808			12,639,650			12,465,582
Allowance for credit losses – loans		(192,031	)		(192,757	)		(187,828	)		(189,537	)		(204,681	)
NET LOANS	$	12,812,874		$	12,661,602		$	12,458,980		$	12,450,113		$	12,260,901

DEPOSITS
(Dollars In Thousands)	March 31,		December 31,		September 30,		June 30,		March 31,
	2025		2024		2024		2024		2024
Demand deposits	$	7,786,554	$	7,980,061	$	7,678,510	$	7,757,679	$	7,771,976
Savings deposits		4,791,874		4,522,758		4,302,236		4,339,161		4,679,593
Certificates and other time deposits of $100,000 or more		896,143		1,043,068		1,277,833		1,415,131		1,451,443
Certificates and other time deposits of $100,000 or less		625,203		692,068		802,949		889,949		901,280
Brokered certificates of deposits¹		362,204		283,671		303,572		167,150		80,292
TOTAL DEPOSITS	$	14,461,978	$	14,521,626	$	14,365,100	$	14,569,070	$	14,884,584

^{1 –} Total brokered deposits of $1.1 billion, which includes brokered CD’s of $362.2 million at March 31, 2025.


CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN ANALYSIS
(Dollars in Thousands)
	For the Three Months Ended
	March 31, 2025						March 31, 2024
	Average Balance		Interest Income / Expense		Average Rate		Average Balance		Interest Income / Expense		Average Rate
ASSETS
Interest-bearing deposits	$	294,016	$	2,372	3.23	%	$	575,699	$	6,493	4.51	%
Federal Home Loan Bank stock		43,980		997	9.07			41,764		835	8.00
Investment Securities: ⁽¹⁾
Taxable		1,634,452		8,372	2.05			1,783,057		8,748	1.96
Tax-exempt ⁽²⁾		2,046,674		15,844	3.10			2,246,265		17,229	3.07
Total Investment Securities		3,681,126		24,216	2.63			4,029,322		25,977	2.58
Loans held for sale		20,965		319	6.09			21,782		328	6.02
Loans: ⁽³⁾
Commercial		8,770,282		147,772	6.74			8,598,110		159,209	7.41
Real estate mortgage		2,191,384		24,446	4.46			2,130,947		22,357	4.20
HELOC and installment		828,874		15,191	7.33			821,815		16,129	7.85
Tax-exempt ⁽²⁾		1,129,848		13,332	4.72			904,412		10,367	4.59
Total Loans		12,941,353		201,060	6.21			12,477,066		208,390	6.68
Total Earning Assets		16,960,475		228,645	5.39	%		17,123,851		241,695	5.65	%
Total Non-Earning Assets		1,381,263						1,306,670
TOTAL ASSETS	$	18,341,738					$	18,430,521
LIABILITIES
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,522,434	$	34,606	2.51	%	$	5,419,821	$	39,491	2.91	%
Money market deposits		3,437,998		25,952	3.02			3,045,478		27,383	3.60
Savings deposits		1,299,405		2,445	0.75			1,559,877		3,801	0.97
Certificates and other time deposits		1,947,854		17,544	3.60			2,427,859		27,610	4.55
Total Interest-Bearing Deposits		12,207,691		80,547	2.64			12,453,035		98,285	3.16
Borrowings		1,262,926		11,701	3.71			1,011,812		10,552	4.17
Total Interest-Bearing Liabilities		13,470,617		92,248	2.74			13,464,847		108,837	3.23
Noninterest-bearing deposits		2,211,647						2,428,170
Other liabilities		318,600						295,365
Total Liabilities		16,000,864						16,188,382
STOCKHOLDERS’ EQUITY		2,340,874						2,242,139
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,341,738		92,248			$	18,430,521		108,837
Net Interest Income (FTE)			$	136,397					$	132,858
Net Interest Spread (FTE) ⁽⁴⁾					2.65	%					2.42	%

Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.39	%					5.65	%
Interest Expense / Average Earning Assets					2.17	%					2.55	%
Net Interest Margin (FTE) ⁽⁵⁾					3.22	%					3.10	%

⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed using a 30/360 day basis.
⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $6,127 and $5,795 for the three months ended March 31, 2025 and 2024, respectively.
⁽³⁾ Non accruing loans have been included in the average balances.
⁽⁴⁾ Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
⁽⁵⁾ Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.


ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE – NON-GAAP
(Dollars In Thousands, Except Per Share Amounts)	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Net Income Available to Common Stockholders – GAAP	$	54,870		$	63,880		$	48,719		$	39,456		$	47,472
Adjustments:
Net realized losses on sales of available for sale securities		7			11,592			9,114			49			2
Gain on branch sale		—			(19,983	)		—			—			—
Non-core expenses^1,2		—			762			—			—			3,481
Tax on adjustments		(2	)		1,851			(2,220	)		(12	)		(848	)
Adjusted Net Income Available to Common Stockholders – Non-GAAP	$	54,875		$	58,102		$	55,613		$	39,493		$	50,107

Average Diluted Common Shares Outstanding (in thousands)		58,242			58,247			58,289			58,328			59,273

Diluted Earnings Per Common Share – GAAP	$	0.94		$	1.10		$	0.84		$	0.68		$	0.80
Adjustments:
Net realized losses on sales of available for sale securities		—			0.20			0.15			—			—
Gain on branch sale		—			(0.34	)		—			—			—
Non-core expenses^1,2		—			0.01			—			—			0.06
Tax on adjustments		—			0.03			(0.04	)		—			(0.01	)
Adjusted Diluted Earnings Per Common Share – Non-GAAP	$	0.94		$	1.00		$	0.95		$	0.68		$	0.85

¹ – Non-core expenses in 4Q24 included $0.8 million of costs directly related to the branch sale.
² – Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.


NET INTEREST MARGIN (“NIM”), ADJUSTED
(Dollars in Thousands)
	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Net Interest Income (GAAP)	$	130,270		$	134,370		$	131,110		$	128,571		$	127,063
Fully Taxable Equivalent (“FTE”) Adjustment		6,127			5,788			5,883			5,859			5,795
Net Interest Income (FTE) (non-GAAP)	$	136,397		$	140,158		$	136,993		$	134,430		$	132,858

Average Earning Assets (GAAP)	$	16,960,475		$	17,089,198		$	16,990,358		$	17,013,984		$	17,123,851
Net Interest Margin (GAAP)		3.07	%		3.15	%		3.09	%		3.02	%		2.97	%
Net Interest Margin (FTE) (non-GAAP)		3.22	%		3.28	%		3.23	%		3.16	%		3.10	%

RETURN ON TANGIBLE COMMON EQUITY – NON-GAAP
(Dollars In Thousands)	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Total Average Stockholders’ Equity (GAAP)	$	2,340,874		$	2,312,270		$	2,251,547		$	2,203,361		$	2,242,139
Less: Average Preferred Stock		(25,125	)		(25,125	)		(25,125	)		(25,125	)		(25,125	)
Less: Average Intangible Assets, Net of Tax		(726,917	)		(728,218	)		(729,581	)		(730,980	)		(732,432	)
Average Tangible Common Equity, Net of Tax (Non-GAAP)	$	1,588,832		$	1,558,927		$	1,496,841		$	1,447,256		$	1,484,582

Net Income Available to Common Stockholders (GAAP)	$	54,870		$	63,880		$	48,719		$	39,456		$	47,472
Plus: Intangible Asset Amortization, Net of Tax		1,206			1,399			1,399			1,399			1,546
Tangible Net Income (Non-GAAP)	$	56,076		$	65,279		$	50,118		$	40,855		$	49,018

Return on Tangible Common Equity (Non-GAAP)		14.12	%		16.75	%		13.39	%		11.29	%		13.21	%

EFFICIENCY RATIO – NON-GAAP
(Dollars In Thousands)	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Non Interest Expense (GAAP)	$	92,902		$	96,289		$	94,629		$	91,413		$	96,935
Less: Intangible Asset Amortization		(1,526	)		(1,771	)		(1,772	)		(1,771	)		(1,957	)
Less: OREO and Foreclosure Expenses		(600	)		(227	)		(942	)		(373	)		(534	)
Adjusted Non Interest Expense (Non-GAAP)	$	90,776		$	94,291		$	91,915		$	89,269		$	94,444

Net Interest Income (GAAP)	$	130,270		$	134,370		$	131,110		$	128,571		$	127,063
Plus: Fully Taxable Equivalent Adjustment		6,127			5,788			5,883			5,859			5,795
Net Interest Income on a Fully Taxable Equivalent Basis (Non-GAAP)	$	136,397		$	140,158		$	136,993		$	134,430		$	132,858

Non Interest Income (GAAP)	$	30,048		$	42,742		$	24,866		$	31,334		$	26,638
Less: Investment Securities (Gains) Losses		7			11,592			9,114			49			2
Adjusted Non Interest Income (Non-GAAP)	$	30,055		$	54,334		$	33,980		$	31,383		$	26,640
Adjusted Revenue (Non-GAAP)	$	166,452		$	194,492		$	170,973		$	165,813		$	159,498
Efficiency Ratio (Non-GAAP)		54.54	%		48.48	%		53.76	%		53.84	%		59.21	%

Adjusted Non Interest Expense (Non-GAAP)	$	90,776		$	94,291		$	91,915		$	89,269		$	94,444
Less: Non-core Expenses^1,2		—			(762	)		—			—			(3,481	)
Adjusted Non Interest Expense Excluding Non-core Expenses (Non-GAAP)	$	90,776		$	93,529		$	91,915		$	89,269		$	90,963

Adjusted Revenue (Non-GAAP)	$	166,452		$	194,492		$	170,973		$	165,813		$	159,498
Less: Gain on Branch Sale		—			(19,983	)		—			—			—
Adjusted Revenue Excluding Gain on Branch Sale (Non-GAAP)	$	166,452		$	174,509		$	170,973		$	165,813		$	159,498
Adjusted Efficiency Ratio (Non-GAAP)		54.54	%		53.60	%		53.76	%		53.84	%		57.03	%
¹ – Non-core expenses in 4Q24 included $0.8 million of costs directly related to the branch sale.
² – Non-core expenses in 1Q24 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.

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

SOURCE: First Merchants Corporation, Muncie, Indiana

The MIL Network –

April 25, 2025

MIL-OSI: First Northwest Bancorp Reports First Quarter 2025 Improved Profitability

Source: GlobeNewswire (MIL-OSI)

PORT ANGELES, Wash., April 24, 2025 (GLOBE NEWSWIRE) — First Northwest Bancorp (Nasdaq: FNWB) (“First Northwest” or the “Company”) today reported net income of $1.5 million for the first quarter of 2025, compared to a net loss of $2.8 million for the fourth quarter of 2024 and net income of $396,000 for the first quarter of 2024. Basic and diluted income per share were $0.17 for the first quarter of 2025, compared to basic and diluted loss per share of $0.32 for the fourth quarter of 2024 and basic and diluted income per share of $0.04 for the first quarter of 2024.

In the first quarter of 2025, the Company recorded adjusted pre-tax, pre-provision net revenue (“PPNR”)⁽¹⁾ of $1.5 million, compared to $1.4 million for the preceding quarter and $1.2 million for the first quarter of 2024.

The Board of Directors of First Northwest declared a quarterly cash dividend of $0.07 per common share, payable on May 23, 2025, to shareholders of record as of the close of business on May 9, 2025.

Quote from First Northwest President and CEO, Matthew P. Deines:
“We were pleased to see improved profitability in the first quarter of 2025, which helped grow capital levels and tangible book value. We saw improvement on our asset quality metrics, with nonperforming loans 14% lower than the prior quarter, and remain focused on continued asset quality improvement over the balance of 2025. Core commercial and consumer customer growth was positive during the first quarter, with lower net loans and deposits largely the result of a decrease in funding to one large wholesale relationship and reduced brokered deposit balances. We expect better core growth and asset quality trends, combined with ongoing expense discipline and modest margin improvement, will continue to improve profitability and capital in future quarters. With improved profitability, we are evaluating the potential for future stock buybacks.”

Key Points for First Quarter and Going Forward

Positive Balance Sheet Trends:

A favorable deposit mix shift included a $45.0 million decrease in brokered deposits while core customer deposits grew $23.0 million. The loan-to-deposit ratio was stable at 99.9% compared to 99.3% in the fourth quarter of 2024.
The Company reduced borrowings by $28.9 million. The total cost of funds decreased to 2.67% compared to 2.80% in the fourth quarter of 2024.

Update on provision for credit losses:

The Company recorded a $1.6 million provision for credit losses on loans in the first quarter of 2025, primarily due to $1.4 million of charge-offs related to three commercial business loans, one commercial construction loan and a small number of consumer loans. This compares to loan credit loss provisions of $3.8 million for the preceding quarter and $1.2 million for the first quarter of 2024.
We believe the reserve on individually analyzed loans does not represent a universal decline in the collectability of all loans in the portfolio. We continue to work on resolution plans for all troubled borrowers and expect further improvement in nonperforming loans over the course of 2025.

Other significant events:

First Fed Bank’s (“First Fed” or the “Bank”) balance sheet restructuring continued with the remaining bank-owned life insurance policy (“BOLI”) surrender transaction recorded in the first quarter of 2025, with $266,000 of tax and penalties recorded in the provision for income tax. The surrendered policy value was reinvested in the second quarter of 2025. We expect to receive the return of the surrendered funds early in the third quarter of 2025.
We sadly lost a former Bank employee in the first quarter of 2025, resulting in a $1.1 million BOLI death benefit gain.
The Company recorded a $846,000 gain on extinguishment of debt related to repurchasing $5.0 million of subordinated debt at a discount during the first quarter of 2025. In addition to the current quarter gain, the future cost related to interest expense on the subordinated debt will be reduced.
The Company also recognized a $315,000 gain on the conversion of a commercial business loan receivable into a Series A equity investment during the first quarter of 2025.

(1) See reconciliation of Non-GAAP Financial Measures later in this release.

Selected Quarterly Financial Ratios:

	As of or For the Quarter Ended
	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Performance ratios: ⁽¹⁾
Return on average assets		0.28	%		-0.51	%		-0.36	%		-0.40	%		0.07	%
Adjusted PPNR return on average assets ⁽²⁾		0.27			0.26			0.17			0.10			0.22
Return on average equity		3.92			-6.92			-4.91			-5.47			0.98
Net interest margin ⁽³⁾		2.76			2.73			2.70			2.76			2.76
Efficiency ratio ⁽⁴⁾		79.4			92.2			100.3			72.3			88.8
Equity to total assets		7.22			6.89			7.13			7.17			7.17
Book value per common share	$	16.63		$	16.45		$	17.17		$	16.81		$	17.00
Tangible performance ratios: ⁽¹⁾
Tangible common equity to tangible assets ⁽²⁾		7.15	%		6.83	%		7.06	%		7.10	%		7.10	%
Return on average tangible common equity ⁽²⁾		3.96			-6.99			-4.96			-5.53			0.99
Tangible book value per common share ⁽²⁾	$	16.48		$	16.29		$	17.00		$	16.64		$	16.83
Capital ratios (First Fed): ⁽⁵⁾
Tier 1 leverage		9.5	%		9.4	%		9.4	%		9.4	%		9.7	%
Common equity Tier 1 capital		12.7			12.4			12.2			12.4			12.6
Total risk-based		13.9			13.6			13.4			13.5			13.6

(1	)	Performance ratios are annualized, where appropriate.
(2	)	See reconciliation of Non-GAAP Financial Measures later in this release.
(3	)	Net interest income divided by average interest-earning assets.
(4	)	Total noninterest expense as a percentage of net interest income and total other noninterest income.
(5	)	Current period capital ratios are preliminary and subject to finalization of the FDIC Call Report.

Adjusted Pre-tax, Pre-Provision Net Revenue ⁽¹⁾

Adjusted PPNR for the first quarter of 2025 increased $40,000 to $1.5 million, compared to $1.4 million for the preceding quarter, and increased $308,000 from $1.2 million in the first quarter one year ago.

	For the Quarter Ended
(Dollars in thousands)	March 31, 2025		December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Net interest income	$	13,847	$	14,137		$	14,020		$	14,235		$	13,928
Total noninterest income		4,092		1,300			1,779			7,347			2,188
Total revenue		17,939		15,437			15,799			21,582			16,116
Total noninterest expense		14,249		14,233			15,848			15,609			14,303
PPNR ⁽¹⁾		3,690		1,204			(49	)		5,973			1,813
Less selected nonrecurring adjustments to PPNR:
BOLI death benefit		1,059		1,536			—			—			—
Gain on extinguishment of subordinated debt included in other income		846		—			—			—			—
Gain on conversion of loan receivable into Series A equity investment		315		—			—			—			—
Equity investment repricing adjustment		—		(1,762	)		—			—			651
One-time compensation payouts related to reduction in force		—		—			(996	)		—			—
Net gain on sale of premises and equipment		—		—			—			7,919			—
Sale leaseback taxes and assessments included in occupancy and equipment		—		—			—			(359	)		—
Net gain on sale of investment securities		—		—			—			(2,117	)		—
Adjusted PPNR ⁽¹⁾	$	1,470	$	1,430		$	947		$	530		$	1,162

(1) See reconciliation of Non-GAAP Financial Measures later in this release.

Total interest income decreased $1.4 million to $26.8 million for the first quarter of 2025, compared to $28.2 million for the previous quarter, and decreased $503,000 compared to $27.3 million in the first quarter of 2024. Interest income decreased in the first quarter of 2025 primarily due to a decrease in the income earned on loans receivable and reduced interest income received on Company deposit accounts as both yields earned and average volumes decreased. Average loan balances and related interest income were impacted by a significant decrease in the Northpointe Bank Mortgage Purchase Program (“Northpointe Bank MPP”) of $24.7 million and $461,000, respectively. Variable-rate yields on loans and investments were impacted by the cumulative 100 basis points Federal Reserve rate cuts which occurred between September and December 2024.
Total interest expense decreased $1.1 million to $13.0 million for the first quarter of 2025, compared to $14.1 million for the previous quarter, and decreased $422,000 compared to $13.4 million in the first quarter of 2024. Interest expense decreased in the first quarter of 2025 primarily due to decreases in interest paid on brokered certificates of deposit (“CDs”), money market accounts and customer CDs.
The net interest margin increased to 2.76% for the first quarter of 2025, from 2.73% for the prior quarter, and was flat compared to the first quarter of 2024. The Company reported reduced rates and declining volumes of CDs and money market accounts during the first quarter of 2025 which lowered costs; however, these savings were partially offset by a decrease in interest earned on loans and an increase in cost due to higher average borrowings.
Noninterest income included a $1.1 million BOLI death benefit payment received due to the passing of a former employee, a $846,000 gain on extinguishment of debt and a $315,000 gain on the conversion of a loan receivable into an equity investment during the current quarter.
Noninterest expense was relatively unchanged at $14.3 million for the first quarter of 2025, compared to the previous quarter and the first quarter of 2024.

Allowance for Credit Losses on Loans (“ACLL”) and Credit Quality

The allowance for credit losses on loans (“ACLL”) increased $176,000 to $20.6 million at March 31, 2025, from $20.5 million at December 31, 2024. The ACLL as a percentage of total loans was 1.24% at March 31, 2025, an increase from 1.21% at December 31, 2024, and an increase from 1.05% one year earlier. The small increase to the pooled loan reserve combined with charge-offs totaling $1.4 million resulted in a provision expense of $1.6 million for the quarter ended March 31, 2025.

Nonperforming loans totaled $26.4 million at March 31, 2025, a decrease of $4.1 million, or 13.5%, from December 31, 2024. ACLL to nonperforming loans increased to 78% at March 31, 2025, from 67% at December 31, 2024, and decreased from 92% at March 31, 2024. This ratio increased during the first quarter as principal payments and charge-offs decreased balances on loans that were already adequately reserved.

Classified loans decreased $4.7 million to $37.9 million at March 31, 2025, from $42.5 million at December 31, 2024, primarily due to $3.9 million in principal payments received on two commercial construction loans and charge-offs totaling $825,000 on two commercial business loans and one commercial construction loan during the first quarter. An $8.1 million construction loan relationship, which became a classified loan in the fourth quarter of 2022; a $7.2 million commercial construction loan relationship, which became classified in the second quarter of 2024; and a $6.2 million commercial loan relationship, which became classified in the fourth quarter of 2023, account for 57% of the classified loan balance at March 31, 2025. The Bank has exercised legal remedies, including the appointment of a third-party receiver and foreclosure actions, to liquidate the underlying collateral to satisfy the real estate loans in two of these three collateral-dependent relationships. The Bank is also closely monitoring a group of commercial business loans that have similar collateral, with 16 loans totaling $1.7 million included in classified loans at March 31, 2025, and an additional seven loans totaling $2.4 million included in the special mention risk grading category.

	For the Quarter Ended
ACLL ($ in thousands)	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Balance at beginning of period	$	20,449		$	21,970		$	19,343		$	17,958		$	17,510
Charge-offs:
Construction and land		(374	)		(411	)		—			(3,978	)		—
Auto and other consumer		(243	)		(364	)		(492	)		(832	)		(806	)
Commercial business		(811	)		(4,596	)		(24	)		(2,643	)		(33	)
Total charge-offs		(1,428	)		(5,371	)		(516	)		(7,453	)		(839	)
Recoveries:
One-to-four family		—			—			42			—			2
Commercial real estate		6			2			—			—			—
Auto and other consumer		43			52			24			198			46
Commercial business		2			36			—			—			—
Total recoveries		51			90			66			198			48
Net loan charge-offs		(1,377	)		(5,281	)		(450	)		(7,255	)		(791	)
Provision for credit losses		1,553			3,760			3,077			8,640			1,239
Balance at end of period	$	20,625		$	20,449		$	21,970		$	19,343		$	17,958

Average total loans		1,662,164			1,708,232			1,718,402			1,717,830			1,678,656
Annualized net charge-offs to average outstanding loans		0.34	%		1.23	%		0.10	%		1.70	%		0.19	%

Asset Quality ($ in thousands)	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Nonaccrual loans:
One-to-four family	$	1,404		$	1,477		$	1,631		$	1,750		$	1,237
Multi-family		—			—			—			708			708
Commercial real estate		5,574			5,598			5,634			14			22
Construction and land		15,280			19,544			19,382			19,292			14,440
Home equity		54			55			116			118			121
Auto and other consumer		710			700			894			746			1,012
Commercial business		3,365			3,141			2,719			1,003			1,941
Total nonaccrual loans		26,387			30,515			30,376			23,631			19,481
Other real estate owned		—			—			—			—			—
Total nonperforming assets	$	26,387		$	30,515		$	30,376		$	23,631		$	19,481

Nonaccrual loans as a % of total loans ⁽¹⁾		1.59	%		1.80	%		1.75	%		1.39	%		1.14	%
Nonperforming assets as a % of total assets ⁽²⁾		1.21			1.37			1.35			1.07			0.87
ACLL as a % of total loans		1.24			1.21			1.27			1.14			1.05
ACLL as a % of nonaccrual loans		78.16			67.01			72.33			81.85			92.18
Total past due loans to total loans		1.74			1.98			1.92			1.45			1.91

(1	)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.
(2	)	Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.

Financial Condition and Capital

Investment securities decreased $24.9 million, or 7.3%, to $315.4 million at March 31, 2025, compared to $340.3 million three months earlier, and decreased $10.5 million compared to $326.0 million at March 31, 2024. The market value of the portfolio increased $3.1 million during the first quarter of 2025. The estimated average life of the securities portfolio was approximately 6.9 years at March 31, 2025, 6.9 years at the prior quarter end and 7.8 years at the end of the first quarter of 2024. The effective duration of the portfolio was approximately 4.3 years at March 31, 2025, compared to 3.9 years at the prior quarter end and 4.4 years at the end of the first quarter of 2024. The MBS non-agency portfolio decreased $20.2 million due to early redemptions and maturities and $2.4 million from regular repayment activity during the most recent quarter.

Investment Securities ($ in thousands)		March 31, 2025		December 31, 2024		March 31, 2024	Three Month % Change		One Year % Change
Available for Sale at Fair Value
Municipal bonds	$	78,295	$	77,876	$	87,004	0.5	%	-10.0	%
U.S. government agency issued asset-backed securities (ABS agency)		12,643		12,876		14,822	-1.8		-14.7
Corporate issued asset-backed securities (ABS corporate)		15,671		16,122		13,929	-2.8		12.5
Corporate issued debt securities (Corporate debt)		55,067		54,491		53,031	1.1		3.8
U.S. Small Business Administration securities (SBA)		8,061		8,666		7,911	-7.0		1.9
Mortgage-backed securities:
U.S. government agency issued mortgage-backed securities (MBS agency)		96,642		98,697		83,271	-2.1		16.1
Non-agency issued mortgage-backed securities (MBS non-agency)		49,054		71,616		65,987	-31.5		-25.7
Total securities available for sale	$	315,433	$	340,344	$	325,955	-7.3		-3.2

Net loans, excluding loans held for sale, decreased $31.4 million, or 1.9%, to $1.64 billion at March 31, 2025, from $1.68 billion at December 31, 2024, and decreased $49.0 million, or 2.9%, from $1.69 billion one year prior. Construction loans that converted into fully amortizing loans during the quarter totaled $13.3 million. Loan payoffs of $71.0 million, regular payments of $29.4 million and charge-offs totaling $1.4 million outpaced new loan funding totaling $45.3 million and draws on existing loans totaling $23.3 million. The large decrease in commercial business loans was due to the change in funding needs of the Northpointe Bank MPP, which dropped $36.2 million compared to the prior quarter.

Loans ($ in thousands)		March 31, 2025			December 31, 2024		March 31, 2024	Three Month % Change		One Year % Change
Real Estate:
One-to-four family	$	394,428		$	395,315	$	383,905	-0.2	%	2.7	%
Multi-family		338,147			332,596		339,538	1.7		-0.4
Commercial real estate		392,882			390,379		385,130	0.6		2.0
Construction and land		64,877			78,110		125,347	-16.9		-48.2
Total real estate loans		1,190,334			1,196,400		1,233,920	-0.5		-3.5
Consumer:
Home equity		79,151			79,054		72,391	0.1		9.3
Auto and other consumer		273,878			268,876		268,834	1.9		1.9
Total consumer loans		353,029			347,930		341,225	1.5		3.5
Commercial business		120,486			151,493		136,297	-20.5		-11.6
Total loans receivable		1,663,849			1,695,823		1,711,442	-1.9		-2.8
Less:
Derivative basis adjustment		(566	)		188		710	-401.1		-179.7
Allowance for credit losses on loans		20,625			20,449		17,958	0.9		14.9
Total loans receivable, net	$	1,643,790		$	1,675,186	$	1,692,774	-1.9		-2.9

Total deposits decreased $22.0 million to $1.67 billion at March 31, 2025, compared to $1.69 billion at December 31, 2024, and was relatively unchanged compared to one year prior. During the first quarter of 2025, total customer deposit balances increased $23.0 million and brokered deposit balances decreased $45.0 million. Overall, the current rate environment continues to contribute to greater competition for deposits leading to higher rates paid on interest-bearing demand deposits and savings accounts during the current quarter. The deposit mix compared to March 31, 2024, also reflects a shift to higher demand and money market account balances with increased rates paid on those accounts while rates paid on certificate and savings accounts decreased.

Deposits ($ in thousands)		March 31, 2025		December 31, 2024		March 31, 2024	Three Month % Change		One Year % Change
Noninterest-bearing demand deposits	$	247,890	$	256,416	$	252,761	-3.3	%	-1.9	%
Interest-bearing demand deposits		169,912		164,891		170,729	3.0		-0.5
Money market accounts		424,469		413,822		395,480	2.6		7.3
Savings accounts		235,188		205,055		236,550	14.7		-0.6
Certificates of deposit, customer		450,663		464,928		418,904	-3.1		7.6
Certificates of deposit, brokered		137,946		182,914		192,200	-24.6		-28.2
Total deposits	$	1,666,068	$	1,688,026	$	1,666,624	-1.3		0.0

Total shareholders’ equity increased to $157.0 million at March 31, 2025, compared to $153.9 million three months earlier, due to an increase in the after-tax fair market values of the available-for-sale investment securities portfolio of $2.4 million and net income of $1.5 million, partially offset by dividends declared of $656,000 and a decrease in the after-tax fair market values of derivatives of $425,000.

Capital levels for both the Company and the Bank remain in excess of applicable regulatory requirements and the Bank was categorized as “well-capitalized” at March 31, 2025. Preliminary calculations of Common Equity Tier 1 and Total Risk-Based Capital Ratios at March 31, 2025, were 12.7% and 13.9%, respectively.

First Northwest continued to return capital to our shareholders through cash dividends during the first quarter of 2025. The Company paid cash dividends totaling $649,000 in the first quarter of 2025. No shares of common stock were repurchased under the Company’s April 2024 Stock Repurchase Plan (the “Repurchase Plan”) during the quarter ended March 31, 2025. There are 846,123 shares that remain available for repurchase under the Repurchase Plan.

We recommend reading this earnings release in conjunction with the First Quarter 2025 Investor Presentation, located at http://investor.ourfirstfed.com/quarterly-reports and included as an exhibit to our April 24, 2025, Current Report on Form 8-K.

About the Company
First Northwest Bancorp (Nasdaq: FNWB) is a financial holding company engaged in investment activities including the business of its subsidiary, First Fed Bank. First Fed is a Pacific Northwest-based financial institution which has served its customers and communities since 1923. Currently First Fed has 18 locations in Washington state including 12 full-service branches. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a full array of financial products and services for individuals, small businesses, non-profit organizations and commercial customers. In 2022, First Northwest made an investment in The Meriwether Group, LLC, a boutique investment banking and accelerator firm. Additionally, First Northwest focuses on strategic partnerships to provide modern financial services such as digital payments and marketplace lending. First Northwest Bancorp was incorporated in 2012 and completed its initial public offering in 2015 under the ticker symbol FNWB. The Company is headquartered in Port Angeles, Washington.

Forward-Looking Statements
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance and execution on certain strategies, perceived opportunities in the market, potential future credit experience, including our ability to collect, the outcome of litigation and statements regarding our mission and vision, and include, but are not limited to, statements about our plans, objectives, expectations and intentions that are not historical facts, and other statements often identified by words such as “believes,” “expects,” “anticipates,” “estimates,” or similar expressions. These forward-looking statements are based upon current management beliefs and expectations and may, therefore, involve risks and uncertainties, many of which are beyond our control. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio; changes in general economic conditions and conditions within the securities markets, including potential recessionary and other unfavorable conditions and trends relating to housing markets, costs of living, unemployment levels, interest rates, supply chain difficulties and inflationary pressures, among other things; legislative, regulatory, and policy changes; and other factors described in the Company’s latest Annual Report on Form 10-K under the section entitled “Risk Factors,” and other filings with the Securities and Exchange Commission (“SEC”),which are available on our website at www.ourfirstfed.com and on the SEC’s website at www.sec.gov.

Any of the forward-looking statements that we make in this press release and in the other public statements we make may turn out to be incorrect because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company’s operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2025 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Company’s operations and stock price performance.

For More Information Contact:
Matthew P. Deines, President and Chief Executive Officer
Phyllis Nomura, EVP and Chief Financial Officer
IRGroup@ourfirstfed.com
360-457-0461

FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (Unaudited)

	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
ASSETS
Cash and due from banks	$	18,911		$	16,811		$	17,953		$	19,184		$	15,562
Interest-earning deposits in banks		51,412			55,637			64,769			63,995			61,784
Investment securities available for sale, at fair value		315,433			340,344			310,860			306,714			325,955
Loans held for sale		2,940			472			378			1,086			988
Loans receivable (net of allowance for credit losses on loans $20,625, $20,449, $21,970, $19,343, and $17,958)		1,643,790			1,675,186			1,714,416			1,677,764			1,692,774
Federal Home Loan Bank (FHLB) stock, at cost		13,106			14,435			14,435			13,086			15,876
Accrued interest receivable		8,319			8,159			8,939			9,466			8,909
Premises held for sale, net		—			—			—			—			6,751
Premises and equipment, net		9,870			10,129			10,436			10,714			11,028
Servicing rights on sold loans, at fair value		3,301			3,281			3,584			3,740			3,820
Bank-owned life insurance, net		31,786			41,150			41,429			41,113			34,681
Equity and partnership investments		15,026			13,229			14,912			15,085			15,121
Goodwill and other intangible assets, net		1,082			1,082			1,083			1,084			1,085
Deferred tax asset, net		13,179			13,738			10,802			12,216			12,704
Right-of-use (“ROU”) asset, net		16,687			17,001			17,315			17,627			5,841
Prepaid expenses and other assets		31,588			21,352			24,175			23,088			27,141
Total assets	$	2,176,430		$	2,232,006		$	2,255,486		$	2,215,962		$	2,240,020

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	1,666,068		$	1,688,026		$	1,711,641		$	1,708,288		$	1,666,624
Borrowings		307,091			336,014			334,994			302,575			371,455
Accrued interest payable		2,163			3,295			2,153			3,143			2,830
Lease liability, net		17,266			17,535			17,799			18,054			6,227
Accrued expenses and other liabilities		24,217			31,770			25,625			23,717			29,980
Advances from borrowers for taxes and insurance		2,583			1,484			2,485			1,304			2,398
Total liabilities		2,019,388			2,078,124			2,094,697			2,057,081			2,079,514

Shareholders’ Equity
Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding		—			—			—			—			—
Common stock, $0.01 par value, 75,000,000 shares authorized; issued and outstanding at each period end: 9,440,618; 9,353,348; 9,365,979; 9,453,247; and 9,442,796		94			93			94			94			94
Additional paid-in capital		93,450			93,357			93,218			93,985			93,763
Retained earnings		98,056			97,198			100,660			103,322			106,202
Accumulated other comprehensive loss, net of tax		(28,129	)		(30,172	)		(26,424	)		(31,597	)		(32,465	)
Unearned employee stock ownership plan (ESOP) shares		(6,429	)		(6,594	)		(6,759	)		(6,923	)		(7,088	)
Total shareholders’ equity		157,042			153,882			160,789			158,881			160,506
Total liabilities and shareholders’ equity	$	2,176,430		$	2,232,006		$	2,255,486		$	2,215,962		$	2,240,020

FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (Unaudited)

	For the Quarter Ended
	March 31, 2025		December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
INTEREST INCOME
Interest and fees on loans receivable	$	22,231	$	23,716		$	23,536		$	23,733		$	22,767
Interest on investment securities		3,803		3,658			3,786			3,949			3,632
Interest on deposits in banks		482		550			582			571			645
FHLB dividends		307		273			302			358			282
Total interest income		26,823		28,197			28,206			28,611			27,326
INTEREST EXPENSE
Deposits		9,737		11,175			10,960			10,180			10,112
Borrowings		3,239		2,885			3,226			4,196			3,286
Total interest expense		12,976		14,060			14,186			14,376			13,398
Net interest income		13,847		14,137			14,020			14,235			13,928
PROVISION FOR CREDIT LOSSES
Provision for credit losses on loans		1,553		3,760			3,077			8,640			1,239
Provision for (recapture of) credit losses on unfunded commitments		15		(105	)		57			99			(269	)
Provision for credit losses		1,568		3,655			3,134			8,739			970
Net interest income after provision for credit losses		12,279		10,482			10,886			5,496			12,958
NONINTEREST INCOME
Loan and deposit service fees		1,106		1,054			1,059			1,076			1,102
Sold loan servicing fees and servicing rights mark-to-market		195		(115	)		10			74			219
Net gain on sale of loans		11		52			58			150			52
Net gain on sale of investment securities		—		—			—			(2,117	)		—
Net gain on sale of premises and equipment		—		—			—			7,919			—
Increase in cash surrender value of bank-owned life insurance		372		328			315			293			243
Income from death benefit on bank-owned life insurance, net		1,059		1,536			—			—			—
Other income (loss)		1,349		(1,555	)		337			(48	)		572
Total noninterest income		4,092		1,300			1,779			7,347			2,188
NONINTEREST EXPENSE
Compensation and benefits		7,715		7,367			8,582			8,588			8,128
Data processing		2,011		2,065			2,085			2,008			1,944
Occupancy and equipment		1,592		1,559			1,553			1,799			1,240
Supplies, postage, and telephone		298		296			360			317			293
Regulatory assessments and state taxes		479		460			548			457			513
Advertising		265		362			409			377			309
Professional fees		777		813			698			684			910
FDIC insurance premium		434		491			533			473			386
Other expense		678		820			1,080			906			580
Total noninterest expense		14,249		14,233			15,848			15,609			14,303
Income (loss) before provision for income taxes		2,122		(2,451	)		(3,183	)		(2,766	)		843
Provision for income taxes		608		359			(1,203	)		(547	)		447
Net income (loss)	$	1,514	$	(2,810	)	$	(1,980	)	$	(2,219	)	$	396

Basic and diluted earnings (loss) per common share	$	0.17	$	(0.32	)	$	(0.23	)	$	(0.25	)	$	0.04

FIRST NORTHWEST BANCORP AND SUBSIDIARY ADDITIONAL INFORMATION (Dollars in thousands) (Unaudited)

Selected Loan Detail	March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024
Construction and land loans breakout
1-4 Family construction	$	42,371	$	39,319	$	43,125	$	56,514	$	69,075
Multifamily construction		9,223		15,407		29,109		43,341		45,776
Nonresidential construction		7,229		16,857		17,500		1,015		3,374
Land and development		6,054		6,527		5,975		6,403		7,122
Total construction and land loans	$	64,877	$	78,110	$	95,709	$	107,273	$	125,347

Auto and other consumer loans breakout
Triad Manufactured Home loans	$	134,740	$	128,231	$	129,600	$	110,510	$	119,309
Woodside auto loans		118,972		117,968		126,129		131,151		128,072
First Help auto loans		13,012		14,283		15,971		17,427		8,326
Other auto loans		1,313		1,647		2,064		2,690		3,313
Other consumer loans		5,841		6,747		7,434		23,845		9,814
Total auto and other consumer loans	$	273,878	$	268,876	$	281,198	$	285,623	$	268,834

Commercial business loans breakout
Northpointe Bank MPP	$	–	$	36,230	$	38,155	$	9,150	$	15,047
Secured lines of credit		39,986		35,701		37,686		28,862		41,014
Unsecured lines of credit		2,030		1,717		1,571		1,133		1,001
SBA loans		6,889		7,044		7,219		7,146		8,944
Other commercial business loans		71,581		70,801		70,696		70,803		70,291
Total commercial business loans	$	120,486	$	151,493	$	155,327	$	117,094	$	136,297

Loans by Collateral and Unfunded Commitments	March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024
One-to-four family construction	$	38,221	$	44,468	$	51,607	$	49,440	$	70,100
All other construction and land		30,947		34,290		45,166		58,346		55,286
One-to-four family first mortgage		428,081		466,046		469,053		434,840		436,543
One-to-four family junior liens		15,155		15,090		14,701		13,706		12,608
One-to-four family revolving open-end		51,832		51,481		48,459		44,803		45,536
Commercial real estate, owner occupied:
Health care		29,386		29,129		29,407		29,678		29,946
Office		19,363		17,756		17,901		19,215		17,951
Warehouse		14,843		14,948		11,645		14,613		14,683
Other		74,915		78,170		64,535		56,292		55,063
Commercial real estate, non-owner occupied:
Office		41,885		49,417		49,770		50,158		53,099
Retail		50,737		49,591		49,717		50,101		50,478
Hospitality		62,226		61,919		62,282		62,628		66,982
Other		93,549		81,640		82,573		84,428		93,040
Multi-family residential		339,217		333,419		354,118		350,382		339,907
Commercial business loans		76,330		77,381		86,904		79,055		90,781
Commercial agriculture and fishing loans		22,914		21,833		15,369		14,411		10,200
State and political subdivision obligations		369		369		404		405		405
Consumer automobile loans		133,209		133,789		144,036		151,121		139,524
Consumer loans secured by other assets		137,619		131,429		132,749		129,293		122,895
Consumer loans unsecured		3,051		3,658		4,411		5,209		6,415
Total loans	$	1,663,849	$	1,695,823	$	1,734,807	$	1,698,124	$	1,711,442

Unfunded commitments under lines of credit or existing loans	$	172,260	$	163,827	$	166,446	$	155,005	$	148,736

FIRST NORTHWEST BANCORP AND SUBSIDIARY NET INTEREST MARGIN ANALYSIS (Dollars in thousands) (Unaudited)

	Three Months Ended March 31,
	2025								2024
	Average			Interest					Average			Interest
	Balance			Earned/		Yield/			Balance			Earned/		Yield/
	Outstanding			Paid		Rate			Outstanding			Paid		Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net ^{(1) (2)}	$	1,642,007		$	22,231		5.49	%	$	1,661,420		$	22,767		5.51	%
Investment securities		333,208			3,803		4.63			307,490			3,632		4.75
FHLB dividends		13,609			307		9.15			12,328			282		9.20
Interest-earning deposits in banks		42,917			482		4.55			46,583			645		5.57
Total interest-earning assets ⁽³⁾		2,031,741			26,823		5.35			2,027,821			27,326		5.42
Noninterest-earning assets		143,033								138,366
Total average assets	$	2,174,774							$	2,166,187
Interest-bearing liabilities:
Interest-bearing demand deposits	$	168,414		$	260		0.63		$	165,379		$	187		0.45
Money market accounts		414,425			2,345		2.29			377,505			1,949		2.08
Savings accounts		216,499			783		1.47			235,784			953		1.63
Certificates of deposit, customer		451,936			4,522		4.06			437,525			4,494		4.13
Certificates of deposit, brokered		158,269			1,827		4.68			205,923			2,529		4.94
Total interest-bearing deposits ⁽⁴⁾		1,409,543			9,737		2.80			1,422,116			10,112		2.86
Advances		279,500			2,796		4.06			252,912			2,892		4.60
Subordinated debt		38,370			443		4.68			39,446			394		4.02
Total interest-bearing liabilities		1,727,413			12,976		3.05			1,714,474			13,398		3.14
Noninterest-bearing deposits ⁽⁴⁾		243,569								249,283
Other noninterest-bearing liabilities		47,238								40,563
Total average liabilities		2,018,220								2,004,320
Average equity		156,554								161,867
Total average liabilities and equity	$	2,174,774							$	2,166,187

Net interest income				$	13,847							$	13,928
Net interest rate spread							2.30								2.28
Net earning assets	$	304,328							$	313,347
Net interest margin ⁽⁵⁾							2.76								2.76
Average interest-earning assets to average interest-bearing liabilities		117.6	%							118.3	%

(1)	The average loans receivable, net balances include nonaccrual loans.
(2)	Interest earned on loans receivable includes net deferred costs of ($338,000) and ($171,000) for the three months ended March 31, 2025 and 2024, respectively.
(3)	Includes interest-earning deposits (cash) at other financial institutions.
(4)	Cost of all deposits, including noninterest-bearing demand deposits, was 2.39% and 2.43% for the three months ended March 31, 2025 and 2024, respectively.
(5)	Net interest income divided by average interest-earning assets.

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

Non-GAAP Financial Measures
This press release contains financial measures that are not in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Non-GAAP measures are presented where management believes the information will help investors understand the Company’s results of operations or financial position and assess trends. Where non-GAAP financial measures are used, the comparable GAAP financial measure is also provided. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that may be presented by other companies. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons. Reconciliations of the GAAP and non-GAAP measures are presented below.

Calculations Based on PPNR and Adjusted PPNR:

	For the Quarter Ended
(Dollars in thousands)	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Net income (loss)	$	1,514		$	(2,810	)	$	(1,980	)	$	(2,219	)	$	396
Plus: provision for credit losses		1,568			3,655			3,134			8,739			970
Provision for income taxes		608			359			(1,203	)		(547	)		447
PPNR ⁽¹⁾		3,690			1,204			(49	)		5,973			1,813
Less selected nonrecurring adjustments to PPNR:
BOLI death benefit		1,059			1,536			—			—			—
Gain on extinguishment of subordinated debt included in other income		846			—			—			—			—
Gain on conversion of loan receivable into Series A equity investment		315			—			—			—			—
Equity investment repricing adjustment		—			(1,762	)		—			—			651
One-time compensation payouts related to reduction in force		—			—			(996	)		—			—
Net gain on sale of premises and equipment		—			—			—			7,919			—
Sale leaseback taxes and assessments included in occupancy and equipment		—			—			—			(359	)		—
Net gain on sale of investment securities		—			—			—			(2,117	)		—
Adjusted PPNR ⁽¹⁾	$	1,470		$	1,430		$	947		$	530		$	1,162

Average total assets	$	2,174,774		$	2,205,502		$	2,209,333		$	2,219,370		$	2,166,187
Return on average assets (GAAP)		0.28	%		-0.51	%		-0.36	%		-0.40	%		0.07	%
PPNR return on average assets (Non-GAAP) ⁽¹⁾		0.69	%		0.22	%		-0.01	%		1.08	%		0.34	%
Adjusted PPNR return on average assets (Non-GAAP) ⁽¹⁾		0.27	%		0.26	%		0.17	%		0.10	%		0.22	%

(1)

PPNR removes the provisions for credit loss and income tax from net income. This removes potentially volatile estimates, providing a comparative amount limited to income and expense recorded during the period. Adjusted PPNR further removes large nonrecurring transactions recorded during the period. We believe these metrics provide comparative amounts for a better review of recurring net revenue.

FIRST NORTHWEST BANCORP AND SUBSIDIARY ADDITIONAL INFORMATION (Dollars in thousands) (Unaudited)

Calculations Based on Tangible Common Equity:

	For the Quarter Ended
(Dollars in thousands, except per share data)		March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Total shareholders’ equity	$	157,042		$	153,882		$	160,789		$	158,881		$	160,506
Less: Goodwill and other intangible assets		1,082			1,082			1,083			1,084			1,085
Disallowed non-mortgage loan servicing rights		415			423			489			517			489
Total tangible common equity	$	155,545		$	152,377		$	159,217		$	157,280		$	158,932

Total assets	$	2,176,430		$	2,232,006		$	2,255,486		$	2,215,962		$	2,240,020
Less: Goodwill and other intangible assets		1,082			1,082			1,083			1,084			1,085
Disallowed non-mortgage loan servicing rights		415			423			489			517			489
Total tangible assets	$	2,174,933		$	2,230,501		$	2,253,914		$	2,214,361		$	2,238,446

Average shareholders’ equity	$	156,554		$	161,560		$	160,479		$	163,079		$	161,867
Less: Average goodwill and other intangible assets		1,082			1,083			1,084			1,085			1,085
Average disallowed non-mortgage loan servicing rights		423			489			517			489			481
Total average tangible common equity	$	155,049		$	159,988		$	158,878		$	161,505		$	160,301

Net income (loss)	$	1,514		$	(2,810	)	$	(1,980	)	$	(2,219	)	$	396
Common shares outstanding		9,440,618			9,353,348			9,365,979			9,453,247			9,442,796
GAAP Ratios:
Equity to total assets		7.22	%		6.89	%		7.13	%		7.17	%		7.17	%
Return on average equity		3.92	%		-6.92	%		-4.91	%		-5.47	%		0.98	%
Book value per common share	$	16.63		$	16.45		$	17.17		$	16.81		$	17.00
Non-GAAP Ratios:
Tangible common equity to tangible assets ⁽¹⁾		7.15	%		6.83	%		7.06	%		7.10	%		7.10	%
Return on average tangible common equity ⁽¹⁾		3.96	%		-6.99	%		-4.96	%		-5.53	%		0.99	%
Tangible book value per common share ⁽¹⁾	$	16.48		$	16.29		$	17.00		$	16.64		$	16.83

(1

)

We believe that the use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

Photos accompanying this announcement are available at:

https://www.globenewswire.com/NewsRoom/AttachmentNg/d5c93711-67c1-4664-a49c-37df22040147

https://www.globenewswire.com/NewsRoom/AttachmentNg/4a3584b1-1204-464b-8080-7fcc46d66470

https://www.globenewswire.com/NewsRoom/AttachmentNg/37ce187a-5662-457d-bd13-66e409ac2710

https://www.globenewswire.com/NewsRoom/AttachmentNg/4b958691-2f11-4ceb-a89a-ab88b1b1d702

https://www.globenewswire.com/NewsRoom/AttachmentNg/7207465f-e4fb-4f05-8218-e87558fb913c

https://www.globenewswire.com/NewsRoom/AttachmentNg/1c8a4efe-4d1b-4b02-bdac-6fd686314c0b

The MIL Network –

April 24, 2025

MIL-OSI United Kingdom: Ban Airbnb tax breaks and introduce additional charges for short term lets

Source: Scottish Greens

24 Apr 2025 Housing

Homes are for living in, not for profiteering.

The Scottish Greens have tabled plans to ban tax breaks for short term let operators profiteering from houses that could be used to tackle Scotland’s homelessness crisis.

Green MSP Ross Greer has lodged an amendment to the Housing (Scotland) Bill which would ban short term let operators from receiving relief from Non-Domestic Rates (NDR), commonly known as business rates. A second amendment lodged by the MSP would give Ministers the power to charge short term lets an additional NDR rate instead.

At present short term lets typically enjoy up to 100% NDR relief through policies such as the Small Business Bonus Scheme.

These reforms would discourage businesses from buying up homes to turn into short term lets, like Airbnbs. It is hoped the move would encourage the sale of homes currently used as short term lets to free up housing for people to actually live in, rather than for businesses to profit from.

Since the last election, the Scottish Greens have doubled the tax paid when buying a holiday home or buy-to-let property and given councils the power to double Council Tax on holiday homes.

These reforms have had the desired effect on house purchases, with 2455 fewer second homes bought last year than in 2023, the largest decrease in a decade. Combined, these will also raise over a quarter of a billion pounds for public services in the current financial year.

Mr Greer said:

“There are communities across the country where the greed of short term let operators and buy-to-let landlords has destroyed any chance of local young people ever owning their own home.

“Given the damage they’ve done to the housing market, there is absolutely no need for short term let operators to continue receiving massive tax breaks. Instead, they should pay a bit more in tax to fund the extra affordable housing we need to solve the crisis they helped to cause.

“The changes already delivered by Green MSPs have reduced the number of second and holiday homes bought each year, freeing up more properties for people who need a home to live in and raising millions of pounds for vital services like schools and hospitals.

“We will continue cracking down on the rich hoarding homes and working to free up houses for people to actually live in.

“We have thousands of homeless people across Scotland while many homes are bought up and used as Airbnbs. The Scottish Greens believe housing should be for people and not for profit.”

MIL OSI United Kingdom –

April 24, 2025

MIL-OSI: Eurocastle Releases Fourth Quarter and Year End 2024 Financial Results

Source: GlobeNewswire (MIL-OSI)

EUROCASTLE INVESTMENT LIMITED

FOR IMMEDIATE RELEASE
Contact:
Oak Fund Services (Guernsey) Limited
Company Administrator
Attn: Nicole Barnes
Tel: +44 1481 723450

Eurocastle Releases Fourth Quarter and Year End 2024 Financial Results

Guernsey, 24 April 2025 – Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has released its annual report for the year ended 31 December 2024.

IFRS NAV of €22.08 million, or €22.05 per share vs €21.34 per share as at Q3 2024 and €21.77 per share as at YE 2023, reflecting an increase in the value of the Company’s holding in a Luxembourg fund under the New Investment Strategy, following the closing of its first investment in October 2024.
Adjusted Net Asset Value (“NAV”) of €11.35 million¹, or €11.34 per share² vs. €10.91 per share in Q3 2024 and €11.12 per share as at YE 2023.

The tables below summarise the NAV by segment:


	YE 2024 NAV		Q3 2024 NAV		YE 2023 NAV
	€’m	€ p.s.	€’m	€ p.s.	€’m	€ p.s.
New Investment Strategy – Greece	5.77	5.76	0.11	0.11	0.10	0.10
Legacy Italian Real Estate Funds	0.06	0.06	0.06	0.06	0.08	0.08
Net Corporate Cash³	12.28	12.26	17.47	17.45	17.83	17.86
Legacy German Tax Asset	3.97	3.97	3.73	3.72	3.73	3.73
IFRS NAV	22.08	22.05	21.37	21.34	21.74	21.77

Legacy German Tax Reserve⁴	(5.99)	(5.97)	(5.44)	(5.43)	(5.46)	(5.46)

Adjusted NAV before Liquidation Reserve	16.09	16.08	15.93	15.91	16.28	16.31

Liquidation Reserve⁴	(4.74)	(4.74)	(5.00)	(5.00)	(5.18)	(5.19)

Adjusted NAV	11.35	11.34	10.93	10.91	11.10	11.12
Ordinary shares outstanding	1,001,555		1,001,555		998,555

As at 31 December 2024, the Company’s assets mainly comprise:

1. €12.28 million, or €12.26 per share, of net corporate cash, which is available to continue seeking investments under the New Investment Strategy.

2. €5.77 million, or €5.76 per share, in the Company’s first investment under the New Investment Strategy, a share in a Luxembourg fund which has opportunistically acquired a boutique retail complex in an affluent part of Athens, Greece.

3. A tax asset of €3.97 million, or €3.97 per share, representing amounts paid (and associated interest) in relation to additional tax assessed against a legacy German property subsidiary where the Company won the first instance of its appeal in December 2024. The German tax authorities have since appealed the decision and the Company is waiting for the date of the next hearing.

4. Residual interests in two legacy Italian Real Estate Fund Investments with an NAV of €0.06 million, or €0.06 per share, where the underlying properties have been fully sold, with both funds now in liquidation.

2024 BUSINESS HIGHLIGHTS

FY 2024 Overview

During 2024, having largely concluded its Realisation Plan, the Company made significant progress in implementing the New Investment Strategy by establishing the platform through which it can raise third party capital and make investments, while also closing on the first acquisition made as part of this strategy.

Highlights

New Investment Strategy – In August 2024, Eurocastle launched a Luxembourg regulated fund, European Properties Investment Fund S.C.A., SICAV RAIF (“EPIF” or the “Fund”), through which it expects to invest alongside selected external co-investors. EPIF initially closed with Eurocastle committing to invest €8 million alongside a €2 million commitment from its JV Partner. EPIF is now being marketed to potential investors with a target size of €100 million.
In addition to generating attractive risk adjusted returns on its share of any investments made, Eurocastle also anticipates receiving market standard management and incentive fees from external investors. The Company sees the Fund as an attractive opportunity to earn enhanced returns on the capital it invests while also building a meaningful base for future investments.
In October 2024, the Fund made its first acquisition, being part of a boutique retail complex in an affluent part of Athens with Eurocastle investing a total of €5.5 million into the Fund. The asset was acquired from one of the largest Greek banks out of a distressed situation. As at the end of 2024, Eurocastle’s 80% share in the NAV of EPIF is €5.8 million. In parallel with executing this first investment, EPIF has been underwriting a number of additional opportunities.
Legacy Italian Real Estate Funds –The remaining NAV for these investments of €0.06 million, or €0.06 per share, reflects cash currently reserved in the funds that is expected to be released once the fund manager resolves certain potential liabilities and liquidates each fund.
Legacy German Tax Matter – Prior to 2024, the Company had paid a net amount of €3.7 million in relation to the Legacy German tax matter against which it has raised a corresponding tax asset (together with associated interest). The Company, in pursuing the reimbursement of this amount through the German fiscal court, won the first instance of its appeal in December 2024. Shortly after, the German tax authorities appealed the decision through the German federal tax court and the Company is currently waiting to be notified of the date of the hearing. In the meantime, €2.5 million of the €3.7 million of additional tax paid by the Company, being the additional tax assessed before late payment interest, is accruing interest at 6% per annum, which would be paid to the Company should it finally prevail in the case.
The remaining potential exposure, associated with the same point under dispute, is estimated to be €1.7 million. This relates to the years 2013 to 2015 which remain subject to ongoing tax audits. Notwithstanding the Company’s expectation that the tax matter will eventually be resolved in the Company’s favour, as at 31 December 2024, the full potential liability of €6.0 million, or €5.97 per share (including associated defence costs and interest accrued), is fully reserved for within the Additional Reserves.
Additional Reserves – As at 31 December 2024, of the total Additional Reserves of €10.7 million, €6.0 million related to the legacy German tax matter with the balance of approximately €4.7 million in place to allow for future costs and potential liabilities while the Company pursues in parallel the New Investment Strategy. The Board anticipates reviewing the appropriate level of reserves once it has further clarity on the amount of commitments received by EPIF.

Subsequent Events

On April 23^rd, 2025, EPIF successfully held its first investor close, securing €16 million of commitments from 10 investors taking the total fund size to €26 million. Currently, a significant number of potential additional commitments are at advanced stage of due diligence, with a further close expected in May 2025.

The commitments closed on 23 April 2025 will reduce Eurocastle’s interest in the Fund from 80% to approximately 31%. As a result, the new investors will reimburse Eurocastle an estimated total of €3.5 million of the €5.5 million it had invested to date in EPIF. This reimbursement is to align Eurocastle’s revised pro rata share of the capital called plus compensatory interest. The amount to be paid to Eurocastle is substantially in line with the relevant share of Eurocastle’s valuation of its interest in EPIF as at 31 December 2024.


Income Statement for the Fourth Quarter 2024, Full Year 2024 and Full Year 2023	Q4 2024	FY 2024	FY 2023
	€ Thousands	€ Thousands	€ Thousands
*Portfolio Returns*
New Investment Strategy – Greece unrealised fair value movement	429	273	–
Legacy Italian NPLs & Other Loans realised gain	–	–	2
Legacy Italian Real Estate Funds unrealised fair value movement	–	(18)	(50)
Fair value movement on Investments	429	255	(48)
Other Income	100	113	2
Interest income	345	827	519
Loss on foreign currency translation	–	(1)	(2)
Total income	874	1,194	471

*Operating Expenses*
Manager base and incentive fees	42	103	94
Remaining operating expenses	115	745	1,012
Other operating expenses	157	848	1,106
Total expenses	157	848	1,106

Net profit/(loss) for the period/year	717	346	(635)
*€ per share*	*0.72*	*0.35*	*(0.64)*

	Balance Sheet and Adjusted NAV Reconciliation as at 31 December 2024	New Strategy Investments Greece	Legacy Italian Investments	Corporate	Total	Total
					2024	2023
		€ Thousands	€ Thousands	€ Thousands	€ Thousands	€ Thousands
Assets
	Other assets	–	–	315	315	210
	Legacy German tax asset	–	–	3,974	3,974	3,727
	Investments – New Investment Strategy – Greece	5,770	–	–	5,770	–
	Investments – Legacy Italian Real Estate Funds	–	64	–	64	82
	Cash, cash equivalents and treasury investments
	Cash and cash equivalents	–	–	12,415	12,415	13,951
	Treasury investments	–	–	–	–	4,236
Total assets		5,770	64	16,704	22,538	22,206
Liabilities
	Trade and other payables		–	389	389	425
	Manager base and incentive fees		–	63	63	41
Total liabilities			–	452	452	466
IFRS Net Asset Value		5,770	64	16,252	22,086	21,740
Liquidation cash reserve		–	–	(4,748)	(4,748)	(5,185)
Legacy German tax cash reserve		–	–	(2,008)	(2,008)	(1,728)
Legacy German tax asset		–	–	(3,974)	(3,974)	(3,727)
Adjusted NAV		5,770	64	5,522	11,356	11,100
*Adjusted NAV (€ per Share)*		*5.76*	*0.06*	*5.52*	*11.34*	*11.12*

NOTICE:

This announcement contains inside information for the purposes of the Market Abuse Regulation 596/2014.

ADDITIONAL INFORMATION

For investment portfolio information, please refer to the Company’s most recent Financial Report, which will be available on the Company’s website (www.eurocastleinv.com).

ABOUT EUROCASTLE

Eurocastle Investment Limited (“Eurocastle” or the “Company”) is a publicly traded closed-ended investment company. On 8 July 2022, the Company announced the relaunch of its investment activity and is currently in the early stages of pursuing its new strategy by initially focusing on opportunistic real estate in Greece with a plan to expand across Southern Europe. For more information regarding Eurocastle Investment Limited and to be added to our email distribution list, please visit www.eurocastleinv.com.

FORWARD LOOKING STATEMENTS

This release contains statements that constitute forward-looking statements. Such forward-looking statements may relate to, among other things, future commitments to sell real estate and achievement of disposal targets, availability of investment and divestment opportunities, timing or certainty of completion of acquisitions and disposals, the operating performance of our investments and financing needs. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may”, “will”, “should”, “potential”, “intend”, “expect”, “endeavor”, “seek”, “anticipate”, “estimate”, “overestimate”, “underestimate”, “believe”, “could”, “project”, “predict”, “project”, “continue”, “plan”, “forecast” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. The Company’s ability to predict results or the actual effect of future plans or strategies is limited. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, its actual results and performance may differ materially from those set forth in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause the Company’s actual results in future periods to differ materially from forecasted results or stated expectations including the risks regarding Eurocastle’s ability to declare dividends or achieve its targets regarding asset disposals or asset performance.

¹ In light of the Realisation Plan announced in November 2019, the Adjusted NAV as at 31 December 2024 reflects additional reserves for future costs and potential liabilities, which have not been accounted for under the IFRS NAV (“Additional Reserves”). No commitments for these future costs and potential liabilities existed as at 31 December 2024.
² Per share calculations for Eurocastle as at 31 December 2024 are based on 1,001,555 shares in issue. YE 2023 NAV per share based on 998,555 shares; Q3 2024 NAV per share based on 1,001,555 shares.
³ Reflects corporate cash net of accrued liabilities and other assets.

⁴ Reserves that were put in place when the Company realised the majority of its investment assets in 2019 in order for the Company to continue in operation and fund its
future costs and potential liabilities. These reserves are not accounted for under IFRS.

The MIL Network –

April 24, 2025

MIL-Evening Report: ER Report: A Roundup of Significant Articles on EveningReport.nz for April 24, 2025

ER Report: Here is a summary of significant articles published on EveningReport.nz on April 24, 2025.

The ocean can look deceptively calm – until it isn’t. Here’s what ‘hazardous surf’ really means
Source: The Conversation (Au and NZ) – By Samuel Cornell, PhD Candidate, Beach Safety Research Group, School of Population Health, UNSW Sydney Over the Easter weekend, seven people drowned along the Australian coast. Most were swept off rock platforms – extremely dangerous locations that are increasingly prevalent in Australia’s coastal fatality data. The weather was

The major parties have announced their plans to address domestic and family violence. How do they stack up?
Source: The Conversation (Au and NZ) – By Kate Fitz-Gibbon, Professor (Practice), Faculty of Business and Economics, Monash University In the past week, at least seven women have been killed in Australia, allegedly by men. These deaths have occurred in different contexts – across state borders, communities and relationships. But are united by one truth:

The biggest losers: how Australians became the world’s most enthusiastic gamblers
Source: The Conversation (Au and NZ) – By Wayne Peake, Adjunct research fellow, School of Humanities and Communication Arts, Western Sydney University The story goes that the late billionaire Australian media magnate Kerry Packer once visited a Las Vegas casino, where a Texan was bragging about his ranch and how many millions it was worth.

A golden era for personalized medicine is approaching, but are we ready?
Source: The Conversation (Au and NZ) – By Nazia Pathan, PhD, Postdoctoral Researcher, Population Health Research Institute, McMaster University Biobanks have become some of the most transformative tools in medical research, enabling scientists to study the relationships between genes, health and disease on an unprecedented scale (Piqsels/Siyya) If there’s a disease that seems to run

The billions spent on NZ’s accommodation supplement is failing to make rent affordable – so what will?
Source: The Conversation (Au and NZ) – By Edward Yiu, Associate Professor, School of Business, University of Auckland, Waipapa Taumata Rau Pixelbliss/Shutterstock New Zealand’s unaffordable housing market has left many low and middle-income families reliant on the accommodation supplement to cover rent and mortgage payments. But our new research has found the scheme, which costs

Fossil teeth show extinct giant kangaroos spent their lives close to home – and perished when the climate changed
Source: The Conversation (Au and NZ) – By Christopher Laurikainen Gaete, PhD Candidate, University of Wollongong Chris Laurikainen Gaete Large kangaroos today roam long distances across the outback, often surviving droughts by moving in mobs to find new food when pickings are slim. But not all kangaroos have been this way. In new research published

The billions spent on NZ’s accomodation supplement is failing to make rent affordable – so what will?
Source: The Conversation (Au and NZ) – By Edward Yiu, Associate Professor, School of Business, University of Auckland, Waipapa Taumata Rau Pixelbliss/Shutterstock New Zealand’s unaffordable housing market has left many low and middle-income families reliant on the accommodation supplement to cover rent and mortgage payments. But our new research has found the scheme, which costs

The gambling industry has women in its sights. Why aren’t policymakers paying attention?
Source: The Conversation (Au and NZ) – By Simone McCarthy, Postdoctoral Research Fellow – Commercial Determinants of Health, Deakin University Wpadington/Shutterstock Whatever the code, whatever the season, Australian sports fans are bombarded with gambling ads. Drawing on Australians’ passion, loyalty and pride for sport, the devastating health and social consequences of gambling – including financial

When ‘equal’ does not mean ‘the same’: Liberals still do not understand their women problem
Source: The Conversation (Au and NZ) – By Carol Johnson, Emerita Professor, Department of Politics and International Relations, University of Adelaide “Women’s” issues are once again playing a significant role in the election debate as Labor and the Liberals trade barbs over which parties’ policies will benefit women most. In the latest salvo, the opposition

Tremors, seizures and paralysis: this brain disorder is more common than multiple sclerosis – but often goes undiagnosed
Source: The Conversation (Au and NZ) – By Benjamin Scrivener, PhD Candidate, Faculty of Medical and Health Sciences, University of Auckland, Waipapa Taumata Rau Kateryna Kon/Shutterstock Imagine suddenly losing the ability to move a limb, walk or speak. You would probably recognise this as a medical emergency and get to hospital. Now imagine the doctors

The origin story of the Anzac biscuit is largely myth – but that shouldn’t obscure the history of women during the war
Source: The Conversation (Au and NZ) – By Garritt C. Van Dyk, Senior Lecturer in History, University of Waikato Australian Comforts Fund buffet in Longueval, France, 1916. Australian War Memorial The Anzac biscuit is a cultural icon, infused with mythical value, representing the connection between women on the home front and soldiers serving overseas during

Politics with Michelle Grattan: historian Frank Bongiorno on dramatic shifts in how elections are fought and won
Source: The Conversation (Au and NZ) – By Michelle Grattan, Professorial Fellow, University of Canberra This election has been lacklustre, without the touch of excitement of some past campaigns. Through the decades, campaigning has changed dramatically, adopting new techniques and technologies. This time, we’ve seen politicians try to jump onto viral podcasts. To discuss old

Albanese government announces $1.2 billion plan to purchase critical minerals
Source: The Conversation (Au and NZ) – By Michelle Grattan, Professorial Fellow, University of Canberra A re-elected Albanese government will take the unprecedented step of buying or obtaining options over key critical minerals to protect Australia’s national interest and boost its economic resilience. The move follows US President Donald Trump’s ordering a review into American

Why special measures to boost Fiji women’s political representation remain a distant goal
RNZ Pacific Despite calls from women’s groups urging the government to implement policies to address the underrepresentation of women in politics, the introduction of temporary special measures (TSM) to increase women’s political representation in Fiji remains a distant goal. This week, leader of the Social Democratic Liberal Party (Sodelpa), Cabinet Minister Aseri Radrodro, and opposition

Albanese government announces $1.2 billion in plan to purchase critical minerals
Source: The Conversation (Au and NZ) – By Michelle Grattan, Professorial Fellow, University of Canberra A re-elected Albanese government will take the unprecedented step of buying or obtaining options over key critical minerals to protect Australia’s national interest and boost its economic resilience. The move follows US President Donald Trump’s ordering a review into American

Flooding incidents in Ghana’s capital are on the rise. Researchers chase the cause
Source: The Conversation (Au and NZ) – By Stephen Appiah Takyi, Senior Lecturer, Department of Planning, Kwame Nkrumah University of Science and Technology (KNUST) Urban flooding is a major problem in the global south. In west and central Africa, more than 4 million people were affected by flooding in 2024. In Ghana, cities suffer damage

Australia needs bold ideas on defence. The Coalition’s increased spending plan falls disappointingly short
Source: The Conversation (Au and NZ) – By Peter Layton, Visiting Fellow, Strategic Studies, Griffith University Just as voting has begun in this year’s federal election, the Coalition has released its long-awaited defence policy platform. The main focus, as expected, is a boost in defence spending to 3% of Australia’s GDP within the next decade.

Sniping koalas from helicopters: here’s what’s wrong with Victoria’s unprecedented cull
Source: The Conversation (Au and NZ) – By Liz Hicks, Lecturer in Law, The University of Melbourne Roberto La Rosa/Shutterstock Snipers in helicopters have shot more than 700 koalas in the Budj Bim National Park in western Victoria in recent weeks. It’s believed to be the first time koalas have been culled in this way.

Rather than short-term fixes, communities need flexible plans to prepare for a range of likely climate impacts
Source: The Conversation (Au and NZ) – By Tom Logan, Senior Lecturer Above the Bar of Civil Systems Engineering, University of Canterbury Dave Rowland/Getty Images As New Zealanders clean up after ex-Cyclone Tam which left thousands without power and communities once again facing flooding, it’s tempting to seek immediate solutions. However, after the cleanup and

Why do Labor and the Coalition have so many similar policies? It’s simple mathematics
Source: The Conversation (Au and NZ) – By Gabriele Gratton, Professor of Politics and Economics and ARC Future Fellow, UNSW Sydney Pundits and political scientists like to repeat that we live in an age of political polarisation. But if you sat through the second debate between Prime Minister Anthony Albanese and Opposition leader Peter Dutton

MIL OSI Analysis – EveningReport.nz –

April 24, 2025

MIL-Evening Report: The billions spent on NZ’s accommodation supplement is failing to make rent affordable – so what will?

Source: The Conversation (Au and NZ) – By Edward Yiu, Associate Professor, School of Business, University of Auckland, Waipapa Taumata Rau

Pixelbliss/Shutterstock

New Zealand’s unaffordable housing market has left many low and middle-income families reliant on the accommodation supplement to cover rent and mortgage payments.

But our new research has found the scheme, which costs the government almost NZ$5 billion a year, might not be an effective tool in addressing the country’s housing affordability crisis.

Introduced in 1993, the accommodation supplement is a weekly, means-tested payment designed to subsidise part of a household’s rent or mortgage. The supplement is calculated independently of actual rent or mortgage payments.

But our study looking at data from Auckland between 2019 and 2023 found accommodation supplement rental subsidies were not delivering meaningful improvements in affordability for renters. Subsidies used to support mortgage payments, however, appeared to be more effective in offering relief to low-income households wanting stable and affordable housing.

Our results raise questions about whether the current policy of subsidising private rentals is working to address housing affordability in New Zealand.

Renters left behind

Our study compared the proportion of household disposable income spent on rent between households receiving the supplement versus those in the same income group who did not receive it.

The results revealed a striking gap.

In 2023 renters in the middle-income bracket who received the accommodation supplement were spending, on average, 35.6% of their income (including the supplement) on rent. Similar households without the subsidy spent 25.85% of their income on rent. This suggests the support is not significantly narrowing the affordability gap between subsidised and unsubsidised renters.

This study also picked up potential signs of landlords inflating the rents for tenants receiving subsidies. This is known as “subsidy capturing”. On average, middle-income tenants receiving the accommodation supplement paid NZ$539.40 per week in rent in 2023. Non-recipients paid $502.90. That’s a 7.3% difference.

Further research is needed to determine whether this discrepancy is due to rent inflation or differences in housing quality. But the finding aligns with international studies showing that subsidies can unintentionally drive up market rents.

If landlords are capturing part of the subsidy by increasing rents, then the benefit meant for vulnerable tenants is being diluted.

New Zealand’s housing market ranks as one of the least affordable in the OECD.
ChameleonsEye/Shutterstock

Greater promise with mortgage support

Our data suggests mortgage support seems to level the playing field more effectively than rental assistance. The mortgage-to-income ratio for subsidised households stood at 25.55% and 29.95% in 2022 and 2023, respectively (income includes the supplement). This closely matches the 26.6% and 27.5% recorded for non-subsidised households in the same income group.

One reason for the difference in the effectiveness of the supplement is that homeowners are typically required to contribute more upfront – a deposit – giving them a greater financial stake in their housing. This commitment may encourage better financial decisions and housing choices. It may also offer long-term benefits such as asset building and housing stability.

Rental subsidies are essential for immediate relief, especially in emergencies or periods of transition. But our research calls into question their effectiveness in enhancing affordability. More targeted support for low-income homeowners could offer a more sustainable path forward.

Intentions must match results

The accommodation is undoubtedly grounded in good intentions. But considering how much of the national budget is being spent on housing-related welfare, it is essential the programmes deliver the best possible results for taxpayers.

Measuring effectiveness is not about questioning the intent but about ensuring public resources truly achieve meaningful objectives.

Simply increasing funding for subsidies is unlikely to solve the problem. As New Zealand confronts an ongoing housing affordability crisis, this study adds to growing evidence that policy effectiveness – not just how much is spent – is what truly matters.

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. The billions spent on NZ’s accommodation supplement is failing to make rent affordable – so what will? – https://theconversation.com/the-billions-spent-on-nzs-accommodation-supplement-is-failing-to-make-rent-affordable-so-what-will-254779

MIL OSI Analysis – EveningReport.nz –

April 24, 2025

MIL-Evening Report: The billions spent on NZ’s accomodation supplement is failing to make rent affordable – so what will?

Source: The Conversation (Au and NZ) – By Edward Yiu, Associate Professor, School of Business, University of Auckland, Waipapa Taumata Rau

Pixelbliss/Shutterstock

New Zealand’s unaffordable housing market has left many low and middle-income families reliant on the accommodation supplement to cover rent and mortgage payments.

But our new research has found the scheme, which costs the government almost NZ$5 billion a year, might not be an effective tool in addressing the country’s housing affordability crisis.

Introduced in 1993, the accommodation supplement is a weekly, means-tested payment designed to subsidise part of a household’s rent or mortgage. The supplement is calculated independently of actual rent or mortgage payments.

But our study looking at data from Auckland between 2019 and 2023 found accommodation supplement rental subsidies were not delivering meaningful improvements in affordability for renters. Subsidies used to support mortgage payments, however, appeared to be more effective in offering relief to low-income households wanting stable and affordable housing.

Our results raise questions about whether the current policy of subsidising private rentals is working to address housing affordability in New Zealand.

Renters left behind

Our study compared the proportion of household disposable income spent on rent between households receiving the supplement versus those in the same income group who did not receive it.

The results revealed a striking gap.

In 2023 renters in the middle-income bracket who received the accommodation supplement were spending, on average, 35.6% of their income (including the supplement) on rent. Similar households without the subsidy spent 25.85% of their income on rent. This suggests the support is not significantly narrowing the affordability gap between subsidised and unsubsidised renters.

This study also picked up potential signs of landlords inflating the rents for tenants receiving subsidies. This is known as “subsidy capturing”. On average, middle-income tenants receiving the accommodation supplement paid NZ$539.40 per week in rent in 2023. Non-recipients paid $502.90. That’s a 7.3% difference.

Further research is needed to determine whether this discrepancy is due to rent inflation or differences in housing quality. But the finding aligns with international studies showing that subsidies can unintentionally drive up market rents.

If landlords are capturing part of the subsidy by increasing rents, then the benefit meant for vulnerable tenants is being diluted.

New Zealand’s housing market ranks as one of the least affordable in the OECD.
ChameleonsEye/Shutterstock

Greater promise with mortgage support

Our data suggests mortgage support seems to level the playing field more effectively than rental assistance. The mortgage-to-income ratio for subsidised households stood at 25.55% and 29.95% in 2022 and 2023, respectively (income includes the supplement). This closely matches the 26.6% and 27.5% recorded for non-subsidised households in the same income group.

One reason for the difference in the effectiveness of the supplement is that homeowners are typically required to contribute more upfront – a deposit – giving them a greater financial stake in their housing. This commitment may encourage better financial decisions and housing choices. It may also offer long-term benefits such as asset building and housing stability.

Rental subsidies are essential for immediate relief, especially in emergencies or periods of transition. But our research calls into question their effectiveness in enhancing affordability. More targeted support for low-income homeowners could offer a more sustainable path forward.

Intentions must match results

The accommodation is undoubtedly grounded in good intentions. But considering how much of the national budget is being spent on housing-related welfare, it is essential the programmes deliver the best possible results for taxpayers.

Measuring effectiveness is not about questioning the intent but about ensuring public resources truly achieve meaningful objectives.

Simply increasing funding for subsidies is unlikely to solve the problem. As New Zealand confronts an ongoing housing affordability crisis, this study adds to growing evidence that policy effectiveness – not just how much is spent – is what truly matters.

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. The billions spent on NZ’s accomodation supplement is failing to make rent affordable – so what will? – https://theconversation.com/the-billions-spent-on-nzs-accomodation-supplement-is-failing-to-make-rent-affordable-so-what-will-254779

MIL OSI Analysis – EveningReport.nz –

April 24, 2025

MIL-OSI: Univest Financial Corporation Reports First Quarter Results

Source: GlobeNewswire (MIL-OSI)

SOUDERTON, Pa., April 23, 2025 (GLOBE NEWSWIRE) — Univest Financial Corporation (“Univest” or the “Corporation”) (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the “Bank”) and its insurance, investments and equipment financing subsidiaries, announced net income for the quarter ended March 31, 2025 of $22.4 million, or $0.77 diluted earnings per share, compared to net income of $20.3 million, or $0.69 diluted earnings per share, for the quarter ended March 31, 2024.

Dividend
On April 23, 2025, Univest declared a quarterly cash dividend of $0.22 per share to be paid on May 21, 2025 to shareholders of record as of May 7, 2025, which represents an increase of $0.01 per share, or 4.8%. Univest had last increased its dividend by $0.01 per share in May 2022.

One-Time Items
The financial results for the quarter included tax-free bank owned life insurance (“BOLI”) death benefits claims of $1.0 million, which represented $0.04 diluted earnings per share.

Loans
Gross loans and leases increased $6.5 million, or 0.1% (0.4% annualized), from December 31, 2024. Gross loans and leases increased $254.0 million, or 3.9%, from March 31, 2024, primarily due to increases in commercial, commercial real estate, residential mortgage loans and home equity loans, partially offset by decreases in construction loans and lease financings.

Deposits, Borrowings and Liquidity
Total deposits decreased $100.8 million, or 1.5% (6.0% annualized), from December 31, 2024, primarily due to seasonal declines in public funds deposits and decreases in commercial and consumer deposits, partially offset by an increase in brokered deposits. Total deposits increased $253.1 million, or 4.0%, from March 31, 2024, due to increases in consumer, commercial, and public funds deposits, partially offset by a decrease in brokered deposits. Noninterest-bearing deposits totaled $1.4 billion and represented 21.5% of total deposits at March 31, 2025, compared to $1.4 billion representing 20.9% of total deposits at December 31, 2024. Unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.5 billion at March 31, 2025 and December 31, 2024. This represented 21.9% of total deposits at March 31, 2025, compared to 22.0% at December 31, 2024.

Total borrowings decreased $57.0 million, or 14.8%, from December 31, 2024, primarily due to maturities of long-term FHLB advances totaling $50.0 million. These borrowings were replaced with brokered deposits during the quarter.

As of March 31, 2025, the Corporation and its subsidiaries reported cash and cash equivalents totaling $169.1 million and had committed borrowing capacity of $3.7 billion, of which $2.3 billion was available. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $468.0 million at March 31, 2025. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.

Net Interest Income and Margin
Net interest income of $56.8 million for the first quarter of 2025 increased $5.3 million, or 10.3%, from the first quarter of 2024 and $1.3 million, or 2.4%, from the fourth quarter of 2024. The increase in net interest income for the first quarter of 2025 compared to the first quarter of 2024 was driven by higher average balances of loans and increased yields on interest earning assets, as well as a reduction in our overall cost of funds. The increase in net interest income for the first quarter of 2025 compared to the fourth quarter of 2024 was primarily driven by lower average balances of interest-bearing liabilities and related costs outpacing decreases in income from interest-earning deposits with other banks.

Net interest margin, on a tax-equivalent basis, was 3.09% for the first quarter of 2025, compared to 2.88% for the first and fourth quarters of 2024. Excess liquidity reduced net interest margin by approximately three basis points for the quarter ended March 31, 2025 compared to approximately 14 basis points for the quarter ended December 31, 2024 and approximately three basis points for the quarter ended March 31, 2024. Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, would have been 3.12% for the quarter ended March 31, 2025 compared to 3.02% for the quarter ended December 31, 2024 and 2.91% for the quarter ended March 31, 2024.

Noninterest Income
Noninterest income for the quarter ended March 31, 2025 was $22.4 million, a decrease of $3.2 million, or 12.4%, from the comparable period in the prior year.

Other service fee income decreased $3.7 million, or 57.8%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to a $3.4 million net gain from the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024. Additionally, net servicing fees on sold mortgage loans decreased by $177 thousand, primarily attributable to the previously mentioned sale of mortgage servicing rights.

Other income decreased $780 thousand, or 76.1%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to decreases in other real estate owned income, fees on risk participation agreements for interest rate swaps and gains on sale of Small Business Administration loans.

Net gain on mortgage banking activities decreased $292 thousand, or 31.1%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to decreased salable volume.

Insurance commission and fee income decreased $312 thousand, or 4.3%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to a decrease in contingent income of $700 thousand, which was $1.6 million and $2.3 million, for the three months ended March 31, 2025 and 2024, respectively. Contingent income is largely recognized in the first quarter of the year. The decrease was partially offset by an increase of $404 thousand in revenue for commercial lines.

BOLI income increased $1.1 million, or 132.7%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to the previously discussed death benefits claims.

Investment advisory commission and fee income increased $419 thousand, or 8.1%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to new customer relationships and appreciation of assets under management and supervision.

Service charges on deposit accounts increased $323 thousand, or 17.3%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to an increase in treasury management income.

Noninterest Expense
Noninterest expense for the quarter ended March 31, 2025 was $49.3 million, a decrease of $746 thousand, or 1.5%, from the comparable period in the prior year.

Salaries, benefits and commissions decreased $512 thousand, or 1.6%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to an increase in compensation capitalized and a decrease in medical claims expense, partially offset by an increase in incentive compensation due to increased profitability.

Tax Provision
The effective income tax rate was 18.7% and 20.5% for the quarters ended March 31, 2025 and March 31, 2024, respectively. The discrete tax effect of vested equity compensation awards favorably impacted the first quarter of 2025 by 71 basis points and unfavorably impacted the first quarter of 2024 by 74 basis points. Additionally, the effective tax rate for the three months ended March 31, 2025 was favorably impacted by 76 basis points from the proceeds of BOLI death benefits. Excluding the discrete impact of vested equity compensation awards and BOLI death benefits, the effective tax rate was 20.2% for the three months ended March 31, 2025 compared to 19.8% for the three months ended March 31, 2024.

Asset Quality and Provision for Credit Losses
Nonperforming assets totaled $34.0 million at March 31, 2025, $33.2 million at December 31, 2024, and $40.0 million at March 31, 2024.

Net loan and lease charge-offs were $1.7 million for the three months ended March 31, 2025 compared to $767 thousand and $1.4 million for the three months ended December 31, 2024 and March 31, 2024, respectively.

The provision for credit losses was $2.3 million for the three months ended March 31, 2025 compared to $2.4 million and $1.4 million for the three months ended December 31, 2024 and March 31, 2024, respectively. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at March 31, 2025 and December 31, 2024, and 1.30% at March 31, 2024.

Share Repurchases
During the quarter ended March 31, 2025, the Corporation repurchased 221,760 shares of common stock at an average price of $29.22 per share. Including brokerage fees and excise tax, the average price per share was $29.54. As of March 31, 2025, 1,178,394 shares are available for repurchase under the Share Repurchase Plan.

Conference Call
Univest will host a conference call to discuss first quarter 2025 results on Thursday, April 24, 2025 at 9:00 a.m. EST. Participants may preregister at https://www.netroadshow.com/events/login?show=175e015e&confId=80607. The general public can access the call by dialing 1-833-470-1428; using Access Code 021974. A replay of the conference call will be available through May 1, 2025 by dialing 1-866-813-9403; using Access Code 718470.

About Univest Financial Corporation
Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $8.0 billion in assets and $5.2 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2025. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.

This press release and the reports Univest files with the Securities and Exchange Commission often contain “forward-looking statements” relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business, prospects and strategies of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest’s future financial condition, results of operations, business, prospects or strategies to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition and demand for financial services in our market area; (2) inflation and/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and/or lead to higher operating costs and higher costs we pay to retain and attract deposits; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or credit loss provisions; (4) fluctuations in real estate values and both residential and commercial real estate market conditions; (5) changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; (6) our ability to access cost-effective funding; (7) changes in economic conditions nationally and in our market, including potential recessionary conditions and the levels of unemployment in our market area; (8) changes in the economic assumptions or methodology used to calculate our allowance for credit losses; (9) legislative, regulatory, accounting or tax changes; (10) monetary and fiscal policies of the U.S. government, including the policies of the Board of Governors of the Federal Reserve System; (11) the imposition of tariffs or other domestic or international governmental policies; (12) the failure to maintain current technologies and to successfully implement future information technology enhancements; (13) technological issues that may adversely affect our operations or those of our customers; (14) a failure or breach in our operational or security systems or infrastructure, including cyberattacks; (15) changes in the securities markets; (16) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (17) our ability to enter into new markets successfully and capitalize on growth opportunities and/or (18) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

(UVSP – ER)


Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2025
(Dollars in thousands)

Balance Sheet (Period End)	03/31/25			12/31/24			09/30/24			06/30/24			03/31/24
ASSETS
Cash and due from banks	$	73,319		$	75,998		$	78,346		$	66,808		$	49,318
Interest-earning deposits with other banks		95,815			252,846			426,354			124,103			152,288
Cash and cash equivalents		169,134			328,844			504,700			190,911			201,606
Investment securities held-to-maturity		130,889			134,111			137,681			140,112			143,474
Investment securities available for sale, net of allowance for credit losses		364,503			357,361			354,100			342,776			350,819
Investments in equity securities		1,667			2,506			2,406			2,995			3,355
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost		35,732			38,980			40,235			37,438			37,394
Loans held for sale		13,150			16,653			17,131			28,176			13,188
Loans and leases held for investment		6,833,037			6,826,583			6,730,734			6,684,837			6,579,086
Less: Allowance for credit losses, loans and leases		(87,790	)		(87,091	)		(86,041	)		(85,745	)		(85,632	)
Net loans and leases held for investment		6,745,247			6,739,492			6,644,693			6,599,092			6,493,454
Premises and equipment, net		47,175			46,671			47,411			48,174			48,739
Operating lease right-of-use assets		27,182			28,531			29,260			29,985			30,702
Goodwill		175,510			175,510			175,510			175,510			175,510
Other intangibles, net of accumulated amortization		8,061			8,309			7,158			7,701			7,473
Bank owned life insurance		139,482			139,351			138,744			137,823			137,896
Accrued interest and other assets		117,435			112,098			106,708			114,753			102,958
Total assets	$	7,975,167		$	8,128,417		$	8,205,737		$	7,855,446		$	7,746,568

LIABILITIES
Noninterest-bearing deposits	$	1,433,995		$	1,414,635		$	1,323,953		$	1,397,308		$	1,401,806
Interest-bearing deposits:		5,224,503			5,344,624			5,530,195			5,098,014			5,003,552
Total deposits		6,658,498			6,759,259			6,854,148			6,495,322			6,405,358
Short-term borrowings		4,031			11,181			8,256			11,781			4,816
Long-term debt		175,000			225,000			225,000			250,000			250,000
Subordinated notes		149,386			149,261			149,136			149,011			148,886
Operating lease liabilities		30,062			31,485			32,246			33,015			33,744
Accrued expenses and other liabilities		54,718			64,930			59,880			62,180			60,095
Total liabilities		7,071,695			7,241,116			7,328,666			7,001,309			6,902,899

SHAREHOLDERS’ EQUITY
Common stock, $5 par value: 48,000,000 shares authorized and 31,556,799 shares issued		157,784			157,784			157,784			157,784			157,784
Additional paid-in capital		300,634			302,829			301,262			300,166			298,914
Retained earnings		541,776			525,780			512,938			500,482			488,790
Accumulated other comprehensive loss, net of tax benefit		(37,922	)		(43,992	)		(41,623	)		(54,124	)		(54,740	)
Treasury stock, at cost		(58,800	)		(55,100	)		(53,290	)		(50,171	)		(47,079	)
Total shareholders’ equity		903,472			887,301			877,071			854,137			843,669
Total liabilities and shareholders’ equity	$	7,975,167		$	8,128,417		$	8,205,737		$	7,855,446		$	7,746,568


	For the three months ended,
Balance Sheet (Average)	03/31/25			12/31/24			06/30/24			03/31/24			12/31/23
Assets	$	7,981,043		$	8,163,347		$	8,005,265		$	7,721,540		$	7,696,575
Investment securities, net of allowance for credit losses		500,078			500,748			493,334			493,140			500,983
Loans and leases, gross		6,856,503			6,758,649			6,730,791			6,640,536			6,577,365
Deposits		6,617,653			6,804,483			6,641,324			6,353,752			6,303,854
Shareholders’ equity		896,811			880,237			864,406			844,572			842,546

Univest Financial Corporation
Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
March 31, 2025
(Dollars in thousands)

Summary of Major Loan and Lease Categories (Period End)	03/31/25			12/31/24			09/30/24			06/30/24			03/31/24
Commercial, financial and agricultural	$	1,034,361		$	1,037,835		$	1,044,043		$	1,055,332		$	1,014,568
Real estate-commercial		3,546,402			3,530,451			3,442,083			3,373,889			3,283,729
Real estate-construction		281,785			274,483			285,616			313,229			379,995
Real estate-residential secured for business purpose		536,082			536,095			530,674			532,628			524,196
Real estate-residential secured for personal purpose		992,767			994,972			969,562			952,665			922,412
Real estate-home equity secured for personal purpose		189,119			186,836			182,901			179,150			177,446
Loans to individuals		16,930			21,250			26,794			26,430			27,200
Lease financings		235,591			244,661			249,061			251,514			249,540
Total loans and leases held for investment, net of deferred income		6,833,037			6,826,583			6,730,734			6,684,837			6,579,086
Less: Allowance for credit losses, loans and leases		(87,790	)		(87,091	)		(86,041	)		(85,745	)		(85,632	)
Net loans and leases held for investment	$	6,745,247		$	6,739,492		$	6,644,693		$	6,599,092		$	6,493,454


Asset Quality Data (Period End)	03/31/25			12/31/24			09/30/24			06/30/24			03/31/24
Nonaccrual loans and leases, including nonaccrual loans held for sale	$	11,126		$	12,667		$	15,319		$	16,200		$	20,363
Accruing loans and leases 90 days or more past due		322			321			310			205			268
Total nonperforming loans and leases		11,448			12,988			15,629			16,405			20,631
Other real estate owned		22,433			20,141			20,915			20,007			19,220
Repossessed assets		79			76			79			149			167
Total nonperforming assets	$	33,960		$	33,205		$	36,623		$	36,561		$	40,018
Nonaccrual loans and leases / Loans and leases held for investment		0.16	%		0.19	%		0.23	%		0.24	%		0.31	%
Nonperforming loans and leases / Loans and leases held for investment		0.17	%		0.19	%		0.23	%		0.25	%		0.31	%
Nonperforming assets / Total assets		0.43	%		0.41	%		0.45	%		0.47	%		0.52	%

Allowance for credit losses, loans and leases	$	87,790		$	87,091		$	86,041		$	85,745		$	85,632
Allowance for credit losses, loans and leases / Loans and leases held for investment		1.28	%		1.28	%		1.28	%		1.28	%		1.30	%
Allowance for credit losses, loans and leases / Nonaccrual loans and leases		789.05	%		687.54	%		561.66	%		529.29	%		420.53	%
Allowance for credit losses, loans and leases / Nonperforming loans and leases		766.86	%		670.55	%		550.52	%		522.68	%		415.06	%


	For the three months ended,
	03/31/25			12/31/24			09/30/24			06/30/24			03/31/24
Net loan and lease charge-offs	$	1,686		$	767		$	820		$	809		$	1,406
Net loan and lease charge-offs (annualized)/Average loans and leases		0.10	%		0.05	%		0.05	%		0.05	%		0.09	%

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2025
(Dollars in thousands, except per share data)
	For the three months ended,
For the period:	03/31/25		12/31/24		09/30/24		06/30/24		03/31/24
Interest income	$	103,416	$	107,476	$	106,438	$	99,832	$	98,609
Interest expense		46,635		52,004		53,234		48,805		47,142
Net interest income		56,781		55,472		53,204		51,027		51,467
Provision for credit losses		2,311		2,380		1,414		707		1,432
Net interest income after provision for credit losses		54,470		53,092		51,790		50,320		50,035
Noninterest income:
Trust fee income		2,161		2,265		2,110		2,008		2,108
Service charges on deposit accounts		2,194		2,192		2,037		1,982		1,871
Investment advisory commission and fee income		5,613		5,457		5,319		5,238		5,194
Insurance commission and fee income		6,889		4,743		5,238		5,167		7,201
Other service fee income		2,707		3,473		1,815		3,044		6,415
Bank owned life insurance income		1,959		1,012		921		1,086		842
Net gain on sales of investment securities		–		–		18		–		–
Net gain on mortgage banking activities		647		1,320		1,296		1,710		939
Other income		245		868		1,396		745		1,025
Total noninterest income		22,415		21,330		20,150		20,980		25,595
Noninterest expense:
Salaries, benefits and commissions		30,826		31,518		30,702		30,187		31,338
Net occupancy		2,853		2,751		2,723		2,679		2,872
Equipment		1,122		1,147		1,107		1,088		1,111
Data processing		4,364		4,146		4,154		4,161		4,495
Professional fees		1,797		1,669		1,579		1,466		1,688
Marketing and advertising		353		552		490		715		416
Deposit insurance premiums		1,151		1,102		1,097		1,098		1,135
Intangible expenses		130		155		164		188		187
Other expense		6,732		7,618		6,536		7,126		6,832
Total noninterest expense		49,328		50,658		48,552		48,708		50,074
Income before taxes		27,557		23,764		23,388		22,592		25,556
Income tax expense		5,162		4,823		4,810		4,485		5,251
Net income	$	22,395	$	18,941	$	18,578	$	18,107	$	20,305
Net income per share:
Basic	$	0.77	$	0.65	$	0.64	$	0.62	$	0.69
Diluted	$	0.77	$	0.65	$	0.63	$	0.62	$	0.69
Dividends declared per share	$	0.21	$	0.21	$	0.21	$	0.21	$	0.21
Weighted average shares outstanding		29,000,567		29,070,039		29,132,948		29,246,977		29,413,999
Period end shares outstanding		28,962,648		29,045,877		29,081,108		29,190,640		29,337,919

Univest Financial Corporation
Consolidated Selected Financial Data (Unaudited)
March 31, 2025



	For the three months ended,
Profitability Ratios (annualized)	03/31/25			12/31/24			09/30/24			06/30/24			03/31/24

Return on average assets		1.14	%		0.92	%		0.92	%		0.94	%		1.06	%
Return on average shareholders’ equity		10.13	%		8.56	%		8.55	%		8.62	%		9.69	%
Return on average tangible common equity (1)(3)		12.69	%		10.79	%		10.84	%		11.01	%		12.38	%
Net interest margin (FTE)		3.09	%		2.88	%		2.82	%		2.84	%		2.88	%
Efficiency ratio (2)		61.6	%		65.5	%		65.7	%		67.1	%		64.6	%

Capitalization Ratios

Dividends declared to net income		27.2	%		32.2	%		33.0	%		33.9	%		30.5	%
Shareholders’ equity to assets (Period End)		11.33	%		10.92	%		10.69	%		10.87	%		10.89	%
Tangible common equity to tangible assets (1)		9.31	%		8.92	%		8.71	%		8.81	%		8.80	%
Common equity book value per share	$	31.19		$	30.55		$	30.16		$	29.26		$	28.76
Tangible common equity book value per share (1)	$	25.06		$	24.43		$	24.05		$	23.17		$	22.70

Regulatory Capital Ratios (Period End)
Tier 1 leverage ratio		9.80	%		9.51	%		9.53	%		9.74	%		9.65	%
Common equity tier 1 risk-based capital ratio		10.97	%		10.85	%		10.88	%		10.72	%		10.71	%
Tier 1 risk-based capital ratio		10.97	%		10.85	%		10.88	%		10.72	%		10.71	%
Total risk-based capital ratio		14.35	%		14.19	%		14.27	%		14.09	%		14.11	%

(1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.
(2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.
(3) Net income before amortization of intangibles to average tangible common equity.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
				For the Three Months Ended,
Tax Equivalent Basis	March 31, 2025							December 31, 2024
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	119,997		$	1,360	4.60	%	$	402,753		$	4,852	4.79	%
Obligations of state and political subdivisions*		879			4	1.85			1,290			7	2.16
Other debt and equity securities		499,199			4,019	3.27			499,458			3,815	3.04
Federal Home Loan Bank, Federal Reserve Bank and other stock		37,561			687	7.42			39,407			746	7.53
Total interest-earning deposits, investments and other interest-earning assets		657,636			6,070	3.74			942,908			9,420	3.97

Commercial, financial, and agricultural loans		990,860			17,020	6.97			972,840			17,492	7.15
Real estate—commercial and construction loans		3,704,232			52,676	5.77			3,631,142			53,163	5.82
Real estate—residential loans		1,729,146			21,542	5.05			1,708,795			21,249	4.95
Loans to individuals		19,438			393	8.20			25,803			522	8.05
Tax-exempt loans and leases		230,133			2,861	5.04			233,036			2,652	4.53
Lease financings		182,694			3,240	7.19			187,033			3,296	7.01
Gross loans and leases		6,856,503			97,732	5.78			6,758,649			98,374	5.79
Total interest-earning assets		7,514,139			103,802	5.60			7,701,557			107,794	5.57
Cash and due from banks		56,690							56,989
Allowance for credit losses, loans and leases		(87,822	)						(86,812	)
Premises and equipment, net		46,852							47,155
Operating lease right-of-use assets		27,761							28,891
Other assets		423,423							415,567
Total assets	$	7,981,043						$	8,163,347

Liabilities:
Interest-bearing checking deposits	$	1,222,012		$	7,075	2.35	%	$	1,275,348		$	8,504	2.65	%
Money market savings		1,840,194			18,035	3.97			1,954,246			20,653	4.20
Regular savings		702,543			763	0.44			705,222			817	0.46
Time deposits		1,476,495			16,106	4.42			1,499,998			17,247	4.57
Total time and interest-bearing deposits		5,241,244			41,979	3.25			5,434,814			47,221	3.46

Short-term borrowings		6,909			14	0.82			7,102			1	0.06
Long-term debt		217,500			2,361	4.40			225,000			2,501	4.42
Subordinated notes		149,319			2,281	6.20			149,194			2,281	6.08
Total borrowings		373,728			4,656	5.05			381,296			4,783	4.99
Total interest-bearing liabilities		5,614,972			46,635	3.37			5,816,110			52,004	3.56
Noninterest-bearing deposits		1,376,409							1,369,669
Operating lease liabilities		30,675							31,864
Accrued expenses and other liabilities		62,176							65,467
Total liabilities		7,084,232							7,283,110
Total interest-bearing liabilities and noninterest-bearing deposits (“Cost of Funds”)		6,991,381				2.71			7,185,779				2.88

Shareholders’ Equity:
Common stock		157,784							157,784
Additional paid-in capital		302,653							301,895
Retained earnings and other equity		436,374							420,558
Total shareholders’ equity		896,811							880,237
Total liabilities and shareholders’ equity	$	7,981,043						$	8,163,347
Net interest income				$	57,167						$	55,790

Net interest spread						2.23							2.01
Effect of net interest-free funding sources						0.86							0.87
Net interest margin						3.09	%						2.88	%
Ratio of average interest-earning assets to average interest-bearing liabilities		133.82	%						132.42	%

* Obligations of states and political subdivisions are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $554 thousand and $676 thousand for the three months ended March 31,
2025 and December 31, 2024, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included
in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2025 and December 31, 2024 have
been calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Average Balances and Interest Rates (Unaudited)
	For the Three Months Ended March 31,
Tax Equivalent Basis	2025							2024
	Average			Income/		Average		Average			Income/		Average
(Dollars in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-earning deposits with other banks	$	119,997		$	1,360	4.60	%	$	120,845		$	1,609	5.36	%
Obligations of state and political subdivisions*		879			4	1.85			1,951			12	2.47
Other debt and equity securities		499,199			4,019	3.27			499,032			3,647	2.94
Federal Home Loan Bank, Federal Reserve Bank and other stock		37,561			687	7.42			39,115			724	7.44
Total interest-earning deposits, investments and other interest-earning assets		657,636			6,070	3.74			660,943			5,992	3.65

Commercial, financial, and agricultural loans		990,860			17,020	6.97			934,649			16,523	7.11
Real estate—commercial and construction loans		3,704,232			52,676	5.77			3,575,142			50,641	5.70
Real estate—residential loans		1,729,146			21,542	5.05			1,618,188			19,555	4.86
Loans to individuals		19,438			393	8.20			27,315			548	8.07
Tax-exempt loans and leases		230,133			2,861	5.04			232,380			2,464	4.26
Lease financings		182,694			3,240	7.19			189,691			3,169	6.72
Gross loans and leases		6,856,503			97,732	5.78			6,577,365			92,900	5.68
Total interest-earning assets		7,514,139			103,802	5.60			7,238,308			98,892	5.49
Cash and due from banks		56,690							54,870
Allowance for credit losses, loans and leases		(87,822	)						(86,495	)
Premises and equipment, net		46,852							50,592
Operating lease right-of-use assets		27,761							31,121
Other assets		423,423							408,179
Total assets	$	7,981,043						$	7,696,575

Liabilities:
Interest-bearing checking deposits	$	1,222,012		$	7,075	2.35	%	$	1,180,696		$	8,218	2.80	%
Money market savings		1,840,194			18,035	3.97			1,705,291			19,220	4.53
Regular savings		702,543			763	0.44			769,926			905	0.47
Time deposits		1,476,495			16,106	4.42			1,238,878			13,630	4.42
Total time and interest-bearing deposits		5,241,244			41,979	3.25			4,894,791			41,973	3.45

Short-term borrowings		6,909			14	0.82			10,127			5	0.20
Long-term debt		217,500			2,361	4.40			292,486			2,883	3.96
Subordinated notes		149,319			2,281	6.20			148,818			2,281	6.16
Total borrowings		373,728			4,656	5.05			451,431			5,169	4.61
Total interest-bearing liabilities		5,614,972			46,635	3.37			5,346,222			47,142	3.55
Noninterest-bearing deposits		1,376,409							1,409,063
Operating lease liabilities		30,675							34,166
Accrued expenses and other liabilities		62,176							64,578
Total liabilities		7,084,232							6,854,029
Total interest-bearing liabilities and noninterest-bearing deposits (“Cost of Funds”)		6,991,381				2.71			6,755,285				2.81

Shareholders’ Equity:
Common stock		157,784							157,784
Additional paid-in capital		302,653							300,679
Retained earnings and other equity		436,374							384,083
Total shareholders’ equity		896,811							842,546
Total liabilities and shareholders’ equity	$	7,981,043						$	7,696,575
Net interest income				$	57,167						$	51,750

Net interest spread						2.23							1.94
Effect of net interest-free funding sources						0.86							0.94
Net interest margin						3.09	%						2.88	%
Ratio of average interest-earning assets to average interest-bearing liabilities		133.82	%						135.39	%

* Obligations of states and political subdivisions are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $554 thousand and $453 thousand for the three months ended
March 31, 2025 and 2024, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included
in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2025 and 2024 have been
calculated using the Corporation’s federal applicable rate of 21.0%.

Univest Financial Corporation
Loan Portfolio Overview (Unaudited)
March 31, 2025

(Dollars in thousands)
Industry Description	Total Outstanding Balance		% of Commercial Loan Portfolio
CRE – Retail	$	469,397	8.7	%
Animal Production		394,279	7.3
CRE – Multi-family		360,743	6.7
CRE – Office		299,751	5.6
CRE – 1-4 Family Residential Investment		278,386	5.2
CRE – Industrial / Warehouse		253,136	4.7
Hotels & Motels (Accommodation)		207,710	3.8
Specialty Trade Contractors		189,427	3.5
Nursing and Residential Care Facilities		177,053	3.3
Motor Vehicle and Parts Dealers		146,911	2.7
Merchant Wholesalers, Durable Goods		146,037	2.7
Homebuilding (tract developers, remodelers)		140,612	2.6
Repair and Maintenance		134,183	2.5
Crop Production		110,882	2.1
CRE – Mixed-Use – Residential		109,872	2.0
Wood Product Manufacturing		101,606	1.9
Professional, Scientific, and Technical Services		95,730	1.8
Food Services and Drinking Places		86,916	1.6
Administrative and Support Services		83,145	1.5
Merchant Wholesalers, Nondurable Goods		83,088	1.5
Fabricated Metal Product Manufacturing		78,181	1.4
Real Estate Lenders, Secondary Market Financing		75,461	1.4
Religious Organizations, Advocacy Groups		65,857	1.2
CRE – Mixed-Use – Commercial		64,683	1.2
Miniwarehouse / Self-Storage		64,553	1.2
Personal and Laundry Services		64,508	1.2
Education		62,362	1.2
Amusement, Gambling, and Recreation Industries		61,437	1.1
Food Manufacturing		56,400	1.0
Industries with >$50 million in outstandings	$	4,462,306	82.7	%
Industries with <$50 million in outstandings	$	936,324	17.3	%
Total Commercial Loans	$	5,398,630	100.0	%


Consumer Loans and Lease Financings	Total Outstanding Balance
Real Estate-Residential Secured for Personal Purpose		992,767
Real Estate-Home Equity Secured for Personal Purpose		189,119
Loans to Individuals		16,930
Lease Financings		235,591
Total – Consumer Loans and Lease Financings	$	1,434,407
Total	$	6,833,037

Univest Financial Corporation
Non-GAAP Reconciliation
March 31, 2025



Non-GAAP to GAAP Reconciliation
Management uses non-GAAP measures in its analysis of the Corporation’s performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.

	As of or for the three months ended,
(Dollars in thousands)	03/31/25			12/31/24			09/30/24			06/30/24			03/31/24
Net income	$	22,395		$	18,941		$	18,578		$	18,107		$	20,305
Amortization of intangibles, net of tax		103			122			130			149			148
Net income before amortization of intangibles	$	22,498		$	19,063		$	18,708		$	18,256		$	20,453

Shareholders’ equity	$	903,472		$	887,301		$	877,071		$	854,137		$	843,669
Goodwill		(175,510	)		(175,510	)		(175,510	)		(175,510	)		(175,510	)
Other intangibles (a)		(2,104	)		(2,263	)		(2,147	)		(2,157	)		(2,273	)
Tangible common equity	$	725,858		$	709,528		$	699,414		$	676,470		$	665,886

Total assets	$	7,975,167		$	8,128,417		$	8,205,737		$	7,855,446		$	7,746,568
Goodwill		(175,510	)		(175,510	)		(175,510	)		(175,510	)		(175,510	)
Other intangibles (a)		(2,104	)		(2,263	)		(2,147	)		(2,157	)		(2,273	)
Tangible assets	$	7,797,553		$	7,950,644		$	8,028,080		$	7,677,779		$	7,568,785

Average shareholders’ equity	$	896,811		$	880,237		$	864,406		$	844,572		$	842,546
Average goodwill		(175,510	)		(175,510	)		(175,510	)		(175,510	)		(175,510	)
Average other intangibles (a)		(2,162	)		(2,146	)		(2,086	)		(2,222	)		(2,318	)
Average tangible common equity	$	719,139		$	702,581		$	686,810		$	666,840		$	664,718

(a) Amount does not include mortgage servicing rights

The MIL Network –

April 24, 2025

MIL-OSI Europe: REPORT on the control of the financial activities of the European Investment Bank – annual report 2023 – A10-0068/2025

Source: European Parliament

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the control of the financial activities of the European Investment Bank – annual report 2023

(2024/2052(INI))

The European Parliament,

– having regard to the European Investment Bank Group (‘EIB Group’) 2023 activity report of 1 February 2024 entitled ‘A Blueprint for Sustainable Living’, and to the EIB Group document of 2 February 2023 entitled ‘EIB Group Operational Plan 2023-2025’,– having regard to the European Investment Bank (‘EIB’, ‘the Bank’) Investment Report 2023/2024 entitled ‘Transforming for competitiveness’, published on 7 February 2024,

– having regard to the EIB document of 8 May 2023 entitled ‘Mid-term review of the EIB Energy Lending Policy’,

– having regard to the EIB Group report on the implementation of the EIB Group Transparency Policy in 2023, published on 1 July 2024,

– having regard to the EIB Group document of 27 November 2023 entitled ‘The EIB Group PATH Framework – Version 1.2 of November 2023 – Supporting counterparties on their pathways to align with the Paris Agreement’,

– having regard to the EIB Group and EIB documents of 21 June 2024 entitled ‘EIB Group 2024-2027 Strategic Roadmap’ and of 29 November 2023 entitled ‘EIB Global Strategic Roadmap’,

– having regard to the EIB Group Sustainability Report 2023, published on 25 July 2024,

– having regard to the EIB information note of 6 February 2023 entitled ‘The European Investment Bank’s approach to human rights’,

– having regard to the EIB Group Complaints Mechanism Report 2023, published on 10 June 2024,

– having regard to the EIB Group document of 14 October 2024 entitled ‘Diversity, Equity and Inclusion at the EIB Group’,

– having regard to the EIB publication of 23 September 2024 entitled ‘EIB Audit Committee Annual Reports for the year 2023’,

– having regard to the EIB Group report of 15 July 2024 entitled ‘EIB Group activities in EU cohesion regions 2023’,– having regard to the EIB report of 19 October 2023 entitled ‘EIB Investment Survey 2023 – European Union overview’,

– having regard to the EIB Group report of 26 June 2024 entitled ‘EIB Group support for EU businesses: Evidence of impact in addressing market failures’,

– having regard to the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 5 March 2024 entitled ‘A new European Defence Industrial Strategy: Achieving EU readiness through a responsive and resilient European Defence Industry’ (JOIN(2024)0010),

– having regard to European Court of Auditors Special Report 22/2024 entitled ‘Double funding from the EU budget’,

– having regard to the EIB Group report of 29 December 2023 entitled ‘European Investment Bank Group Risk Management Disclosure Report – June 2023’,

– having regard to the joint communication of 19 March 2025 from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy entitled ‘Joint White Paper for European Defence Readiness 2030’ (JOIN(2025)0120),

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Budgetary Control (A10-0068/2025),

A. whereas the EIB Group includes the EIB and the European Investment Fund (EIF); whereas the EIB stands as the world’s largest multilateral development bank; whereas the EIB is treaty-bound to contribute to EU integration; whereas the EIB’s key priorities include providing funding for projects to foster European integration and social cohesion; whereas the EIF acts as a dedicated body for supporting the European Union’s policy objectives in the areas of entrepreneurship, job creation and economic cohesion;

B. whereas, as a bank owned by the EU Member States, the EIB is governed by a Board of Governors, a Board of Directors and a Management Committee, and it maintains robust internal mechanisms for accountability, governance and audit; whereas the EIF is owned by the EIB (60 %), the EU (30 %) and financial institutions (10 %) from the Member States, the UK and Türkiye, and is managed by the General Meeting of EIF shareholders, the Board of Directors and the Chief Executive, with independent internal mechanisms for accountability, governance and audit, some of which are shared at the Group level;

C. whereas both the EIB and the EIF operate within a competitive market but are held to high standards of transparency and stakeholder engagement as EU bodies;

D. whereas the EIB Group promotes EU policies both within and outside the EU and collaborates closely with other EU and national institutions, aligning its financing with the EU’s political priorities; whereas the EIB Group outlined eight strategic priorities in its Strategic Roadmap for 2024-2027: climate action, digital transformation, defence, cohesion, agriculture, social infrastructure, external financing and promoting the Capital Markets Union;

E. whereas the EIB is also tasked with securing resources through borrowing activities, which are crucial for implementing the EU’s policies;

F. whereas the European Council’s strategic agenda for 2024-2029 envisages an enhanced role for the EIB Group as a driver of EU defence and security, and emphasises the need to boost EU competitiveness and improve citizens’ economic and social well-being through significant collective investment efforts, leveraging both public and private funding;

G. whereas the Draghi report on the future of European competitiveness [1] proposed numerous ways to expand the EIB’s role in financing EU policies and to enable the EIB to assume more risk;

H. whereas the EIB Group’s core mission is to bolster Europe’s potential for job creation and economic growth; whereas its investments should tackle inequalities by improving access to jobs, training opportunities, housing and education in order to address poverty and unemployment; whereas it is crucial to overcome barriers to financing for small and medium-sized enterprises (SMEs) and mid-caps; whereas public lending and guarantee schemes serve as vital countercyclical policy tools, especially during economic downturns, and help mitigate structural market failures;

I. whereas the EIB is a cornerstone of the European financial architecture for development and the largest multilateral lender in the EU’s neighbouring regions, including the Eastern Neighbourhood countries, the Western Balkans, the Middle East, and North Africa; whereas the EIB is expected to help close the gap in productive investment between Europe and its main competitors by increasing investment in innovation, communication technology and intellectual property;

J. whereas the success of the EU’s policy objectives and their effective implementation increasingly depend on the EIB Group; whereas the depth and quality of Parliament’s oversight of the EIB’s financial operations should therefore be in line with the intensity of EIB-Commission cooperation, which has become very significant;

K. whereas the EIB’s business model requires the highest standards of integrity, accountability and transparency, and robust measures must be implemented and regularly updated to combat financial fraud, corruption, money laundering, terrorism, organised crime and both tax evasion and avoidance; whereas the EIB Group has a control framework aimed at preventing and mitigating sanctions risks;

L. whereas the EIB Group adheres to the Basel Committee on Banking Supervision’s definition of compliance risk, with the aim of preventing the risk of legal or regulatory sanctions, material financial loss, or damage to reputation; whereas the Bank takes appropriate measures to mitigate such risks by ensuring strict compliance with legal and regulatory frameworks, both at EU and international level;

Financial operations and performance

1. Acknowledges that the EIB has operated effectively and efficiently in a landscape marked by significant global challenges, including geopolitical tensions, climate change impacts and other factors influencing the global economy; suggests exploring both the EIB’s effectiveness and efficiency through thoughtful analysis, particularly focusing on the impact on competitiveness and growth;

2. Recognises that EIB financing is becoming increasingly crucial in the context of high interest rates and constrained public finances; expects the EIB, in the context of a challenging economic outlook and increased global competition, to address constraints to EU competitiveness, such as volatile energy prices, skills shortages in key sectors and insufficient investments in innovation and new technologies;

3. Notes that the EIB Group achieved strong consolidated results amounting to EUR 2.272 billion in 2023 under the International Financial Reporting Standards (IFRS), compared to EUR 2.327 billion in 2022, reflecting a year-on-year decrease of 2.4 %; calls for a detailed analysis of the factors contributing to this decrease, especially since the period was marked by steady economic growth; observes that EIB reserves reached over EUR 56 billion in 2023, up from EUR 53.9 billion in 2022 and EUR 36 billion in 2014;

4. Notes that the EIB’s total liquidity ratio remained well within internal limits to the end of 2023 and that the EIB’s Common Equity Tier 1 (CET1) ratio stood at 33.1 % in 2023, significantly higher than the average ratio of significant institutions supervised by the European Central Bank (ECB) at that time; emphasises that maintaining the EIB’s AAA rating with a ‘stable’ outlook is crucial for securing favourable market financing at preferential rates and should be preserved; underlines that the EIB’s high credit standing is key to its successful business model;

5. Calls on the EIB to maintain its strong capital position and consistently high profits, but notes that the Bank has potential to absorb potential fluctuations in returns without compromising shareholder capital or its credit rating, has the capacity to take on more risk in strategic investments and is well-equipped to invest more in higher-risk innovative projects where private capital remains hesitant;

6. Highlights that the EIB’s total disbursements reached EUR 54.4 billion in 2023, with EUR 53.4 billion from its own resources, compared to EUR 54.3 billion (EUR 53.3 billion from its own resources) in 2022; observes that the EIF’s disbursements on private equity investments amounted to EUR 139.7 million in 2023, compared to EUR 113.7 million in 2022; notes that, according to an economic model developed jointly by the EIB’s Economics Department and the Commission’s Joint Research Centre, the EIB Group’s overall investment within the EU in 2023 is expected to create around 1 460 000 new jobs in the EU-27 by 2027 and boost the EU’s GDP by 1.03 percentage points; calls on the EIB Group to ensure a more balanced geographical distribution of investments to maximise their impact across all EU regions, promoting cohesive and inclusive growth throughout the Union, with particular attention to under-represented and less developed areas;

7. Recalls that the EIB’s Statute mandates geographical balance among its staff and that the selection of staff members must be based on merit, while also considering fair representation of nationals from all Member States; encourages the Bank to continuously monitor geographical balance among its staff and to adjust the recruitment process accordingly, if needed;

8. Welcomes the fact that the EIB Group upholds a rigorous policy against tax fraud, tax evasion, tax avoidance, money laundering and terrorism financing;

InvestEU, the simplification of the multiannual financial framework, and the Recovery and Resilience Facility

9. Welcomes the adoption, on 13 December 2023, of the EIB Group Operational Plan 2024-2026, which outlines the priorities and activities for implementing the EIB Group’s strategy over the next three years; calls for adjustments to new market conditions, including simplification and a reduction of bureaucracy to remove barriers to financing for SMEs, which must be significantly increased; acknowledges that increasing higher-risk activities and mandates is crucial for providing effective support to high value-added and innovative sectors;

10. Recalls that the EIB Group has been allocated 75 % (EUR 19.6 billion) of the EU budgetary guarantee under the InvestEU Regulation [2]; highlights that, in 2023 alone, the EIB approved 30 operations under InvestEU totalling EUR 9.1 billion; believes that in order to stay competitive, significant investments are needed, primarily from the private sector; believes that focusing on innovative projects, start-ups and scale-ups would enhance European competitiveness and growth; notes that this requires mobilising private investments; calls, therefore, on the EIB to play a more significant role in strategic de-risking through guarantees, thereby encouraging private capital investment;

11. Stresses that, within the current 2021-2027 multiannual financial framework, the EIB manages 87 mandates from the Commission, increasing to about 130 if those relating to shared management and assigned by local governments and the Member States are included, and notes that the EIB produces no fewer than 457 reports a year for these; points out that de-bureaucratisation and simplification are deemed necessary to enable better use of resources;

12. Emphasises that the EIB is managing six Recovery and Resilience Facility (RRF) mandates in four Member States, signed in 2021 (Greece and Italy), 2022 (Romania) and 2024 (Spain), totalling EUR 8.7 billion; acknowledges that the adoption of ‘financing not linked to costs’ instruments, which have significantly expanded with the RRF, inherently raises the risk of errors and double funding; expresses its concern about the transparency, auditing and monitoring of the implementation of the RRF; calls on the EIB to cooperate with Member States to address government capacity constraints and the lack of technical skills so as to ensure that RRF resources are managed as effectively as possible, in alignment with national structures and complying with all RRF reporting requirements, especially in the implementation of investment projects and reforms; urges the Commission and the EIB, in its advisory role, to refrain from proposing new financing mechanisms based on the RRF model without taking corrective measures, including in the upcoming post-2027 multiannual financial framework; stresses that, while the EIB seeks simplification, it must not compromise the soundness of EU resource management or the ability to maintain oversight and accountability, as mandated by the Treaties;

Energy security

13. Notes the EIB’s continued support for security of supply, which mainly takes the form of reinforcing electricity grids and cross-border infrastructure, of reducing energy demand through energy efficiency projects and of fostering low-carbon power generation; commends the fact that the EIB has supported new dimensions of energy security, such as demand response and energy storage, and has promoted the development of a sustainable supply of critical raw materials (CRM) needed for the energy transition; calls for an urgent analysis of the real impact of these projects implemented to date, especially of their impact on the availability and cost of energy and thus on the general competitiveness of European companies;

14. Reiterates the need to address energy poverty and emphasises the need for a fair and inclusive energy transition; recalls that the energy crisis is exacerbating inflation, increasing food insecurity and straining household budgets; encourages the EIB to leverage the Just Transition Mechanism and the Modernisation Fund to support regions and populations most affected by the energy transition; stresses the importance of using the Just Transition Mechanism to support workers and regions affected by the phase out of fossil fuels, ensuring access to retraining and quality jobs; recognises that numerous sectors are grappling with challenges stemming from the combined effects of adaption to European Green Deal objectives and the repercussions of the energy crisis and inflation; stresses that accelerating the deployment of innovative low-carbon technologies requires bringing their costs to a level that is competitive with fossil fuels and adjusting to the ongoing reform of the green policies;

15. Acknowledges that the REPowerEU plan is a crucial new element in the EU policy response to the energy crisis; notes that, in July 2023, the EIB Group increased the financing targets of the October 2022 commitment from EUR 30.0 billion until 2027 to EUR 45.0 billion (REPowerEU+), in order to scale up its efforts to support the EU’s energy security; calls for a clear overview of potential double funding of energy projects;

16. Underlines that in 2023, the EIB provided approximately EUR 21.4 billion in financing for energy-related projects, of which around EUR 19.8 billion in the EU and EUR 1.6 billion outside the EU; considers it necessary to increase not only the volume of financing for energy-related projects, but also the efficiency of the investments; underlines, in this regard, the importance of the EIB’s combined offer of competent technical assistance and innovative financial support, and encourages the Bank to expand the range of innovative financing products offered to economic operators, going beyond the standard market offer;

17. Believes that hydrogen and its derivatives, particularly when sourced from renewable energy, can significantly contribute to the EU’s decarbonisation goals and reduce dependence on fossil fuels; urges the EIB to take a leading role in mobilising private investments, which are essential for scaling up hydrogen production across the EU, while ensuring technological neutrality and supporting a diverse range of innovative solutions for decarbonisation, including further scientific research aimed at enhancing and stabilising the efficiency of hydrogen technology; encourages the Bank to consider the cost-effectiveness of such projects from the perspective of their total life cycle;

Defence and security policy

18. Welcomes the significant role that the EIB Group plays in supporting the EU’s defence and security policy by providing funding and leveraging private investment to enhance the Union’s strategic autonomy and resilience; stresses the importance of the EIB’s investment capabilities, supporting initiatives that contribute to strengthening the EU’s defence industry, advancing cybersecurity infrastructure and promoting innovation in critical defence technologies;

19. Appreciates that security and defence is set as one of the Bank’s core priorities in its Strategic Roadmap for 2024-2027; highlights that in May 2024, the EIB’s Board of Directors approved the EIB Group Security and Defence Industry Action Plan, which follows the EIB Group 2022 Strategic European Security Initiative aimed at supporting innovation in dual-use technology, in order to enhance support for the EU’s security and defence industry; notes, with satisfaction, that EIB Group support is provided to SMEs and innovative start-ups within the security and defence sector under the ‘dual-use’ principle, upholding the ‘credible civil use’ criterion, but waiving the revenue test; welcomes the decision of the EIB Board of Directors of 21 March 2025 to expand the Bank’s eligibilities for financing Europe’s security and defence industry and infrastructure, by ensuring that excluded activities are as limited as possible in scope;

20. Welcomes the EIB’s targeted investments in both defence and civilian infrastructure and emphasises the need for strategic investment in technologies that serve both civilian and defence purposes, in line with the EU’s broader goals of promoting innovation and enhancing the Union’s security; calls on the EIB Group to conduct a review of the impact of the extension of its new dual-use goods policy;

21. Stresses the importance of SMEs, start-ups and mid-caps in the security and defence industry and in developing a common European market for defence; believes that smaller actors play a crucial role in strengthening the Union’s capacity and autonomy to develop innovative defence products; encourages the EIB to further support cross-border research and development (R&D) cooperation, particularly by paving the way for smaller actors to take part in the defence supply chains; stresses that greater EIB investment in the defence sector can encourage investment by commercial banks in the same area and considers it necessary to increase the flexibility of lending to SMEs in this regard;

22. Notes that the resources allocated to support the defence and security sector mainly come from the European Defence Fund (EDF) (EUR 8 billion), the EIB Strategic European Security Initiative (SESI) (EUR 8 billion) and the European Defence Industry Programme (EDIP) (EUR 1.5 billion); calls for a dedicated capital allocation on defence and the further adjustment of the scope of eligible investments in order to meet the ambitious role of contributing to Europe’s peace and security set by the White Paper on European Defence Readiness 2030 for the EIB Group; welcomes the integration of the EIB’s existing EUR 8 billion SESI into a cross-cutting and permanent public policy goal and the removal of a predefined ceiling for financing in this area; believes that these measures will allow the Bank to respond to the investment needs in security and defence, while safeguarding its operations and strong financial position; believes that the decision by the Board of Governors in June 2024 to increase the gearing ratio of the Bank will enable increased investments in areas of strategic importance, including in security and defence;

23. Underlines the added value of the innovative measures that the EIB has adopted to accelerate investments in security and defence, and of the ‘one-stop shop’ that acts as the single point of entry for clients and external stakeholders, to whom it offers expert assistance to streamline access and speed up deployment of financing available under the SESI; encourages the EIB to continue developing and implementing agreed upon measures that simplify client procedures and further accelerate investment processes, while ensuring that the AAA rating is preserved;

24. Notes, with appreciation, that in June 2023, the EIB approved an increase in SESI for security investments in the EU from EUR 6.0 billion to EUR 8.0 billion for the period from 2022 to 2027, also including the space and cybersecurity sectors; encourages the EIB to strengthen institutional partnerships with the EU Agency for the Space Programme and other potentially relevant partners, in accordance with EU competition rules;

25. Commends the EIB’s cooperation with all relevant stakeholders, including Member State governments, the European Defence Agency (EDA) and the NATO Innovation Fund; appreciates, in particular, the EIB Group’s cooperation with the EDA and welcomes the signing of an update to the memorandum of understanding between the two bodies on 3 October 2024, which will allow them to strengthen strategic partnerships and jointly identify financing needs to better support research, development and innovation (RDI) in the area of security and defence in the Union;

26. Invites the EIB to further strengthen such collaboration with key stakeholders with a view to increasing impact, synergies and complementarity with EU defence programmes, ensuring that its investments complement broader EU defence policy goals and contribute to achieving economies of scale in European defence capabilities; asks the EIB to enhance regional security and resilience, particularly in Eastern Europe and the Mediterranean through the creation of infrastructure that supports regional security and fosters greater cooperation between EU Member States on defence matters; stresses, furthermore, the importance of exploring cooperation with the NATO Innovation Fund in order to improve access to financing for technology start-ups, in parallel to the deployment of the EIF Defence Equity Facility;

Social infrastructure and housing

27. Asks the EIB to increase risk-taking for projects providing essential services with long-term clear and measurable benefits; welcomes, in this vein, the EIB Group’s actions and measures in the area of housing and social infrastructure that contribute to affordable housing, social inclusion and regional development, while also supporting sustainability and innovation; calls on the EIB to prioritise its investments towards these goals in order to achieve better economic growth, social inclusion and regional cohesion, while also supporting the EU’s sustainability objectives; invites the Bank to focus on sustainable urban development and inclusive growth by ensuring that the EU’s housing and infrastructure needs are met for a stronger, more cohesive and prosperous Europe;

28. Emphasises that housing purchase and rental costs have surged significantly in recent years, reducing the affordability of many metropolitan areas in the EU and limiting access to housing; stresses that the EIB must play a stronger role in addressing the housing crisis; welcomes the inclusion of support for social infrastructure in the EIB Group’s eight strategic priorities for 2024-2027 and agrees that investments in energy-efficient, sustainable and accessible housing, and education within easy reach are crucial for boosting productivity and fostering strong and resilient societies; encourages the EIB to prioritise investments in housing cooperatives, energy-efficient social housing and renovation projects targeting low-income households; believes that addressing the EU’s major housing investment gaps requires overcoming both financial and non-financial investment barriers and the large-scale mobilisation of resources and capacities;

29. Welcomes that the EIB, in collaboration with the Commission, has initiated a pan-European investment platform aimed at promoting affordable and sustainable housing, combining advisory services and financing, and encourages the participants to continue this initiative;

30. Welcomes the EIB’s commitment to easing the pressure on housing markets in Europe; stresses that housing purchase and rental prices have increased significantly in recent years, reducing the affordability of many metropolitan areas in the EU and compromising access to these; emphasises that EIB analysis shows that the EU needs about 1.5 million new housing units per year to cope with demand, and that about 75 % of the EU’s building stock needs to be renovated, representing an additional 5 million units per year; welcomes the fact that the EIB supports the reconstruction of existing housing and the construction of new social and affordable accommodation; encourages the EIB to mobilise more funding for affordable housing projects among the Member States;

31. Calls for the strengthening of technical assistance and financial expertise in support of local and regional authorities, especially in areas with low investment capacity, in order to improve access to EIB funding; believes that cooperation with local authorities, local governments and civil society representatives should foster the development of social housing suitable for all, and especially for the most vulnerable citizens of the concerned Member State; is aware that the effectiveness of the EIB’s action in the housing and social infrastructure sector also depends on the removal of policy and regulatory hurdles;

32. Notes that, in 2023, the EIB signed EUR 8.3 billion in financial support for energy efficiency operations, of which 65 % was for energy efficiency in buildings; invites the EIB to prioritise long-term affordable and accessible solutions, and sustainable investments, such as energy-efficient renovations and the reuse of vacant buildings;

33. Believes that the related investments should ensure sufficient durability before any change of destination or use is authorised;

34. Invites the EIB to build on its long-standing experience as an accelerator of European investments and to also deploy its potential in the education and training and healthcare sectors, including through advisory services; calls on the Bank to strengthen support for healthcare capacities, both within and outside the EU, thus ensuring a stronger role for Europe in the world;

Support for SMEs, mid-caps, start-ups, scale-ups and businesses in rural and remote areas, the Capital Markets Union and the role of the EIF

35. Highlights that SMEs, start-ups and scale-ups are vital for the EU’s economy; notes that these businesses encounter significant hurdles in accessing financing, markets and talent, which constrains their growth; asserts that business growth, dynamism and public investment are essential for fostering innovation, competitiveness and productivity; encourages the EIB Group to continue addressing these challenges, notably in the current geopolitical context, through customised financial programmes, risk-sharing mechanisms and targeted financial instruments, while ensuring the additionality of public resources for these purposes and avoiding the crowding out of private capital; notes that different instruments to support lending to businesses can be combined depending on the context, and that different EIB Group instruments target different market failures and firm types; stresses the need to provide technical assistance to SMEs before project approval, in order to improve access to EIB funding;

36. Notes that the development of a well-functioning securitisation market can be a key first step towards establishing a strong Capital Markets Union (CMU); believes that the CMU will benefit consumers and SMEs by offering high-yield investment opportunities in the real economy and will eventually boost the venture capital market by improving access to diversified funding sources; believes that financing European scale-ups with European capital should be a priority, as exemplified by the European Tech Champions Initiative, which was launched in February 2023 to finance promising European tech companies and prevent the sale of businesses to foreign investors because of the lack of European investment; encourages the EIF to explore establishing the second generation of this initiative; observes that the European Tech Champions Initiative is complemented by the European Scale-up Initiative, which aims to provide crucial financing for Europe’s high-tech companies in their late-stage development; notes that these investments should be in line with policy actions at EU and national level; is aware of the comparative weaknesses of the European venture capital market in respect of other competitors’ markets, and that European start-ups and scale-ups are often obliged to relocate or search for foreign buyers or rely on sources of financing other than venture capital, hence less suited to high-growth;

37. Acknowledges the mission of the EIF to support access to financing for European micro, small and medium-sized enterprises; believes that the EIF should significantly step up its activities for the development of the European venture capital ecosystem, while maintaining a geographical balance; calls for the EIF’s activities to be strengthened, enabling increased investment in high-growth sectors, enhancing risk-sharing between public and private investors, and promoting innovation throughout Europe; considers it necessary to monitor the rate of increase in support for micro, small and medium-sized enterprises;

38. Encourages the EIF to further develop its monitoring tools to better track the long-term performance of venture capital funds and SME financing operations, especially in terms of job creation, innovation diffusion and regional impact; stresses also the critical role of large European companies in Europe’s economic structure, particularly those operating in essential sectors such as energy, defence and infrastructure; calls for a balanced approach that ensures the EIB continues to support large European companies in securing investment capital for major projects and research and development initiatives, thereby enhancing Europe’s global competitiveness;

39. Praises the support provided by the EIB Group to about 400 000 SMEs and mid-caps in 2023 alone, with EUR 31.1 billion in financing, including loans and guarantees for businesses (of which EUR 14.9 billion was deployed by the EIF), resulting in the mobilisation of over EUR 134 billion, and notes that it teamed up with almost 300 partner institutions across Europe to this end; encourages the EIB to continue its role in improving access to financing for SMEs, which often face barriers to funding from traditional financial institutions, providing targeted financing to ensure sufficient resources to grow and thrive; welcomes and calls for the constant expansion of the number of partner institutions to reach a wide geographical and sectoral coverage;

40. Recalls that the deployment of the European Guarantee Fund ended in 2023 and that its disbursements to help SMEs to recover from the adverse impact of the pandemic reached approximately 200 000 SMEs across the EU; recalls the concerns expressed in previous resolutions about the transparency of the decision-making processes and information about final recipients;

41. Welcomes that EIF measures on anti-money-laundering, countering the financing of terrorism and tax avoidance encompass risk assessments for products and transactions, thorough due diligence on counterparties and screening the ownership structures and key individuals against sanctions and adverse media; welcomes the introduction of mandatory staff training and the conclusion of an agreement with the Financial Intelligence Unit of Luxembourg on the reporting of and follow-up on any suspicious transactions detected;

Key policy areas of cohesion, climate action and environmental sustainability, and digitalisation

42. Appreciates that in its 2021-2027 Cohesion Orientation, the EIB committed to dedicating at least 40 % of its total financing in the EU between 2022 and 2024 to projects in cohesion regions; notes that, in 2023, such financing amounted to EUR 29.8 billion, equivalent to 45 % of the Bank’s total signatures in the EU; underlines that the share of EIB financing allocated to less developed regions increased from 24 % in 2022 to 26 % in 2023, totalling EUR 17.2 billion, well above the 21 % target set in the EIB Cohesion Orientation for 2023; reiterates the call for the EIB to continue monitoring, analysing and addressing the shortcomings that prevent certain regions or countries from fully benefiting from the EIB’s financial support and assistance;

43. Acknowledges the role played by the EIF in contributing to economic and social cohesion in the Union through a wide range of financial instruments; notes that EIF commitments to credit guarantees, venture capital and private equity investments for cohesion regions in 2023 stood at EUR 6.8 billion, representing 48 % of total EIF commitments in the EU; notes that in 2023, the EIF was especially active in Central and Eastern Europe;

44. Notes that the EIB Environmental and Social Sustainability Framework includes revised environmental and social policy and standards promoting an integrated approach to impact and risk assessment and management;

45. Acknowledges that over the past 15 years, EIB Advisory has supported over 1 000 projects in cohesion regions; calls on the Bank to actively promote financing opportunities in less developed and transition regions, including by boosting the presence of advisory services in EIB local offices; considers it necessary to also take into account the geographical distribution of EIB support for increasing social cohesion;

46. Highlights the EIB’s initiatives in cohesion regions to support the healthcare sector, including the HERA Invest programme, a EUR 100 million guarantee established with the Commission to support research and development in addressing pressing cross-border health threats; encourages the EIB to promote targeted investments in key systemic enablers such as healthcare, education, social housing, digital connectivity and local financing for cities and regions, ensuring a better geographical balance, either through direct lending or financial instruments, and to leverage synergies between EU grants and EIB loans to enhance cross-border rail connectivity, which is crucial for better integration within the EU single market;

47. Acknowledges the EIB’s strategic orientation since 2019 to be the EU Climate Bank; emphasises that in 2023 alone, the EIB signed EUR 41.8 billion in financing for climate action and EUR 25.1 billion for environmental sustainability (EUR 35.1 billion and EUR 15.9 billion respectively in 2022); notes that EIB financing for climate change adaptation totalled EUR 2.7 billion in 2023, corresponding to 6.4 % of its total climate action (compared to EUR 1.9 billion, or 5.4 %, in 2022); welcomes that climate action and environmental sustainability financing, as a whole, accounted for 60 % of EIB financing in 2023; calls for maintaining technological neutrality in its investment strategy in climate and sustainable financing;

48. Recalls that the EIB Energy Lending Policy (ELP), adopted in 2019, established a ‘phase out support to energy projects reliant on unabated fossil fuels’ and introduced a transition period during which the Bank could continue to approve projects already under appraisal, but the Board of Directors did not approve any such project after the end of 2021; remarks that, in 2022, the EIB Group introduced a temporary and exceptional extension of the exemptions to the Paris Alignment for Counterparties Framework (so-called PATH) in support of REPowerEU, to cover projects with high innovative content and renewable energy projects and electric vehicle charging infrastructure in the EU; observes that, in 2023, the EIB Group decided to apply the same temporary and exceptional extension also for projects in the spirit of REPowerEU outside the EU; notes that such temporary and exceptional extensions are expected to run until 2027, subject to a Climate Bank roadmap review expected in 2025; recalls its previous resolution [3] and maintains that PATH offers the appropriate framework for supporting counterparties on their pathways to align with the Paris Agreement objectives; emphasises that the EIB is expected to intensify its engagement with all of its clients to foster the development of their decarbonisation plans;

49. Notes the EIB Group Climate Bank Roadmap mid-term review, approved in 2023, which includes a simplified Paris Alignment framework for microenterprises, the revision of the PATH framework’s disclosure requirements for financial intermediaries and a temporary extension of the list of countries in which the EIB can act as a sole financier of climate adaptation projects due to their particular vulnerability to climate change;

50. Welcomes the EIB Group’s inclusion of agriculture and bioeconomy among its key priorities, but notes that agriculture, fisheries and forestry received only 1.1 % of the EIB’s lending stock in 2023; considers it important for the EIB to programme significant amounts for financing the agricultural sector and through simplified procedures;

51. Underlines that agriculture is a key driver of growth and development in rural areas; acknowledges the increasing challenges faced by the agricultural sector and the need for EU farmers to adapt to the European Green Deal objectives, cope with the energy crisis and manage rising inflation; calls on the EIB Group to enhance support and foster innovation for this vital sector, which plays a significant role in ensuring food security, leveraging the EU’s One Health approach by integrating human, animal, plant and environmental health to create sustainable, resilient and productive agri-food systems; highlights the financial challenges faced by farmers, particularly young and small operators, noting that farmers and the enterprises in this sector experience lower success rates when applying for financing;

52. Stresses that EIB support should have a just transition approach in order to achieve sustainable agriculture that protects the environment, human health and animal welfare, while improving farmers’ livelihoods, in particular for small and medium-sized farms; maintains that supporting rural areas is essential for promoting balanced and inclusive development, generational renewal and equal access to financial opportunities for women and men; reiterates its call on the EIB Group to increase its involvement in the agricultural sector by improving access to funding;

53. Appreciates that the EIB Group is one of the key supporters of digitalisation in the EU, particularly in financing digital infrastructure and supporting innovative digital start-ups; encourages the EIB to enhance its support for digital networks strengthening the EU’s technological autonomy and innovation in key technologies;

54. Believes that reducing digital inequality and preventing social exclusion requires significant public investment in telecommunications infrastructure, particularly in rural areas; encourages the EIB to support European citizens in acquiring adequate digital literacy to fully participate in society, with a special focus on the elderly and those with disabilities;

55. Recognises the critical role of the cybersecurity sector in protecting businesses and governments from advanced digital threats and foreign influence; welcomes the increase in security investments from EUR 6 billion to EUR 8 billion, financed through the SESI to address security challenges, including those in the New Space industry;

56. Welcomes the EIB’s focus on gender equality and women’s economic empowerment, resulting in a total of EUR 5.8 billion in investment in this field in 2023 (compared to EUR 5.1 billion in 2022); believes that the EIB could further increase microfinance loans to women-led businesses, which still face discrimination in access to financing;

57. Highlights that the security of supply of critical raw materials is crucial for both the green and digital transitions, as well as for the defence sector and the EU industrial base in general; calls on the EIB to increase investments in the CRM sector to help diversify the supply of both primary and secondary raw materials and to develop circular economy solutions, in particular R&D for alternative materials, such as bio-based materials; welcomes, in this regard, the adoption on 21 March 2025 of a new CRM strategic initiative, with an expected EUR 2 billion in financing for CRM investment in 2025, a new CRM Task Force and a dedicated one-stop shop to build and manage a pipeline of CRM operations and advisory activities and increased technical expertise and partnerships;

The EIB’s activities outside the EU

58. Underlines that in EIB Global’s second year of existence, it provided financing amounting to EUR 8.4 billion (compared to EUR 9.1 billion in 2022); notes that, as EIB Global financing is limited to 50 % of the total cost of a project, investment co-financing with development finance institutions and multilateral development banks is recurring; calls on the EIB and the Commission to invest in internal audit and independent control functions to guarantee the integrity and soundness of all operations;

59. Recalls that EIB Global is among the key implementing actors of the European Global Gateway and, as such, is expected to apply the highest standards of transparency and accountability;

60. Notes the adoption by the EIB Board of Directors of the EIB Global Strategic Roadmap and its commitment to respect and promote human rights and the rule of law in the projects it supports;

61. Highlights the importance of ensuring that the EIB Group’s interventions in Ukraine are guided by the priorities for the country’s reconstruction agreed with the EU, and are consistent with the methods and frameworks laid out in the Ukraine Plan and with the provisions of the EU Treaties; notes that the EIB is further enhancing its efforts to address fraud and corruption in relation to the EIB Group projects implemented in Ukraine; calls for the continued application of appropriate conditionality on the financial assistance provided to Ukraine, with a focus on ensuring effective oversight mechanisms, such as access to information and premises, and the monitoring of visits, and calls for conditionality to be extended to all non-EU countries for which it provides financing;

62. Urges the strengthening of the administrative and audit capacity of Ukrainian authorities responsible for implementing, monitoring, controlling and supervising funded actions, in particular for the prevention of fraud, corruption, conflicts of interest and irregularities; reiterates that the EIB should have clear and unrestricted oversight at all times;

63. Believes that a greater role for the EIB will bring added value for both the reconstruction of Ukraine and the enlargement process and for prospective partnerships under the EU’s Global Gateway agenda and neighbourhood policy and in support of the Sustainable Development Goals; encourages the Commission to maximise cooperation with the EIB to leverage the EU’s strategic autonomy, particularly on energy and raw materials;

64. Welcomes the adoption, in 2024, of the Ukraine Facility, which follows the EIB’s EU for Ukraine (EU4U) initiative and establishes a support mechanism based on EU budget resources; encourages the Member States to ensure that solid support continues to be provided to the country, in line with its needs;

65. Stresses that, in order to support Ukraine, the EIB has built up a loan portfolio of over EUR 7 billion since the beginning of the conflict with Russia in 2014; underlines that, as of 31 December 2023, the EIB’s exposure (disbursed and not yet disbursed) amounted to EUR 5.750 billion, predominantly covered by EU guarantees under the External Lending Mandate; notes that, in addition, the Bank also granted financial guarantees on exposures to counterparties located in Ukraine, fully covered by EU Comprehensive Guarantees, for a signed amount of EUR 388.7 million at the end of 2023 (compared to EUR 478.8 million at the end of 2022);

66. Notes the growing financial engagement of the EIB in Ukraine; calls on the Bank to provide regular, detailed updates to the budgetary authority and relevant audit bodies regarding the disbursement and implementation of funds covered by EU guarantees;

67. Underlines the disproportionate impact of the Russian war of aggression against Ukraine on eastern EU regions bordering Russia and Belarus; draws attention to the costs borne by these regions and Member States as a result of their shared border with hostile neighbouring countries, notably their need to increasingly redirect public funds towards security, defence and preparedness, while dealing with severely reduced resources due to a disruption in economic activities, cross-border trade and other exchanges, and in cohesion programmes; calls on the EIB to take this into account in its financing decisions;

68. Welcomes the significant investments made in Moldova to support economic resilience, improving energy security, enhancing infrastructure and aiding the country’s progress towards EU integration; acknowledges that in the Western Balkans, EIB Global invested EUR 1.2 billion in 2023, plus an additional EUR 700 million to enhance road safety and improve railway networks; welcomes the adoption of the Reform and Growth Facility for the Western Balkans in 2024 and the Reform and Growth Facility for Moldova approved by the European Parliament;

69. Recognises the role played by the EIB in supporting the Western Balkans on their path to Union membership, in line with the EU’s enlargement policy; observes that EIB Global invested EUR 1.2 billion in the Western Balkans in 2023, mobilising a total of over EUR 6 billion in investments; notes that the majority of the financing was allocated to sustainable connectivity, followed by credit lines for SMEs, infrastructure projects in the healthcare, education and skills sectors, and water supply and sanitation;

70. Asks the EIB to collaborate with other bilateral and multilateral institutions to develop and apply common methodologies for development impact analysis, with a view to ensuring added value and long-term, positive impacts;

EIB accountability architecture

71. Recalls that internal oversight at the EIB is headed by the Inspectorate General (IG), which comprises three accountability-related divisions – operations evaluation, the complaints mechanism and fraud investigation – that hold complementary roles, contributing to the consistent handling of allegations and complaints;

72. Observes that the EIB Complaints Mechanism (EIB-CM) handled a total of 104 cases in 2023 (97 in 2022); notes that 60 new complaints were received in 2023 (54 in 2022), of which 44 were considered admissible and 29 were related to EIB-financed projects, of which 27 were located outside Europe;

73. Notes that the EIB Procurement Complaints Committee is the independent EIB committee handling complaints about project procurement procedures relating to EIB-financed projects outside the EU;

74. Welcomes the efforts of the Investigative Division (IG/IN) to cooperate and coordinate efforts with the other components of the EU’s anti-fraud architecture, in particular the European Anti-Fraud Office (OLAF) and the European Public Prosecutor’s Office (EPPO), which received 37 % of the referrals made for investigations in 2023 (27 cases out of 74); encourages the IG/IN to strengthen its cooperation with all components of the EU’s anti-fraud architecture;

75. Notes that the IG/IN carries out proactive fraud detection activities using the Fraud and Integrity Risk Scoring Tool and the Corruption Risk In Procurement robot and that, in 2023, 24 reviews identified targets for three full and in-depth proactive integrity reviews; invites the Bank to assess how these digital tools could be further enhanced to support transparency and financial accountability;

76. Regrets the fact that, despite repeated calls by Parliament, the IG/IN annual report does not provide adequate information about the financial magnitude of the cases it handles, the funds or mandates affected, the kinds of projects concerned, the mitigating measures adopted, the role of the EIB services and of the intermediaries or partners in the cases, or even the Member States concerned; invites the representatives of the IG/IN to increase the level of engagement, interactions and transparency with Parliament, especially regarding the control of the financial activities; reiterates its call to the IG/IN to go beyond providing a mere narrative description of a few case studies, and to periodically report valuable insights into the extent to which financial interests are safeguarded; suggests that the IG/IN adopt a reporting model similar to those used by other investigative bodies, such as EPPO and OLAF, where a proper balance between transparency and duty of confidentiality or of professional secrecy is pursued;

77. Is aware that the EIB Exclusion Policy provides for an autonomous exclusion process that is not fully equivalent to the Commission’s Early Detection and Exclusion System in terms of decision-making standards, results and remedies; reiterates its call on the EIB Group and the Commission to cooperate in identifying the potential gaps and proposing remedies, including an expedited procedure to enforce EIB exclusion decisions via the Early Detection and Exclusion System; observes that in 2023, exclusion proceedings based on IG/IN findings excluded five companies from participating in any EIB-financed activity for a period of five years;

78. Welcomes the approval, in 2023, of the EIB Group’s Internal Control Framework Policy; acknowledges the results of the group alignment process between the EIB and the EIF insofar as they reflect the different business models and governance structures of the two entities; refers, in particular, to the Audit Committee’s remarks that both internal audit and the internal control framework should evolve to become group functions;

79. Notes that the EIB’s independent external auditor is the third line of defence; points out that the regular rotation of auditors and assignments allows fresh perspectives, and therefore observes that the EIB external auditor should be rotated periodically, yet its mandate was extended until 2027 and it has been the auditor of the EIB Group since 2009;

80. Appreciates that the EIB Group Risk Management Framework and EIB Group’s semi-annual Risk Management Disclosure Reports are effective and are aligned with the requirements and technical standards of the European Banking Authority;

81. Stresses that, in 2023, despite difficult market conditions, the EIB’s portfolio continued to exhibit very low levels of non-performing exposures (NPEs); takes the view that even if a significant portion of the Bank’s loan portfolio benefits from credit enhancements or from EU Member State guarantees, the high quality of the EIB’s portfolio results from the diligent implementation of very effective EIB lending policies;

82. Highlights that the EIB does not fall within the scope of application of the EU’s legislation applicable to credit institutions, in particular the Capital Requirements Regulation [4] and Directive [5] (CRR, CRD), thus the Bank is entitled to determine its capital and liquidity requirements in a manner that is adequate and appropriate to its activities, its mission and the market conditions; points out that the EIB Group is committed to conform to the best banking and market practices and can determine their applicability in line with the proportionality principle; stresses that the implementation of these norms should not create unwarranted burden; welcomes the fact that the EIB Group voluntarily performed the Review and Evaluation Process; points out that this should be in line with the EIB’s governance structure and mission;

83. Understands that, in line with the EU’s evolving needs, the EU institutions approved, in 2024, the change in statute proposed by the EIB Board of Governors by amending the statutory limit on its gearing ratio [6] and raising it from 250 % to 290 %, to enable the EIB to invest more without increasing its equity base;

84. Notes that the amended gearing ratio paves the way for increased risk-taking; acknowledges that investments in renewable energy, sustainable infrastructure and innovative technologies are crucial for the EU’s competitiveness, but often carry greater risk because of the uncertainty of returns; points out that increased risk-taking may increase the volatility of the EIB’s returns, but observes that the EIB maintains capital buffers that would support expanded risk activities;

85. Is alarmed by the situation of Northvolt AB, a battery manufacturer considered pivotal in the green transition; stresses that Northvolt has benefited from a substantial EIB lending package of slightly over EUR 942.6 million as part of the debt financing to expand a gigafactory site; notes that Northvolt filed for bankruptcy in March 2025; calls on the EIB to provide details about the evaluation and decision-making process to fund Northvolt AB and the causes that led to the failure of the project;

86. Stresses that the expansion of the gigafactory site was expected to increase the annual output capacity for battery production and was of strategic importance for global competitiveness and was consistent with the EU’s strategies in the sector;

87. Calls on the Commission and the EIB Board of Directors to launch an in-depth internal review without undue delay to verify the financial damage, the reasons for and the background to the failure of this flagship project and to learn from this experience in order to prevent the recurrence of a similar situation or enable the early detection thereof;

88. Maintains that the greatest added value of EU support lies in fostering higher-risk investments in innovative projects, scaling up EU strategic goals and enabling long-term transition projects that cannot get funding from the private sector; believes that to effectively pursue its targets in innovation and competitiveness, the InvestEU programme should focus on financing higher-risk and more scale-up investment and that the EIB Group should take on more and larger high-risk projects, which should involve primarily and preferentially European investors, combining a more risk-absorption-oriented deployment of InvestEU resources with an equivalent orientation in the use of the EIB Group’s own financial resources; urges the EIB to introduce stricter conditions to prevent EU public financing from being used to subsidise companies relocating production outside Europe, ensuring that all EIB-funded projects contribute to long-term European industrial resilience;

89. Is aware that members of the EIB’s Management Committee are often civil servants in their countries of origin before beginning their terms at the EIB, which typically last for two to six years, and that they are therefore entitled to pursue professional development opportunities subject to certain conditions during the cooling-off period (which has been extended to a period of 24 months after the end of their term at the EIB); notes that Management Committee members are asked to inform the Ethics and Compliance Committee and seek approval as soon as possible for any negotiations regarding prospective employment;

90. Strongly echoes Parliament’s repeated calls to strengthen the mechanism to prevent conflicts of interest within the EIB and to improve the handling of such cases, and to better define the terms under which EIB vice-presidents can participate in decisions about operations in their countries of origin, and insists that these matters be addressed in a future revision of the Management Committee code of conduct;

91. Highlights that on 31 October 2023, the European Ombudsman ruled in Case 611/2022/KR that a former vice-president had participated in approving financing agreements between the EIB and a national promotional bank [7] in his country of origin just weeks before becoming the Chief Executive Officer of that national promotional bank, despite the EIB’s Chief Compliance Officer advising against such actions during the appointment process; understands that this case predates the entry into force of the current Management Committee code of conduct, which now includes specific provisions regarding the prospective employment of its members; notes that, in the future review of the rules applicable to its Ethics and Compliance Committee, the EIB has committed to consider the European Ombudsman recommendation to make public the Committee’s decisions;

92. Observes that mitigating measures, such as ring-fencing and cooling-off periods, are the most common precautionary clauses to be used when handling a revolving-doors case and understands that such measures are implemented and are complied with by the members of the Management Committee, including those recently reported on in the media;

93. Shares the view of the European Ombudsman that the role of the EIB Ethics and Compliance Committee should be strengthened when it comes to overseeing the intended new jobs of Management Committee members and that it should be able to impose and enforce risk-mitigating measures; understands that the role of the Ethics and Compliance Committee has become more prominent in recent years and that internal discussions are ongoing on how to enhance its efficiency;

94. Invites the Bank to boost the participation of European companies in procurement processes launched for projects financed by the EIB; encourages the Bank to advise borrowers to prioritise eligibility for European companies in order to strengthen European competitiveness;

95. Reiterates its call on the EIB to ensure proper geographical representation, including at middle and senior management levels, and calls on it to publish an annual breakdown of the gender and nationality for middle and senior management positions;

Scrutiny, transparency and oversight

96. Strongly regrets the fact that the European Court of Auditors (ECA) still lacks full access to all data relating to EIB operations; acknowledges that not all the activities of the EIB are directly financed by the EU and, therefore, not all activities are automatically accessible to the ECA; insists that the ECA should have access to the necessary information to comprehensively and exhaustively assess all EIB operations involving EU funds, including those conducted through financial intermediaries, designed to implement EU policies; calls on the ECA to fully scrutinise, to the best of its abilities, all operations involving the EU budget to any degree;

97. Observes that the main relevant audit tasks are entrusted to the EIB Audit Committee, which is a fully independent body; believes that the participation of qualified external representatives in specific Audit Committee tasks could enhance the objectivity of the Audit Committee’s analyses;

98. Notes that the EIB’s Transparency Policy strikes a compromise between the principle of openness and the need to safeguard sensitive information; observes that the policy indicates what information should be published proactively and when – stipulating, for instance, that project summaries should be published at least three weeks before the project’s financing is considered for approval by the EIB Board of Directors – and sets out the relevant derogations; calls for these summaries to provide meaningful information to stakeholders;

99. Notes that in 2023, 449 projects were approved by the EIB Board of Directors and that almost all (94 %) of the project summaries were published, in the majority (57 %) of cases before approval; observes that all EIB operations conducted through financial intermediaries are published on the EIB’s website and that the EIB provides details on request;

100. Recalls that all EIB documents are accessible to the public in line with the presumption in favour of disclosure; emphasises that all applicants should be informed in advance about public access to documents, and any refusals should be based solely on specified exceptions; stresses that the EIB should consider publishing, in a timely manner, information regarding the rationale and context for projects and the explanation of their alignment with and contribution to EU policy goals; calls on the EIB to systematically publish audit results of its largest financial operations, ensuring independent scrutiny of its risk management and impact assessments; expects the EIB to limit non-disclosure to the applicable exceptions listed in Regulation (EC) No 1049/2001 [8] and Regulation (EC) No 1367/2006 [9]; calls for the full implementation of the Ombudsman’s recommendations issued following its inquiries into EIB disclosure policy and related requests for access to documents;

101. Recalls that all recipients of EU funding have a general obligation to acknowledge its origin and ensure the visibility of any EU funding received; calls on the EIB Group to ensure that final recipients comply with the visibility criteria of the EU’s financial support;

102. Highlights that the Bank is working to reduce the time needed to bring a product from conception to market availability (time to market) by fully digitising its project cycles; calls for the Bank to intensify its efforts in the digitalisation of its operations;

103 Reiterates its call on the EIB to strengthen and fully implement its policy on tax fraud, evasion and avoidance, including by refraining from funding beneficiaries or financial intermediaries which have been found to be, or are at high risk of being, involved in such practices;

104. Reiterates that more structured dialogue between Parliament and the EIB would be enhanced by the adoption of a memorandum of cooperation; praises, in this connection, the EIB’s unprecedented cooperation with Parliament for the preparation of this resolution, noting that it is a tangible expression of openness and transparency;

Follow-up on Parliament’s recommendations

105. Urges the EIB to continue reporting on the status of previous recommendations issued by Parliament, particularly regarding the outcomes achieved and the impact of the actions taken to implement its priorities and the EU’s policies, especially as regards:

(a) impact (economic, environmental and social) of its investment strategy and results achieved in contributing to the balanced and steady development of the internal market in the interests of the Union;

(b) actions adopted to enhance the prevention and countering of conflicts of interest, fraud, corruption and other potential forms of misconduct;

(c) new measures to strengthen transparency;

(d) measures to strengthen support for SMEs and eligible economic operators during the implementation of EU policies;

(e) follow-up on the calls and requests adopted via the present resolution;

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106. Instructs its President to forward this resolution to the Council and the Commission, and asks that the Council and the EIB Board of Directors hold a debate on Parliament’s positions presented herein.

MIL OSI Europe News –

April 24, 2025

MIL-OSI Europe: REPORT on the ninth report on economic and social cohesion – A10-0066/2025

Source: European Parliament

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the ninth report on economic and social cohesion

(2024/2107(INI))

The European Parliament,

– having regard to Articles 2 and 3 of the Treaty on European Union,

– having regard to Articles 4, 162, 174 to 178, and 349 of the Treaty on the Functioning of the European Union (TFEU),

– having regard to Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy [1] (Common Provisions Regulation),

– having regard to Regulation (EU) 2021/1058 of the European Parliament and of the Council of 24 June 2021 on the European Regional Development Fund and on the Cohesion Fund [2],

– having regard to Regulation (EU) 2021/1059 of the European Parliament and of the Council of 24 June 2021 on specific provisions for the European territorial cooperation goal (Interreg) supported by the European Regional Development Fund and external financing instruments [3],

– having regard to Regulation (EU) 2021/1057 of the European Parliament and of the Council of 24 June 2021 establishing the European Social Fund Plus (ESF+) and repealing Regulation (EU) No 1296/2013 [4],

– having regard to Regulation (EU) 2021/1056 of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund [5],

– having regard to Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013 [6],

– having regard to Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending Regulations (EU) No 1301/2013, (EU) No 1303/2013 and (EU) No 508/2014 as regards specific measures to mobilise investments in the healthcare systems of Member States and in other sectors of their economies in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative)[7],

– having regard to Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 April 2020 amending Regulations (EU) No 1301/2013 and (EU) No 1303/2013 as regards specific measures to provide exceptional flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak [8],

– having regard to Regulation (EU) 2020/461 of the European Parliament and of the Council of 30 March 2020 amending Council Regulation (EC) No 2012/2002 in order to provide financial assistance to Member States and to countries negotiating their accession to the Union that are seriously affected by a major public health emergency [9],

– having regard to Regulation (EU) 2020/2221 of the European Parliament and of the Council of 23 December 2020 amending Regulation (EU) No 1303/2013 as regards additional resources and implementing arrangements to provide assistance for fostering crisis repair in the context of the COVID-19 pandemic and its social consequences and for preparing a green, digital and resilient recovery of the economy (REACT-EU)[10],

– having regard to Regulation (EU) 2022/562 of the European Parliament and of the Council of 6 April 2022 amending Regulations (EU) No 1303/2013 and (EU) No 223/2014 as regards Cohesion’s Action for Refugees in Europe (CARE)[11],

– having regard to Regulation (EU) 2022/2039 of the European Parliament and of the Council of 19 October 2022 amending Regulations (EU) No 1303/2013 and (EU) 2021/1060 as regards additional flexibility to address the consequences of the military aggression of the Russian Federation FAST (Flexible Assistance for Territories) – CARE [12],

– having regard to the URBACT programme for sustainable urban cooperation, established in 2002,

– having regard to the Urban Agenda for the EU of 30 May 2016,

– having regard to the Territorial Agenda 2030 of 1 December 2020,

– having regard to the 9th Cohesion Report, published by the Commission on 27 March 2024 [13], and the Commission communication of 27 March 2024 on the 9th Cohesion Report (COM(2024)0149),

– having regard to the study entitled ‘The future of EU cohesion: Scenarios and their impacts on regional inequalities’, published by the European Parliamentary Research Service in December 2024,

– having regard to the Commission report of February 2024 entitled ‘Forging a sustainable future together – Cohesion for a competitive and inclusive Europe’[14],

– having regard to the opinion of the European Economic and Social Committee of 31 May 2024 on the 9th Cohesion Report [15],

– having regard to the opinion of the Committee of the Regions of 21 November 2024 entitled ‘A renewed Cohesion Policy post 2027 that leaves no one behind – CoR responses to the 9th Cohesion Report and the Report of the Group of High-Level Specialists on the Future of Cohesion Policy’,

– having regard to the report entitled ‘The future of European competitiveness – A competitiveness strategy for Europe’, published by the Commission on 9 September 2024,

– having regard to the agreement adopted at the 21st Conference of the Parties to the UN Framework Convention on Climate Change (COP21) in Paris on 12 December 2015 (the Paris Agreement),

– having regard to the study entitled ‘Streamlining EU Cohesion Funds: addressing administrative burdens and redundancy’, published by its Directorate-General for Internal Policies of the Union in November 2024 [16],

– having regard to Regulation (EU) 2025/XXXX of the European Parliament and of the Council of [INSERT DATE] on the Border Regions’ Instrument for Development and Growth in the EU (BRIDGEforEU) [INSERT FOOTNOTE ONCE PUBLISHED IN OJ],

– having regard to the Commission communication of 3 May 2022 entitled ‘Putting people first, securing sustainable and inclusive growth, unlocking the potential of the EU’s outermost regions’ (COM(2022)0198),

– having regard to the opinion in the form of a letter from the Committee on Agriculture and Rural Development (XXX),

– having regard to its resolution of 25 March 2021 on cohesion policy and regional environment strategies in the fight against climate change [17],

– having regard to its resolution of 20 May 2021 on reversing demographic trends in EU regions using cohesion policy instruments [18],

– having regard to its resolution of 14 September 2021 entitled ‘Towards a stronger partnership with the EU outermost regions [19],

– having regard to its resolution of 15 September 2022 on economic, social and territorial cohesion in the EU: the 8th Cohesion Report [20],

– having regard to its resolution of 20 October 2023 on possibilities to increase the reliability of audits and controls by national authorities in shared management [21],

– having regard to its resolution of 23 November 2023 on harnessing talent in Europe’s regions [22],

– having regard to its resolution of 14 March 2024 entitled ‘Cohesion policy 2014-2020 – implementation and outcomes in the Member States [23],

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Regional Development (A10-0066/2025),

A. whereas cohesion policy is at the heart of EU policies and is the EU’s main tool for investments in sustainable economic, social and territorial development, and contributing to the Green Deal objectives, across the EU under its multiannual financial frameworks for the periods of 2014-2020 and 2021-2027; whereas cohesion policy, as mandated by the Treaties, is fundamental for a well-functioning and thriving internal market by promoting the development of all regions in the EU, and especially the less developed ones;

B. whereas cohesion policy has fostered economic, social and territorial convergence in the EU, notably by increasing the gross domestic products, for example, of central and eastern EU Member States, which went from 43 % of the EU average in 1995 to around 80 % in 2023; whereas the 9th Cohesion Report highlights that, by the end of 2022, cohesion policy supported over 4.4 million businesses, creating more than 370 000 jobs in these companies; whereas it also underlines that cohesion policy generates a significant return on investment, and that each euro invested in the 2014–2020 and 2021–2027 programmes will have generated 1.3 euros of additional GDP in the Union by 2030; whereas cohesion policy constituted, on average, around 13 % of total public investment in the EU [24];

C. whereas the Commission report entitled ‘The long-term vision for the EU’s rural areas: key achievements and ways forward’, presented alongside the ninth Cohesion Report, underlines that EUR 24.6 billion, or 8 % of the rural development pillar of the common agricultural policy, is directed towards investments in rural areas beyond farming investments, setting the scene for a debate on the future of rural areas;

D. whereas between 2021 and 2027, cohesion policy will have invested over EUR 140 billion in the green and digital transitions [25], to help improve networks and infrastructure, support nature conservation, improve green and digital skills and foster job creation and services for the public;

E. whereas despite the widely acknowledged and proven positive impact of cohesion policy on social, economic and territorial convergence, significant challenges remain, marked notably by development disparities at sub-national level, within regions and in regions caught in a development trap, and by the impact of climate change, in terms of demography, the digital and green transitions, and connectivity, but also in terms of sustainable economic development, in particular in least developed regions and rural and remote areas;

F. whereas cohesion policy and sectoral programmes of the EU have repeatedly and efficiently helped regions to respond effectively to emergencies and asymmetric shocks such as the COVID-19 crisis, Brexit, the energy crisis and the refugee crisis caused by Russia’s invasion of Ukraine, as well as natural disasters, even though it is a long-term, structural policy and not a crisis management instrument or the ‘go-to’ emergency response funding mechanism; whereas such crises have delayed the implementation of the European Structural and Investment Funds and whereas a considerable number of projects financed with Recovery and Resilience Facility (RRF) funds have been taken for the most part from projects that had been slated for investment under cohesion policy;

G. whereas despite measures already taken for the 2014-2020 and 2021-2027 periods, the regulatory framework governing the use and administration of cohesion policy instruments and funds should be further simplified and interoperable digital tools better used and developed, including the establishment of one-stop digitalised service centres, with the objective of streamlining procedures, enhancing stakeholder trust, reducing the administrative burden, increasing flexibility in fund management and speeding up payments, not only for the relevant authorities but also for the final beneficiaries; whereas it is necessary to increase the scope for using funds more flexibly, including the possibility of financing the development of dual-use products; whereas it is of utmost importance to formulate any future cohesion policy with a strategic impetus throughout the funding period, which could, however, be reassessed at midterm;

H. whereas the low absorption rate of the 2021-2027 cohesion policy funds, currently at just 6 %, is not because of a lack of need from Member States or regions, but rather stems from delays in the approval of operational programmes, the transition period between financial frameworks, the prioritisation of NextGenerationEU by national managing authorities, limited administrative capacity and complex bureaucratic procedures; whereas Member States and regions may not rush to absorb all available funds as they anticipate a possible extension under the N+2 or N+3 rules;

I. whereas radical modifications to the cohesion regulatory framework, from one programming period to the next, contribute to generating insecurity among the authorities responsible and beneficiaries, gold-plating legislation, increasing error rates (and the accompanying negative reputational and financial consequences), delays in implementation and, ultimately, disaffection among beneficiaries and the general population;

J. whereas there is sometimes competition between cohesion funds, emergency funds and sectoral policies;

K. whereas demographic changes vary significantly across EU regions, with the populations of some Member States facing a projected decline in the coming years and others projected to grow; whereas demographic changes also take place between regions, including movement away from outermost regions, but are generally observed as movement from rural to urban areas within Member States, wherein women are leaving rural areas in greater numbers than men, but also to metropolitan areas, where villages around big cities encounter difficulties in investing in basic infrastructure; whereas the provision of essential services such as healthcare, education and transportation must be reinforced in all regions, with a particular focus on rural and remote areas; whereas a stronger focus is needed on areas suffering from depopulation and inadequate services, requiring targeted measures to encourage young people to remain through entrepreneurship projects, high-quality agriculture and sustainable tourism;

L. whereas taking account of the ageing population is crucial in order to ensure justice among the generations and thereby to strengthen participation, especially among young people;

M. whereas urban areas are burdened by new challenges resulting from the population influx to cities, as well as rising housing and energy prices, requiring the necessary housing development, new environmental protection and energy-saving measures, such as accelerated deep renovation to combat energy poverty and promote energy efficiency; whereas the EU cohesion policy should help to contribute to an affordable and accessible housing market for all people in the EU, especially for low- and middle-income households, urban residents, families with children, women and young people;

N. whereas effective implementation of the Urban Agenda for the EU can enhance the capacity of cities to contribute to cohesion objectives, thereby improving the quality of life of citizens and guaranteeing a more efficient use of the EU’s financial resources;

O. whereas particular attention needs to be paid to rural areas, as well as areas affected by industrial transition and EU regions that suffer from severe and permanent natural or demographic handicaps, brain drain, climate-related risks and water scarcity, such as the outermost regions, and in particular islands located at their peripheries or at the periphery of the EU, sparsely populated regions, islands, mountainous areas and cross-border regions, as well as coastal and maritime regions;

P. whereas Russia’s war of aggression against Ukraine has created a new geopolitical reality that has had a strong impact on the employment, economic development and opportunities, and general well-being of the population living in regions bordering Ukraine, Belarus and Russia, as well as candidate countries such as Ukraine and Moldova, which therefore require special attention and support, including by accordingly adapting cohesion policy; whereas this war has led to an unprecedented number of people seeking shelter in the EU, placing an additional burden on local communities and services; whereas the collective security of the EU is strongly dependent on the vitality and well-being of regions situated at the EU’s external borders;

Q. whereas the unique situation of Northern Ireland requires a bespoke approach building on the benefits of PEACE programmes examining how wider cohesion policy can benefit the process of reconciliation;

R. whereas 79 % of citizens who are aware of EU-funded projects under cohesion policy believe that EU-funded projects have a positive impact on the regions [26], which contributes to a pro-EU attitude;

S. whereas overall awareness of EU-funded projects under cohesion policy has decreased by 2 percentage points since 2021 [27], meaning that greater decentralisation should be pursued to bring cohesion policy even closer to the citizen;

1. Insists that the regional and local focus, place-based approach and strategic planning of cohesion policy, as well as its decentralised programming and implementation model based on the partnership principle with strengthened implementation of the European code of conduct, the involvement of economic and civil society actors, and multi-level governance, are key and positive elements of the policy, and determine its effectiveness; is firmly convinced that this model of cohesion policy should be continued in all regions and deepened where possible as the EU’s main long-term investment instrument for reducing disparities, ensuring economic, social and territorial cohesion, and stimulating regional and local sustainable growth in line with EU strategies, protecting the environment, and as a key contributor to EU competitiveness and just transition, as well as helping to cope with new challenges ahead;

2. Calls for a clear demarcation between cohesion policy and other instruments, in order to avoid overlaps and competition between EU instruments, ensure complementarity of the various interventions and increase visibility and readability of EU support; in this context, notes that the RRF funds are committed to economic development and growth, without specifically focusing on economic, social and territorial cohesion between regions; is concerned about the Commission’s plans to apply a performance-based approach to the European Structural and Investment Funds (ESIF); acknowledges that performance-based mechanisms can be instrumental in making the policy more efficient and results-orientated, but cautions against a one-size-fits-all imposition of the model and expresses serious doubt about ideas to link the disbursement of ESIF to the fulfilment of centrally defined reform goals, even more so if the reform goals do not fall within the scope of competence of the regional level;

3. Is opposed to any form of top-down centralisation reform of EU funding programmes, including those under shared management, such as the cohesion policy and the common agricultural policy, and advocates for greater decentralisation of decision-making to the local and regional levels; calls for enhanced involvement of local and regional authorities and economic and civil society actors at every stage of EU shared management programmes, from preparation and programming to implementation, delivery and evaluation, keeping in mind that the economic and social development of, and territorial cohesion between, regions can only be accomplished on the basis of good cooperation between all actors;

4. Emphasises that the European Agricultural Fund for Rural Development (EAFRD) plays a key role, alongside cohesion policy funds, in supporting rural areas; stresses that the EAFRD’s design must align with the rules of cohesion policy funds to boost synergies and facilitate multi-funded rural development projects;

5. Is convinced that cohesion policy can only continue to play its role if it has solid funding; underlines that this implies that future cohesion policy must be provided with robust funding for the post-2027 financial period; stresses that it is necessary to provide funding that is ambitious enough and easily accessible to allow cohesion policy to continue to fulfil its role as the EU’s main investment policy, while retaining the flexibility to meet potential new challenges, including the possibility of financing the development of dual-use products, and to enable local authorities, stakeholders and beneficiaries to effectively foster local development; is of the firm opinion that the capacity to offer flexible responses to unpredictable challenges should not come at the expense of the clear long-term strategic focus and objectives of cohesion policy;

6. Underlines the importance of the next EU multiannual financial framework (MFF) and the mid-term review of cohesion policy programmes 2021-2027 in shaping the future of cohesion policy; reiterates the need for a more ambitious post-2027 cohesion policy in the next MFF 2028-2034; calls, therefore, for the upcoming MFF to ensure that cohesion policy continues to receive at least the same level of funding as in the current period in real terms; furthermore calls for cohesion policy to remain a separate heading in the new MFF; stresses that cohesion policy should be protected from statistical effects that may alter the eligibility of regions by changing the average EU GDP; reiterates the need for new EU own resources;

7. Proposes, therefore, that next MFF be more responsive to unforeseen needs, including with sufficient margins and flexibilities from the outset; emphasises in this regard, however, that cohesion policy is not a crisis instrument and that it should not deviate from its main objectives, namely from its long-term investment nature; calls for the European Union Solidarity Fund to be strengthened, including in its pre-financing, making it less bureaucratic and more easily accessible, in order to develop an appropriate instrument capable of responding adequately to the economic, social and territorial consequences of future natural disasters or health emergencies; emphasises the need for Parliament to have adequate control over any emergency funds and instruments;

8. Recognises the need to also use nomenclature of territorial units for statistics (NUTS) 3 classification for specific cases, in a manner that recognises that inequalities in development exist within all NUTS 2 regions; is of the opinion that regional GDP per capita must remain the main criterion for determining Member States’ allocations under cohesion policy; welcomes the fact that, following Parliament’s persistent calls, the Commission has begun considering additional criteria [28] such as greenhouse gas emissions, population density, education levels and unemployment rates, in order to provide a better socio-economic overview of the regions;

9. Stresses that the rule of law conditionality is an overarching conditionality, recognising and enforcing respect for the rule of law, also as an enabling condition for cohesion policy funding, to ensure that Union resources are used in a transparent, fair and responsible manner with sound financial management; considers it necessary to reinforce respect for the rule of law and fundamental rights, and to ensure that all actions are consistent with supporting democratic principles, gender equality and human rights, including workers’ rights, the rights of disabled people and children’s rights, in the implementation of cohesion policy; highlights the important role of the European Anti-Fraud Office and the European Public Prosecutor’s Office in protecting the financial interests of the Union;

10. Calls for further efforts to simplify, make more flexible, strengthen synergies and streamline the rules and administrative procedures governing cohesion policy funds at EU, national and regional level, taking full advantage of the technologies available to increase accessibility and efficiency, building on the existing and well-established shared management framework, in order to strengthen confidence among users, thus encouraging the participation of a broader range of economic and civil society actors in projects supported and maximising the funds’ impact; calls for further initiatives enabling better absorption of cohesion funds, including increased co-financing levels, higher pre-financing and faster investment reimbursements; calls for local administration, in particular representing smaller communities, to be technically trained for better administrative management of the funds; stresses, therefore, the importance of strengthening the single audit principle, further expanding simplified cost options and reducing duplicating controls and audits that overlap with national and regional oversight for the same project and beneficiary, with a view to eliminating the possibility of repeating errors in subsequent years of implementation;

11. Calls on the Commission and the Member States to give regions greater flexibility already at the programming stage, in order to cater for their particular needs and specificities, emphasising the need to involve the economic and civil society actors; underlines that thematic concentration was a key element in aligning cohesion policy with Europe 2020 objectives; asks the Commission, therefore, to present all findings related to the implementation of thematic concentration and to draw lessons for future legislative proposals;

12. Acknowledges that the green, digital and demographic transitions present significant challenges but, at the same time, opportunities to achieve the objective of economic, social and territorial cohesion; recognises that, statistically, high-income areas can hide the economic problems within a region; is aware of the risk of a widening of regional disparities, a deepening of social inequalities and a rising ‘geography of discontent’ related to the transition process; underlines the need to reach the EU’s sustainability and climate objectives, and to maintain shared economic growth by strengthening the Union’s competitiveness; calls, therefore, for a European strategy that guarantees harmonious growth within the Union, meeting the respective regions’ specific needs; reaffirms its commitment to pursuing the green and digital transitions, as this will create opportunities to improve the EU’s competitiveness; underlines the need to invest in infrastructure projects that enhance connectivity, particularly in sustainable, intelligent transport, and in energy and digital networks, ensuring that all regions, including remote and less-developed ones, are fully integrated into the single market and benefit equitably from the opportunities it provides; emphasises, in this context, the need to support the development of green industries, fostering local specificities and traditions to increase the resilience of the economic environment and civil society to future challenges;

13. Urges that the cohesion policy remain consistent with a push towards increasing innovation and completing the EU single market, in line with the conclusions of the Draghi report on European competitiveness; underlines, in the context of regional disparities, the problem of the persisting innovation divide and advocates for a tailored, place-based approach to fostering innovation and economic convergence across regions and reducing the innovation gap; calls for a stronger role for local and regional innovation in building competitive research and innovation ecosystems and promoting territorial cohesion; points to new EU initiatives, such as regional innovation valleys and partnerships for regional innovation, that aim to connect territories with different levels of innovation performance and tackle the innovation gap; considers that this approach will reinforce regional autonomy, allowing local and regional authorities to shape EU policies and objectives in line with their specific needs, characteristics and capacities, while safeguarding the partnership principle;

14. Is convinced that cohesion policy needs to continue to foster the principle of just transition, addressing the specific needs of regions, while leaving no territory and no one behind; calls for continued financing of the just transition process, with the Just Transition Fund being fully integrated into the Common Provisions Regulation and endowed with reinforced financial means for the post-2027 programming period; emphasises, nonetheless, the need to assess the impact of the Just Transition Fund on the transformation of eligible regions and, while ensuring it remains part of cohesion policy, refine its approach in the new MFF on the basis of the findings and concrete measures to ensure the economic and social well-being of affected communities;

15. Underlines the need to improve the relationship between cohesion policy and EU economic governance, while avoiding a punitive approach; stresses that the European Semester should comply with cohesion policy objectives under Articles 174 and 175 TFEU; calls for the participation of the regions in the fulfilment of these objectives and for a stronger territorial approach; calls for a process of reflection on the concept of macroeconomic conditionality and for the possibility to be explored of replacing this concept with new forms of conditionality to better reflect the new challenges ahead;

16. Is concerned about the growing number of regions in a development trap, which are stagnating economically and are suffering from sharp demographic decline and limited access to essential services; calls, therefore, for an upward adjustment in co-financing for projects aimed at strengthening essential services; stresses the role of cohesion policy instruments in supporting different regions and local areas that are coping with demographic evolution affecting people’s effective right to stay, including, among others, challenges related to depopulation, ageing, gender imbalances, brain drain, skills shortages and workforce imbalances across regions; recognises the need for targeted economic incentives and structural interventions to counteract these phenomena; in this context, calls for the implementation of targeted programmes to attract, develop and retain talent, particularly in regions experiencing significant outflows of skilled workers, by fostering education, culture, entrepreneurship and innovation ecosystems that align with local and regional economic needs and opportunities;

17. Recognises the importance of supporting and financing specific solutions for regions with long-standing and serious economic difficulties or severe permanent natural and demographic handicaps; reiterates the need for maintaining and improving the provision of quality essential services (such as education and healthcare), transport and digital connectivity of these regions, fostering their economic diversification and job creation, and helping them respond to challenges such as rural desertification, population ageing, poverty, depopulation, loneliness and isolation, as well as the lack of opportunities for vulnerable people such as persons with disabilities; underlines the need to prioritise the development and adequate funding of strategic sectors, such as renewable energy, sustainable tourism, digital innovation and infrastructure, in a manner that is tailored to the economic potential and resources of each region, in order to create broader conditions for endogenous growth and balanced development across all regions, especially rural, remote and less-developed areas, border regions, islands and outermost regions; recalls the importance of strong rural-urban linkages and particular support for women in rural areas;

18. Emphasises the need for a tailored approach for the outermost regions, as defined under Article 349 TFEU, which face unique and cumulative structural challenges due to their remoteness, small market size, vulnerability to climate change and economic dependencies; underlines that these permanent constraints, including the small size of the domestic economy, great distance from the European continent, location near third countries, double insularity for most of them, and limited diversification of the productive sector, result in additional costs and reduced competitiveness, making their adaptation to the green and digital transition particularly complex and costly; underlines their great potential to further develop, inter alia through improved regional connectivity, key sectors such as blue economy, sustainable agriculture, renewable energies, space activities, research or eco-tourism; reiterates its long-standing call on the Commission to duly consider the impact of all newly proposed legislation on the outermost regions, with a view to avoiding disproportionate regulatory burdens and adverse effects on these regions’ economies;

19. Underlines the fact that towns, cities and metropolitan areas have challenges of their own, such as considerable pockets of poverty, housing problems, traffic congestion and poor air quality, generating challenges for social and economic cohesion created by inharmonious territorial development; emphasises the need for a specific agenda for cities and calls for deepening their links with functional urban areas, encompassing smaller cities and towns, to ensure that economic and social benefits are spread more evenly across the entire territory; highlights the need to strengthen coordination between the initiatives of the Urban Agenda for the EU and the instruments of cohesion policy, favouring an integrated approach that takes into account territorial specificities and emerging challenges; calls, furthermore, for more direct access to EU funding for regional and local authorities, as well as cities and urban authorities, by inter alia widening the use of integrated territorial investments (ITI);

20. Stresses the need to continue and strengthen investments in affordable housing within the cohesion policy framework, recognising its significance for both regions and cities; highlights the need to foster its changes relevant to investing in housing beyond the two current possibilities (energy efficiency and social housing); emphasises the important role that cohesion policy plays in the roll-out and coordination of these initiatives; believes, furthermore, that it is important to include housing affordability in the URBACT initiative;

21. Stresses the strategic importance of strong external border regions for the security and resilience of the EU; calls on the Commission to support the Member States and regions affected by Russia’s war of aggression against Ukraine, in particular the regions on the EU’s eastern border, by revising the Guidelines on regional State aid [29], through tailor-made tools and investments under the cohesion policy, as well as supporting them to make the most of the possibilities offered by the cohesion policy funds, including Interreg, in a flexible way, to help cope with the detrimental socio-economic impact of the war on their populations and territories; calls, furthermore, for support to be given to regions bordering candidate countries such as Ukraine and Moldova to strengthen connections and promote their EU integration;

22. Highlights the added value of territorial cooperation in general and cross-border cooperation in particular; underlines the importance of Interreg for cross-border regions, including outermost regions; emphasises its important role in contributing to their development and overcoming cross-border obstacles, including building trust across borders, developing transport links, identifying and reducing legal and administrative obstacles and increasing the provision and use of cross-border public services, among others; considers Interreg as the main EU instrument for tackling the persistent cross-border obstacles faced by emergency services, and proposes that there be a more prominent focus on these services; underlines the fact that cross-border areas, including areas at the EU’s external borders, bordering aggressor countries often face specific challenges; believes that EU border regions, facing multiple challenges, must be supported and is of the opinion that they must be provided with increased means; welcomes the new regulation on BRIDGEforEU; emphasises the importance of small-scale and cross-border projects and stresses the need for effective implementation on the ground; calls on the Commission to encourage Member States to actively support awareness-raising campaigns in bordering regions to maximise the impact of cross-border cooperation;

23. Recalls the need to ‘support cohesion’, rather than just rely on the ‘do no harm to cohesion’ principle, which means that no action should hamper the convergence process or contribute to regional disparities; calls for a stronger integration of these principles as cross-cutting in all EU policies, to ensure that they support the objectives of social, economic and territorial cohesion, as set out in Articles 3 and 174 TFEU; calls, furthermore, on the Commission to issue specific guidelines on how to implement and enforce these principles across EU policies, paying particular attention to the impact of EU laws on the competitiveness of less developed regions; reiterates that new legislative proposals need to take due account of local and regional realities; suggests that the Commission draw on innovative tools such as RegHUB (the network of regional hubs) to collect data on the impact of EU policies on the regions; to this end, underlines the need to strengthen the territorial impact assessment of EU legislation, with a simultaneous strengthening of the territorial aspects of other relevant policies; insists that promoting cohesion should also be seen as a way of fostering solidarity and mutual support among Member States and their regions; calls on the Commission and the Member States to continue their efforts regarding communication and visibility of the benefits of cohesion policy, demonstrating to citizens the EU’s tangible impact and serving as a key tool in addressing Euroscepticism; welcomes the launch of the multilingual version of the Kohesio platform;

24. Notes with concern the severe decline in recent years of adequate levels of national funding by Member States towards their poorer regions; recalls the importance of respecting the EU rule on additionality; calls on the Commission to ensure that national authorities take due account of internal cohesion in drafting and implementing structural and investment fund projects;

25. Insists that, in addition to adjusting to regional needs, cohesion policy must be adapted to the smallest scale, i.e. funds must be accessible to the smallest projects and project bearers; points out that their initiatives are often the most innovative and have a significant impact on rural development; reiterates that these funds should be accessible to all, regardless of their size or scope; approves of the Cohesion Alliance’s call for ‘a post-2027 Cohesion Policy that leaves no one behind’;

26. Stresses that delays in the MFF negotiations, together with the fact that Member States have placed a greater focus on the programming of the RRF funds, led to considerable delays in the programming period 2021-2027; stresses the importance of a timely agreement in the next framework, and therefore calls for the Common Provisions Regulation (CPR) and the budget negotiations to be finalised at least one year before the start of the new funding period so that Member States can develop their national and regional funding strategies in good time to ensure a successful transition to the next funding period and the continuation of existing ESIF projects;

27. Instructs its President to forward this resolution to the Council, the Commission, the European Economic and Social Committee, the European Committee of the Regions and the national and regional parliaments of the Member States.

MIL OSI Europe News –

April 24, 2025

MIL-OSI: First Hawaiian, Inc. Reports First Quarter 2025 Financial Results and Declares Dividend

Source: GlobeNewswire (MIL-OSI)

HONOLULU, April 23, 2025 (GLOBE NEWSWIRE) — First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended March 31, 2025.

“I’m pleased to report that First Hawaiian Bank started 2025 with a solid quarter. Retail deposits continued to grow, net interest income rose from the prior quarter, expenses were well managed, and credit quality remained strong,” said Bob Harrison, Chairman, President, and CEO. “Despite the current economic uncertainty, our customers can be confident in the strength of our balance sheet, our solid capital position, and our deep roots in the community, which provide the stability and reliability that define us.”

On April 22, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on May 30, 2025, to stockholders of record at the close of business on May 19, 2025.

First Quarter 2025 Highlights:

Net income of $59.2 million, or $0.47 per diluted share
Total loans and leases declined $115.2 million versus prior quarter
Total deposits declined $106.4 million versus prior quarter
Net interest margin increased 5 basis points to 3.08%
Recorded a $10.5 million provision for credit losses
Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $23.7 billion at March 31, 2025 versus $23.8 billion at December 31, 2024.

Gross loans and leases were $14.3 billion as of March 31, 2025, a decrease of $115.2 million, or 0.8%, from $14.4 billion as of December 31, 2024.

Total deposits were $20.2 billion as of March 31, 2025, a decrease of $106.4 million, or 0.5%, from $20.3 billion as of December 31, 2024.

Net Interest Income

Net interest income for the first quarter of 2025 was $160.5 million, an increase of $1.8 million, or 1.1%, compared to $158.8 million for the prior quarter.

The net interest margin was 3.08% in the first quarter of 2025, an increase of 5 basis points compared to 3.03% in the prior quarter.

Provision Expense

During the quarter ended March 31, 2025, we recorded a $10.5 million provision for credit losses. In the quarter ended December 31, 2024, we recorded a $0.8 million negative provision for credit losses.

Noninterest Income

Noninterest income was $50.5 million in the first quarter of 2025, an increase of $21.1 million compared to noninterest income of $29.4 million in the prior quarter. Noninterest income in the fourth quarter of 2024 included a $26.2 million loss on the sale of investment securities.

Noninterest Expense

Noninterest expense was $123.6 million in the first quarter of 2025, a decrease of $0.6 million compared to noninterest expense of $124.1 million in the prior quarter.

The efficiency ratio was 58.2% and 65.5% for the quarters ended March 31, 2025 and December 31, 2024, respectively.

Taxes

The effective tax rate was 23.0% and 18.9% for the quarters ended March 31, 2025 and December 31, 2024, respectively.

Asset Quality

The allowance for credit losses was $166.6 million, or 1.17% of total loans and leases, as of March 31, 2025, compared to $160.4 million, or 1.11% of total loans and leases, as of December 31, 2024. The reserve for unfunded commitments was $33.3 million as of March 31, 2025, compared to $32.8 million as of December 31, 2024. Net charge-offs were $3.8 million, or 0.11% of average loans and leases on an annualized basis, for the quarter ended March 31, 2025, compared to net charge-offs of $3.4 million, or 0.09% of average loans and leases on an annualized basis, for the quarter ended December 31, 2024. Total non-performing assets were $20.2 million, or 0.14% of total loans and leases and other real estate owned, on March 31, 2025, compared to total non-performing assets of $20.7 million, or 0.14% of total loans and leases and other real estate owned, on December 31, 2024.

Capital

Total stockholders’ equity was $2.6 billion on March 31, 2025 and December 31, 2024.

The tier 1 leverage, common equity tier 1 and total capital ratios were 9.01%, 12.93% and 14.17%, respectively, on March 31, 2025, compared with 9.14%, 12.80% and 13.99%, respectively, on December 31, 2024.

The Company repurchased 974 thousand shares of common stock at a total cost of $25.0 million under the stock repurchase program in the first quarter. The average cost was $25.66 per share repurchased.

First Hawaiian, Inc.

First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii. Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company’s website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.

To access the call by phone, please register via the following link:
https://register-conf.media-server.com/register/BI13d3259b1b3b46188926f83e1bbe1316, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.

A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there can be no assurance that actual results will not prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including (without limitation) the risks and uncertainties associated with the domestic and global economic environment and capital market conditions and other risk factors. For a discussion of some of these risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2024.

Use of Non-GAAP Financial Measures

Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy.

Table 12 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.


Financial Highlights	Table 1
	For the Three Months Ended
	March 31,			December 31,				March 31,
(dollars in thousands, except per share data)	2025			2024				2024
Operating Results:
Net interest income	$	160,526		$	158,753			$	154,427
Provision (benefit) for credit losses		10,500			(750	)			6,300
Noninterest income		50,477			29,376				51,371
Noninterest expense		123,560			124,143				128,813
Net income		59,248			52,496				54,220
Basic earnings per share		0.47			0.41				0.42
Diluted earnings per share		0.47			0.41				0.42
Dividends declared per share		0.26			0.26				0.26
Dividend payout ratio		55.32	%		63.41		%		61.90	%
Performance Ratios⁽¹⁾:
Net interest margin		3.08	%		3.03		%		2.91	%
Efficiency ratio		58.22	%		65.51		%		62.15	%
Return on average total assets		1.01	%		0.88		%		0.90	%
Return on average tangible assets (non-GAAP)⁽²⁾		1.05	%		0.92		%		0.94	%
Return on average total stockholders’ equity		9.09	%		7.94		%		8.73	%
Return on average tangible stockholders’ equity (non-GAAP)⁽²⁾		14.59	%		12.78		%		14.53	%
Average Balances:
Average loans and leases	$	14,309,998		$	14,276,107			$	14,312,563
Average earning assets		21,169,194			21,079,951				21,481,890
Average assets		23,890,459			23,795,735				24,187,207
Average deposits		20,354,040			20,249,573				20,571,930
Average stockholders’ equity		2,641,978			2,629,600				2,496,840
Market Value Per Share:
Closing		24.44			25.95				21.96
High		28.28			28.80				23.12
Low		23.95			22.08				20.37


	As of			As of			As of
	March 31,			December 31,			March 31,
(dollars in thousands, except per share data)	2025			2024			2024
Balance Sheet Data:
Loans and leases	$	14,293,036		$	14,408,258		$	14,320,208
Total assets		23,744,958			23,828,186			24,279,186
Total deposits		20,215,816			20,322,216			20,669,481
Short-term borrowings		250,000			250,000			500,000
Total stockholders’ equity		2,648,852			2,617,486			2,513,761

Per Share of Common Stock:
Book value	$	21.07		$	20.70		$	19.66
Tangible book value (non-GAAP)⁽²⁾		13.15			12.83			11.88

Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases		0.14	%		0.14	%		0.13	%
Allowance for credit losses for loans and leases / total loans and leases		1.17	%		1.11	%		1.12	%

Capital Ratios:
Common Equity Tier 1 Capital Ratio		12.93	%		12.80	%		12.55	%
Tier 1 Capital Ratio		12.93	%		12.80	%		12.55	%
Total Capital Ratio		14.17	%		13.99	%		13.75	%
Tier 1 Leverage Ratio		9.01	%		9.14	%		8.80	%
Total stockholders’ equity to total assets		11.16	%		10.98	%		10.35	%
Tangible stockholders’ equity to tangible assets (non-GAAP)⁽²⁾		7.27	%		7.10	%		6.52	%

Non-Financial Data:
Number of branches		48			48			50
Number of ATMs		273			273			275
Number of Full-Time Equivalent Employees		1,995			1,997			2,065

⁽¹⁾Except for the efficiency ratio, amounts are annualized for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024.

⁽²⁾Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. For a reconciliation to the most directly comparable GAAP financial measure, see Table 12, GAAP to Non-GAAP Reconciliation.


Consolidated Statements of Income	Table 2
	For the Three Months Ended
	March 31,		December 31,			March 31,
(dollars in thousands, except per share amounts)	2025		2024			2024
Interest income
Loans and lease financing	$	192,102	$	198,347		$	199,844
Available-for-sale investment securities		13,150		12,767			14,546
Held-to-maturity investment securities		16,647		17,071			17,793
Other		13,251		11,977			12,769
Total interest income		235,150		240,162			244,952
Interest expense
Deposits		71,709		78,465			84,143
Short-term borrowings		2,599		2,685			5,953
Other		316		259			429
Total interest expense		74,624		81,409			90,525
Net interest income		160,526		158,753			154,427
Provision (benefit) for credit losses		10,500		(750	)		6,300
Net interest income after provision (benefit) for credit losses		150,026		159,503			148,127
Noninterest income
Service charges on deposit accounts		7,535		7,968			7,546
Credit and debit card fees		14,474		14,834			16,173
Other service charges and fees		12,167		13,132			9,904
Trust and investment services income		9,370		9,449			10,354
Bank-owned life insurance		4,371		5,713			4,286
Investment securities gains (losses), net		37		(26,171	)		—
Other		2,523		4,451			3,108
Total noninterest income		50,477		29,376			51,371
Noninterest expense
Salaries and employee benefits		60,104		59,003			59,262
Contracted services and professional fees		14,839		14,472			15,739
Occupancy		8,100		7,708			6,941
Equipment		13,871		14,215			13,413
Regulatory assessment and fees		3,823		3,745			8,120
Advertising and marketing		2,179		1,529			2,612
Card rewards program		7,919		7,926			8,508
Other		12,725		15,545			14,218
Total noninterest expense		123,560		124,143			128,813
Income before provision for income taxes		76,943		64,736			70,685
Provision for income taxes		17,695		12,240			16,465
Net income	$	59,248	$	52,496		$	54,220
Basic earnings per share	$	0.47	$	0.41		$	0.42
Diluted earnings per share	$	0.47	$	0.41		$	0.42
Basic weighted-average outstanding shares		126,281,802		127,350,626			127,707,354
Diluted weighted-average outstanding shares		127,166,932		128,167,502			128,217,689


Consolidated Balance Sheets	Table 3
(dollars in thousands, except share amount)	March 31, 2025			December 31, 2024			March 31, 2024
Assets
Cash and due from banks	$	240,738		$	258,057		$	202,121
Interest-bearing deposits in other banks		1,073,841			912,133			1,072,145
Investment securities:
Available-for-sale, at fair value (amortized cost: $2,091,034 as of March 31, 2025, $2,190,448 as of December 31, 2024 and $2,466,109 as of March 31, 2024)		1,858,428			1,926,516			2,159,338
Held-to-maturity, at amortized cost (fair value: $3,250,275 as of March 31, 2025, $3,262,509 as of December 31, 2024 and $3,470,710 as of March 31, 2024)		3,724,908			3,790,650			3,988,011
Loans held for sale		1,547			—			—
Loans and leases		14,293,036			14,408,258			14,320,208
Less: allowance for credit losses		166,612			160,393			159,836
Net loans and leases		14,126,424			14,247,865			14,160,372

Premises and equipment, net		292,576			288,530			281,181
Accrued interest receivable		78,973			79,979			85,715
Bank-owned life insurance		495,567			491,890			484,193
Goodwill		995,492			995,492			995,492
Mortgage servicing rights		4,926			5,078			5,533
Other assets		851,538			831,996			845,085
Total assets	$	23,744,958		$	23,828,186		$	24,279,186
Liabilities and Stockholders’ Equity
Deposits:
Interest-bearing	$	13,330,265		$	13,347,068		$	13,620,928
Noninterest-bearing		6,885,551			6,975,148			7,048,553
Total deposits		20,215,816			20,322,216			20,669,481
Short-term borrowings		250,000			250,000			500,000
Retirement benefits payable		96,241			97,135			102,242
Other liabilities		534,049			541,349			493,702
Total liabilities		21,096,106			21,210,700			21,765,425

Stockholders’ equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 142,139,353 / 125,692,598 shares as of March 31, 2025, issued/outstanding: 141,748,847 / 126,422,898 shares as of December 31, 2024 and issued/outstanding: 141,687,612 / 127,841,908 shares as of March 31, 2024)		1,421			1,417			1,417
Additional paid-in capital		2,564,408			2,560,380			2,551,488
Retained earnings		960,337			934,048			858,494
Accumulated other comprehensive loss, net		(433,769	)		(463,994	)		(523,780	)
Treasury stock (16,446,755 shares as of March 31, 2025, 15,325,949 shares as of December 31, 2024 and 13,845,704 shares as of March 31, 2024)		(443,545	)		(414,365	)		(373,858	)
Total stockholders’ equity		2,648,852			2,617,486			2,513,761
Total liabilities and stockholders’ equity	$	23,744,958		$	23,828,186		$	24,279,186


Average Balances and Interest Rates																	Table 4
	Three Months Ended						Three Months Ended						Three Months Ended
	March 31, 2025						December 31, 2024						March 31, 2024
	Average		Income/		Yield/		Average		Income/		Yield/		Average		Income/		Yield/
(dollars in millions)	Balance		Expense		Rate		Balance		Expense		Rate		Balance		Expense		Rate
Earning Assets
Interest-Bearing Deposits in Other Banks	$	1,171.1	$	12.8	4.44	%	$	948.9	$	11.3	4.75	%	$	858.6	$	11.6	5.45	%
Available-for-Sale Investment Securities
Taxable		1,891.4		13.2	2.79			1,987.7		12.7	2.56			2,210.6		14.5	2.63
Non-Taxable		1.4		—	5.52			1.4		—	5.30			1.8		—	5.61
Held-to-Maturity Investment Securities
Taxable		3,164.0		13.6	1.72			3,224.8		13.9	1.72			3,416.4		14.6	1.71
Non-Taxable		599.0		3.7	2.51			601.7		3.9	2.56			603.4		4.0	2.65
Total Investment Securities		5,655.8		30.5	2.16			5,815.6		30.5	2.10			6,232.2		33.1	2.13
Loans Held for Sale		0.3		—	6.28			1.3		—	5.75			0.7		—	6.92
Loans and Leases⁽¹⁾
Commercial and industrial		2,196.8		33.6	6.20			2,157.8		35.2	6.50			2,164.9		37.2	6.92
Commercial real estate		4,420.1		66.5	6.10			4,333.1		68.9	6.33			4,323.5		70.1	6.53
Construction		937.0		15.4	6.67			990.7		17.4	6.99			924.7		17.4	7.55
Residential:
Residential mortgage		4,150.3		40.9	3.94			4,183.5		40.8	3.90			4,264.1		42.0	3.94
Home equity line		1,149.8		13.1	4.61			1,157.1		13.3	4.55			1,172.1		12.0	4.13
Consumer		1,019.5		18.9	7.53			1,033.2		19.0	7.29			1,083.5		18.1	6.71
Lease financing		436.5		4.3	3.99			420.7		4.4	4.18			379.8		3.7	3.91
Total Loans and Leases		14,310.0		192.7	5.44			14,276.1		199.0	5.55			14,312.6		200.5	5.63
Other Earning Assets		32.0		0.4	5.48			38.1		0.7	6.73			77.8		1.2	5.90
Total Earning Assets⁽²⁾		21,169.2		236.4	4.51			21,080.0		241.5	4.56			21,481.9		246.4	4.61
Cash and Due from Banks		235.9						226.2						244.3
Other Assets		2,485.4						2,489.5						2,461.0
Total Assets	$	23,890.5					$	23,795.7					$	24,187.2

Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings	$	6,232.5	$	21.3	1.38	%	$	5,940.3	$	21.1	1.42	%	$	6,059.7	$	23.4	1.56	%
Money Market		3,922.2		23.0	2.38			4,053.6		26.6	2.61			3,944.9		28.8	2.94
Time		3,317.1		27.4	3.36			3,362.0		30.8	3.64			3,325.3		31.9	3.86
Total Interest-Bearing Deposits		13,471.8		71.7	2.16			13,355.9		78.5	2.34			13,329.9		84.1	2.54
Other Short-Term Borrowings		250.0		2.6	4.22			250.0		2.7	4.27			500.0		6.0	4.79
Other Interest-Bearing Liabilities		27.5		0.3	4.67			25.3		0.2	4.07			33.0		0.4	5.22
Total Interest-Bearing Liabilities		13,749.3		74.6	2.20			13,631.2		81.4	2.38			13,862.9		90.5	2.63
Net Interest Income			$	161.8					$	160.1					$	155.9
Interest Rate Spread⁽³⁾					2.31	%					2.18	%					1.98	%
Net Interest Margin⁽⁴⁾					3.08	%					3.03	%					2.91	%
Noninterest-Bearing Demand Deposits		6,882.2						6,893.7						7,242.0
Other Liabilities		617.0						641.2						585.5
Stockholders’ Equity		2,642.0						2,629.6						2,496.8
Total Liabilities and Stockholders’ Equity	$	23,890.5					$	23,795.7					$	24,187.2

⁽¹⁾Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

⁽²⁾Interest income includes taxable-equivalent basis adjustments of $1.2 million, $1.4 million and $1.5 million for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

⁽³⁾Interest rate spread is the difference between the average yield on earning assets and the average rate paid on interest-bearing liabilities, on a fully taxable-equivalent basis.

⁽⁴⁾Net interest margin is net interest income annualized for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, on a fully taxable-equivalent basis, divided by average total earning assets.

Analysis of Change in Net Interest Income

Table 5

Three Months Ended March 31, 2025

Compared to December 31, 2024

(dollars in millions)

Volume

Rate

Total ⁽¹⁾

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

2.3

$

(0.8

)

$

1.5

Available-for-Sale Investment Securities

Taxable

(0.6

)

1.1

0.5

Held-to-Maturity Investment Securities

Taxable

(0.3

)

—

(0.3

)

Non-Taxable

—

(0.2

)

(0.2

)

Total Investment Securities

(0.9

)

0.9

—

Loans and Leases

Commercial and industrial

0.5

(2.1

)

(1.6

)

Commercial real estate

0.9

(3.3

)

(2.4

)

Construction

(1.1

)

(0.9

)

(2.0

)

Residential:

Residential mortgage

(0.3

)

0.4

0.1

Home equity line

(0.2

)

—

(0.2

)

Consumer

(0.4

)

0.3

(0.1

)

Lease financing

0.1

(0.2

)

(0.1

)

Total Loans and Leases

(0.5

)

(5.8

)

(6.3

)

Other Earning Assets

(0.1

)

(0.2

)

(0.3

)

Total Change in Interest Income

0.8

(5.9

)

(5.1

)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.9

(0.7

)

0.2

Money Market

(1.0

)

(2.6

)

(3.6

)

Time

(0.5

)

(2.9

)

(3.4

)

Total Interest-Bearing Deposits

(0.6

)

(6.2

)

(6.8

)

Other Short-Term Borrowings

—

(0.1

)

(0.1

)

Other Interest-Bearing Liabilities

—

0.1

Total Change in Interest Expense

(0.6

)

(6.2

)

(6.8

)

Change in Net Interest Income

$

1.4

$

0.3

$

1.7

⁽¹⁾The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

Analysis of Change in Net Interest Income

Table 6

Three Months Ended March 31, 2025

Compared to March 31, 2024

(dollars in millions)

Volume

Rate

Total ⁽¹⁾

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

3.7

$

(2.5

)

$

1.2

Available-for-Sale Investment Securities

Taxable

(2.2

)

0.9

(1.3

)

Held-to-Maturity Investment Securities

Taxable

(1.1

)

0.1

(1.0

)

Non-Taxable

—

(0.3

)

(0.3

)

Total Investment Securities

(3.3

)

0.7

(2.6

)

Loans and Leases

Commercial and industrial

0.5

(4.1

)

(3.6

)

Commercial real estate

1.5

(5.1

)

(3.6

)

Construction

0.2

(2.2

)

(2.0

)

Residential:

Residential mortgage

(1.1

)

—

(1.1

)

Home equity line

(0.2

)

1.3

1.1

Consumer

(1.2

)

2.0

0.8

Lease financing

0.5

0.1

0.6

Total Loans and Leases

0.2

(8.0

)

(7.8

)

Other Earning Assets

(0.7

)

(0.1

)

(0.8

)

Total Change in Interest Income

(0.1

)

(9.9

)

(10.0

)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.7

(2.8

)

(2.1

)

Money Market

(0.2

)

(5.6

)

(5.8

)

Time

(0.1

)

(4.4

)

(4.5

)

Total Interest-Bearing Deposits

0.4

(12.8

)

(12.4

)

Other Short-Term Borrowings

(2.7

)

(0.7

)

(3.4

)

Other Interest-Bearing Liabilities

(0.1

)

—

(0.1

)

Total Change in Interest Expense

(2.4

)

(13.5

)

(15.9

)

Change in Net Interest Income

$

2.3

$

3.6

$

5.9

⁽¹⁾The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.


Loans and Leases						Table 7
	March 31,		December 31,		March 31,
(dollars in thousands)	2025		2024		2024
Commercial and industrial	$	2,261,394	$	2,247,428	$	2,189,875
Commercial real estate		4,367,433		4,463,992		4,301,300
Construction		954,072		918,326		972,517
Residential:
Residential mortgage		4,129,518		4,168,154		4,242,502
Home equity line		1,144,895		1,151,739		1,165,778
Total residential		5,274,413		5,319,893		5,408,280
Consumer		998,325		1,023,969		1,054,227
Lease financing		437,399		434,650		394,009
Total loans and leases	$	14,293,036	$	14,408,258	$	14,320,208


Deposits						Table 8
	March 31,		December 31,		March 31,
(dollars in thousands)	2025		2024		2024
Demand	$	6,885,551	$	6,975,148	$	7,048,553
Savings		6,110,796		6,021,364		6,277,679
Money Market		3,865,203		4,027,334		4,059,204
Time		3,354,266		3,298,370		3,284,045
Total Deposits	$	20,215,816	$	20,322,216	$	20,669,481


Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More						Table 9
	March 31,		December 31,		March 31,
(dollars in thousands)	2025		2024		2024
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial	$	—	$	329	$	942
Commercial real estate		216		411		2,953
Construction		375		—		—
Total Commercial Loans		591		740		3,895
Residential Loans:
Residential mortgage		12,809		12,768		7,777
Home equity line		6,788		7,171		6,345
Total Residential Loans		19,597		19,939		14,122
Total Non-Accrual Loans and Leases		20,188		20,679		18,017
Total Non-Performing Assets	$	20,188	$	20,679	$	18,017

Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial	$	740	$	1,432	$	529
Construction		—		536		606
Total Commercial Loans		740		1,968		1,135
Residential mortgage		1,008		1,317		359
Consumer		2,554		2,734		2,126
Total Accruing Loans and Leases Past Due 90 Days or More	$	4,302	$	6,019	$	3,620

Total Loans and Leases	$	14,293,036	$	14,408,258	$	14,320,208


Allowance for Credit Losses and Reserve for Unfunded Commitments	Table 10
	For the Three Months Ended
	March 31,				December 31,				March 31,
(dollars in thousands)	2025				2024				2024
Balance at Beginning of Period	$	193,240			$	197,397			$	192,138
Loans and Leases Charged-Off
Commercial and industrial		(1,459	)			(851	)			(909	)
Home equity line		(14	)			—				—
Consumer		(5,025	)			(4,774	)			(4,854	)
Total Loans and Leases Charged-Off		(6,498	)			(5,625	)			(5,763	)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial		403				298				211
Commercial real estate		251				—				—
Total Commercial Loans		654				298				211
Residential Loans:
Residential mortgage		20				30				30
Home equity line		64				32				44
Total Residential Loans		84				62				74
Consumer		1,979				1,858				1,689
Total Recoveries on Loans and Leases Previously Charged-Off		2,717				2,218				1,974
Net Loans and Leases Charged-Off		(3,781	)			(3,407	)			(3,789	)
Provision (Benefit) for Credit Losses		10,500				(750	)			6,300
Balance at End of Period	$	199,959			$	193,240			$	194,649
Components:
Allowance for Credit Losses	$	166,612			$	160,393			$	159,836
Reserve for Unfunded Commitments		33,347				32,847				34,813
Total Allowance for Credit Losses and Reserve for Unfunded Commitments	$	199,959			$	193,240			$	194,649
Average Loans and Leases Outstanding	$	14,309,998			$	14,276,107			$	14,312,563
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding⁽¹⁾		0.11		%		0.09		%		0.11		%
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding		1.17		%		1.11		%		1.12		%
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases		8.25x				7.76x				8.87x

⁽¹⁾Annualized for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024.

Loans and Leases by Year of Origination and Credit Quality Indicator

Table 11

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Amortized

(dollars in thousands)

2025

2024

2023

2022

2021

Prior

Cost Basis

Total

Commercial Lending

Commercial and Industrial

Risk rating:

Pass

$

19,578

$

173,435

$

68,842

$

172,494

$

220,547

$

268,053

$

1,148,880

$

20,009

$

2,091,838

Special Mention

364

916

2,250

3,353

58

1,229

41,972

—

50,142

Substandard

—

7,948

26

1,238

24,836

—

34,048

Other ⁽¹⁾

8,099

12,828

7,983

6,045

2,255

2,105

46,051

—

85,366

Total Commercial and Industrial

28,041

187,179

79,075

189,840

222,886

272,625

1,261,739

20,009

2,261,394

Current period gross charge-offs

—

43

95

179

356

779

7

—

1,459

Commercial Real Estate

Risk rating:

Pass

105,358

291,863

384,491

796,202

632,631

1,889,571

100,071

7,645

4,207,832

Special Mention

—

8,979

2,235

7,483

41,397

22,702

11,747

—

94,543

Substandard

—

54,918

1,007

9,003

—

64,928

Other ⁽¹⁾

—

130

—

130

Total Commercial Real Estate

105,358

300,842

386,726

858,603

675,035

1,921,406

111,818

7,645

4,367,433

Current period gross charge-offs

—

Construction

Risk rating:

Pass

4,610

122,410

198,780

353,108

162,361

52,233

22,934

—

916,436

Special Mention

—

147

—

147

Other ⁽¹⁾

522

14,134

8,910

8,500

1,553

3,177

693

—

37,489

Total Construction

5,132

136,544

207,690

361,608

163,914

55,557

23,627

—

954,072

Current period gross charge-offs

—

Lease Financing

Risk rating:

Pass

69,731

94,965

99,259

56,228

13,304

98,262

—

431,749

Special Mention

—

226

—

195

—

421

Substandard

—

4,411

526

292

—

5,229

Total Lease Financing

69,731

99,376

100,011

56,520

13,499

98,262

—

437,399

Current period gross charge-offs

—

Total Commercial Lending

$

208,262

$

723,941

$

773,502

$

1,466,571

$

1,075,334

$

2,347,850

$

1,397,184

$

27,654

$

8,020,298

Current period gross charge-offs

$

—

$

43

$

95

$

179

$

356

$

779

$

7

$

—

$

1,459

(continued)


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2025		2024		2023		2022		2021		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	41,949	$	161,436	$	183,292	$	482,310	$	933,384	$	1,578,605	$	—	$	—	$	3,380,976
680 – 739		4,088		18,218		34,761		65,347		101,230		192,602		—		—		416,246
620 – 679		734		1,714		3,922		23,196		18,793		51,826		—		—		100,185
550 – 619		—		—		817		6,495		7,696		17,224		—		—		32,232
Less than 550		—		—		731		771		2,253		7,503		—		—		11,258
No Score ⁽³⁾		—		13,199		6,330		16,757		9,837		50,065		—		—		96,188
Other ⁽²⁾		759		8,020		11,914		16,416		14,182		37,781		3,361		—		92,433
Total Residential Mortgage		47,530		202,587		241,767		611,292		1,087,375		1,935,606		3,361		—		4,129,518
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		911,857		1,404		913,261
680 – 739		—		—		—		—		—		—		169,131		1,684		170,815
620 – 679		—		—		—		—		—		—		39,262		592		39,854
550 – 619		—		—		—		—		—		—		12,077		485		12,562
Less than 550		—		—		—		—		—		—		6,645		486		7,131
No Score ⁽³⁾		—		—		—		—		—		—		1,272		—		1,272
Total Home Equity Line		—		—		—		—		—		—		1,140,244		4,651		1,144,895
Current period gross charge-offs		—		—		—		—		—		—		14		—		14

Total Residential Lending	$	47,530	$	202,587	$	241,767	$	611,292	$	1,087,375	$	1,935,606	$	1,143,605	$	4,651	$	5,274,413
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	14	$	—	$	14

Consumer Lending
FICO:
740 and greater		32,634		80,861		58,623		73,919		37,183		15,253		93,415		112		392,000
680 – 739		19,668		66,839		41,621		38,860		18,814		9,295		84,783		515		280,395
620 – 679		6,692		31,051		16,155		17,379		8,533		6,406		50,655		793		137,664
550 – 619		596		9,333		6,584		9,663		5,434		4,471		16,458		849		53,388
Less than 550		280		3,004		4,421		5,131		3,263		2,741		5,399		508		24,747
No Score ⁽³⁾		750		821		95		30		—		18		35,238		194		37,146
Other ⁽²⁾		201		—		—		257		600		1,044		70,883		—		72,985
Total Consumer Lending	$	60,821	$	191,909	$	127,499	$	145,239	$	73,827	$	39,228	$	356,831	$	2,971	$	998,325
Current period gross charge-offs	$	—	$	660	$	481	$	585	$	270	$	809	$	1,883	$	337	$	5,025

Total Loans and Leases	$	316,613	$	1,118,437	$	1,142,768	$	2,223,102	$	2,236,536	$	4,322,684	$	2,897,620	$	35,276	$	14,293,036
Current period gross charge-offs	$	—	$	703	$	576	$	764	$	626	$	1,588	$	1,904	$	337	$	6,498

⁽¹⁾Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score (680 and above). As of March 31, 2025, the majority of the loans in this population were current.

⁽²⁾Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. As of March 31, 2025, the majority of the loans in this population were current.

⁽³⁾No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.


GAAP to Non-GAAP Reconciliation	Table 12
	For the Three Months Ended
	March 31,			December 31,			March 31,
(dollars in thousands)	2025			2024			2024
Income Statement Data:
Net income	$	59,248		$	52,496		$	54,220

Average total stockholders’ equity	$	2,641,978		$	2,629,600		$	2,496,840
Less: average goodwill		995,492			995,492			995,492
Average tangible stockholders’ equity	$	1,646,486		$	1,634,108		$	1,501,348

Average total assets	$	23,890,459		$	23,795,735		$	24,187,207
Less: average goodwill		995,492			995,492			995,492
Average tangible assets	$	22,894,967		$	22,800,243		$	23,191,715

Return on average total stockholders’ equity⁽¹⁾		9.09	%		7.94	%		8.73	%
Return on average tangible stockholders’ equity (non-GAAP)⁽¹⁾		14.59	%		12.78	%		14.53	%

Return on average total assets⁽¹⁾		1.01	%		0.88	%		0.90	%
Return on average tangible assets (non-GAAP)⁽¹⁾		1.05	%		0.92	%		0.94	%



	As of			As of			As of
	March 31,			December 31,			March 31,
(dollars in thousands, except per share amounts)	2025			2024			2024
Balance Sheet Data:
Total stockholders’ equity	$	2,648,852		$	2,617,486		$	2,513,761
Less: goodwill		995,492			995,492			995,492
Tangible stockholders’ equity	$	1,653,360		$	1,621,994		$	1,518,269

Total assets	$	23,744,958		$	23,828,186		$	24,279,186
Less: goodwill		995,492			995,492			995,492
Tangible assets	$	22,749,466		$	22,832,694		$	23,283,694

Shares outstanding		125,692,598			126,422,898			127,841,908

Total stockholders’ equity to total assets		11.16	%		10.98	%		10.35	%
Tangible stockholders’ equity to tangible assets (non-GAAP)		7.27	%		7.10	%		6.52	%

Book value per share	$	21.07		$	20.70		$	19.66
Tangible book value per share (non-GAAP)	$	13.15		$	12.83		$	11.88

⁽¹⁾Annualized for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024.

The MIL Network –

April 24, 2025

MIL-OSI: Hanover Bancorp, Inc. Reports First Quarter 2025 Results Highlighted by Accelerated Margin Expansion, Improved Credit Quality Metrics & Successful Core Banking System Conversion

Source: GlobeNewswire (MIL-OSI)

First Quarter Performance Highlights

Net Income: Net income for the quarter ended March 31, 2025 totaled $1.5 million or $0.20 per diluted share (including Series A preferred shares). Adjusted (non-GAAP) net income (excluding core system conversion expenses of $2.6 million, net of tax) increased to $4.1 million or $0.55 per diluted share for the quarter ended March 31, 2025.
Net Interest Income: Net interest income was $14.6 million for the quarter ended March 31, 2025, an increase of $0.8 million or 5.95% from the quarter ended December 31, 2024 and $1.7 million, or 13.10% from the quarter ended March 31, 2024.
Net Interest Margin Expansion: The Company’s net interest margin during the quarter ended March 31, 2025 increased to 2.68% from 2.53% in the quarter ended December 31, 2024 and 2.41% in the quarter ended March 31, 2024.
Strong Liquidity Position: At March 31, 2025, undrawn liquidity sources, which include cash and unencumbered securities and secured and unsecured funding capacity, totaled $679.0 million, or approximately 322% of uninsured deposit balances. Insured and collateralized deposits, which include municipal deposits, accounted for approximately 89% of total deposits at March 31, 2025.
Demand Deposits: Demand deposits increased $12.6 million or 6.23% from March 31, 2024 and $3.9 million or 1.85% from December 31, 2024.
Loan Diversification Strategy: The Company continues to actively manage its Multi-Family and Commercial Real Estate portfolios which resulted in a reduction in the commercial real estate concentration ratio to 369% of capital at March 31, 2025 from 385% at December 31, 2024 and 416% at March 31, 2024. The Company continues to focus loan growth primarily in residential loan products originated for sale to specific buyers in the secondary market, C&I and SBA loans. The Company will selectively explore Commercial Real Estate opportunities with an emphasis on relationship based Commercial Real Estate lending.
Asset Quality: At March 31, 2025, the Bank’s asset quality improved with non-performing loans decreasing 28.5% to $11.7 million, representing 0.60% of the total loan portfolio, while the allowance for credit losses increased to 1.17% of total loans.
Tangible Book Value Per Share: Tangible book value per share (including Series A preferred shares) was $23.62 at March 31, 2025 (inclusive of one-time core system conversion expenses of $2.6 million, net of tax, or $0.34 per share) compared to $23.86 at December 31, 2024.
Technology & Rebranding: The Company completed its core processing system conversion to FIS Horizon in February 2025. This conversion, coupled with our recently revealed refreshed corporate logo, exemplifies our momentum towards a more technologically advanced, modern and digitally forward-thinking bank.
Quarterly Cash Dividend: The Company’s Board of Directors approved a $0.10 per share cash dividend on both common and Series A preferred shares payable on May 14, 2025 to stockholders of record on May 7, 2025.

MINEOLA, N.Y., April 23, 2025 (GLOBE NEWSWIRE) — Hanover Bancorp, Inc. (“Hanover” or “the Company” – NASDAQ: HNVR), the holding company for Hanover Community Bank (“the Bank”), today reported results for the quarter ended March 31, 2025 and the declaration of a $0.10 per share cash dividend on both common and Series A preferred shares payable on May 14, 2025 to stockholders of record on May 7, 2025.

Earnings Summary for the Quarter Ended March 31, 2025

The Company reported net income for the quarter ended March 31, 2025 of $1.5 million or $0.20 per diluted share (including Series A preferred shares), versus $4.1 million or $0.55 per diluted share (including Series A preferred shares) in the quarter ended March 31, 2024. The Company recorded adjusted (non-GAAP) net income (excluding core system conversion expenses of $2.6 million, net of tax) of $4.1 million or $0.55 per diluted share in the quarter ended March 31, 2025, versus net income of $4.1 million or $0.55 per diluted share in the comparable 2024 quarter (which included no adjustments). Returns on average assets, average stockholders’ equity and average tangible equity were 0.27%, 3.11% and 3.45%, respectively, for the quarter ended March 31, 2025, versus 0.74%, 8.70% and 9.71%, respectively, for the comparable quarter of 2024. Adjusted (non-GAAP) returns, exclusive of core system conversion expenses on average assets, average stockholders’ equity and average tangible equity were 0.73%, 8.36% and 9.27%, respectively, in the quarter ended March 31, 2025, versus 0.74%, 8.70% and 9.71%, respectively, in the comparable quarter of 2024.

While net interest income and non-interest income increased during the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, these were partially offset by increases in provision for credit losses and non-interest expenses, particularly compensation and benefits and the one-time core system conversion expenses. The increase in compensation and benefits expense in the first quarter of 2025 versus the comparable 2024 quarter was primarily related to lower deferred loan origination costs partially offset by lower incentive compensation expense resulting from reduced lending activity. The Company’s effective tax rate decreased to 13.8% in the first quarter of 2025 from 24.9% both in the linked quarter and the comparable 2024 quarter due to the tax impact of the windfall benefit from expiring stock options that were exercised and vested restricted stock. We expect a normalized run rate of 25.0% for the remainder of the year.

Net interest income was $14.6 million for the quarter ended March 31, 2025, an increase of $1.7 million, or 13.10% from the comparable 2024 quarter due to improvement of the Company’s net interest margin to 2.68% in the 2025 quarter from 2.41% in the comparable 2024 quarter. The yield on interest earning assets decreased to 6.01% in the 2025 quarter from 6.03% in the comparable 2024 quarter, a decrease of 2 basis points that was partially offset by a 32 basis point decrease in the cost of interest-bearing liabilities to 4.01% in 2025 from 4.33% in the first quarter of 2024. Net interest income on a linked quarter basis increased $0.8 million or 5.95%, due to a 15 basis point increase in net interest margin resulting from a 23 basis point decrease in cost of interest-bearing liabilities, partially offset by a 5 basis point decrease on yield on interest earning assets. The increase in the net interest margin was a result of the late 2024 reductions in the Fed Funds effective rate and the liability sensitive nature of the Bank’s balance sheet.

Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s quarterly results: “We are pleased with our first quarter performance which reflected sizable improvements in Net Interest Income and Net Interest Margin that drove stronger adjusted ROTE and ROA for the period. Specifically, NII increased from $13.8 million to $14.6 million and NIM from 2.53% to 2.68%, resulting in adjusted ROTE of 9.27% and ROA of 0.73%, confirming a trend away from the restrictive environment of the last couple of years. Building on this positive momentum were improved credit metrics and the completion of our core banking system conversion, a significant achievement that is expected to deliver tangible operational efficiencies and customer benefits while enhancing our commitment to digital banking. In addition to the core banking system conversion, we recently announced our new logo which is representative of our focus on innovation and a digital forward strategy. Moving forward, we remain committed to disciplined development of our core business verticals which include niche residential, SBA and C&I lending. Further, we look forward to a more favorable banking environment and the upcoming potential qualification for the Russell 2000, which should increase institutional ownership and enhance the liquidity of our stock.”

Balance Sheet Highlights

Total assets at March 31, 2025 were $2.29 billion versus $2.31 billion at December 31, 2024. Total securities available for sale at March 31, 2025 were $93.2 million, an increase of $9.4 million from December 31, 2024, primarily driven by growth in collateralized mortgage obligations, collateralized loan obligations and corporate bonds.

Total deposits at March 31, 2025 were $1.94 billion, a decrease of $17.8 million or 0.91%, compared to $1.95 billion at December 31, 2024. Total deposits increased $19.2 million or 1.00% from March 31, 2024. Demand deposits increased $12.6 million or 6.23% from March 31, 2024. Our loan to deposit ratio improved to 101% at March 31, 2025 from 102% at December 31, 2024.

The Company had $517.1 million in total municipal deposits at March 31, 2025, at a weighted average rate of 3.71% versus $509.3 million at a weighted average rate of 3.72% at December 31, 2024 and $576.3 million at a weighted average rate of 4.65% at March 31, 2024. The Company’s municipal deposit program is built on long-standing relationships developed in the local marketplace. This core deposit business will continue to provide a stable source of funding for the Company’s lending products at costs lower than those of consumer deposits and market-based borrowings. The Company continues to broaden its municipal deposit base and currently services 40 customer relationships.

Total borrowings at March 31, 2025 were $107.8 million, with a weighted average rate and term of 4.11% and 20 months, respectively. At March 31, 2025 and December 31, 2024, the Company had $107.8 million of term FHLB advances outstanding. The Company had no FHLB overnight borrowings outstanding at March 31, 2025 and December 31, 2024. The Company had no borrowings outstanding under lines of credit with correspondent banks at March 31, 2025 and December 31, 2024.

Stockholders’ equity was $196.6 million at both March 31, 2025 and December 31, 2024. Retained earnings increased by $0.8 million due primarily to net income of $1.5 million for the quarter ended March 31, 2025, which was offset by $0.7 million of dividends declared. The accumulated other comprehensive loss at March 31, 2025 was 0.71% of total equity and was comprised of a $0.9 million after tax net unrealized loss on the investment portfolio and a $0.5 million after tax net unrealized loss on derivatives. Tangible book value per share (including Series A preferred shares) was $23.62 at March 31, 2025 (inclusive of one-time core system conversion expenses of $2.6 million, net of tax, or $0.34 per share) compared to $23.86 at December 31, 2024.

Loan Portfolio

For the three months ended March 31, 2025, the Bank’s loan portfolio decreased $24.9 million to $1.96 billion from December 31, 2024. The decrease resulted primarily from the ongoing management of our commercial real estate and multifamily loan concentrations. At March 31, 2025, the Company’s residential loan portfolio (including home equity) amounted to $733.6 million, with an average loan balance of $486 thousand and a weighted average loan-to-value ratio of 57%. Commercial real estate (including construction) and multifamily loans totaled $1.06 billion at March 31, 2025, with an average loan balance of $1.5 million and a weighted average loan-to-value ratio of 59%. As will be discussed below, approximately 37% of the multifamily portfolio is subject to rent regulation. The Company’s commercial real estate concentration ratio continues to improve, decreasing to 369% of capital at March 31, 2025 from 385% at December 31, 2024 and 416% at March 31, 2024, with loans secured by office space accounting for 2.23% of the total loan portfolio and totaling $43.8 million at March 31, 2025. The Company’s loan pipeline with executed term sheets at March 31, 2025 is approximately $255.0 million, with approximately 92% being niche-residential, conventional C&I and SBA lending opportunities.

The Bank remains focused on expanding its core verticals and continues to originate loans for its portfolio and for sale in the secondary market under its residential flow origination program. Of the $48.8 million in closed residential loans originated in the quarter ended March 31, 2025, $27.6 million were originated for the Bank’s portfolio and reflected a weighted average yield of 6.64% before origination and other fees, which average 50-100 bps per loan, and a weighted average LTV of 58%. The remaining $21.2 million of closed loans were originated for sale in the secondary market. During the quarter ended March 31, 2025, the Company sold $18.3 million of residential loans under its flow origination program and recorded gains on sale of loans held-for-sale of $0.4 million with a premium of 2.38%.

During the quarters ended March 31, 2025 and 2024, the Company sold approximately $23.4 million and $26.7 million, respectively, in government guaranteed SBA loans and recorded gains on sale of loans held-for-sale of $1.9 million and $2.5 million, respectively. SBA loan originations and gains on sale were lower due to a combination of factors, including: lower than expected loan sale premiums due, we believe, to first quarter market turmoil; delays in loan closings resulting from the impact of administrative changes to SBA Standard Operating Procedures; and the inability of certain loans to close because of delays by state regulatory agencies in issuing permit approvals to certain borrowers. As we enter the second quarter of 2025, we expect to navigate these factors and to increase the volume of origination and loan sale activity throughout the year. The Bank concluded the first quarter of 2025 with C&I loan originations of approximately $16.8 million. Based on its existing pipeline, the Bank expects C&I lending and deposit activity to grow as the year progresses.

Commercial Real Estate Statistics

A significant portion of the Bank’s commercial real estate portfolio consists of loans secured by Multi-Family and CRE-Investor owned real estate that are predominantly subject to fixed interest rates for an initial period of 5 years. The Bank’s exposure to Land/Construction loans is minor at $8.0 million, all at floating interest rates. As shown below, 31% of the loan balances in these combined portfolios will either have a rate reset or mature in 2025 and 2026, with another 56% with rate resets or maturing in 2027.

Multi-Family Market Rent Portfolio Fixed Rate Reset/Maturity Schedule								Multi-Family Stabilized Rent Portfolio Fixed Rate Reset/Maturity Schedule
Calendar Period	# Loans	Total O/S ($000’s omitted)		Avg O/S ($000’s omitted)		Avg Interest Rate		Calendar Period	# Loans	Total O/S ($000’s omitted)		Avg O/S ($000’s omitted)		Avg Interest Rate

2025	10	$	16,321	$	1,632	4.45	%	2025	10	$	17,025	$	1,703	5.03	%
2026	36		117,886		3,275	3.66	%	2026	20		42,549		2,127	3.67	%
2027	70		174,601		2,494	4.29	%	2027	53		123,668		2,333	4.22	%
2028	16		21,382		1,336	6.20	%	2028	13		10,914		839	7.17	%
2029	6		4,929		821	7.70	%	2029	4		4,328		1,082	6.38	%
2030+	2		171		85	6.00	%	2030+	4		1,129		282	6.02	%
Fixed Rate	140		335,290		2,395	4.61	%	Fixed Rate	104		199,613		1,919	4.39	%
Floating Rate	2		749		375	9.50	%	Floating Rate	—		—		—	—	%
Total	142	$	336,039	$	2,366	4.26	%	Total	104	$	199,613	$	1,919	4.39	%

CRE Investor Portfolio Fixed Rate Reset/Maturity Schedule
Calendar Period	# Loans	Total O/S ($000’s omitted)		Avg O/S ($000’s omitted)		Avg Interest Rate

2025	29	$	23,092	$	796	6.13	%
2026	33		41,668		1,263	4.84	%
2027	90		162,557		1,806	5.03	%
2028	30		31,763		1,059	6.64	%
2029	4		2,353		588	7.03	%
2030+	13		7,967		613	6.49	%
Fixed Rate	199		269,400		1,354	5.35	%
Floating Rate	5		19,074		3,815	8.73	%
Total CRE-Inv.	204	$	288,474	$	1,414	5.57	%

Rental breakdown of Multi-Family portfolio

The table below segments our portfolio of loans secured by Multi-Family properties based on rental terms and location. As shown below, 63% of the combined portfolio is secured by properties subject to free market rental terms, which is the dominant tenant type. Both the Market Rent and Stabilized Rent segments of our portfolio present very similar average borrower profiles. The portfolio is primarily located in the New York City boroughs of Brooklyn, the Bronx and Queens.

Multi-Family Loan Portfolio – Loans by Rent Type
Rent Type	# of Notes	Outstanding Loan Balance		% of Total Multi-Family		Avg Loan Size		LTV		Current DSCR	Avg # of Units
		($000’s omitted)				($000’s omitted)

Market	142	$	336,039	63	%	$	2,366	61.5	%	1.41	11
Location
Manhattan	7	$	10,299	2	%	$	1,471	49.6	%	1.88	14
Other NYC	93	$	244,552	46	%	$	2,630	61.2	%	1.40	9
Outside NYC	42	$	81,188	15	%	$	1,933	64.2	%	1.36	13

Stabilized	104	$	199,613	37	%	$	1,919	62.1	%	1.42	12
Location
Manhattan	6	$	8,843	2	%	$	1,474	44.2	%	1.58	17
Other NYC	86	$	171,852	32	%	$	1,998	62.8	%	1.41	11
Outside NYC	12	$	18,918	3	%	$	1,576	64.1	%	1.49	16

Office Property Exposure

The Bank’s exposure to the Office market is minor. Loans secured by office space accounted for 2.23% of the total loan portfolio with a total balance of $43.8 million, of which less than 1% is located in Manhattan. The pool has a 2.32x weighted average DSCR, a 53% weighted average LTV and less than $353,000 of exposure in Manhattan.

Asset Quality and Allowance for Credit Losses

At March 31, 2025, the Bank’s asset quality metrics improved with non-performing loans totaling $11.7 million compared to non-performing loans of $16.4 million at December 31, 2024, a decrease of $4.7 million. This decrease resulted primarily from the contracted sale of non-performing loans totaling $5.0 million, net of a $0.3 million charge-off, during the quarter. At March 31, 2025 non-performing loans were 0.60% of total loans outstanding versus 0.82% at December 31, 2024.

During the first quarter of 2025, the Bank recorded a provision for credit losses expense of $0.6 million. The March 31, 2025 allowance for credit losses was $22.9 million versus $22.8 million at December 31, 2024. The allowance for credit losses as a percentage of total loans was 1.17% at March 31, 2025 and 1.15% at December 31, 2024.

Net Interest Margin

The Bank’s net interest margin increased to 2.68% for the quarter ended March 31, 2025 compared to 2.53% in the quarter ended December 31, 2024 and 2.41% in the quarter ended March 31, 2024 due to the recent reductions in the Fed Funds effective rate and the liability sensitive nature of the Bank’s balance sheet.

About Hanover Community Bank and Hanover Bancorp, Inc.

Hanover Bancorp, Inc. (NASDAQ: HNVR), is the bank holding company for Hanover Community Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to client needs. Management and the Board of Directors are comprised of a select group of successful local businesspeople who are committed to the success of the Bank by knowing and understanding the metro-New York area’s financial needs and opportunities. Backed by state-of-the-art technology, Hanover offers a full range of financial services. Hanover offers a complete suite of consumer, commercial, and municipal banking products and services, including multi-family and commercial mortgages, residential loans, business loans and lines of credit. Hanover also offers its customers access to 24-hour ATM service with no fees attached, free checking with interest, telephone banking, advanced technologies in mobile and internet banking for our consumer and business customers, safe deposit boxes and much more. The Company’s corporate administrative office is located in Mineola, New York where it also operates a full-service branch office along with additional branch locations in Garden City Park, Hauppauge, Forest Hills, Flushing, Sunset Park, Rockefeller Center and Chinatown, New York, and Freehold, New Jersey, with a new branch opening in Port Jefferson, New York in mid 2025.

Hanover Community Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, call (516) 548-8500 or visit the Bank’s website at www.hanoverbank.com.

Non-GAAP Disclosure

This discussion, including the financial statements attached thereto, includes non-GAAP financial measures which include the Company’s adjusted net income, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity, tangible common equity (“TCE”) ratio, TCE, tangible assets, tangible book value per share, return on average tangible equity and efficiency ratio. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes that the presentation of non-GAAP financial measures provides both management and investors with a greater understanding of the Company’s operating results and trends in addition to the results measured in accordance with GAAP, and provides greater comparability across time periods. While management uses non-GAAP financial measures in its analysis of the Company’s performance, this information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP. The Company’s non-GAAP financial measures may not be comparable to similarly titled measures used by other financial institutions.

With respect to the calculations of and reconciliations of adjusted net income, TCE, tangible assets, TCE ratio and tangible book value per share, reconciliations to the most comparable U.S. GAAP measures are provided in the tables that follow.

Forward-Looking Statements

This release may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Hanover Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Hanover Bancorp, Inc. may turn out to be incorrect. They can be affected by inaccurate assumptions that Hanover Bancorp, Inc. might make or by known or unknown risks and uncertainties, including those discussed in our Annual Report on Form 10-K under Item 1A – Risk Factors, as updated by our subsequent filings with the Securities and Exchange Commission. Further, the adverse effect of health emergencies or natural disasters on the Company, its customers, and the communities where it operates may adversely affect the Company’s business, results of operations and financial condition for an indefinite period of time. Consequently, no forward-looking statement can be guaranteed. Hanover Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release or to conform these statements to actual events.

Investor and Press Contact:
Lance P. Burke
Chief Financial Officer
(516) 548-8500


HANOVER BANCORP, INC.
STATEMENTS OF CONDITION (unaudited)
(dollars in thousands)


		March 31,			December 31,			March 31,
			2025			2024			2024
Assets
Cash and cash equivalents		$	160,234		$	162,857		$	136,481
Securities-available for sale, at fair value			93,197			83,755			92,709
Investments-held to maturity			3,671			3,758			3,973
Loans held for sale			16,306			12,404			7,641

Loans, net of deferred loan fees and costs			1,960,674			1,985,524			2,005,515
Less: allowance for credit losses			(22,925	)		(22,779	)		(19,873	)
Loans, net			1,937,749			1,962,745			1,985,642

Goodwill			19,168			19,168			19,168
Premises & fixed assets			14,511			15,337			15,648
Operating lease assets			8,484			8,337			9,336
Other assets			38,207			43,749			36,910
	Assets	$	2,291,527		$	2,312,110		$	2,307,508

Liabilities and stockholders’ equity
Core deposits		$	1,418,209		$	1,456,513		$	1,453,035
Time deposits			518,229			497,770			464,227
Total deposits			1,936,438			1,954,283			1,917,262

Borrowings			107,805			107,805			148,953
Subordinated debentures			24,702			24,689			24,648
Operating lease liabilities			9,144			9,025			10,039
Other liabilities			16,795			19,670			17,063
	Liabilities		2,094,884			2,115,472			2,117,965

Stockholders’ equity			196,643			196,638			189,543
	Liabilities and stockholders’ equity	$	2,291,527		$	2,312,110		$	2,307,508


HANOVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(dollars in thousands, except per share data)

	Three Months Ended
	3/31/2025		3/31/2024

Interest income	$	32,837	$	32,432
Interest expense		18,208		19,497
Net interest income		14,629		12,935
Provision for credit losses		600		300
Net interest income after provision for credit losses		14,029		12,635

Loan servicing and fee income		1,081		913
Service charges on deposit accounts		117		96
Gain on sale of loans held-for-sale		2,352		2,506
Other operating income		182		61
Non-interest income		3,732		3,576

Compensation and benefits		7,232		5,562
Conversion expenses		3,180		–
Occupancy and equipment		1,836		1,770
Data processing		593		518
Professional fees		787		818
Federal deposit insurance premiums		337		318
Other operating expenses		2,031		1,818
Non-interest expense		15,996		10,804

Income before income taxes		1,765		5,407
Income tax expense		244		1,346

Net income	$	1,521	$	4,061

Earnings per share (“EPS”):⁽¹⁾
Basic	$	0.20	$	0.55
Diluted	$	0.20	$	0.55

Average shares outstanding for basic EPS ⁽¹⁾⁽²⁾		7,463,537		7,376,227
Average shares outstanding for diluted EPS ⁽¹⁾⁽²⁾		7,469,489		7,420,926

⁽¹⁾ Calculation includes common stock and Series A preferred stock.
⁽²⁾ Average shares outstanding before subtracting participating securities.


HANOVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
QUARTERLY TREND
(dollars in thousands, except per share data)

	Three Months Ended
	3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024

Interest income	$	32,837	$	33,057	$	34,113	$	33,420	$	32,432
Interest expense		18,208		19,249		21,011		20,173		19,497
Net interest income		14,629		13,808		13,102		13,247		12,935
Provision for credit losses		600		400		200		4,040		300
Net interest income after provision for credit losses		14,029		13,408		12,902		9,207		12,635

Loan servicing and fee income		1,081		981		960		836		913
Service charges on deposit accounts		117		136		123		114		96
Gain on sale of loans held-for-sale		2,352		3,014		2,834		2,586		2,506
Gain on sale of investments		–		27		–		4		–
Other operating income		182		29		37		82		61
Non-interest income		3,732		4,187		3,954		3,622		3,576

Compensation and benefits		7,232		6,699		6,840		6,499		5,562
Conversion expenses		3,180		–		–		–		–
Occupancy and equipment		1,836		1,810		1,799		1,843		1,770
Data processing		593		536		547		495		518
Professional fees		787		782		762		717		818
Federal deposit insurance premiums		337		375		360		365		318
Other operating expenses		2,031		2,198		1,930		1,751		1,818
Non-interest expense		15,996		12,400		12,238		11,670		10,804

Income before income taxes		1,765		5,195		4,618		1,159		5,407
Income tax expense		244		1,293		1,079		315		1,346

Net income	$	1,521	$	3,902	$	3,539	$	844	$	4,061

Earnings per share (“EPS”):⁽¹⁾
Basic	$	0.20	$	0.53	$	0.48	$	0.11	$	0.55
Diluted	$	0.20	$	0.52	$	0.48	$	0.11	$	0.55

Average shares outstanding for basic EPS ⁽¹⁾⁽²⁾		7,463,537		7,427,583		7,411,064		7,399,816		7,376,227
Average shares outstanding for diluted EPS ⁽¹⁾⁽²⁾		7,469,489		7,456,471		7,436,068		7,449,110		7,420,926

⁽¹⁾ Calculation includes common stock and Series A preferred stock.
⁽²⁾ Average shares outstanding before subtracting participating securities.


HANOVER BANCORP, INC.
CONSOLIDATED NON-GAAP FINANCIAL INFORMATION ⁽¹⁾(unaudited)
(dollars in thousands, except per share data)

	Three Months Ended
	3/31/2025			3/31/2024

ADJUSTED NET INCOME:
Net income, as reported	$	1,521		$	4,061
Adjustments:
Conversion expenses		3,180			–
Total adjustments, before income taxes		3,180			–
Adjustment for reported effective income tax rate		608			–
Total adjustments, after income taxes		2,572			–
Adjusted net income	$	4,093		$	4,061
Basic earnings per share – adjusted	$	0.55		$	0.55
Diluted earnings per share – adjusted	$	0.55		$	0.55

ADJUSTED OPERATING EFFICIENCY RATIO:
Operating efficiency ratio, as reported		87.12	%		65.44	%
Adjustments:
Conversion expenses		-17.32	%		0.00	%
Adjusted operating efficiency ratio		69.80	%		65.44	%

ADJUSTED RETURN ON AVERAGE ASSETS		0.73	%		0.74	%
ADJUSTED RETURN ON AVERAGE EQUITY		8.36	%		8.70	%
ADJUSTED RETURN ON AVERAGE TANGIBLE EQUITY		9.27	%		9.71	%

⁽¹⁾ A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with U.S. GAAP. While management uses non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP.


HANOVER BANCORP, INC.
SELECTED FINANCIAL DATA (unaudited)
(dollars in thousands)


	Three Months Ended
	3/31/2025			3/31/2024
Profitability:
Return on average assets		0.27	%		0.74	%
Return on average equity ⁽¹⁾		3.11	%		8.70	%
Return on average tangible equity ⁽¹⁾		3.45	%		9.71	%
Pre-provision net revenue to average assets		0.42	%		1.03	%
Yield on average interest-earning assets		6.01	%		6.03	%
Cost of average interest-bearing liabilities		4.01	%		4.33	%
Net interest rate spread ⁽²⁾		2.00	%		1.70	%
Net interest margin ⁽³⁾		2.68	%		2.41	%
Non-interest expense to average assets		2.85	%		1.96	%
Operating efficiency ratio ⁽⁴⁾		87.12	%		65.44	%

Average balances:
Interest-earning assets	$	2,217,107		$	2,162,835
Interest-bearing liabilities		1,842,073			1,810,397
Loans		1,989,796			1,984,075
Deposits		1,919,436			1,842,642
Borrowings		133,665			162,427


⁽¹⁾ Includes common stock and Series A preferred stock.
⁽²⁾ Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
⁽³⁾ Represents net interest income divided by average interest-earning assets.
⁽⁴⁾ Represents non-interest expense divided by the sum of net interest income and non-interest income.

HANOVER BANCORP, INC.
SELECTED FINANCIAL DATA (unaudited)
(dollars in thousands, except share and per share data)

	At or For the Three Months Ended
	3/31/2025				12/31/2024				9/30/2024				6/30/2024
Asset quality:
Provision for credit losses – loans ⁽¹⁾	$	600			$	400			$	200			$	3,850
Net (charge-offs)/recoveries		(454		)		(1,027		)		(438		)		(79		)
Allowance for credit losses		22,925				22,779				23,406				23,644
Allowance for credit losses to total loans ⁽²⁾		1.17	%			1.15	%			1.17	%			1.17	%
Non-performing loans	$	11,697			$	16,368			$	15,365			$	15,828
Non-performing loans/total loans		0.60	%			0.82	%			0.77	%			0.79	%
Non-performing loans/total assets		0.51	%			0.71	%			0.66	%			0.68	%
Allowance for credit losses/non-performing loans		195.99	%			139.17	%			152.33	%			149.38	%

Capital (Bank only):
Tier 1 Capital	$	201,925			$	201,744			$	198,196			$	195,703
Tier 1 leverage ratio		8.95	%			9.13	%			8.85	%			8.89	%
Common equity tier 1 capital ratio		13.37	%			13.32	%			12.99	%			12.78	%
Tier 1 risk based capital ratio		13.37	%			13.32	%			12.99	%			12.78	%
Total risk based capital ratio		14.62	%			14.58	%			14.24	%			14.21	%

Equity data:
Shares outstanding ⁽³⁾		7,503,731				7,427,127				7,428,366				7,402,163
Stockholders’ equity	$	196,643			$	196,638			$	192,339			$	190,072
Book value per share ⁽³⁾		26.21				26.48				25.89				25.68
Tangible common equity ⁽³⁾		177,239				177,220				172,906				170,625
Tangible book value per share ⁽³⁾		23.62				23.86				23.28				23.05
Tangible common equity (“TCE”) ratio ⁽³⁾		7.80	%			7.73	%			7.49	%			7.38	%

(1) Excludes $0, $0, $0 and $190 thousand provision for credit losses on unfunded commitments for the quarters ended 3/31/25, 12/31/24, 9/30/24 and 6/30/24, respectively.
(2) Calculation excludes loans held for sale.
(3) Includes common stock and Series A preferred stock.


HANOVER BANCORP, INC.
STATISTICAL SUMMARY
QUARTERLY TREND
(unaudited, dollars in thousands, except share data)

	3/31/2025			12/31/2024			9/30/2024			6/30/2024

Loan distribution ⁽¹⁾:
Residential mortgages	$	708,649		$	702,832		$	719,037		$	733,040
Multifamily		535,429			550,570			557,634			562,503
Commercial real estate		520,808			536,288			529,948			549,725
Commercial & industrial		170,442			168,909			171,899			139,209
Home equity		24,914			26,422			26,825			27,992
Consumer		432			503			470			485

Total loans	$	1,960,674		$	1,985,524		$	2,005,813		$	2,012,954

Sequential quarter growth rate		-1.25	%		-1.01	%		-0.35	%		0.37	%

CRE concentration ratio		369	%		385	%		397	%		403	%

Loans sold during the quarter	$	46,649		$	53,499		$	43,537		$	35,302

Funding distribution:
Demand	$	215,569		$	211,656		$	206,327		$	199,835
N.O.W.		698,297			692,890			621,880			661,998
Savings		46,275			48,885			53,024			44,821
Money market		458,068			503,082			572,213			571,170
Total core deposits		1,418,209			1,456,513			1,453,444			1,477,824
Time		518,229			497,770			504,100			464,105
Total deposits		1,936,438			1,954,283			1,957,544			1,941,929
Borrowings		107,805			107,805			125,805			148,953
Subordinated debentures		24,702			24,689			24,675			24,662

Total funding sources	$	2,068,945		$	2,086,777		$	2,108,024		$	2,115,544

Sequential quarter growth rate – total deposits		-0.91	%		-0.17	%		0.80	%		1.29	%

Period-end core deposits/total deposits ratio		73.24	%		74.53	%		74.25	%		76.10	%

Period-end demand deposits/total deposits ratio		11.13	%		10.83	%		10.54	%		10.29	%

⁽¹⁾ Excluding loans held for sale


HANOVER BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ⁽¹⁾(unaudited)
(dollars in thousands, except share and per share amounts)


	3/31/2025			12/31/2024			9/30/2024			6/30/2024			3/31/2024
Tangible common equity
Total equity ⁽²⁾	$	196,643		$	196,638		$	192,339		$	190,072		$	189,543
Less: goodwill		(19,168	)		(19,168	)		(19,168	)		(19,168	)		(19,168	)
Less: core deposit intangible		(236	)		(250	)		(265	)		(279	)		(295	)
Tangible common equity ⁽²⁾	$	177,239		$	177,220		$	172,906		$	170,625		$	170,080

Tangible common equity (“TCE”) ratio
Tangible common equity ⁽²⁾	$	177,239		$	177,220		$	172,906		$	170,625		$	170,080
Total assets		2,291,527			2,312,110			2,327,814			2,331,098			2,307,508
Less: goodwill		(19,168	)		(19,168	)		(19,168	)		(19,168	)		(19,168	)
Less: core deposit intangible		(236	)		(250	)		(265	)		(279	)		(295	)
Tangible assets	$	2,272,123		$	2,292,692		$	2,308,381		$	2,311,651		$	2,288,045
TCE ratio ⁽²⁾		7.80	%		7.73	%		7.49	%		7.38	%		7.43	%

Tangible book value per share
Tangible equity ⁽²⁾	$	177,239		$	177,220		$	172,906		$	170,625		$	170,080
Shares outstanding ⁽²⁾		7,503,731			7,427,127			7,428,366			7,402,163			7,392,412
Tangible book value per share ⁽²⁾	$	23.62		$	23.86		$	23.28		$	23.05		$	23.01

⁽¹⁾ A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with U.S. GAAP. While management uses non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP.

⁽²⁾ Includes common stock and Series A preferred stock.


HANOVER BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Three Months Ended March 31, 2025 and 2024
(unaudited, dollars in thousands)


		2025						2024
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost

Assets:
Interest-earning assets:
Loans	$	1,989,796	$	29,984	6.11	%	$	1,984,075	$	29,737	6.03	%
Investment securities		85,839		1,186	5.60	%		94,845		1,457	6.18	%
Interest-earning cash		133,458		1,482	4.50	%		74,672		1,014	5.46	%
FHLB stock and other investments		8,014		185	9.36	%		9,243		224	9.75	%
Total interest-earning assets		2,217,107		32,837	6.01	%		2,162,835		32,432	6.03	%
Non interest-earning assets:
Cash and due from banks		9,504						7,945
Other assets		49,695						49,941
Total assets	$	2,276,306					$	2,220,721

Liabilities and stockholders’ equity:
Interest-bearing liabilities:
Savings, N.O.W. and money market deposits	$	1,217,429	$	11,455	3.82	%	$	1,161,191	$	12,933	4.48	%
Time deposits		490,979		5,320	4.39	%		486,779		4,962	4.10	%
Total savings and time deposits		1,708,408		16,775	3.98	%		1,647,970		17,895	4.37	%
Borrowings		108,972		1,107	4.12	%		137,788		1,276	3.72	%
Subordinated debentures		24,693		326	5.35	%		24,639		326	5.32	%
Total interest-bearing liabilities		1,842,073		18,208	4.01	%		1,810,397		19,497	4.33	%
Demand deposits		211,028						194,672
Other liabilities		24,726						27,959
Total liabilities		2,077,827						2,033,028
Stockholders’ equity		198,479						187,693
Total liabilities & stockholders’ equity	$	2,276,306					$	2,220,721
Net interest rate spread					2.00	%					1.70	%
Net interest income/margin			$	14,629	2.68	%			$	12,935	2.41	%

The MIL Network –

April 24, 2025

MIL-OSI United Kingdom: Greens lodge plans to tackle holiday home growth where housing costs are highest

Source: Scottish Greens

23 Apr 2025 Finance

Homes are for living in and not for profiteering.

The Scottish Greens are lodging plans to tackle the housing crisis in the areas where it is worst by cracking down on the spread of holiday homes.

At present, someone buying a second or holiday home anywhere in Scotland must pay a tax known as the Additional Dwelling Supplement.

New proposals, lodged by Ross Greer MSP as an amendment to the upcoming Housing Bill, would create a further charge on top of this in areas where rent control measures are introduced.

In some communities such as Lochranza on the Isles of Arran over a third of houses are holiday homes. This trend pushes up housing costs and often forces young people to move out of their own communities in search of an affordable place to live.

Since the last election the Scottish Greens have doubled the Additional Dwelling Supplement (ADS) from 4% to 8% and given councils the power to double Council Tax on holiday homes.

The reforms have had the desired effect on house purchases, with 2455 fewer second homes bought last year than in 2023, the largest decrease in a decade. ADS will also raise more than a quarter of a billion pounds for public services in the current financial year.

Greer’s amendments would allow for further targeted efforts to reduce holiday home ownership in areas where the housing crisis is particularly acute by increasing the Additional Dwelling Supplement in rent control zones. At present, this tax can only be increased or decreased nationwide, with targeted changes not possible.

Ross Greer said:

“Many of the areas where rent is highest are the same ones being filled up with far too many holiday homes. This reduces the number of houses available for people to actually live in and pushes up prices for both renters and first-time buyers.

“Everyone should be able to access a good quality, affordable home. Yet, all across Scotland people are being priced out of the communities they grew up in by holiday homes and buy-to-let landlords.

“This simple proposal will help people trying to find a home in areas where the housing crisis is at its worst. The money raised will come from those who are already wealthy enough to buy extra properties, something totally outwith the reach of most people.

“The housing market is broken. Far too many properties are being used as cash cows for short-term lets and holiday homes, and it is renters who are paying the price. We badly need to shift the balance and free up more homes for those who really need them.”

Mr Greer added:

“The changes already delivered by Green MSPs have reduced the number of second and holiday homes bought each year, freeing up more properties for people who need a home to live in and raising millions of pounds for vital services like schools and hospitals.

“We need to build on this success and ensure that the communities where rent is highest are the ones where people are supported the most.”

MIL OSI United Kingdom –

April 23, 2025

MIL-OSI New Zealand: Property Market – Clearer signs of a market rebound as property activity lifts in early 2025 – CoreLogic

Source: CoreLogic

New Zealand’s housing market continues to show signs of recovery, with national sales activity and dwelling values both lifting in March, supported by easing mortgage rates and renewed buyer confidence, according to CoreLogic NZ’s April Housing Chart Pack. (ref. https://www.corelogic.co.nz/news-research/reports/housing-chart-pack )

Sales volumes were 11% higher in March compared to the same time last year, more than offsetting February’s brief dip. This marks nearly two years of gradual growth in transaction activity.

“Clearly confidence levels are growing, no doubt reflecting the falls in mortgage rates,” said CoreLogic NZ Chief Property Economist Kelvin Davidson.

“The recovery in property values and activity levels is becoming clearer, but it remains measured. Higher stock levels are still giving buyers plenty of choice, which will keep a lid on price growth in the near term.”

National home values edged up 0.5% in March, following a 0.4% increase in February and a flat result in January, based on CoreLogic NZ’s latest Home Value Index.

The recovery is becoming more geographically widespread, extending beyond the main centres into key regional towns and cities.

Investor activity rising

While the supply of available listings continues to track at multi-year highs, reducing the urgency for buyers, improving conditions have nevertheless sparked renewed interest from a range of buyer groups.

First home buyer activity as a share of the market has eased slightly from recent record highs, but investor activity is on the rise, driven by lower mortgage rates.

“Mortgaged investors remain on the comeback trail. Lower interest rates are certainly helping investors by reducing the cashflow top-ups out of other income sources that are generally required on a rental property purchase.”

“While the share of purchases going to mortgaged multiple property owners (MPOs, including investors) remains below historical levels, this group has certainly started to return. Indeed, at 23% in Q1 2025, they’re back to levels not seen since late 2021.”

Mr Davidson said all buyer groups are expected to be more active through the rest of 2025.

“If current momentum continues, we anticipate around 10,000 more residential sales this year compared to 2024. That means more opportunities for everyone—first home buyers, investors and upgraders alike.”

Mixed economic outlook

The economic backdrop remains mixed, with global uncertainty fuelled by recent tariff changes in the United States. While the inflationary impact in New Zealand is expected to be relatively neutral, a softer global growth outlook may support further downward pressure on interest rates.

Despite these crosswinds, CoreLogic anticipates national home values to rise by approximately 5% throughout 2025.

“The year ahead is likely to deliver a subdued but broad-based upturn,” Mr Davidson said.

“Lower mortgage rates are doing much of the heavy lifting, but high listing volumes, ongoing labour market shifts and mortgage lending constraints such as debt-to-income ratio caps will temper the pace of growth.”

Highlights from the April 2025 Housing Chart Pack include:

New Zealand’s residential real estate market is worth a combined $1.62 trillion.
The CoreLogic Home Value Index shows property values across New Zealand increased 0.5% in March. Over the three months to March, there was a 0.9% rise in median property values across NZ.

The total sales count over the 12 months to March is 83,543.

Total listings on the market were 30,524 in March – 23% up on the five-year average. Some major regions such as Waikato, Auckland, and Bay of Plenty are lower than last year in terms of total listings on the market, but Canterbury and Otago are slightly higher, and Wellington more so.

Rental market conditions still favour tenants, as net migration (demand) eases down from its very high peak, and the stock of available rental listings (supply) on the market stays elevated.

Gross rental yields now stand at 3.9%, which Is the highest level since mid-2015.

Inflation is firmly back in the 1–3% target range, and after April’s 0.25% cut, further OCR reductions seem likely in the coming months.

The Chart of the Month shows that investors are starting to return to the market.

While the share of purchases going to mortgaged multiple property owners (MPOs, including investors) remains below normal, this group has certainly started to return. At 23% in Q1 2025, they’re back to levels not seen since late 2021.

MIL OSI New Zealand News –

April 23, 2025

MIL-OSI USA: Kugler, Transmission of Monetary Policy

Source: US State of New York Federal Reserve

Thank you, Juan Pablo. I am delighted to be speaking at the University of Minnesota because, in many ways, this visit feels like a homecoming for me.1 I was born right here in Minneapolis, before I moved to Colombia as a young child. My parents told me so many wonderful stories about this area and the university. My father studied for his Ph.D. here at the economics department. He studied under accomplished economists, including Anne Krueger, Leo Hurwicz, John Buttrick, and Ed Foster, the latter of whom is still here as an emeritus professor. The University of Minnesota has made many contributions to the field of economics and has historically had a close relationship with the Federal Reserve Bank of Minneapolis. So you really are part of the Fed’s extended family, and it is an honor to speak with you.
Today, I would like to speak with you about the transmission of the Fed’s monetary policy. I will discuss how monetary policy is transmitted through the economy, then touch on how I monitor its transmission, and, lastly, talk about two elements related to transmission that I evaluate when making monetary policy decisions. Those elements are the long and variable lags of monetary policy and whether its transmission is asymmetric and has changed over time. But before I delve into my primary topic, I would like to start by offering my views on the economic outlook.
Economic OutlookThe U.S. economy has grown at a solid pace, with real gross domestic product (GDP) expanding 2.5 percent last year. Activity indicators in the first few months of this year show healthy numbers. Last week, the March retail sales release showed resilient consumption, with positive revisions for January and February numbers. However, measures of household sentiment, such as surveys from the University of Michigan, Conference Board, and Morning Consult, have shown signs of softness, albeit to varying degrees. Many survey respondents report that their views reflect trade policy concerns, though, as we have seen, the exact contours of those policies are still taking shape. Thus, GDP growth for the first quarter, which will be reported next week, may show some moderation relative to what we saw in 2024, although this moderation may be offset by increased purchases front-loading the implementation of tariffs. Financial markets have experienced increased volatility in recent weeks. If financial conditions were to tighten persistently, that could weigh on growth in the future.
The labor market remains solid, but the pace of hiring has eased during this year. In the first quarter, U.S. employers added 152,000 jobs per month, on average, compared with a monthly pace of 168,000, on average, last year. The unemployment rate edged up last month to 4.2 percent, but it is still low and has remained near its current level since last summer. Moreover, initial jobless claims have remained stable at low levels. Those numbers are consistent with other measures indicating that the labor market is broadly in balance.
With respect to inflation, progress has slowed since last summer, and inflation remains above the 2 percent goal. Based on the consumer price index (CPI) and producer price index (PPI) data, the 12-month change in the personal consumption expenditures (PCE) price index was estimated to have been 2.3 percent last month and 2.6 percent for the core categories, which exclude food and energy.
I pay careful attention to two subcategories of inflation: first, core goods—which are goods outside of volatile food and energy products—and, second, nonhousing market-based services, which are based on transactions and not imputed prices, such as car maintenance and haircuts. Goods inflation was negative in most of 2024—as was the norm for several years before the pandemic—but it increased to 0.4 percent in January and February. In March, the CPI and PPI releases pointed to goods inflation decreasing to a still-positive 0.1 percent, which is better news. By contrast, nonhousing market services inflation stayed elevated through March, at an estimated 3.4 percent. That category often provides a good signal of inflationary pressures across all services. As we look ahead, while the long-run level of tariffs is still to be determined, tariffs have moved significantly higher this year. That will likely put upward pressure on prices. For instance, both survey- and market-based measures of near-term inflation expectations have moved up. Longer-term inflation expectations—those beyond the next few years—largely remain well anchored and consistent with our 2 percent inflation goal, and I hope they continue in that way.
I am closely monitoring incoming data and the cumulative effects on both sides of our mandate from policies in four distinct areas: trade, immigration, fiscal policy, and regulation. I am also monitoring any risks to the outlook, especially upside risks on inflation or downside risks to employment. Still, I think our monetary policy is well positioned for changes in the macroeconomic environment. Thus, I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable. I remain committed to achieving both of our dual-mandate goals of maximum employment and stable prices.
Overview of Monetary Policy TransmissionNow turning to the primary topic of my speech, I will first discuss how monetary policy is transmitted through the economy. In this section, I will give some examples from the recent past as a tool for explaining my arguments, but I am not intending to comment further on the latest developments in the economy.
Understanding the transmission of monetary policy starts with understanding how the Federal Reserve uses its policy tools. The Federal Open Market Committee (FOMC) adjusts the target range for the federal funds rate, or the rate that banks pay for overnight borrowing. Setting the federal funds rate is the primary means by which the Fed adjusts the stance of monetary policy, among its range of monetary policy tools. In addition to the FOMC directly adjusting the federal funds rate, Fed policymakers’ communications about the future path of monetary policy may also result in changes to longer-term interest rates because households’ and businesses’ expectations about future policy affect the level of interest rates.
Adjustments to the federal funds rate affect a multitude of financial conditions faced by consumers and businesses. For example, changes to the federal funds rate filter through to the interest rates lenders charge for loans to businesses and households as well as to what financial institutions pay in interest on deposits. The current and expected future path of the federal funds rate also affects asset prices, as it changes the relative attractiveness of different investments, such as stocks and real estate. Fluctuations in both interest rates and asset prices affect a household’s wealth and a corporation’s balance sheet, which can, in turn, affect the terms under which they can borrow.2 I have discussed some of the most common ways in which policy is transmitted. There are, of course, other important channels, such as exchange rates and international spillovers, that I will not discuss today. Research suggests that the channels of transmission are extensive and ever evolving.3
Consumers and businesses make decisions based on financial conditions.4 For illustrative purposes, let’s consider a period when FOMC policymakers view it as appropriate to ease the restrictiveness of monetary policy by reducing the target range for the federal funds rate over time. The resulting lower interest rates on consumer loans elicit greater spending on goods and services, particularly on durable goods that are often financed. Lower mortgage rates can encourage renters to buy a home by reducing the monthly payment borrowers face and can encourage existing homeowners to refinance their mortgages to free up cash for other purchases. Lower interest rates can make holding equities more attractive, which raises stock prices and adds to wealth. Higher wealth tends to spur more spending, as households tend to consume at least a portion of their increased wealth. Investment projects that businesses previously believed would be marginally unprofitable become attractive because of reduced financing costs, particularly if businesses expect their sales to rise. Expecting a better macroeconomic environment and lower delinquency rates down the road, banks may loosen their lending standards on approving loans for households and businesses. All these decisions support aggregate demand and may put upward pressure on inflation.
Of course, there are periods when policymakers see it as appropriate to increase the level of restraint placed on the economy by raising the federal funds rate over time. That may occur when policymakers are seeking to lower inflation. Then, the monetary policy effects I just described would be reversed, putting downward pressure on aggregate demand and inflation.
Developments in Monetary Policy and Financial ConditionsLet me now discuss how I view the transmission and the stance of monetary policy during the past few quarters. To be clear, I will not discuss the developments in financial markets over the past few weeks.
In the second half of last year, I gained greater confidence that inflation was on a sustainable path toward the FOMC’s 2 percent objective. I also wanted to preserve the strength I saw in the labor market. As a result, I supported the FOMC’s decision to decrease the target range for the federal funds rate by a total of 1 percentage point during the meetings from September through December. However, even before the Committee began to ease policy, some financial conditions started to ease. This easing can be seen in the Financial Conditions Impulse on Growth index.5 That index, developed by Federal Reserve Board staff, showed easier financial conditions from March 2024. And through January, the demand for loans by households and businesses picked up.6 In the early months of the year, financial conditions, however, remained somewhat restrictive, as borrowing costs continued to be elevated and bank credit moderately tight. Through March, interest rates on short-term small business loans had only edged down since their post-pandemic peak.7 Banks stopped tightening lending standards after nine consecutive quarters, but they left standards unchanged in January.8 These financial conditions helped to moderate aggregate demand and aid in moving inflation sustainably toward our 2 percent target.
Details of Monetary Policy TransmissionMonitoring the financial conditions I just described is one important way I evaluate how well the Fed’s monetary policy is being transmitted to the rest of the economy. But it is not the only way. I also consider two other elements that play important roles in the transmission of our monetary policy.
Timing MattersThe first element to evaluate is the timing with which monetary policy affects the macroeconomy. The contemporary economics literature uses a variety of statistical models to estimate the effects of what are called monetary policy “shocks.” Those are movements in the policy rate that are not explained by estimates of how monetary policy systematically responds to incoming economic and financial data and are not anticipated by the public.9 Focusing on the estimated effects of these shocks helps isolate the consequences solely coming from monetary policy actions and communications. One lesson that emerges from this research is that, broadly speaking, it turns out that Milton Friedman’s “long and variable lags” concept still holds.10 A selection of key studies on the topic estimates that it takes about one to two years for the maximum effects of policy to be observed in economic activity and inflation.11 These long lags in monetary policy affecting the economy point to why it is important for policymakers to anticipate economic conditions as best as possible and try to be proactive about understanding the effects of different shocks to the economy, so they can act quickly when needed.
Direction of TravelThe second element to consider when making decisions related to monetary policy is whether its transmission has been equally impactful during different points in time. For example, credible evidence indicates that contractionary monetary shocks may generally decrease economic activity more strongly than expansionary shocks increase it.12 To understand these asymmetric effects, consider the following illustrative metaphor used by Marriner Eccles, who led the Fed back in the 1930s.
Imagine a string with monetary policy at one end and the economy at the other. Employing tight monetary policy when inflation is rising is like pulling on the string to keep the economy in check—it works fairly well. But attempting to stimulate the economy with loose policy during a downturn is like trying to push on the string to move the economy—a more difficult task.
There is evidence of this asymmetry in consumer spending on long-lasting durable goods, such as vehicles and appliances. While an easier monetary policy may lower interest rates and thus stimulate spending on durable goods in the near term, the effects of that policy may be smaller over time, as households may have already purchased durable goods.13 If a family replaces their living room furniture when rates are low, they are unlikely to need a new set of furniture a few years later and thus would not consider how current rates would change their decisions. Thus, during an easing cycle, it is reasonable to suspect that the potency of monetary policy may be somewhat diminished.
Another example of asymmetry can be seen in the transmission of monetary policy to private lending. Board staff research documented strong growth in the period between the Global Financial Crisis and the pandemic, fueled by structural factors, such as the attractiveness of the market to borrowers and investors due to its higher customization.14 One implication of this strong growth during this past policy tightening is that monetary policy transmission to private credit markets appeared more muted relative to financing through public credit markets or bank commercial and industrial lending.
By contrast, other factors specific to the recent period likely decreased the potency of monetary policy during the tightening cycle but may increase it during the easing cycle. When the pandemic struck and social distancing was common, many households severely curtailed spending. In addition, a historic level of government transfers boosted household income. This combination led the personal savings rate to soar.15 Recent work by Board staff suggests that these excess savings accumulated during the pandemic may have reduced the effects of tighter monetary policy over recent years.16 If households are flush with excess cash, they are less likely to respond to elevated interest rates by curtailing demand. Instead, they may have funds to avoid financing or may feel they are able to afford higher monthly payments.
Now, some five years after the pandemic began, these excess savings are exhausted.17 This creates an environment in which monetary policy could be having its average effects on the household sector, although we should consider that the financial health of borrowers with lower credit scores has deteriorated meaningfully in recent years and credit card and auto loan delinquencies are now above pre-pandemic levels. For these households, easing monetary policy may have larger effects.
I am closely monitoring all these possible changes in monetary policy transmission across the economy. Also, I am humbly aware that it is difficult for economists to judge the overall effect of monetary policy actions on the U.S. economy in real time.
ConclusionTo summarize, I see inflation still running above the 2 percent target while the labor market has remained stable. But the economy is facing heightened uncertainty, with upside risks to inflation and downside risks to employment. This month, we learned that the tariff increases are significantly larger than previously expected. As a result, the economic effects of tariffs and the associated uncertainty are also likely to be larger than anticipated. It is important for monetary policymakers to broadly examine all available information, including market-based measures, surveys, and anecdotal reports, to understand what is happening in the economy as early as possible because, as I discussed, it takes time for policy to have an impact. As the direction of the economy changes, it is critical to pay close attention to real-time data and to consider the lags and asymmetries of policy transmission to ensure we respond not only to the actual movements on both sides of the mandate, but also to the risks to the economic outlook.
As I observe the economy and consider the appropriate path of monetary policy, I am closely studying how the decisions the FOMC makes are transmitted through the economy. We have learned much about how those transmission channels work and how they may have changed in recent years, and there is much more to learn. I am confident some of that research will be done right here at the University of Minnesota. Overall, of course, when setting policy, I am guided by how best to achieve the dual-mandate goals of maximum employment and stable prices given to us by Congress because that results in the best outcomes for all Americans.
Thank you again for such a warm welcome back to the Twin Cities.

1. The views expressed here are my own and are not necessarily those of my colleagues on the Federal Reserve Board or the Federal Open Market Committee. Return to text
2. Such broader changes in credit conditions are called the “credit channel” of monetary policy, discussed in Ben S. Bernanke and Mark Gertler (1995), “Inside the Black Box: The Credit Channel of Monetary Policy Transmission,” Journal of Economic Perspectives, vol. 9 (Autumn), pp. 27–48. Return to text
3. For evidence on how U.S. monetary policy affects exchange rates, see Martin Eichenbaum and Charles L. Evans (1995), “Some Empirical Evidence on the Effects of Shocks to Monetary Policy on Exchange Rates,” Quarterly Journal of Economics, vol. 110 (November), pp. 975–1009. Additionally, U.S. monetary policy also affects global financial conditions, as analyzed by Silvia Miranda-Agrippino and Hélène Rey (2020), “U.S. Monetary Policy and the Global Financial Cycle,” Review of Economic Studies, vol. 87 (November), pp. 2754–76. Return to text
4. For evidence that financial conditions are a crucial part of the transmission of monetary policy, see Mark Gertler and Peter Karadi (2015), “Monetary Policy Surprises, Credit Costs, and Economic Activity,”  American Economic Journal: Macroeconomics, vol. 7 (January), pp. 44–76. Return to text
5. See Andrea Ajello, Michele Cavallo, Giovanni Favara, William B. Peterman, John Schindler, and Nitish R. Sinha (2023), “A New Index to Measure U.S. Financial Conditions” FEDS Notes (Washington: Board of Governors of the Federal Reserve System, June 30). Return to text
6. See Board of Governors of the Federal Reserve System (2025), “The January 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices.” Return to text
7. See survey data from the National Federation of Independent Business, available at William C. Dunkelberg and Holly Wade (2025), “Small Business Economic Trends,” March, https://www.nfib.com/wp-content/uploads/2025/04/NFIB-SBET-Report-March-2025.pdf. Return to text
8. See Board of Governors, “The January 2025 Senior Loan Officer Opinion Survey” (note 6). Return to text
9. For a literature review on the different ways of identifying monetary policy shocks, see V.A. Ramey (2016), “Macroeconomic Shocks and Their Propagation,” in John B. Taylor and Harald Uhlig, eds., Handbook of Macroeconomics, vol. 2 (Amsterdam: North-Holland), pp. 71–162. Return to text
10. See Edward Nelson (2020), Milton Friedman and Economic Debate in the United States, 1932–1972, vol. 1 (Chicago: University of Chicago Press), p. 141. Return to text
11. See the following papers: Lawrence Christiano, Martin Eichenbaum, and Charles L. Evans (1999), “Monetary Policy Shocks: What Have We Learned and to What End?” in John B. Taylor and Michael Woodford, eds., Handbook of Macroeconomics, vol. 1 (Amsterdam: North-Holland), pp. 65–148; Christina D. Romer and David H. Romer (2004), “A New Measure of Monetary Shocks: Derivation and Implications,” American Economic Review, vol. 94 (September), pp. 1055–84; Harald Uhlig (2005), “What Are the Effects of Monetary Policy on Output? Results from an Agnostic Identification Procedure,” Journal of Monetary Economics, vol. 52 (March), pp. 381–419; Jean Boivin, Michael T. Kiley, and Frederic S. Mishkin (2010), “How Has the Monetary Transmission Mechanism Evolved over Time?” in Benjamin M. Friedman and Michael Woodford, eds., Handbook of Monetary Economics, vol. 3 (Amsterdam: North-Holland), pp. 369–422; Olivier Coibion (2012), “Are the Effects of Monetary Policy Shocks Big or Small?” American Economic Journal: Macroeconomics, vol. 4 (April), pp. 1–32; Gertler and Karadi, “Monetary Policy Surprises” (see note 4); Pooyan Amir Ahmadi and Harald Uhlig (2015), “Sign Restrictions in Bayesian FAVARs with an Application to Monetary Policy Shocks (PDF),” NBER Working Papers Series 21738 (Cambridge, Mass.: National Bureau of Economic Research, November); Christiane Baumeister and James D. Hamilton (2018), “Inference in Structural Vector Autoregressions When the Identifying Assumptions Are Not Fully Believed: Re-evaluating the Role of Monetary Policy in Economic Fluctuations,” Journal of Monetary Economics, vol. 100 (December), pp. 48–65; Marek Jarociński and Peter Karadi (2020), “Deconstructing Monetary Policy Surprises—The Role of Information Shocks,” American Economic Journal: Macroeconomics, vol. 12 (April), pp. 1–43; Silvia Miranda-Agrippino and Giovanni Ricco (2021), “The Transmission of Monetary Policy Shocks,” American Economic Journal: Macroeconomics, vol. 13 (July), pp. 74–107; and Michael D. Bauer and Eric T. Swanson (2023), “A Reassessment of Monetary Policy Surprises and High-Frequency Identification,” in Martin Eichenbaum, Erik Hurst, and Jonathan A. Parker, eds., NBER Macroeconomics Annual 2022, vol. 37 (May), pp. 87–155. Return to text
12. See, for instance, Silvana Tenreyro and Gregory Thwaites (2016), “Pushing on a String: US Monetary Policy Is Less Powerful in Recessions,” American Economic Journal: Macroeconomics, vol. 8 (October), pp. 43–74; Joshua D. Angrist, Òscar Jordà, and Guido M. Kuersteiner (2018), “Semiparametric Estimates of Monetary Policy Effects: String Theory Revisited,” Journal of Business & Economic Statistics, vol. 36 (July), pp. 371–87; and Regis Barnichon, Christian Matthes, and Tim Sablik (2017), “Are the Effects of Monetary Policy Asymmetric? (PDF)” Federal Reserve Bank of Richmond, Economic Brief, vol. 3 (March), pp. 1–4. Return to text
13. See Alisdair McKay and Johannes F. Wieland (2021), “Lumpy Durable Consumption Demand and the Limited Ammunition of Monetary Policy,” Econometrica, vol. 89 (November), pp. 2717–49. Return to text
14. See Ahmet Degerli and Phillip J. Monin (2024), “Private Credit Growth and Monetary Policy Transmission,” FEDS Notes (Washington: Board of Governors of the Federal Reserve System, August 2). Return to text
15. See, for instance, Aditya Aladangady, David Cho, Laura Feiveson, and Eugenio Pinto (2022), “Excess Savings during the COVID-19 Pandemic,” FEDS Notes (Washington: Board of Governors of the Federal Reserve System, October 21); and Francois de Soyres, Dylan Moore, and Julio L. Ortiz (2023), “Accumulated Savings during the Pandemic: An International Comparison with Historical Perspective,” FEDS Notes (Washington: Board of Governors of the Federal Reserve System, June 23). Return to text
16. See Thiago R.T. Ferreira, Nils Gornemann, and Julio L. Ortiz (forthcoming), “Household Excess Savings and the Transmission of Monetary Policy,” International Journal of Central Banking. Return to text
17. See Hamza Abdelrahman and Luiz Edgard Oliveira (2024), “Pandemic Savings Are Gone: What’s Next for U.S. Consumers?” SF Fed Blog, Federal Reserve Bank of San Francisco, May 3. Return to text

MIL OSI USA News –

April 23, 2025

MIL-OSI: Veritex Holdings, Inc. Reports First Quarter 2025 Operating Results

Source: GlobeNewswire (MIL-OSI)

DALLAS, April 22, 2025 (GLOBE NEWSWIRE) — Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended March 31, 2025.

“We continue to strengthen our balance sheet in support of our clients during a time of change and uncertainty,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “Key operating financial and credit performance metrics continue to improve and we remain focused on producing previously communicated 2025 goals, including a ROAA that exceeds 1%. Our focus also remains on disciplined loan growth, which is an industry wide challenge in the current environment.”

	Quarter to Date
*Financial Highlights*	Q1 2025			Q4 2024			Q1 2024
	(Dollars in thousands, except per share data) (unaudited)
GAAP
Net income	$	29,070		$	24,882		$	24,156
Diluted EPS		0.53			0.45			0.44
Book value per common share		30.08			29.37			28.23
Return on average assets¹		0.94	%		0.78	%		0.79	%
Return on average equity¹		7.27			6.17			6.33
Net interest margin		3.31			3.20			3.24
Efficiency ratio		60.91			67.04			62.45
Non-GAAP²
Operating earnings	$	29,707		$	29,769		$	29,137
Diluted operating EPS		0.54			0.54			0.53
Tangible book value per common share		22.33			21.61			20.33
Pre-tax, pre-provision operating earnings		43,413			40,945			43,656
Pre-tax, pre-provision operating return on average assets¹		1.41	%		1.28	%		1.42	%
Pre-tax, pre-provision operating return on average loans¹		1.89			1.72			1.84
Operating return on average assets¹		0.96			0.93			0.95
Return on average tangible common equity¹		10.49			9.04			9.52
Operating return on average tangible common equity¹		10.70			10.69			11.34
Operating efficiency ratio		60.62			62.98			58.73

¹ Annualized ratio.
² Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“GAAP”) financial measures to their most directly comparable GAAP measures.

Other First Quarter Financial, Credit and Company Highlights

Net interest margin (“NIM”) increased by 11 bps to 3.31%;
Criticized assets decreased approximately $17.7 million during the quarter;
Redeemed $75.0 million in subordinated notes on February 18, 2025, the associated rate of which switched from fixed to floating, SOFR + 347 bps, on November 15, 2024;
Total loan to deposit ratio declined to 88.9% as of March 31, 2025, compared to 89.3% as of December 31, 2024 and 91.7% as of March 31, 2024;
Repurchased 377,346 shares of our common stock, for approximately $9.5 million, during the quarter, which amounts to 555,016 total shares repurchased, for approximately $13.1 million, under the current Stock Buyback Program;
Announced the extension of the Stock Buyback Program through March 31, 2026;
Book value per share increased $0.71 to $30.08 and tangible book value (non-GAAP) per share increased $0.72 to $22.33;
Allowance for credit losses (“ACL”) to total loans held for investment (“LHI”) increased to 1.19%, compared to 1.18% as of December 31, 2024 and 1.15% as of March 31, 2024; and
Declared and increased our quarterly cash dividend to $0.22 per share of outstanding common stock payable on May 22, 2025.

Results of Operations for the Three Months Ended March 31, 2025

Net Interest Income

For the three months ended March 31, 2025, net interest income before provision for credit losses was $95.4 million and NIM was 3.31% compared to $96.1 million and 3.20%, respectively, for the three months ended December 31, 2024. The approximately $700 thousand decrease, or 0.7%, in net interest income before provision for credit losses was primarily due to a $8.5 million decrease in interest income on loans and a $2.6 million decrease in interest income on deposits in financial institutions and fed funds sold partially offset by a $10.0 million decrease in interest expense on certificates and other time deposits during the three months ended March 31, 2025, compared to the three months ended December 31, 2024. NIM increased 11 bps compared to the three months ended December 31, 2024, primarily due to a decrease in funding costs on deposits and the redemption of $75.0 million of subordinated notes during the three months ended March 31, 2025, partially offset by a decrease in loan yields and average balances.

Compared to the three months ended March 31, 2024, net interest income before provision for credit losses for the three months ended March 31, 2025 increased by $2.6 million, or 2.8%. The increase was primarily due to decreases in interest expense including $10.2 million on certificates and other time deposits, $1.6 million on transaction and savings deposits and $1.4 million on advances from the Federal Home Loan Bank (“FHLB”), as well as increases in interest income of $1.2 million on deposits in financial institutions and fed funds sold and $3.4 million on debt securities. The increase was partially offset by a $15.4 million decrease in interest income on loans. NIM increased 7 bps from 3.24% for the three months ended March 31, 2024 to 3.31% for the three months ended March 31, 2025. The increase was primarily due to decreased funding costs on deposits and advances resulting from interest rate cuts for the year over year period, partially offset by the related declines in rates earned on interest-earnings assets, primarily loans and interest-bearing deposits in other banks.

Noninterest Income

Noninterest income for the three months ended March 31, 2025 was $14.3 million, an increase of $4.2 million, or 42.1%, compared to the three months ended December 31, 2024. The change was primarily due to the $4.4 million loss on sales of debt securities recognized in the three months ended December 31, 2024 with no corresponding loss recorded in the three months ended March 31, 2025. In addition, there was a $1.5 million increase in other noninterest income, driven by a $1.2 million increase in loan servicing income and a $492 thousand increase in equity securities income recognized during the three months ended March 31, 2025 compared to the three months ended December 31, 2024. The increase was partially offset by a $2.1 million decrease in government guaranteed loan income, net, as well as lower BOLI income during the period due to $517 thousand in charges on BOLI policies exchanged under a 1035 exchange which is tax-free under the Internal Revenue Code.

Compared to the three months ended March 31, 2024, noninterest income for the three months ended March 31, 2025 increased by $7.6 million, or 114.5%. The increase was primarily due to a $6.3 million loss on sales of debt securities recognized in the three months ended March 31, 2024 with no corresponding loss recorded in the three months ended March 31, 2025. In addition, there was a $715 thousand increase in service charge and fee income and a $687 thousand increase in government guaranteed loan income for the year over year period.

Noninterest Expense

Noninterest expense was $66.8 million for the three months ended March 31, 2025, compared to $71.2 million for the three months ended December 31, 2024, a decrease of $4.4 million, or 6.1%. The decrease was primarily due to an $822 thousand decrease in salaries and employee benefits primarily due to lower severance costs, offset by an increase in payroll taxes, which are historically higher in the first quarter, a $1.7 million decrease in other noninterest expense primarily driven by lower earnings credit rebates, a $864 thousand decrease in marketing expenses, a $633 thousand decrease in professional and regulatory fees and a $338 thousand decrease in data processing and software costs compared to the three months ended December 31, 2024.

Compared to the three months ended March 31, 2024, noninterest expense for the three months ended March 31, 2025 increased by $4.7 million, or 7.6%. The increase was primarily due to a $3.3 million increase in salaries and employee benefits primarily due a $4.1 million increase in salaries expense and incentives accruals, offset by $1.4 million in higher deferred loan origination costs, which reduce salaries and employee benefit expenses. In addition, there was a $1.5 million increase in other noninterest expense, driven primarily by higher OREO expenses, a $547 thousand increase in data processing and software expense and a $486 thousand increase in marketing expenses. The increase was partially offset by a $1.1 million decrease in professional and regulatory fees compared to the three months ended March 31, 2024.

Income Tax

Income tax expense for the three months ended March 31, 2025 totaled $8.5 million, an increase of $304 thousand, or 3.7%, compared to the three months ended December 31, 2024. The Company’s effective tax rate was approximately 22.7% for the three months ended March 31, 2025 and was due to the recognition of an excess tax expense realized on share-based payment awards.

Financial Condition

Total LHI was $8.83 billion at March 31, 2025, a decrease of $70.5 million compared to December 31, 2024.

Total deposits were $10.67 billion at March 31, 2025, a decrease of $87.5 million, or 3.3% linked quarter annualized. The decrease was primarily the result of decreases of $279.6 million in certificates and other time deposits and $54.4 million in correspondent money market accounts, partially offset by increases of $127.2 million in noninterest bearing deposits and $119.3 million in interest-bearing transaction and savings deposits.

Credit Quality

Nonperforming assets (“NPAs”) totaled $96.9 million, or 0.77% of total assets, of which $72.6 million represents LHI and $24.3 million represents OREO at March 31, 2025, compared to $79.2 million, or 0.62% of total assets, at December 31, 2024. The Company had net charge-offs of $4.0 million for the three months ended March 31, 2025. Annualized net charge-offs to average loans outstanding were 17 bps for the three months ended March 31, 2025, compared to 32 bps and 22 bps for the three months ended December 31, 2024 and March 31, 2024, respectively.

ACL as a percentage of LHI was 1.19%, 1.18% and 1.15% at March 31, 2025, December 31, 2024 and March 31, 2024, respectively. The Company recorded a provision for credit losses on loans of $4.0 million, $2.3 million and $7.5 million for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. The recorded provision for credit losses for the three months ended March 31, 2025, compared to the three months ended December 31, 2024, was primarily attributable to an increase in general reserves as a result of changes in economic factors which now represents 95% of the total ACL. The balance for unfunded commitments increased to $7.4 million as of March 31, 2025, compared to $6.1 million at December 31, 2024 and we recorded a $1.3 million provision for unfunded commitments for the three months ended March 31, 2025, compared to a $401 thousand benefit for unfunded commitments for the three months ended December 31, 2024 and a $1.5 million benefit for unfunded commitments for the three months ended March 31, 2024.

Dividend Information

After the close of the market on Tuesday, April 22, 2025, Veritex’s Board of Directors declared a quarterly cash dividend of $0.22 per share on its outstanding shares of common stock. The dividend will be paid on or after May 22, 2025 to stockholders of record as of the close of business on May 8, 2025.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share of the Company; operating earnings; tangible common equity to tangible assets; return on average tangible common equity; pre-tax, pre-provision operating earnings; pre-tax, pre-provision operating return on average assets; pre-tax, pre-provision operating return on average loans; diluted operating earnings per share; operating return on average assets; operating return on average tangible common equity; and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will host an investor conference call and webcast to review the results on Wednesday, April 23, 2025, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/7qpcarsr/ and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference: https://register-conf.media-server.com/register/BIcb9226ec9df94b1bbbc063029950af5d. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex’s website.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.

Forward-Looking Statements

This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; turmoil in the banking industry, responsive measures to mitigate and manage such turmoil and related supervisory and regulatory actions and costs; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2024, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)

	For the Quarter Ended
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS	$	0.53		$	0.46		$	0.57		$	0.50		$	0.44
Diluted EPS		0.53			0.45			0.56			0.50			0.44
Book value per common share		30.08			29.37			29.53			28.49			28.23
Tangible book value per common share¹		22.33			21.61			21.72			20.62			20.33
Dividends paid per common share outstanding²		0.22			0.20			0.20			0.20			0.20

Common Stock Data:
Shares outstanding at period end		54,297			54,517			54,446			54,350			54,496
Weighted average basic shares outstanding for the period		54,486			54,489			54,409			54,457			54,444
Weighted average diluted shares outstanding for the period		55,123			55,237			54,932			54,823			54,842

Summary of Credit Ratios:
ACL to total LHI		1.19	%		1.18	%		1.21	%		1.16	%		1.15	%
NPAs to total assets		0.77			0.62			0.52			0.65			0.82
NPAs to total loans and OREO		1.03			0.83			0.70			0.85			1.06
Net charge-offs to average loans outstanding³		0.17			0.32			0.01			0.28			0.22

Summary Performance Ratios:
Return on average assets³		0.94	%		0.78	%		0.96	%		0.87	%		0.79	%
Return on average equity³		7.27			6.17			7.79			7.10			6.33
Return on average tangible common equity^{1, 3}		10.49			9.04			11.33			10.54			9.52
Efficiency ratio		60.91			67.04			61.94			59.11			62.45
Net interest margin		3.31			3.20			3.30			3.29			3.24

Selected Performance Metrics – Operating:
Diluted operating EPS¹	$	0.54		$	0.54		$	0.59		$	0.52		$	0.53
Pre-tax, pre-provision operating return on average assets^{1, 3}		1.41	%		1.28	%		1.38	%		1.42	%		1.42	%
Pre-tax, pre-provision operating return on average loans^{1, 3}		1.89			1.72			1.83			1.83			1.84
Operating return on average assets^1,3		0.96			0.93			1.00			0.91			0.95
Operating return on average tangible common equity^1,3		10.70			10.69			11.74			10.94			11.34
Operating efficiency ratio¹		60.62			62.98			60.63			58.41			58.73

Veritex Holdings, Inc. Capital Ratios:
Average stockholders’ equity to average total assets		12.96	%		12.58	%		12.31	%		12.26	%		12.43	%
Tangible common equity to tangible assets¹		9.95			9.54			9.37			9.14			9.02
Tier 1 capital to average assets (leverage)		10.55			10.32			10.06			10.06			10.12
Common equity tier 1 capital		11.04			11.09			10.86			10.49			10.37
Tier 1 capital to risk-weighted assets		11.31			11.36			11.13			10.75			10.63
Total capital to risk-weighted assets		13.46			13.96			13.91			13.45			13.33
Risk weighted assets	$	11,318,220		$	11,247,813		$	11,290,800		$	11,450,997		$	11,407,446

¹ Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
² Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
³ Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (In thousands)

	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(unaudited)						(unaudited)			(unaudited)			(unaudited)
ASSETS
Cash and due from banks	$	81,088		$	52,486		$	54,165		$	53,462		$	41,884
Interest bearing deposits in other banks		768,702			802,714			1,046,625			598,375			698,885
Cash and cash equivalents		849,790			855,200			1,100,790			651,837			740,769
Debt securities, net		1,463,157			1,478,538			1,423,610			1,349,354			1,344,930
Other investments		69,452			69,638			71,257			75,885			76,788
Loans held for sale (“LHFS”)		69,236			89,309			48,496			57,046			64,762
LHI, mortgage warehouse (“MW”)		571,775			605,411			630,650			568,047			449,531
LHI, excluding MW		8,828,672			8,899,133			9,028,575			9,209,094			9,249,551
Total loans		9,469,683			9,593,853			9,707,721			9,834,187			9,763,844
ACL		(111,773	)		(111,745	)		(117,162	)		(113,431	)		(112,032	)
Bank-owned life insurance		85,424			85,324			84,776			84,233			85,359
Bank premises, furniture and equipment, net		112,801			113,480			114,202			105,222			105,299
Other real estate owned (“OREO”)		24,268			24,737			9,034			24,256			18,445
Intangible assets, net of accumulated amortization		27,974			28,664			32,825			35,817			38,679
Goodwill		404,452			404,452			404,452			404,452			404,452
Other assets		210,863			226,200			211,471			232,518			241,863
Total assets	$	12,606,091		$	12,768,341		$	13,042,976		$	12,684,330		$	12,708,396
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits	$	2,318,645		$	2,191,457		$	2,643,894		$	2,416,727		$	2,349,211
Interest-bearing transaction and savings deposits		5,180,495			5,061,157			4,204,708			3,979,454			4,220,114
Certificates and other time deposits		2,679,221			2,958,861			3,625,920			3,744,596			3,486,805
Correspondent money market deposits		486,762			541,117			561,489			584,067			597,690
Total deposits		10,665,123			10,752,592			11,036,011			10,724,844			10,653,820
Accounts payable and other liabilities		151,579			183,944			168,415			180,585			186,027
Advances from FHLB		—			—			—			—			100,000
Subordinated debentures and subordinated notes		155,909			230,736			230,536			230,285			230,034
Total liabilities		10,972,611			11,167,272			11,434,962			11,135,714			11,169,881
Stockholders’ equity:
Common stock		615			613			613			612			611
Additional paid-in capital		1,329,626			1,328,748			1,324,929			1,321,995			1,319,144
Retained earnings		526,044			507,903			493,921			473,801			457,499
Accumulated other comprehensive loss		(42,170	)		(65,076	)		(40,330	)		(76,713	)		(71,157	)
Treasury stock		(180,635	)		(171,119	)		(171,119	)		(171,079	)		(167,582	)
Total stockholders’ equity		1,633,480			1,601,069			1,608,014			1,548,616			1,538,515
Total liabilities and stockholders’ equity	$	12,606,091		$	12,768,341		$	13,042,976		$	12,684,330		$	12,708,396

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (In thousands, except per share data)

	For the Quarter Ended
	Mar 31, 2025		Dec 31, 2024			Sep 30, 2024		Jun 30, 2024		Mar 31, 2024
	(unaudited)		(unaudited)			(unaudited)		(unaudited)		(unaudited)
Interest income:
Loans, including fees	$	146,505	$	154,998		$	167,261	$	166,979	$	161,942
Debt securities		17,106		16,893			15,830		15,408		13,695
Deposits in financial institutions and Fed Funds sold		9,244		11,888			12,571		7,722		8,050
Equity securities and other investments		870		940			1,001		1,138		900
Total interest income		173,725		184,719			196,663		191,247		184,587
Interest expense:
Transaction and savings deposits		45,165		44,841			47,208		45,619		46,784
Certificates and other time deposits		30,268		40,279			46,230		44,811		40,492
Advances from FHLB		27		130			47		1,468		1,391
Subordinated debentures and subordinated notes		2,824		3,328			3,116		3,113		3,114
Total interest expense		78,284		88,578			96,601		95,011		91,781
Net interest income		95,441		96,141			100,062		96,236		92,806
Provision for credit losses		4,000		2,300			4,000		8,250		7,500
Provision (benefit) for unfunded commitments		1,300		(401	)		—		—		(1,541	)
Net interest income after provisions		90,141		94,242			96,062		87,986		86,847
Noninterest income:
Service charges and fees on deposit accounts		5,611		5,612			5,442		4,974		4,896
Loan fees		2,495		2,265			3,278		2,207		2,510
Loss on sales of debt securities		—		(4,397	)		—		—		(6,304	)
Government guaranteed loan income, net		3,301		5,368			780		1,320		2,614
Customer swap income		700		509			271		326		449
Other income		2,182		699			3,335		1,751		2,497
Total noninterest income		14,289		10,056			13,106		10,578		6,662
Noninterest expense:
Salaries and employee benefits		36,624		37,446			37,370		32,790		33,365
Occupancy and equipment		4,650		4,633			4,789		4,585		4,677
Professional and regulatory fees		4,931		5,564			4,903		5,617		6,053
Data processing and software expense		5,403		5,741			5,268		5,097		4,856
Marketing		2,032		2,896			2,781		1,976		1,546
Amortization of intangibles		2,438		2,437			2,438		2,438		2,438
Telephone and communications		330		323			335		365		261
Other		10,426		12,154			12,216		10,273		8,920
Total noninterest expense		66,834		71,194			70,100		63,141		62,116
Income before income tax expense		37,596		33,104			39,068		35,423		31,393
Income tax expense		8,526		8,222			8,067		8,221		7,237
Net income	$	29,070	$	24,882		$	31,001	$	27,202	$	24,156

Basic EPS	$	0.53	$	0.46		$	0.57	$	0.50	$	0.44
Diluted EPS	$	0.53	$	0.45		$	0.56	$	0.50	$	0.44
Weighted average basic shares outstanding		54,486		54,489			54,409		54,457		54,444
Weighted average diluted shares outstanding		55,123		55,237			54,932		54,823		54,842

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)

	For the Quarter Ended
	March 31, 2025							December 31, 2024							March 31, 2024
	Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans¹	$	8,886,905		$	140,329	6.40	%	$	8,957,193		$	147,782	6.56	%	$	9,283,815		$	157,585		6.83	%
LHI, MW		426,724			6,176	5.87			492,372			7,216	5.83			279,557			4,357		6.27
Debt securities		1,467,220			17,106	4.73			1,458,057			16,893	4.61			1,294,994			13,695		4.25
Interest-bearing deposits in other banks		827,751			9,244	4.53			971,451			11,888	4.87			584,593			8,050		5.54
Equity securities and other investments		70,696			870	4.99			72,223			940	5.18			76,269			900		4.75
Total interest-earning assets		11,679,296			173,725	6.03			11,951,296			184,719	6.15			11,519,228			184,587		6.44
ACL		(111,563	)						(117,293	)						(112,229	)
Noninterest-earning assets		938,401							916,969							929,043
Total assets	$	12,506,134						$	12,750,972						$	12,336,042

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	5,449,091		$	45,165	3.36	%	$	5,001,159		$	44,841	3.57	%	$	4,639,445		$	46,784		4.06	%
Certificates and other time deposits		2,726,309			30,268	4.50			3,319,628			40,279	4.83			3,283,735			40,492		4.96
Advances from FHLB and Other		2,333			27	4.69			10,598			130	4.88			100,989			1,391		5.54
Subordinated debentures and subordinated notes		191,638			2,824	5.98			230,633			3,328	5.74			229,881			3,114		5.45
Total interest-bearing liabilities		8,369,371			78,284	3.79			8,562,018			88,578	4.12			8,254,050			91,781		4.47

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,345,586							2,400,809							2,355,315
Other liabilities		170,389							183,810							192,809
Total liabilities		10,885,346							11,146,637							10,802,174
Stockholders’ equity		1,620,788							1,604,335							1,533,868
Total liabilities and stockholders’ equity	$	12,506,134						$	12,750,972						$	12,336,042

Net interest rate spread²						2.24	%						2.03	%							1.97	%
Net interest income and margin³				$	95,441	3.31	%				$	96,141	3.20	%				$	92,806		3.24	%

¹ Includes average outstanding balances of LHFS of $66.3 million, $46.4 million and $53.9 million for the quarters ended March 31, 2025, December 31, 2024, and March 31, 2024, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited) Yield Trend

	For the Quarter Ended
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
Average yield on interest-earning assets:
Loans¹		6.40	%		6.56	%		6.89	%		6.90	%		6.83	%
LHI, MW		5.87			5.83			6.75			6.36			6.27
Total Loans		6.38			6.53			6.89			6.88			6.81
Debt securities		4.73			4.61			4.55			4.58			4.25
Interest-bearing deposits in other banks		4.53			4.87			5.41			5.54			5.54
Equity securities and other investments		4.99			5.18			5.25			5.80			4.75
Total interest-earning assets		6.03	%		6.15	%		6.49	%		6.54	%		6.44	%

Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits		3.36	%		3.57	%		4.00	%		4.01	%		4.06	%
Certificates and other time deposits		4.50			4.83			5.00			5.02			4.96
Advances from FHLB and other		4.69			4.88			5.73			5.54			5.54
Subordinated debentures and subordinated notes		5.98			5.74			5.38			5.44			5.45
Total interest-bearing liabilities		3.79	%		4.12	%		4.46	%		4.50	%		4.47	%

Net interest rate spread²		2.24	%		2.03	%		2.03	%		2.04	%		1.97	%
Net interest margin³		3.31	%		3.20	%		3.30	%		3.29	%		3.24	%

¹Includes average outstanding balances of LHFS of $66.3 million, $46.4 million, $54.3 million, $58.5 million and $53.9 million for the three months ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024, and March 31, 2024, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

	For the Quarter Ended
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
Average cost of interest-bearing deposits		3.74	%		4.07	%		4.44	%		4.46	%		4.43	%
Average costs of total deposits, including noninterest-bearing		2.91			3.16			3.42			3.46			3.42

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)

LHI and Deposit Portfolio Composition

	Mar 31, 2025					Dec 31, 2024					Sep 30, 2024					Jun 30, 2024					Mar 31, 2024
	(Dollars in thousands)
LHI¹
Commercial and Industrial (“C&I”)	$	2,717,037		30.7	%	$	2,693,538		30.2	%	$	2,728,544		30.2	%	$	2,798,260		30.4	%	$	2,785,987		30.1	%
Real Estate:
Owner occupied commercial (“OOCRE”)		795,808		9.0			780,003		8.8			807,223		8.9			806,285		8.7			788,376		8.5
Non-owner occupied commercial (“NOOCRE”)		2,266,526		25.6			2,382,499		26.7			2,338,094		25.9			2,369,848		25.7			2,352,993		25.5
Construction and land		1,214,260		13.7			1,303,711		14.7			1,436,540		15.8			1,536,580		16.7			1,568,257		16.9
Farmland		31,339		0.4			31,690		0.4			32,254		0.4			30,512		0.3			30,979		0.3
1-4 family residential		1,021,293		11.6			957,341		10.7			944,755		10.5			917,402		10.0			969,401		10.5
Multi-family residential		782,412		8.9			750,218		8.4			738,090		8.2			748,740		8.1			751,607		8.1
Consumer		8,597		0.1			9,115		0.1			11,292		0.1			9,245		0.1			8,882		0.1
Total LHI¹	$	8,837,272		100	%	$	8,908,115		100	%	$	9,036,792		100	%	$	9,216,872		100	%	$	9,256,482		100	%

MW		571,775					605,411					630,650					568,047					449,531

Total LHI¹	$	9,409,047				$	9,513,526				$	9,667,442				$	9,784,919				$	9,706,013

Total LHFS		69,236					89,309					48,496					57,046					64,762

Total loans	$	9,478,283				$	9,602,835				$	9,715,938				$	9,841,965				$	9,770,775

Deposits
Noninterest-bearing	$	2,318,645		21.7	%	$	2,191,457		20.4	%	$	2,643,894		24.0	%	$	2,416,727		22.5	%	$	2,349,211		22.1	%
Interest-bearing transaction		863,462		8.1			839,005		7.8			421,059		3.8			523,272		4.9			724,171		6.8
Money market		3,730,446		35.0			3,772,964		35.1			3,462,709		31.4			3,268,286		30.5			3,326,742		31.2
Savings		586,587		5.5			449,188		4.2			320,940		2.9			187,896		1.8			169,201		1.6
Certificates and other time deposits		2,679,221		25.1			2,958,861		27.5			3,625,920		32.8			3,744,596		34.9			3,486,805		32.7
Correspondent money market accounts		486,762		4.6			541,117		5.0			561,489		5.1			584,067		5.4			597,690		5.6
Total deposits	$	10,665,123		100	%	$	10,752,592		100	%	$	11,036,011		100	%	$	10,724,844		100	%	$	10,653,820		100	%

Total loans to deposits ratio		88.9	%				89.3	%				88.0	%				91.8	%				91.7	%

Total loans to deposit ratio, excluding MW loans and LHFS		82.9	%				82.8	%				81.9	%				85.9	%				86.9	%

¹ Total LHI does not include deferred fees of $8.6 million, $9.0 million, $8.2 million, $7.8 million and $6.9 million at March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024 and March 31, 2024, respectively.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited) Asset Quality

	For the Quarter Ended
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(Dollars in thousands)
NPAs:
Nonaccrual loans	$	69,188		$	52,521		$	55,335		$	58,537		$	75,721
Nonaccrual PCD loans¹		196			—			70			73			9,419
Accruing loans 90 or more days past due²		3,249			1,914			2,860			143			220
Total nonperforming loans held for investment (“NPLs”)		72,633			54,435			58,265			58,753			85,360
Other real estate owned (“OREO”)		24,268			24,737			9,034			24,256			18,445
Total NPAs	$	96,901		$	79,172		$	67,299		$	83,009		$	103,805

Charge-offs:
1-4 family residential	$	—		$	—		$	—		$	(31	)	$	—
Multifamily		—			—			—			(198	)		—
OOCRE		—			—			—			—			(120	)
NOOCRE		(3,090	)		(5,113	)		—			(1,969	)		(4,293	)
C&I		(918	)		(4,586	)		(2,259	)		(5,601	)		(946	)
Consumer		(212	)		(420	)		(54	)		(30	)		(71	)
Total charge-offs	$	(4,220	)	$	(10,119	)	$	(2,313	)	$	(7,829	)	$	(5,430	)

Recoveries:
1-4 family residential	$	21		$	2		$	3		$	—		$	1
OOCRE		—			—			—			120			—
NOOCRE		—			1,323			—			—			—
C&I		32			1,047			1,962			361			96
MW		—			—			46			—			—
Consumer		195			30			33			497			49
Total recoveries	$	248		$	2,402		$	2,044		$	978		$	146

Net charge-offs	$	(3,972	)	$	(7,717	)	$	(269	)	$	(6,851	)	$	(5,284	)

Provision for credit losses	$	4,000		$	2,300		$	4,000		$	8,250		$	7,500

ACL	$	111,773		$	111,745		$	117,162		$	113,431		$	112,032

Asset Quality Ratios:
NPAs to total assets		0.77	%		0.62	%		0.52	%		0.65	%		0.82	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.77			0.62			0.52			0.65			0.74
NPAs to total LHI and OREO		1.03			0.83			0.70			0.85			1.06
NPLs to total LHI		0.77			0.57			0.60			0.60			0.88
NPLs, excluding nonaccrual PCD loans, to total LHI		0.77			0.57			0.60			0.60			0.78
ACL to total LHI		1.19			1.18			1.21			1.16			1.15
ACL to total loans, excluding MW and LHFS		1.27			1.25			1.30			1.23			1.21
Net charge-offs to average loans outstanding³		0.17			0.32			0.01			0.28			0.22

¹ Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments – Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
² Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
³ Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP, in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

	As of
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders’ equity	$	1,633,480		$	1,601,069		$	1,608,014		$	1,548,616		$	1,538,515
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(16,306	)		(18,744	)		(21,182	)		(23,619	)		(26,057	)
Tangible common equity	$	1,212,722		$	1,177,873		$	1,182,380		$	1,120,545		$	1,108,006
Common shares outstanding		54,297			54,517			54,446			54,350			54,496

Book value per common share	$	30.08		$	29.37		$	29.53		$	28.49		$	28.23
Tangible book value per common share	$	22.33		$	21.61		$	21.72		$	20.62		$	20.33

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

	As of
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(Dollars in thousands)
Tangible Common Equity
Total stockholders’ equity	$	1,633,480		$	1,601,069		$	1,608,014		$	1,548,616		$	1,538,515
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(16,306	)		(18,744	)		(21,182	)		(23,619	)		(26,057	)
Tangible common equity	$	1,212,722		$	1,177,873		$	1,182,380		$	1,120,545		$	1,108,006
Tangible Assets
Total assets	$	12,606,091		$	12,768,341		$	13,042,976		$	12,684,330		$	12,708,396
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(16,306	)		(18,744	)		(21,182	)		(23,619	)		(26,057	)
Tangible Assets	$	12,185,333		$	12,345,145		$	12,617,342		$	12,256,259		$	12,277,887
Tangible Common Equity to Tangible Assets		9.95	%		9.54	%		9.37	%		9.14	%		9.02	%

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

	For the Quarter Ended
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income	$	29,070		$	24,882		$	31,001		$	27,202		$	24,156
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,437			2,438			2,438			2,438
Less: Tax benefit at the statutory rate		512			512			512			512			512
Net income available for common stockholders adjusted for amortization of core deposit intangibles	$	30,996		$	26,807		$	32,927		$	29,128		$	26,082

Average Tangible Common Equity
Total average stockholders’ equity	$	1,620,788		$	1,604,335		$	1,583,401		$	1,541,609		$	1,533,868
Adjustments:
Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Average core deposit intangibles		(17,904	)		(20,342	)		(22,789	)		(25,218	)		(27,656	)
Average tangible common equity	$	1,198,432		$	1,179,541		$	1,156,160		$	1,111,939		$	1,101,760
Return on Average Tangible Common Equity (Annualized)		10.49	%		9.04	%		11.33	%		10.54	%		9.52	%

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus BOLI 1035 exchange charges, plus severance payments, plus loss on sales of debt securities available for sale (“AFS”), net, plus FDIC special assessment, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.

We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:

	For the Quarter Ended
	Mar 31, 2025		Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024
	(Dollars in thousands, except per share data)
Operating Earnings
Net income	$	29,070	$	24,882	$	31,001	$	27,202	$	24,156
Plus: BOLI 1035 exchange charges¹		517		—		—		—		—
Plus: Severance payments²		—		1,545		1,487		613		—
Plus: Loss on sales of AFS securities, net		—		4,397		—		—		6,304
Plus: FDIC special assessment		—		—		—		134		—
Operating pre-tax income		29,587		30,824		32,488		27,949		30,460
Less: Tax impact of adjustments		109		1,248		307		166		1,323
Plus: Nonrecurring tax adjustments		229		193		—		527		—
Operating earnings	$	29,707	$	29,769	$	32,181	$	28,310	$	29,137

Weighted average diluted shares outstanding		55,123		55,237		54,932		54,823		54,842
Diluted EPS	$	0.53	$	0.45	$	0.56	$	0.50	$	0.44
Diluted operating EPS	$	0.54	$	0.54	$	0.59	$	0.52	$	0.53

¹Represents non-recurring charges for the completion of a 1035 exchange of BOLI contracts.
²Severance payments relate to certain restructurings made during the periods disclosed.

	For the Quarter Ended
	Mar 31, 2025			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024
	(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income	$	29,070		$	24,882		$	31,001		$	27,202		$	24,156
Plus: Provision for income taxes		8,526			8,222			8,067			8,221			7,237
Plus: Provision for credit losses and unfunded commitments		5,300			1,899			4,000			8,250			5,959
Plus: Severance payments		—			1,545			1,487			613			—
Plus: Loss on sale of AFS securities, net		—			4,397			—			—			6,304
Plus: BOLI 1035 exchange charges		517			—			—			—			—
Plus: FDIC special assessment		—			—			—			134			—
Pre-tax, pre-provision operating earnings	$	43,413		$	40,945		$	44,555		$	44,420		$	43,656

Average total assets	$	12,506,134		$	12,750,972		$	12,861,918		$	12,578,706		$	12,336,042
Pre-tax, pre-provision operating return on average assets¹		1.41	%		1.28	%		1.38	%		1.42	%		1.42	%

Average loans	$	9,313,629		$	9,449,565		$	9,661,774		$	9,765,428		$	9,563,372
Pre-tax, pre-provision operating return on average loans¹		1.89	%		1.72	%		1.83	%		1.83	%		1.84	%

Average total assets	$	12,506,134		$	12,750,972		$	12,861,918		$	12,578,706		$	12,336,042
Return on average assets¹		0.94	%		0.78	%		0.96	%		0.87	%		0.79	%
Operating return on average assets¹		0.96			0.93			1.00			0.91			0.95

Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings	$	29,707		$	29,769		$	32,181		$	28,310		$	29,137
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,437			2,438			2,438			2,438
Less: Tax benefit at the statutory rate		512			512			512			512			512
Operating earnings adjusted for amortization of core deposit intangibles	$	31,633		$	31,694		$	34,107		$	30,236		$	31,063

Average Tangible Common Equity
Total average stockholders’ equity	$	1,620,788		$	1,604,335		$	1,583,401		$	1,541,609		$	1,533,868
Adjustments:
Less: Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Less: Average core deposit intangibles		(17,904	)		(20,342	)		(22,789	)		(25,218	)		(27,656	)
Average tangible common equity	$	1,198,432		$	1,179,541		$	1,156,160		$	1,111,939		$	1,101,760
Operating return on average tangible common equity¹		10.70	%		10.69	%		11.74	%		10.94	%		11.34	%

Efficiency ratio		60.91	%		67.04	%		61.94	%		59.11	%		62.45	%
Operating efficiency ratio
Net interest income	$	95,441		$	96,141		$	100,062		$	96,236		$	92,806
Noninterest income		14,289			10,056			13,106			10,578			6,662
Plus: BOLI 1035 exchange charges		517			—			—			—			—
Plus: Loss on sale of AFS securities, net		—			4,397			—			—			6,304
Operating noninterest income		14,806			14,453			13,106			10,578			12,966
Noninterest expense		66,834			71,194			70,100			63,141			62,116
Less: FDIC special assessment		—			—			—			134			—
Less: Severance payments		—			1,545			1,487			613			—
Operating noninterest expense	$	66,834		$	69,649		$	68,613		$	62,394		$	62,116
Operating efficiency ratio		60.62	%		62.98	%		60.63	%		58.41	%		58.73	%

¹ Annualized ratio for quarterly metrics.

The MIL Network –

April 23, 2025

MIL-OSI: First Bank Announces First Quarter 2025 Net Income of $9.4 Million

Source: GlobeNewswire (MIL-OSI)

HAMILTON, N.J., April 22, 2025 (GLOBE NEWSWIRE) — First Bank (Nasdaq Global Market: FRBA) (“the Bank”) today announced results for the first quarter of 2025. Net income for the first quarter of 2025 was $9.4 million, or $0.37 per diluted share, compared to $12.5 million, or $0.50 per diluted share, for the first quarter of 2024. Return on average assets, return on average equity and return on average tangible equityⁱ for the first quarter of 2025 were 1.00%, 9.20% and 10.54%, respectively, compared to 1.41%, 13.36% and 15.64%, respectively, for the first quarter of 2024.

First Quarter 2025 Performance Highlights:

Total loans of $3.24 billion at March 31, 2025 grew $91.8 million, or 11.8%, annualized, from the linked quarter ended December 31, 2024.
Total deposits were $3.12 billion at March 31, 2025, increasing $63.9 million, or 8.5% annualized from the linked quarter ended December 31, 2024.
Net interest margin measured 3.65% for the first quarter of 2025, increasing 11 basis points from 3.54% for the linked quarter ended December 31, 2024.
Tangible book value per shareⁱⁱ grew to $14.47 at March 31, 2025, increasing 8.0%, annualized, from $14.19 at December 31, 2024.
Strong asset quality continued, with nonperforming assets decreasing to 0.42% of total assets at March 31, 2025, compared to 0.46% at December 31, 2024 and 0.64% at March 31, 2024.

“We are pleased to report high-quality loan and deposit growth in the first quarter of 2025,” Patrick L. Ryan, President and CEO of First Bank, reflecting on the Bank’s performance. “Our team produced excellent Commercial and Industrial (“C&I”) loan growth during the quarter with an improved net interest margin and sustained asset quality. We are especially pleased to have achieved this with an efficiency ratio that remained below 60% for the 23^rd consecutive quarter, and with continued growth in our primary areas of focus. Our recent and ongoing investments in technology and new C&I lending and deposit-focused business units are building scale and bearing fruit, as reflected in our 10.8% year-over-year increase in tangible book value per share.”

Mr. Ryan continued, “Our success demonstrates a deep commitment to continuing our evolution from a traditional community bank into a full-service, middle market commercial bank. We are executing with a clear vision for our future success, growing our balance sheet and earnings power through strategic initiatives focused on diversification and profitability. Our goal is to achieve top-quartile performance among our peers in any economic environment. We expect our strong underwriting and diversification strategies will support quality growth in 2025 and beyond. As our new business units continue to scale up, we expect to see even better efficiency and profitability moving forward. Additionally, we are pleased to continue driving returns for shareholders through successful share buybacks and meaningful dividends.”

Income Statement

In the first quarter of 2025, the Bank’s net interest income increased to $32.1 million, growing $1.8 million, or 5.9%, compared to the same period in 2024. The increase was primarily driven by an increase of $2.2 million in interest income which outpaced the $450,000 increase in interest expense in the first quarter of 2025 compared to the same quarter in 2024. Net interest income increased $498,000, or 1.6%, over the linked fourth quarter of 2024. This increase was primarily driven by a decrease of $1.6 million in interest expense on deposits, resulting from lower average rates in the first quarter, partially offset by a $1.1 million decrease in interest income from interest bearing deposits with banks, due to lower average balances and yields.

The Bank’s tax equivalent net interest margin measured 3.65% for the first quarter of 2025, increasing by one basis point from 3.64% for the prior year quarter, and increasing by 11 basis points from 3.54% for the fourth quarter of 2024. The relatively flat margin from the prior year quarter was primarily driven by similar decreases in the average rate on interest earning assets and interest bearing liabilities. The Bank’s net interest margin increased compared to the linked fourth quarter primarily due to declines in average rates on deposits and borrowings outpacing the slight reduction in average rates on earning assets. The Bank’s tax equivalent net interest margin includes the impact of amortization and accretion of premiums and discounts from fair value measurements of assets acquired and liabilities assumed in acquisitions. The net impact of amortization of premiums and accretion of discounts from fair value measurements of assets acquired and liabilities assumed in acquisitions was a $2.8 million increase in net interest income during the first quarter of 2025, compared to $3.1 million for the quarter ended December 31, 2024 and $4.2 million for the first quarter of 2024.

The Bank recorded a credit loss expense totaling $1.5 million during the first quarter of 2025, compared to a credit loss expense totaling $234,000 for the fourth quarter of 2024 and a $698,000 credit loss benefit for the first quarter of 2024. The increased credit loss expense for the first quarter of 2025 is primarily due to the Bank’s loan growth during the quarter. The Bank’s credit loss benefit for the first quarter of 2024 reflected the Bank’s strong and stable asset quality and lack of loan growth during the quarter.

In the first quarter of 2025, the Bank recorded non-interest income totaling $2.0 million, compared to non-interest income measuring $2.0 million during the same period in 2024 and $2.2 million in non-interest income during the fourth quarter of 2024. Non-interest income declined from the linked quarter primarily due to lower loan fee income.

Non-interest expense for the first quarter of 2025 was $20.4 million, an increase of $2.6 million, or 14.5%, compared to $17.8 million for the prior year quarter. Higher non-interest expense was largely due to increases of $1.1 million in salaries and employee benefits primarily due to a larger employee base, $832,000 in other real estate owned (“OREO”) expense due to an $815,000 impairment of an OREO asset recorded during the quarter, and $438,000 in occupancy and equipment primarily due to new branch locations added at the end of 2024.

On a linked quarter basis, non-interest expense increased $1.3 million from $19.1 million for the fourth quarter of 2024. The linked quarter increase primarily reflects increases of $781,000 in OREO expense due to the $815,000 impairment of an OREO asset recorded during the quarter, $606,000 in salaries and employee benefits costs due to year-end salary increases and higher payroll taxes due to bonus payments made in the first quarter of 2025, $202,000 in occupancy and equipment costs due to the new branch locations added at the end of 2024 and higher maintenance and repair costs. These increases were partially offset by a decrease of $425,000 in other professional fees compared to the linked quarter primarily due to lower consulting services and personnel placement fees.

Income tax expense for the three months ended March 31, 2025 was $2.8 million with an effective tax rate of 22.7%, compared to $2.7 million with an effective tax rate of 17.5% for the first quarter of 2024. The effective tax rate for the first quarter of 2025 included the impact of certain discrete items related to stock compensation activity as well as the impact of additional tax credit investments made by the Bank during the quarter. The effective tax rate for the first quarter of 2024 was lower due to certain one-time adjustments primarily related to the finalization of certain tax items related to our acquisition of Malvern Bancorp, Inc. and Malvern Bank, National Association (“Malvern”). Income tax expense for the three months ended December 31, 2024 was $3.9 million with an effective tax rate of 27.2%, which included additional tax related to the Bank’s bank-owned life insurance (“BOLI”) restructuring completed in the second half of 2024. We anticipate our future effective tax rate will be in the range of 23% to 24%.

Balance Sheet

Total assets increased $100.4 million, or 2.7%, from December 31, 2024 to March 31, 2025. Total loans as of March 31, 2025 increased $91.8 million, or 2.9%, from $3.14 billion at December 31, 2024. The Bank’s cash and cash equivalents increased by $16.2 million, or 5.9%, compared to December 31, 2024, as management continued to ensure adequate on-balance sheet liquidity.

The Bank reported total assets of $3.88 billion at March 31, 2025, an increase of $289.4 million, or 8.1%, from $3.59 billion at March 31, 2024. Total loans increased $243.6 million, or 8.1%, to $3.24 billion at March 31, 2025 compared to $2.99 billion at March 31, 2024. The increase primarily reflects strong organic loan growth, particularly in the C&I and owner-occupied commercial real estate portfolios.

Total deposits increased by $63.9 million or 2.1% from $3.06 billion at December 31, 2024 to $3.12 billion at March 31, 2025, due to a combination of in-market and brokered deposits which were utilized to support significant loan growth during the first quarter of 2025. The Bank’s total deposits increased $149.5 million, or 5.0%, from $2.97 billion at March 31, 2024. Organic deposit growth was primarily due to our team’s success in attracting new deposit relationships while also maintaining existing balances amid heightened industry-wide pricing competition.

During the three months ended March 31, 2025, stockholders’ equity increased by $5.8 million, or 1.4%, primarily due to net income, partially offset by dividends and share repurchases.

As of March 31, 2025, the Bank continued to exceed all regulatory capital requirements to be considered well-capitalized, with a Tier 1 Leverage ratio of 9.63%, a Tier 1 Risk-Based capital ratio of 9.59%, a Common Equity Tier 1 Capital ratio of 9.59%, and a Total Risk-Based capital ratio of 11.46%. The tangible stockholders’ equity to tangible assets ratioⁱⁱⁱ measured 9.47% as of March 31, 2025 compared to 9.56% at December 31, 2024. The decline from December 31, 2024, was primarily due to the asset growth during the quarter ended March 31, 2025.

Asset Quality

First Bank’s asset quality metrics remained favorable during the first quarter of 2025. Total nonperforming loans declined from $11.7 million at December 31, 2024 to $11.6 million at March 31, 2025. Total nonperforming assets declined from $17.3 million to $16.4 million during the same period primarily due to the $815,000 impairment of an OREO asset recorded during the quarter.

The Bank recorded net recoveries of $15,000 during the first quarter of 2025 compared to net recoveries of $155,000 in the fourth quarter of 2024 and net charge-offs of $5.3 million in the first quarter of 2024. Net charge-offs for the first quarter of 2024 reflected the charge-off of a $5.5 million purchased credit deteriorated (“PCD”) loan acquired from Malvern, partially offset by $201,000 in net recoveries. The allowance for credit losses on loans as a percentage of total loans measured 1.21% at March 31, 2025, compared to 1.20% at December 31, 2024 and 1.22% at March 31, 2024.

Liquidity and Borrowings

Management believes the Bank’s current liquidity position, coupled with our various contingent funding sources, provides the Bank with a strong liquidity base and a diverse source of funding options. The Bank’s cash and cash equivalents increased by $16.2 million, or 5.9%, compared to December 31, 2024, ensuring adequate on-balance sheet liquidity. Borrowings increased by $34.9 million compared to December 31, 2024, as the Bank utilized Federal Home Loan Bank (“FHLB”) advances to support loan growth, while continuing to maintain adequate available borrowing capacity at the FHLB.

Cash Dividend Declared

On February 21, 2025, the Bank paid $0.06 per share in cash dividends to common stockholders totaling $1.5 million that was declared by the Bank’s Board of Directors on January 21, 2025.

On April 15, 2025, the Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on May 9, 2025, payable on May 23, 2025.

Share Repurchase Program

During the first quarter of 2025 the Bank repurchased 256,454 shares of common stock at an average price of $15.06 per share, under the share repurchase program authorized in October 2024. Through March 31, 2025, 350,000 shares have been repurchased from the current share repurchase plan with a total cost of $5.2 million or $14.74 per share on average. The share repurchase program provides for the repurchase of up to 1.0 million shares of First Bank common stock with an aggregate repurchase amount of up to $16.0 million. The share repurchase program will expire on September 30, 2025.

Conference Call and Earnings Release Supplement

Additional details on the quarterly results and the Bank are included in the attached earnings release supplement. http://ml.globenewswire.com/Resource/Download/b39afd8e-20bb-4429-bcd7-61a0762ab19e

First Bank will host its earnings call on Wednesday, April 23, 2025 at 9:00 AM Eastern Time. The direct dial toll free number for the live call is 1-800-715-9871 and the access code is 3909613. For those unable to participate in the call, a replay will be available by dialing 1-800-770-2030 (access code 3909613) from one hour after the end of the conference call until July 22, 2025. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

About First Bank

First Bank is a New Jersey state-chartered bank with 26 full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Morristown, Pennington, Randolph, Somerset, Trenton and Williamstown, New Jersey; and Coventry, Devon, Doylestown, Lionville, Malvern, Media, Paoli, Trevose, Warminster and West Chester, Pennsylvania; and Palm Beach, Florida. With $3.88 billion in assets as of March 31, 2025, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank’s common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”

Forward Looking Statements

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

______________________

This press release contains “non-GAAP” financial measures, which management uses in its analysis of First Bank’s performance. Management believes these non-GAAP financial measures allow for better comparability of period to period operating performance. Additionally, First Bank believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of the non-GAAP measures used in this presentation to the most directly comparable GAAP measures is provided in the accompanying financial tables.

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

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

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

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

	March 31, 2025		December 31, 2024
Assets
Cash and due from banks	$	32,396	$	18,252
Restricted cash		11,910		14,270
Interest bearing deposits with banks		243,778		239,392
Cash and cash equivalents		288,084		271,914
Interest bearing time deposits with banks		743		743
Investment securities available for sale, at fair value (amortized cost of $90,393 and $84,083, respectively)		85,059		77,413
Equity securities, at fair value		1,860		1,870
Investment securities held to maturity, net of allowance for credit losses of $209 and $206, respectively (fair value of $42,565 and $42,770, respectively)		46,387		47,123
Restricted investment in bank stocks		15,933		14,333
Other investments		13,388		11,612
Loans held for sale		618		–
Loans, net of deferred fees and costs		3,236,039		3,144,266
Less: Allowance for credit losses		(39,223)		(37,773)
Net loans		3,196,816		3,106,493
Premises and equipment, net		21,267		21,351
Other real estate owned, net		4,822		5,637
Accrued interest receivable		14,889		14,267
Bank-owned life insurance		86,258		85,553
Goodwill		44,166		44,166
Other intangible assets, net		8,341		8,827
Deferred income taxes, net		25,178		25,528
Other assets		26,950		43,516
Total assets	$	3,880,759	$	3,780,346

Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits	$	535,584	$	519,320
Interest bearing deposits		2,584,210		2,536,576
Total deposits		3,119,794		3,055,896
Borrowings		281,867		246,933
Subordinated debentures		29,981		29,954
Accrued interest payable		4,887		3,820
Other liabilities		29,315		34,587
Total liabilities		3,465,844		3,371,190
Stockholders’ Equity:
Preferred stock, par value $2 per share; 10,000,000 shares authorized; no shares issued and outstanding		–		–
Common stock, par value $5 per share; 40,000,000 shares authorized; 27,576,676 shares issued and 25,045,612 shares outstanding and 27,375,439 shares issued and 25,100,829 shares outstanding, respectively		136,220		135,495
Additional paid-in capital		124,555		124,524
Retained earnings		184,657		176,779
Accumulated other comprehensive loss		(3,938)		(4,925)
Treasury stock, 2,531,064 and 2,274,610 shares, respectively		(26,579)		(22,717)
Total stockholders’ equity		414,915		409,156
Total liabilities and stockholders’ equity	$	3,880,759	$	3,780,346

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

	Three Months Ended
	March 31,
	2025		2024
Interest and Dividend Income
Investment securities—taxable	$	1,188	$	1,182
Investment securities—tax-exempt		51		38
Interest bearing deposits with banks, Federal funds sold and other		2,997		3,025
Loans, including fees		51,552		49,319
Total interest and dividend income		55,788		53,564

Interest Expense
Deposits		20,844		20,786
Borrowings		2,412		2,116
Subordinated debentures		440		344
Total interest expense		23,696		23,246
Net interest income		32,092		30,318
Credit loss expense (benefit)		1,544		(698)
Net interest income after credit loss expense		30,548		31,016

Non-Interest Income
Service fees on deposit accounts		356		344
Loan fees		326		102
Income from bank-owned life insurance		793		785
Gains on sale of loans, net		29		229
Gains on recovery of acquired loans		24		118
Other non-interest income		443		386
Total non-interest income		1,971		1,964

Non-Interest Expense
Salaries and employee benefits		11,118		10,038
Occupancy and equipment		2,464		2,026
Legal fees		368		316
Other professional fees		726		756
Regulatory fees		684		602
Directors’ fees		282		242
Data processing		805		806
Marketing and advertising		399		296
Travel and entertainment		236		244
Insurance		214		244
Other real estate owned expense, net		920		88
Other expense		2,168		2,152
Total non-interest expense		20,384		17,810
Income Before Income Taxes		12,135		15,170
Income tax expense		2,754		2,658
Net Income	$	9,381	$	12,512

Basic earnings per common share	$	0.37	$	0.50
Diluted earnings per common share	$	0.37	$	0.50

Basic weighted average common shares outstanding		25,118,062		25,039,949
Diluted weighted average common shares outstanding		25,269,002		25,199,381

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

	Three Months Ended March 31,
	2025						2024
	Average				Average		Average				Average
	Balance		Interest		Rate ⁽⁵⁾		Balance		Interest		Rate ⁽⁵⁾
Interest earning assets
Investment securities ^{(1) (2)}	$	134,274	$	1,250		3.78%	$	147,147	$	1,228		3.36%
Loans ⁽³⁾		3,170,772		51,552		6.59%		2,979,522		49,319		6.66%
Interest bearing deposits with banks,
Federal funds sold and other		234,032		2,575		4.46%		203,158		2,710		5.37%
Restricted investment in bank stocks		14,137		300		8.61%		10,421		199		7.68%
Other investments		14,054		122		3.52%		11,870		116		3.93%
Total interest earning assets ⁽²⁾		3,567,269		55,799		6.34%		3,352,118		53,572		6.43%
Allowance for credit losses		(38,181)						(37,607)
Non-interest earning assets		261,101						261,237
Total assets	$	3,790,189					$	3,575,748

Interest bearing liabilities
Interest bearing demand deposits	$	644,736	$	4,027		2.53%	$	618,941	$	3,666		2.38%
Money market deposits		1,045,013		8,631		3.35%		1,014,906		9,789		3.88%
Savings deposits		142,502		650		1.85%		162,113		574		1.42%
Time deposits		717,881		7,536		4.26%		671,546		6,757		4.05%
Total interest bearing deposits		2,550,132		20,844		3.31%		2,467,506		20,786		3.39%
Borrowings		234,526		2,412		4.17%		167,141		2,116		5.09%
Subordinated debentures		29,963		440		5.87%		42,470		344		3.24%
Total interest bearing liabilities		2,814,621		23,696		3.41%		2,677,117		23,246		3.49%
Non-interest bearing deposits		521,326						481,503
Other liabilities		40,570						40,586
Stockholders’ equity		413,672						376,542
Total liabilities and stockholders’ equity	$	3,790,189					$	3,575,748
Net interest income/interest rate spread ⁽²⁾				32,103		2.93%				30,326		2.92%
Net interest margin ^{(2) (4)}						3.65%						3.64%
Tax equivalent adjustment ⁽²⁾				(11)						(8)
Net interest income			$	32,092					$	30,318

(1) Average balance of investment securities available for sale is based on amortized cost.

(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.

(3) Average balances of loans include loans on nonaccrual status.

(4) Net interest income divided by average total interest earning assets.

(5) Annualized.

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

	As of or For the Quarter Ended
	3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
EARNINGS
Net interest income	$	32,092	$	31,594	$	30,094	$	30,540	$	30,318
Credit loss expense (benefit)		1,544		234		1,579		63		(698)
Non-interest income		1,971		2,176		2,479		689		1,964
Non-interest expense		20,384		19,124		18,644		17,953		17,810
Income tax expense		2,754		3,915		4,188		2,140		2,658
Net income		9,381		10,497		8,162		11,073		12,512

PERFORMANCE RATIOS
Return on average assets ⁽¹⁾		1.00%		1.10%		0.88%		1.23%		1.41%
Return on average equity ⁽¹⁾		9.20%		10.27%		8.15%		11.52%		13.36%
Return on average tangible equity ^{(1) (2)}		10.54%		11.82%		9.42%		13.40%		15.64%
Net interest margin ^{(1) (3)}		3.65%		3.54%		3.48%		3.62%		3.64%
Yield on loans ⁽¹⁾		6.59%		6.62%		6.73%		6.81%		6.66%
Total cost of deposits ⁽¹⁾		2.75%		2.89%		3.06%		3.01%		2.83%
Efficiency ratio ⁽²⁾		57.65%		56.98%		58.49%		55.88%		55.56%

SHARE DATA
Common shares outstanding		25,045,612		25,100,829		25,186,920		25,144,983		25,096,449
Basic earnings per share	$	0.37	$	0.42	$	0.32	$	0.44	$	0.50
Diluted earnings per share		0.37		0.41		0.32		0.44		0.50
Book value per share		16.57		16.30		15.96		15.61		15.23
Tangible book value per share ⁽²⁾		14.47		14.19		13.84		13.46		13.06

MARKET DATA
Market value per share	$	14.81	$	14.07	$	15.20	$	12.74	$	13.74
Market value / Tangible book value		102.35%		99.16%		109.83%		94.65%		105.20%
Market capitalization	$	370,926	$	353,169	$	382,841	$	320,347	$	344,825

CAPITAL & LIQUIDITY
Stockholders’ equity / assets		10.69%		10.82%		10.70%		10.86%		10.64%
Tangible stockholders’ equity / tangible assets ⁽²⁾		9.47%		9.56%		9.41%		9.50%		9.27%
Loans / deposits		103.73%		102.89%		101.23%		101.02%		100.75%

ASSET QUALITY
Net charge-offs	$	(15)	$	(155)	$	386	$	175	$	5,293
Net charge-offs (recoveries), excluding PCD loan charge-off ⁽⁴⁾		(15)		(155)		386		175		(201)
Nonperforming loans		11,584		11,677		12,014		14,227		17,054
Nonperforming assets		16,406		17,314		17,651		20,226		23,053
Net charge offs / average loans ⁽¹⁾		0.00%		(0.02%)		0.05%		0.02%		0.72%
Net charge offs (recoveries), excluding PCD loan charge-off / average loans ^{(1) (4)}		(0.00%)		(0.02%)		0.05%		0.02%		(0.03%)
Nonperforming loans / total loans		0.36%		0.37%		0.39%		0.47%		0.57%
Nonperforming assets / total assets		0.42%		0.46%		0.47%		0.56%		0.64%
Allowance for credit losses on loans / total loans		1.21%		1.20%		1.21%		1.21%		1.22%
Allowance for credit losses on loans / nonperforming loans		338.60%		323.48%		311.59%		254.81%		213.42%

OTHER DATA
Total assets	$	3,880,759	$	3,780,346	$	3,757,653	$	3,615,731	$	3,591,398
Total loans		3,236,039		3,144,266		3,087,488		2,998,029		2,992,423
Total deposits		3,119,794		3,055,896		3,050,070		2,967,634		2,970,262
Total stockholders’ equity		414,915		409,156		402,070		392,489		382,254
Number of full-time equivalent employees		315		318		313		294		288

(1) Annualized.

(2) Non-GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition. See the accompanying table, “Non-GAAP Financial Measures,” for calculation and reconciliation.

(3) Tax equivalent using a federal income tax rate of 21%.

(4) Excludes $5.5 million in a PCD loan charge-off in first quarter of 2024, which was reserved for through purchase accounting marks at the time of the Malvern acquisition.

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

	As of the Quarter Ended
	3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
LOAN COMPOSITION
Commercial and industrial	$	651,690	$	576,625	$	546,541	$	530,996	$	508,911
Commercial real estate:
Owner-occupied		694,113		671,357		688,988		647,625		625,643
Investor		1,160,549		1,181,684		1,170,508		1,143,954		1,172,311
Construction and development		200,262		205,096		193,460		190,108		184,816
Multi-family		308,217		287,843		267,861		270,238		279,668
Total commercial real estate		2,363,141		2,345,980		2,320,817		2,251,925		2,262,438
Residential real estate:
Residential mortgage and first lien home equity loans		142,298		142,769		144,081		144,978		154,704
Home equity–second lien loans and revolving lines of credit		52,438		51,020		49,763		46,882		45,869
Total residential real estate		194,736		193,789		193,844		191,860		200,573
Consumer and other		29,760		31,324		29,518		26,321		23,702
Total loans prior to deferred loan fees and costs		3,239,327		3,147,718		3,090,720		3,001,102		2,995,624
Net deferred loan fees and costs		(3,288)		(3,452)		(3,232)		(3,073)		(3,201)
Total loans	$	3,236,039	$	3,144,266	$	3,087,488	$	2,998,029	$	2,992,423

LOAN MIX
Commercial and industrial		20.1%		18.3%		17.7%		17.7%		17.0%
Commercial real estate:
Owner-occupied		21.5%		21.4%		22.3%		22.3%		20.9%
Investor		35.9%		37.6%		37.9%		37.9%		39.2%
Construction and development		6.2%		6.5%		6.3%		6.3%		6.2%
Multi-family		9.5%		9.1%		8.7%		8.7%		9.3%
Total commercial real estate		73.1%		74.6%		75.2%		75.2%		75.6%
Residential real estate:
Residential mortgage and first lien home equity loans		4.4%		4.6%		4.7%		4.7%		5.2%
Home equity–second lien loans and revolving lines of credit		1.6%		1.6%		1.6%		1.6%		1.5%
Total residential real estate		6.0%		6.2%		6.3%		6.3%		6.7%
Consumer and other		0.9%		1.0%		0.9%		0.9%		0.8%
Net deferred loan fees and costs		(0.1%)		(0.1%)		(0.1%)		(0.1%)		(0.1%)
Total loans		100.0%		100.0%		100.0%		100.0%		100.0%

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

	As of the Quarter Ended
	3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
DEPOSIT COMPOSITION
Non-interest bearing demand deposits	$	535,584	$	519,320	$	519,079	$	499,765	$	470,749
Interest bearing demand deposits		629,974		629,099		597,802		574,515		580,864
Money market and savings deposits		1,197,517		1,198,039		1,235,637		1,199,382		1,219,634
Time deposits		756,719		709,438		697,552		693,972		699,015
Total Deposits	$	3,119,794	$	3,055,896	$	3,050,070	$	2,967,634	$	2,970,262

DEPOSIT MIX
Non-interest bearing demand deposits		17.2%		17.0%		17.0%		16.8%		15.8%
Interest bearing demand deposits		20.2%		20.6%		19.6%		19.4%		19.6%
Money market and savings deposits		38.4%		39.2%		40.5%		40.4%		41.1%
Time deposits		24.2%		23.2%		22.9%		23.4%		23.5%
Total Deposits		100.0%		100.0%		100.0%		100.0%		100.0%

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

	As of or For the Quarter Ended
	3/31/2025		12/31/2024		9/30/2024		6/30/2024		3/31/2024
Return on Average Tangible Equity
Net income (numerator)	$	9,381	$	10,497	$	8,162	$	11,073	$	12,512

Average stockholders’ equity	$	413,672	$	406,579	$	398,535	$	386,644	$	376,542
Less: Average Goodwill and other intangible assets, net		52,805		53,278		53,823		54,347		54,790
Average Tangible stockholders’ equity (denominator)	$	360,867	$	353,301	$	344,712	$	332,297	$	321,752

Return on average tangible equity ⁽¹⁾		10.54%		11.82%		9.42%		13.40%		15.64%

Tangible Book Value Per Share
Stockholders’ equity	$	414,915	$	409,156	$	402,070	$	392,489	$	382,254
Less: Goodwill and other intangible assets, net		52,507		52,993		53,484		54,026		54,483
Tangible stockholders’ equity (numerator)	$	362,408	$	356,163	$	348,586	$	338,463	$	327,771

Common shares outstanding (denominator)		25,045,612		25,100,829		25,186,920		25,144,983		25,096,449

Tangible book value per share	$	14.47	$	14.19	$	13.84	$	13.46	$	13.06

Tangible Equity / Tangible Assets
Stockholders’ equity	$	414,915	$	409,156	$	402,070	$	392,489	$	382,254
Less: Goodwill and other intangible assets, net		52,507		52,993		53,484		54,026		54,483
Tangible stockholders’ equity (numerator)	$	362,408	$	356,163	$	348,586	$	338,463	$	327,771

Total assets	$	3,880,759	$	3,780,346	$	3,757,653	$	3,615,731	$	3,591,398
Less: Goodwill and other intangible assets, net		52,507		52,993		53,484		54,026		54,483
Tangible total assets (denominator)	$	3,828,252	$	3,727,353	$	3,704,169	$	3,561,705	$	3,536,915

Tangible stockholders’ equity / tangible assets		9.47%		9.56%		9.41%		9.50%		9.27%

Efficiency Ratio
Non-interest expense	$	20,384	$	19,124	$	18,644	$	17,953	$	17,810
Less: Other real estate owned write-down		815		–		362		–		–
Adjusted non-interest expense (numerator)	$	19,569	$	19,124	$	18,282	$	17,953	$	17,810

Net interest income	$	32,092	$	31,594	$	30,094	$	30,540	$	30,318
Non-interest income		1,971		2,176		2,479		689		1,964
Total revenue		34,063		33,770		32,573		31,229		32,282
Add: Losses on sale of investment securities, net		–		–		555		–		–
(Subtract) Add: (Gains) losses on sale of loans, net		(29)		(38)		(135)		900		(229)
Less: Bank Owned Life Insurance Incentive		(88)		(168)		(1,116)		–		–
Adjusted total revenue (denominator)	$	33,946	$	33,564	$	31,877	$	32,129	$	32,053

Efficiency ratio		57.65%		56.98%		57.35%		55.88%		55.56%

(1) Annualized.

The MIL Network –

April 23, 2025

MIL-OSI: Orrstown Financial Services, Inc. Reports First Quarter 2025 Results

Source: GlobeNewswire (MIL-OSI)

Net income of $18.1 million, or $0.93 per diluted share, for the three months ended March 31, 2025 compared to net income of $13.7 million, or $0.71 per diluted share, for the three months ended December 31, 2024; the first quarter of 2025 included $1.6 million in expenses related to the merger compared to $3.9 million in expenses related to the merger and $0.5 million for a legal settlement for the fourth quarter of 2024;
Excluding the impact of the non-recurring charges referenced above, net of taxes, net income and diluted earnings per share were $19.3 million⁽¹⁾ and $1.00⁽¹⁾, respectively, for the first quarter of 2025 compared to $16.7 million⁽¹⁾ and $0.87⁽¹⁾, respectively, for the fourth quarter of 2024;
Net interest margin, on a tax equivalent basis, was 4.00% in the first quarter of 2025 compared to 4.05% in the fourth quarter of 2024; the net accretion impact of purchase accounting marks was $6.9 million of net interest income, which represents 51 basis points of net interest margin for the first quarter of 2025 compared to $7.2 million of net interest income, which represents 52 basis points of net interest margin for the fourth quarter of 2024;
Return on average assets was 1.35% and return on average equity was 13.98% for the three months ended March 31, 2025, compared to 1.00% and 10.54% for the return on average assets and return on average equity, respectively, for the three months ended December 31, 2024;
Excluding the impact of non-recurring charges referenced above, net of taxes, adjusted return on average assets was 1.45%⁽¹⁾ and adjusted return on average equity was 14.97%⁽¹⁾ for the three months ended March 31, 2025 compared to 1.22% and 12.86%, respectively, for the three months ended December 31, 2024;
Commercial loans declined by $49.7 million, or 2%, from December 31, 2024 to March 31, 2025 due primarily to strategic actions to reduce risk in the portfolio in an uncertain economic environment, including reducing commercial real estate (“CRE”) loan concentrations;
Noninterest expense decreased by $4.7 million from $42.9 million for the three months ended December 31, 2024 to $38.2 million for the three months ended March 31, 2025; salaries and benefits expense declined by $2.0 million from the fourth quarter of 2024 to the first quarter of 2025; merger-related expenses decreased by $2.3 million;
Recovery of $0.6 million was recorded for the provision for credit losses for the three months ended March 31, 2025 compared to expense of $2.1 million for the three months ended December 31, 2024; the decrease in loans contributed to the negative provision for credit losses during the first quarter of 2025; during the fourth quarter of 2024, the provision was driven by charge-offs of $3.0 million;
Total risk-based capital ratio was 13.1% at March 31, 2025 compared to 12.4% at December 31, 2024; the Tier 1 leverage ratio increased to 8.6% at March 31, 2025 compared to 8.3% at December 31, 2024; all capital ratios applicable to the Company were above relevant regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines;
Tangible common equity increased to 7.9% at March 31, 2025 compared to 7.5% at December 31, 2024;
Tangible book value per common share⁽¹⁾ increased to $21.99 per share at March 31, 2025 compared to $21.19 per share at December 31, 2024;
The Board of Directors declared a cash dividend of $0.26 per common share, payable May 13, 2025, to shareholders of record as of May 6, 2025.

⁽¹⁾ Non-GAAP measure. See Appendix A for additional information.

HARRISBURG, Pa., April 22, 2025 (GLOBE NEWSWIRE) — Orrstown Financial Services, Inc. (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended March 31, 2025. Net income totaled $18.1 million for the three months ended March 31, 2025, compared to net income of $13.7 million for the three months ended December 31, 2024 and net income of $8.5 million for the three months ended March 31, 2024. Diluted earnings per share was $0.93 for the three months ended March 31, 2025, compared to diluted earnings per share of $0.71 for the three months ended December 31, 2024 and diluted earnings per share of $0.81 for the three months ended March 31, 2024. For the first quarter of 2025, excluding the impact of merger-related expenses, net of taxes, net income and diluted earnings per share were $19.3 million⁽¹⁾ and $1.00⁽¹⁾, respectively. For the fourth quarter of 2024, excluding the impact of merger-related expenses and other non-recurring charges, net of taxes, net income and diluted earnings per share were $16.7 million⁽¹⁾ and $0.87⁽¹⁾, respectively. For the first quarter of 2024, excluding the impact of the merger-related expenses, net of taxes, net income and diluted earnings per share were $9.2 million⁽¹⁾ and $0.88⁽¹⁾, respectively.

“While operating results continued to be impacted by merger-related expenses, core earnings were solid and net interest margin remained strong,” said Thomas R. Quinn, Jr., President and Chief Executive Officer. “We do not believe that merger-related expenses will be material going forward and expect operating results to normalize beginning later in the second quarter. A significant amount of our focus has been on completing a system conversion and creating a strong foundation for growth. The deliberate steps we have taken in the last few quarters to protect credit quality, build liquidity and enhance our capital ratios after the merger were intended to position the Company for growth, including the ability to accelerate commercial lending for strong credits and take advantage of strategic opportunities as they arise. We remain optimistic about the future, both in the short and long term.”

⁽¹⁾ Non-GAAP measure. See Appendix A for additional information.

DISCUSSION OF RESULTS

Balance Sheet

Loans

Loans held for investment decreased by $55.2 million and totaled $3.9 billion at both March 31, 2025 and December 31, 2024. The decrease from the fourth quarter of 2024 was primarily due to strategic actions to reduce risk in the portfolio, including reducing CRE loan concentrations.

Investment Securities

Investment securities, all of which are classified as available-for-sale, increased by $25.8 million to $855.5 million at March 31, 2025 from $829.7 million at December 31, 2024. During the first quarter of 2025, the Bank purchased $39.6 million of investment securities and net unrealized gains were $3.8 million. These increases were partially offset by paydowns of $18.4 million. The overall duration of the Company’s investment securities portfolio was 4.3 years at March 31, 2025 compared to 4.1 years at December 31, 2024. See Appendix B for a summary of the Bank’s investment securities at March 31, 2025, highlighting their concentrations, credit ratings and credit enhancement levels.

Deposits

During the first quarter of 2025, deposits increased by $10.6 million and totaled $4.6 billion at both March 31, 2025 and December 31, 2024. Interest-bearing demand deposits, non-interest bearing demand deposits and savings deposits increased by $52.5 million, $38.0 million and $4.1 million, respectively, from December 31, 2024 to March 31, 2025. These increases were partially offset by decreases in time deposits of $47.5 million and money market deposits of $36.5 million during the first quarter of 2025. The Bank has experienced some reductions in higher yielding promotional balances, but has been successful in retaining or replacing those deposits through demand deposit accounts. The Bank’s loan-to-deposit ratio decreased slightly to 84% at March 31, 2025 from 85% at December 31, 2024.

Borrowings

The Bank actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were $100.3 million at March 31, 2025 compared to $115.4 million at December 31, 2024 due to the maturity of a $15 million FHLB advance during the first quarter of 2025. The Bank seeks to maintain sufficient liquidity to ensure client needs can be addressed in a timely basis. The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of approximately $1.8 billion at March 31, 2025.

Income Statement

Net Interest Income and Margin

Net interest income was $48.8 million for the three months ended March 31, 2025 compared to $50.6 million for the three months ended December 31, 2024. The net interest margin, on a tax equivalent basis, decreased to 4.00% in the first quarter of 2025 from 4.05% in the fourth quarter of 2024, which was impacted by the Federal Funds rate cuts in the fourth quarter of 2024. Overall, the yield on loans declined by 23 basis points and the cost of deposits declined by 15 basis points from the fourth quarter of 2024 to the first quarter of 2025.

The net interest margin was positively impacted by the net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings of $6.9 million, which represented 51 basis points of net interest margin during the first quarter of 2025. During the fourth quarter of 2024, the net accretion impact of purchase accounting marks was $7.2 million, which represented 52 basis points of net interest margin. Funding costs continue to decline as market rates have been reduced.

Interest income on loans, on a tax equivalent basis, decreased by $4.7 million to $63.4 million for the three months ended March 31, 2025 compared to $68.1 million for the three months ended December 31, 2024. Average loans decreased by $51.6 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024. There were also two fewer days in the first quarter of 2025 compared to the fourth quarter of 2024. The accretion of purchase accounting marks on loans totaled $6.6 million during the first quarter of 2025 compared to $7.6 million during the fourth quarter of 2024. This decrease reduced net interest margin by six basis points during the first quarter of 2025.

Interest income on investment securities, on a tax equivalent basis, was $10.1 million for the first quarter of 2025 compared to $9.9 million in the fourth quarter of 2024. Average investment securities increased by $15.7 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024 primarily due to the aforementioned purchases.

Interest expense, on a tax equivalent basis, decreased by $2.6 million to $26.8 million for the three months ended March 31, 2025 compared to $29.4 million for the three months ended December 31, 2024. Average interest-bearing deposits decreased by $77.1 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024. The cost of interest-bearing deposits declined by 16 basis points from the fourth quarter of 2024 to the first quarter of 2025. In addition, interest expense includes $0.6 million and $0.9 million of amortization of purchase accounting marks for the three months ended March 31, 2025 and December 31, 2024, respectively.

Provision for Credit Losses

The allowance for credit losses (“ACL”) on loans decreased to $47.8 million at March 31, 2025 from $48.7 million at December 31, 2024. The ACL to total loans was 1.23% at March 31, 2025 compared to 1.24% at December 31, 2024. The Company recorded a recovery in the provision for credit losses on loans of $0.6 million for the three months ended March 31, 2025 compared to provision expense of $2.1 million for the three months ended December 31, 2024. Net charge-offs were $0.3 million for the three months ended March 31, 2025 compared to $3.0 million for the three months ended December 31, 2024. During the fourth quarter of 2024, the Bank sold $6.0 million of loans, most of which were C&I loans, which resulted in a charge-off totaling $0.6 million. There was a corresponding $0.6 million of purchase accounting accretion associated with these loans during the fourth quarter of 2024.

Classified loans decreased by $12.4 million to $76.2 million at March 31, 2025 from $88.6 million at December 31, 2024 primarily due to repayments. Non-accrual loans decreased by $1.4 million to $22.7 million at March 31, 2025 from $24.1 million at December 31, 2024. Nonaccrual loans to total loans decreased to 0.59% at March 31, 2025 compared to 0.61% at December 31, 2024. Management believes the ACL to be adequate based on current asset quality metrics and economic forecasts. Substantial efforts have been made in the last few quarters to reduce risk in the loan portfolio and properly position the Bank for future growth

Noninterest Income

Noninterest income increased by $0.4 million to $11.6 million in the three months ended December 31, 2024 from $11.2 million in the three months ended December 31, 2024.

Wealth management income increased by $0.5 million to $5.4 million for the three months ended March 31, 2025 compared to $4.9 million for the three months ended December 31, 2024. While current market conditions are expected to negatively impact wealth management fees in the near term, the team continues to focus on alternative revenue sources and seeks to continuously grow the business.

Income from service charges was $2.4 million for the three months ended March 31, 2025 compared to $2.1 million for the three months ended December 31, 2024. There were reduced service charges in the fourth quarter due to fee waivers provided to clients in the post-conversion period from November through the end of the year.

Income from mortgage banking activities decreased from $0.5 million in the three months ended December 31, 2024 to $0.3 million in the three months ended March 31, 2025. This decrease was primarily due to a reduction in the fair value of mortgage servicing rights, which was driven by interest rate movements in the first quarter of 2025.

Noninterest Expenses

Noninterest expenses decreased by $4.7 million to $38.2 million in the three months ended March 31, 2025 from $42.9 million in the three months ended December 31, 2024.

For the three months ended March 31, 2025, merger-related expenses totaled $1.6 million, a decrease of $2.3 million, compared to $3.9 million for the three months ended December 31, 2024. The merger costs incurred during the first quarter of 2025 included software conversion costs and professional fees associated with the conversion and the external audit. While the Company expects to incur some residual merger-related expenses in the second quarter of 2025, they are not expected to be significant.

Salaries and benefits expense decreased by $2.0 million to $20.4 million for the three months ended March 31, 2025 compared to $22.4 million for the three months ended December 31, 2024. The decrease during the first quarter of 2025 is reflective of the continued synergies being achieved as a result of the merger. The generated savings are being partially offset by investments in talent designed to prepare the Company for additional growth and further enhance operational efficiency. In addition, salaries and benefits expense is typically elevated during the first quarter of the year due to employee benefit costs, including social security and unemployment taxes.

Professional services expense increased by $0.2 million from the three months ended December 31, 2024 to the three months ended March 31, 2025. The Company continued to utilize an elevated level of third-party assistance to enhance daily functions and operational processes throughout the organization. It is anticipated that the reliance on these services will decline in the second quarter of 2025.

Taxes other than income increased by $1.3 million in the three months ended March 31, 2025 compared to the three months ended December 31, 2024. This increase reflects an increase in the estimated state shares tax expense and the impact of certain tax credits recognized during the fourth quarter of 2024.

Income Taxes

The Company’s effective tax rate was 20.7% for the first quarter of 2025 compared to 20.1% for the fourth quarter of 2024. The Company’s effective tax rate for the three months ended March 31, 2025 is less than the 21% federal statutory rate primarily due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank’s tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) and the impact of nondeductible merger-related costs. The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly.

Capital

Shareholders’ equity totaled $532.9 million at March 31, 2025 compared to $516.7 million at December 31, 2024. The increase is due to net income of $18.1 million and other comprehensive income of $4.7 million, primarily due to an increase in unrealized gains in the investment portfolio, partially offset by dividend payments of $5.0 million and share-based compensation activity of $1.6 million.

Tangible book value per share⁽¹⁾ increased to $21.99 per share at March 31, 2025 from $21.19 per share at December 31, 2024.

The Company’s tangible common equity ratio was 7.9% at March 31, 2025 compared to 7.5% at December 31, 2024. The Company’s total risk-based capital ratio was 13.1% at March 31, 2025 compared to 12.4% at December 31, 2024 driven by earnings and the effect of the decrease in loans on risk weighted assets. The Company’s Tier 1 leverage ratio increased to 8.6% at March 31, 2025 compared to 8.3% at December 31, 2024 driven by earnings during the first quarter of 2025.

At March 31, 2025, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines. The Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.

⁽¹⁾ Non-GAAP measure. See Appendix A for additional information.

Investor Relations Contact:

Neelesh Kalani

Executive Vice President, Chief Financial Officer

Phone (717) 510-7097

FINANCIAL HIGHLIGHTS (Unaudited)


	Three Months Ended
	March 31,			March 31,
(In thousands)		2025			2024

Profitability for the period:
Net interest income	$	48,761		$	26,881
(Recovery of) Provision for credit losses		(554	)		298
Noninterest income		11,624			6,630
Noninterest expenses		38,176			22,469
Income before income tax expense		22,763			10,744
Income tax expense		4,712			2,213
Net income available to common shareholders	$	18,051		$	8,531

Financial ratios:
Return on average assets ⁽¹⁾		1.35	%		1.11	%
Return on average assets, adjusted ^{(1) (2) (3)}		1.45	%		1.19	%
Return on average equity ⁽¹⁾		13.98	%		12.79	%
Return on average equity, adjusted ^{(1) (2) (3)}		14.97	%		13.79	%
Net interest margin ⁽¹⁾		4.00	%		3.77	%
Efficiency ratio		63.2	%		67.0	%
Efficiency ratio, adjusted ^{(2) (3)}		60.5	%		65.0	%
Income per common share:
Basic	$	0.94		$	0.82
Basic, adjusted ^{(2) (3)}	$	1.01		$	0.89
Diluted	$	0.93		$	0.81
Diluted, adjusted ^{(2) (3)}	$	1.00		$	0.88

Average equity to average assets		9.65	%		8.66	%

⁽¹⁾ Annualized for the three months ended March 31, 2025 and 2024.
⁽²⁾ Ratio has been adjusted for the non-recurring charges for all periods presented.
⁽³⁾ Non-GAAP based financial measure. Please refer to Appendix A – Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.

FINANCIAL HIGHLIGHTS (Unaudited)
(continued)
	March 31,			December 31,
(Dollars in thousands, except per share amounts)		2025			2024
At period-end:
Total assets	$	5,441,586		$	5,441,589
Loans, net of allowance for credit losses		3,828,181			3,882,525
Loans held-for-sale, at fair value		5,261			6,614
Securities available for sale, at fair value		855,456			829,711
Total deposits		4,633,716			4,623,096
FHLB advances and other borrowings and Securities sold under agreements to repurchase		123,480			141,227
Subordinated notes and trust preferred debt		68,850			68,680
Shareholders’ equity		532,936			516,682

Credit quality and capital ratios⁽¹⁾:
Allowance for credit losses to total loans		1.23	%		1.24	%
Total nonaccrual loans to total loans		0.59	%		0.61	%
Nonperforming assets to total assets		0.42	%		0.45	%
Allowance for credit losses to nonaccrual loans		210	%		202	%
Total risk-based capital:
Orrstown Financial Services, Inc.		13.1	%		12.4	%
Orrstown Bank		13.0	%		12.4	%
Tier 1 risk-based capital:
Orrstown Financial Services, Inc.		10.8	%		10.2	%
Orrstown Bank		11.9	%		11.2	%
Tier 1 common equity risk-based capital:
Orrstown Financial Services, Inc.		10.6	%		10.0	%
Orrstown Bank		11.9	%		11.2	%
Tier 1 leverage capital:
Orrstown Financial Services, Inc.		8.6	%		8.3	%
Orrstown Bank		9.5	%		9.1	%

Book value per common share	$	27.32		$	26.65

⁽¹⁾ Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses (“CECL”) to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the CECL standard.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands, except per share amounts)	March 31, 2025			December 31, 2024
Assets
Cash and due from banks	$	64,376		$	51,026
Interest-bearing deposits with banks		222,744			197,848
Cash and cash equivalents		287,120			248,874
Restricted investments in bank stocks		19,693			20,232
Securities available for sale (amortized cost of $886,782 and $864,920 at March 31, 2025 and December 31, 2024, respectively)		855,456			829,711
Loans held for sale, at fair value		5,261			6,614
Loans		3,875,985			3,931,214
Less: Allowance for credit losses		(47,804	)		(48,689	)
Net loans		3,828,181			3,882,525
Premises and equipment, net		51,729			50,217
Cash surrender value of life insurance		144,798			143,854
Goodwill		68,106			68,106
Other intangible assets, net		45,230			47,765
Accrued interest receivable		19,893			21,058
Deferred tax assets, net		36,206			42,647
Other assets		79,913			79,986
Total assets	$	5,441,586		$	5,441,589

Liabilities
Deposits:
Noninterest-bearing	$	932,152		$	894,176
Interest-bearing		3,701,564			3,728,920
Total deposits		4,633,716			4,623,096
Securities sold under agreements to repurchase and federal funds purchased		23,131			25,863
FHLB advances and other borrowings		100,349			115,364
Subordinated notes and trust preferred debt		68,850			68,680
Other liabilities		82,604			91,904
Total liabilities		4,908,650			4,924,907

Shareholders’ Equity
Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding		—			—
Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 19,721,340 shares issued and 19,509,642 outstanding at March 31, 2025; 19,722,640 shares issued and 19,389,967 outstanding at December 31, 2024		1,026			1027
Additional paid—in capital		421,445			423,274
Retained earnings		139,547			126,540
Accumulated other comprehensive loss		(24,024	)		(26,316	)
Treasury stock— 211,698 and 332,673 shares, at cost at March 31, 2025 and December 31, 2024, respectively		(5,058	)		(7,843	)
Total shareholders’ equity		532,936			516,682
Total liabilities and shareholders’ equity	$	5,441,586		$	5,441,589

ORRSTOWN FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended
	March 31,			March 31,
(Dollars in thousands, except per share amounts)		2025			2024
Interest income
Loans	$	63,432		$	36,233
Investment securities – taxable		8,944			4,584
Investment securities – tax-exempt		875			877
Short-term investments		2,268			956
Total interest income		75,519			42,650
Interest expense
Deposits		24,260			13,516
Securities sold under agreements to repurchase and federal funds purchased		84			25
FHLB advances and other borrowings		1,118			1,474
Subordinated notes and trust preferred debt		1,296			754
Total interest expense		26,758			15,769
Net interest income		48,761			26,881
(Recovery of) Provision for credit losses		(554	)		298
Net interest income after (recovery of) provision for credit losses		49,315			26,583
Noninterest income
Service charges		2,395			1,200
Interchange income		1,427			911
Swap fee income		394			199
Wealth management income		5,415			3,102
Mortgage banking activities		302			458
Investment securities gains (losses)		13			(5	)
Other income		1,678			765
Total noninterest income		11,624			6,630
Noninterest expenses
Salaries and employee benefits		20,388			13,752
Occupancy, furniture and equipment		4,675			2,639
Data processing		924			1,265
Advertising and bank promotions		499			398
FDIC insurance		824			441
Professional services		1,826			631
Taxes other than income		942			494
Intangible asset amortization		2,535			225
Merger-related expenses		1,649			672
Restructuring expenses		91			—
Other operating expenses		3,823			1,952
Total noninterest expenses		38,176			22,469
Income before income tax expense		22,763			10,744
Income tax expense		4,712			2,213
Net income	$	18,051		$	8,531


	Three Months Ended
	March 31,		March 31,
	2025		2024
Share information:
Basic earnings per share	$	0.94	$	0.82
Diluted earnings per share	$	0.93	$	0.81
Dividends paid per share	$	0.26	$	0.20
Weighted average shares – basic		19,157		10,349
Weighted average shares – diluted		19,328		10,482

ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
	Three Months Ended
	3/31/2025							12/31/2024							9/30/2024							6/30/2024							3/31/2024
			Taxable-			Taxable-				Taxable-			Taxable-				Taxable-			Taxable-				Taxable-			Taxable-				Taxable-			Taxable-
	Average		Equivalent			Equivalent		Average		Equivalent			Equivalent		Average		Equivalent			Equivalent		Average		Equivalent			Equivalent		Average		Equivalent			Equivalent
(In thousands)	Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate
Assets
Federal funds sold & interest-bearing bank balances	$	203,347	$	2,268		4.52	%	$	199,236	$	2,492		4.96	%	$	184,465	$	2,452		5.29	%	$	142,868	$	1,864		5.25	%	$	74,523	$	956		5.16	%
Investment securities ⁽¹⁾⁽²⁾		865,126		10,052		4.65			849,389		9,887		4.66			849,700		10,123		4.77			538,451		6,114		4.54			519,851		5,694		4.39
Loans ^{(1)(3)(4)(5)(6)}		3,909,694		63,641		6.59			3,961,269		68,073		6.82			3,989,259		70,849		7.07			2,324,942		35,690		6.17			2,308,103		36,382		6.34
Total interest-earning assets		4,978,167		75,961		6.17			5,009,894		80,452		6.38			5,023,424		83,424		6.61			3,006,261		43,668		5.84			2,902,477		43,032		5.96
Other assets		447,530							454,271							491,719							204,863							196,295
Total assets	$	5,425,697						$	5,464,165						$	5,515,143						$	3,211,124						$	3,098,772
Liabilities and Shareholders’ Equity
Interest-bearing demand deposits⁽⁷⁾	$	2,473,543		14,156		2.32		$	2,522,885		15,575		2.45		$	2,554,743		16,165		2.52		$	1,649,753		10,118		2.47		$	1,570,622		9,192		2.35
Savings deposits⁽⁷⁾		273,313		165		0.25			272,718		166		0.24			283,337		148		0.21			165,467		140		0.34			170,005		144		0.34
Time deposits		970,588		9,939		4.15			998,963		11,109		4.41			1,014,628		12,290		4.82			481,721		5,007		4.18			428,443		4,180		3.92
Total interest-bearing deposits		3,717,444		24,260		2.65			3,794,566		26,850		2.81			3,852,708		28,603		2.95			2,296,941		15,265		2.67			2,169,070		13,516		2.51
Securities sold under agreements to repurchase and federal funds purchased		26,163		84		1.30			21,572		67		1.23			23,075		96		1.66			13,412		27		0.81			12,010		25		0.85
FHLB advances and other borrowings		112,859		1,118		4.02			115,373		1,165		4.01			115,388		1,154		3.98			115,000		1,152		4.03			137,505		1,474		4.31
Subordinated notes and trust preferred debt		68,739		1,296		7.65			68,571		1,360		7.88			68,399		1,437		8.36			32,118		734		9.19			32,100		754		9.45
Total interest-bearing liabilities		3,925,205		26,758		2.76			4,000,082		29,442		2.92			4,059,570		31,290		3.07			2,457,471		17,178		2.81			2,350,685		15,769		2.70
Noninterest-bearing demand deposits		887,726							849,999							807,886							423,037							417,469
Other liabilities		89,077							97,685							110,017							57,828							62,329
Total liabilities		4,902,008							4,947,766							4,977,473							2,938,336							2,830,483
Shareholders’ equity		523,689							516,399							537,670							272,788							268,289
Total	$	5,425,697						$	5,464,165						$	5,515,143						$	3,211,124						$	3,098,772
Taxable-equivalent net interest income / net interest spread				49,203		3.41	%				51,010		3.46	%				52,134		3.55	%				26,490		3.02	%				27,263		3.26	%
Taxable-equivalent net interest margin						4.00	%						4.05	%						4.14	%						3.54	%						3.77	%
Taxable-equivalent adjustment				(442	)						(437	)						(437	)						(387	)						(382	)
Net interest income			$	48,761						$	50,573						$	51,697						$	26,103						$	26,881
Ratio of average interest-earning assets to average interest-bearing liabilities						127	%						125	%						124	%						122	%						123	%


NOTES:
⁽¹⁾ Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
⁽²⁾ Average balance of investment securities is computed at fair value.
⁽³⁾ Average balances include nonaccrual loans.
⁽⁴⁾ Interest income on loans includes prepayment and late fees, where applicable.
⁽⁵⁾ Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status in the three months ended March 31, 2024.
⁽⁶⁾ Interest income on loans includes accretion on purchase accounting marks of $6.6 million, $7.6 million, $7.3 million, $0.2 million, and $0.1 million for the three months ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024 and March 31, 2024, respectively.

ORRSTOWN FINANCIAL SERVICES, INC.
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)

(In thousands)	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Profitability for the quarter:
Net interest income	$	48,761		$	50,573		$	51,697		$	26,103		$	26,881
(Recovery of) Provision for credit losses		(554	)		1,755			13,681			812			298
Noninterest income		11,624			11,247			12,386			7,172			6,630
Noninterest expenses		38,176			42,930			60,299			22,639			22,469
Income (loss) before income taxes		22,763			17,135			(9,897	)		9,824			10,744
Income tax expense (benefit)		4,712			3,451			(1,994	)		2,086			2,213
Net income (loss)	$	18,051		$	13,684		$	(7,903	)	$	7,738		$	8,531

Financial ratios:
Return on average assets⁽¹⁾		1.35	%		1.00	%	(0.57)%				0.97	%		1.11	%
Return on average assets, adjusted^(1)(2)(3)		1.45	%		1.22	%		1.55	%		1.09	%		1.19	%
Return on average equity⁽¹⁾		13.98	%		10.54	%	(5.85)%				11.41	%		12.79	%
Return on average equity, adjusted^(1)(2)(3)		14.97	%		12.86	%		15.85	%		12.88	%		13.79	%
Net interest margin⁽¹⁾		4.00	%		4.05	%		4.14	%		3.54	%		3.77	%
Efficiency ratio		63.2	%		69.4	%		94.1	%		68.0	%		67.0	%
Efficiency ratio, adjusted⁽²⁾⁽³⁾		60.5	%		62.3	%		60.2	%		64.6	%		65.0	%

Per share information:
Income (loss) per common share:
Basic	$	0.94		$	0.72		$	(0.41	)	$	0.74		$	0.82
Basic, adjusted⁽²⁾⁽³⁾		1.01			0.87			1.12			0.84			0.89
Diluted		0.93			0.71			(0.41	)		0.73			0.81
Diluted, adjusted⁽²⁾⁽³⁾		1.00			0.87			1.11			0.83			0.88
Book value		27.32			26.65			26.65			25.97			25.38
Book value, adjusted^{(2) (3)}		27.38			28.40			28.24			26.12			25.44
Tangible book value⁽³⁾		21.99			21.19			21.12			24.08			23.47
Tangible book value, adjusted^{(2) (3)}		22.06			22.94			22.72			24.23			23.53
Cash dividends paid		0.26			0.23			0.23			0.20			0.20

Average basic shares		19,157			19,118			19,088			10,393			10,349
Average diluted shares		19,328			19,300			19,226			10,553			10,482
⁽¹⁾Annualized.
⁽²⁾ Ratio has been adjusted for non-recurring expenses for all periods presented.
⁽³⁾ Non-GAAP based financial measure. Please refer to Appendix A – Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.

ORRSTOWN FINANCIAL SERVICES, INC.
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
(In thousands)	March 31, 2025		December 31, 2024			September 30, 2024		June 30, 2024			March 31, 2024
Noninterest income:
Service charges	$	2,395	$	2,050		$	2,360	$	1,283		$	1,200
Interchange income		1,427		1,608			1,779		961			911
Swap fee income		394		597			505		375			199
Wealth management income		5,415		4,902			5,037		3,312			3,102
Mortgage banking activities		302		517			491		369			458
Other income		1,678		1,578			1,943		884			765
Investment securities gains (losses)		13		(5	)		271		(12	)		(5	)
Total noninterest income	$	11,624	$	11,247		$	12,386	$	7,172		$	6,630

Noninterest expenses:
Salaries and employee benefits	$	20,388	$	22,444		$	27,190	$	13,195		$	13,752
Occupancy, furniture and equipment		4,675		4,893			4,333		2,705			2,639
Data processing		924		1,540			2,046		1,237			1,265
Advertising and bank promotions		499		878			537		774			398
FDIC insurance		824		955			862		419			441
Professional services		1,826		1,591			1,119		801			631
Taxes other than income		942		(312	)		503		49			494
Intangible asset amortization		2,535		2,838			2,464		215			225
Provision for legal settlement		—		478			—		—			—
Merger-related expenses		1,649		3,887			16,977		1,135			672
Restructuring expenses		91		39			257		—			—
Other operating expenses		3,823		3,699			4,011		2,109			1,952
Total noninterest expenses	$	38,176	$	42,930		$	60,299	$	22,639		$	22,469

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
(In thousands)	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Balance Sheet at quarter end:
Cash and cash equivalents	$	287,120		$	248,874		$	236,780		$	132,509		$	182,722
Restricted investments in bank stocks		19,693			20,232			20,247			11,147			11,453
Securities available for sale		855,456			829,711			826,828			529,082			514,909
Loans held for sale, at fair value		5,261			6,614			3,561			1,562			535
Loans:
Commercial real estate:
Owner occupied		617,854			633,567			622,726			371,301			364,280
Non-owner occupied		1,157,383			1,160,238			1,164,501			710,477			707,871
Multi-family		257,724			274,135			276,296			151,542			147,773
Non-owner occupied residential		168,354			179,512			190,786			89,156			91,858
Agricultural		134,916			125,156			129,486			25,551			25,909
Commercial and industrial		455,494			451,384			471,983			349,425			339,615
Acquisition and development:
1-4 family residential construction		40,621			47,432			56,383			32,439			22,277
Commercial and land development		227,434			241,424			262,317			129,883			118,010
Municipal		30,780			30,044			27,960			10,594			10,925
Total commercial loans		3,090,560			3,142,892			3,202,438			1,870,368			1,828,518
Residential mortgage:
First lien		464,642			460,297			451,195			271,153			270,748
Home equity – term		9,224			5,988			6,508			4,633			4,966
Home equity – lines of credit		295,820			303,561			303,165			192,736			189,966
Installment and other loans		15,739			18,476			18,131			8,713			8,875
Total loans		3,875,985			3,931,214			3,981,437			2,347,603			2,303,073
Allowance for credit losses		(47,804	)		(48,689	)		(49,630	)		(29,864	)		(29,165	)
Net loans held for investment		3,828,181			3,882,525			3,931,807			2,317,739			2,273,908
Goodwill		68,106			68,106			70,655			18,724			18,724
Other intangible assets, net		45,230			47,765			46,144			1,974			2,189
Total assets		5,441,586			5,441,589			5,470,589			3,198,782			3,183,331
Total deposits		4,633,716			4,623,096			4,650,853			2,702,884			2,695,951
FHLB advances and other borrowings and Securities sold under agreements to repurchase		123,480			141,227			137,310			129,625			127,099
Subordinated notes and trust preferred debt		68,850			68,680			68,510			32,128			32,111
Total shareholders’ equity		532,936			516,682			516,206			278,376			271,682

HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Capital and credit quality measures⁽¹⁾:
Total risk-based capital:
Orrstown Financial Services, Inc.		13.1	%		12.4	%		12.4	%		13.3	%		13.4	%
Orrstown Bank		13.0	%		12.4	%		12.2	%		13.1	%		13.1	%
Tier 1 risk-based capital:
Orrstown Financial Services, Inc.		10.8	%		10.2	%		10.0	%		11.1	%		11.2	%
Orrstown Bank		11.9	%		11.2	%		11.0	%		12.0	%		11.9	%
Tier 1 common equity risk-based capital:
Orrstown Financial Services, Inc.		10.6	%		10.0	%		9.8	%		11.1	%		11.2	%
Orrstown Bank		11.9	%		11.2	%		11.0	%		12.0	%		11.9	%
Tier 1 leverage capital:
Orrstown Financial Services, Inc.		8.6	%		8.3	%		8.0	%		8.9	%		9.0	%
Orrstown Bank		9.5	%		9.1	%		8.8	%		9.5	%		9.6	%

Average equity to average assets		9.65	%		9.45	%		9.75	%		8.50	%		8.66	%
Allowance for credit losses to total loans		1.23	%		1.24	%		1.25	%		1.27	%		1.27	%
Total nonaccrual loans to total loans		0.59	%		0.61	%		0.68	%		0.36	%		0.56	%
Nonperforming assets to total assets		0.42	%		0.45	%		0.49	%		0.26	%		0.40	%
Allowance for credit losses to nonaccrual loans		210	%		202	%		184	%		357	%		226	%

Other information:
Net charge-offs (recoveries)	$	331		$	3,002		$	269		$	113		$	(42	)
Classified loans		76,211			88,628			105,465			48,722			48,997
Nonperforming and other risk assets:
Nonaccrual loans		22,727			24,111			26,927			8,363			12,886
Other real estate owned		138			138			138			—			—
Total nonperforming assets		22,865			24,249			27,065			8,363			12,886
Financial difficulty modifications still accruing		5,127			4,897			9,497			—			—
Loans past due 90 days or more and still accruing		400			641			337			187			99
Total nonperforming and other risk assets	$	28,392		$	29,787		$	36,899		$	8,550		$	12,985

(1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses (“CECL”) to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard.

Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations

Management believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.

As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled $113.3 million and $115.9 million at March 31, 2025 and December 31, 2024, respectively. In addition, during the three months ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024 and March 31, 2024, the Company incurred $1.6 million, $3.9 million, $17.0 million, $1.1 million and $0.7 million in in merger-related expenses, respectively. During the three months ended December 31, 2024 and September 30, 2024, the Company incurred other non-recurring charges totaling $0.5 million and $20.2 million, respectively.

Tangible book value per common share and the impact of the non-recurring expenses on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.

The following tables present the computation of each non-GAAP based measure:

(In thousands)

Tangible Book Value per Common Share	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Shareholders’ equity (most directly comparable GAAP-based measure)	$	532,936		$	516,682		$	516,206		$	278,376		$	271,682
Less: Goodwill		68,106			68,106			70,655			18,724			18,724
Other intangible assets		45,230			47,765			46,144			1,974			2,189
Related tax effect		(9,498	)		(10,031	)		(9,690	)		(415	)		(460	)
Tangible common equity (non-GAAP)	$	429,098		$	410,842		$	409,097		$	258,093		$	251,229

Common shares outstanding		19,510			19,390			19,373			10,720			10,705

Book value per share (most directly comparable GAAP-based measure)	$	27.32		$	26.65		$	26.65		$	25.97		$	25.38
Intangible assets per share		5.33			5.46			5.53			1.89			1.91
Tangible book value per share (non-GAAP)	$	21.99		$	21.19		$	21.12		$	24.08		$	23.47

(In thousands)	Three Months Ended
Adjusted Ratios for Non-recurring Charges	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Net income (loss) (A) – most directly comparable GAAP-based measure	$	18,051		$	13,684		$	(7,903	)	$	7,738		$	8,531
Plus: Merger-related expenses (B)		1,649			3,887			16,977			1,135			672
Plus: Executive retirement expenses (B)		—			35			4,758			—			—
Plus: Provision for credit losses on non-PCD loans (B)		—			—			15,504			—			—
Plus: Provision for legal settlement (B)		—			478			—			—			—
Less: Related tax effect (C)		(368	)		(1,386	)		(7,915	)		(139	)		(1	)
Adjusted net income (D=A+B-C) – Non-GAAP	$	19,332		$	16,698		$	21,421		$	8,734		$	9,202

Average assets (E)	$	5,425,697		$	5,464,165		$	5,515,143		$	3,211,124		$	3,098,772
Return on average assets (= A / E) – most directly comparable GAAP-based measure⁽¹⁾		1.35	%		1.00	%	(0.57) %				0.97	%		1.11	%
Return on average assets, adjusted (= D / E) – Non-GAAP⁽¹⁾		1.45	%		1.22	%		1.55	%		1.09	%		1.19	%

Average equity (F)	$	523,689		$	516,399		$	537,670		$	272,788		$	268,289
Return on average equity (= A / F) – most directly comparable GAAP-based measure⁽¹⁾		13.98	%		10.54	%	(5.85) %				11.41	%		12.79	%
Return on average equity, adjusted (= D / F) – Non-GAAP⁽¹⁾		14.97	%		12.86	%		15.85	%		12.88	%		13.79	%

Weighted average shares – basic (G) – most directly comparable GAAP-based measure		19,157			19,118			19,088			10,393			10,349
Basic earnings (loss) per share (= A / G) – most directly comparable GAAP-based measure	$	0.94		$	0.72		$	(0.41	)	$	0.74		$	0.82
Basic earnings per share, adjusted (= D / G) – Non-GAAP	$	1.01		$	0.87		$	1.12		$	0.84		$	0.89

Weighted average shares – diluted (H) – most directly comparable GAAP-based measure		19,328			19,300			19,226			10,553			10,482
Diluted earnings (loss) per share (= A / H) – most directly comparable GAAP-based measure	$	0.93		$	0.71		$	(0.41	)	$	0.73		$	0.81
Diluted earnings per share, adjusted (= D / H) – Non-GAAP	$	1.00		$	0.87		$	1.11		$	0.83		$	0.88

(1) Annualized

	Three Months Ended
	March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024
Noninterest expense (I) – most directly comparable GAAP-based measure	$	38,176		$	42,930		$	60,299		$	22,639		$	22,469
Less: Merger-related expenses (B)		(1,649	)		(3,887	)		(16,977	)		(1,135	)		(672	)
Less: Executive retirement expenses (B)		—			(35	)		(4,758	)		—			—
Less: Provision for legal settlement (B)		—			(478	)		—			—			—
Adjusted noninterest expense (J = I – B) – Non-GAAP	$	36,527		$	38,531		$	38,564		$	21,504		$	21,797

Net interest income (K)	$	48,761		$	50,573		$	51,697		$	26,103		$	26,881
Noninterest income (L)		11,624			11,247			12,386			7,172			6,630
Total operating income (M = K + L)	$	60,385		$	61,820		$	64,083		$	33,275		$	33,511

Efficiency ratio (= I / M) – most directly comparable GAAP-based measure		63.2	%		69.4	%		94.1	%		68.0	%		67.0	%
Efficiency ratio, adjusted (= J / M) – Non-GAAP		60.5	%		62.3	%		60.2	%		64.6	%		65.0	%

(1) Annualized

Appendix B- Investment Portfolio Concentrations

The following table summarizes the credit ratings and collateral associated with the Company’s investment security portfolio, excluding equity securities, at March 31, 2025:

(In thousands)

Sector	Portfolio Mix		Amortized Book		Fair Value		Credit Enhancement		AAA		AA		A		BBB		BB		NR		Collateral / Guarantee Type
Unsecured ABS	—	%	$	2,952	$	2,768	27	%	—	%	—	%	—	%	—	%	—	%	100	%	Unsecured Consumer Debt
Student Loan ABS	—			3,808		3,792	28		—		—		—		—		—		100		Seasoned Student Loans
Federal Family Education Loan ABS	9			78,231		77,955	11		1		47		33		7		12		—		Federal Family Education Loan ⁽¹⁾
PACE Loan ABS	—			1,943		1,710	7		100		—		—		—		—		—		PACE Loans ⁽²⁾
Non-Agency CMBS	2			13,966		14,022	30		—		—		—		—		—		100
Non-Agency RMBS	2			16,323		14,726	16		100		—		—		—		—		—		Reverse Mortgages ⁽³⁾
Municipal – General Obligation	11			99,248		89,952			17		76		7		—		—		—
Municipal – Revenue	14			120,676		107,154			—		82		12		—		—		6
SBA ReRemic ⁽⁵⁾	—			2,095		2,087			—		100		—		—		—		—		SBA Guarantee ⁽⁴⁾
Small Business Administration	1			5,511		5,629			—		100		—		—		—		—		SBA Guarantee ⁽⁴⁾
Agency MBS	19			164,144		162,334			—		100		—		—		—		—		Residential Mortgages ⁽⁴⁾
Agency CMO	40			355,699		352,729			—		100		—		—		—		—
U.S. Treasury securities	2			20,040		18,417			—		100		—		—		—		—		U.S. Government Guarantee ⁽⁴⁾
Corporate bonds	—			1,939		1,974			—		—		52		48		—		—
	100	%	$	886,575	$	855,249			4	%	87	%	5	%	1	%	—	%	3	%

⁽¹⁾ 97% guaranteed by U.S. government
⁽²⁾ PACE acronym represents Property Assessed Clean Energy loans
⁽³⁾ Non-agency reverse mortgages with current structural credit enhancements
⁽⁴⁾ Guaranteed by U.S. government or U.S. government agencies
⁽⁵⁾ SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits

Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor’s, Moody’s, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor’s rates U.S. government obligations at AA+.

About the Company

With $5.4 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania and Anne Arundel, Baltimore, Harford, Howard, and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company’s lending area also includes counties in Pennsylvania, Maryland, Delaware, Virginia and West Virginia within a 75-mile radius of the Company’s executive and administrative offices as well as the District of Columbia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company’s management with respect to, among other things, future events and the Company’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results to differ from those expressed or implied by the forward-looking statements include, but are not limited to, the following: interest rate changes or volatility; general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ineffectiveness of the Company’s strategic growth plan due to changes in current or future market conditions; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in, and evolving interpretations of, existing and future laws and regulations; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with litigation and legal proceedings; the possibility that the anticipated benefits of the merger with Codorus Valley Bancorp are not realized when expected or at all; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2024 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequent filings made with the Securities and Exchange Commission.

The foregoing list of factors is not exhaustive. If one or more events related to these or other risks or uncertainties materializes, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company disclaims any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company’s behalf may issue.

The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only and are not forecasts and may not reflect actual results.

The MIL Network –

April 23, 2025

MIL-OSI: Western New England Bancorp, Inc. Reports Results for Three Months Ended March 31, 2025 and Declares Quarterly Cash Dividend

Source: GlobeNewswire (MIL-OSI)

WESTFIELD, Mass., April 22, 2025 (GLOBE NEWSWIRE) — Western New England Bancorp, Inc. (the “Company” or “WNEB”) (NasdaqGS: WNEB), the holding company for Westfield Bank (the “Bank”), announced today the unaudited results of operations for the three months ended March 31, 2025. The Company reported net income of $2.3 million, or $0.11 per diluted share, for the three months ended March 31, 2025, compared to net income of $3.0 million, or $0.14 per diluted share, for the three months ended March 31, 2024. On a linked quarter basis, net income was $2.3 million, or $0.11 per diluted share, compared to net income of $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.07 per share on the Company’s common stock. The dividend will be payable on or about May 21, 2025 to shareholders of record on May 7, 2025.

In addition, the Company announced that its Board of Directors authorized a new stock repurchase plan (the “2025 Plan”), pursuant to which the Company may repurchase up to 1.0 million shares of the Company’s common stock, or approximately 4.8% of the Company’s outstanding common stock as of today. The 2025 Plan will commence upon the completion of the Company’s existing share repurchase plan (the “2024 Plan”). The 2024 Plan was approved by the Board of Directors on May 21, 2024, and as of March 31, 2025, there were 265,609 shares of common stock available for repurchase under the 2024 Plan.

James C. Hagan, President and Chief Executive Officer, commented, “I am pleased to report the results for the first quarter of 2025. Our strong, diversified core deposit base and our disciplined approach to managing our funding costs have resulted in an increase in net interest income for the third consecutive quarter. The net interest margin increased eight basis points to 2.49% compared to the preceding quarter. We will continue to proactively manage our funding costs and benefit from our liability sensitive balance sheet to support net interest margin growth. In the first quarter, core deposits increased $70.2 million, or 4.5%, and represented 70.0% of total deposits while the loan-to-deposit ratio decreased to 89.3%. During the same period, average funding costs decreased four basis points.

“We continue to focus on extending credit within our markets and servicing the needs of our existing customer base while ensuring new opportunities present the appropriate levels of risk and return. Consistent with our prudent credit culture, we continue to proactively identify and manage credit risk within the loan portfolio. Our asset quality remains strong, with nonaccrual loans at 0.29% of total loans as of March 31, 2025.

“The Company is considered to be well-capitalized, as defined by regulators and internal Company targets, and we remain disciplined in our capital management strategies. We continue to believe that buying back shares represents a valuable use of the Company’s capital. Today, we announced the 2025 Plan, which will commence upon the completion of the 2024 Plan. Our stock repurchase programs are an integral element of our capital management strategies. As such, we believe that repurchasing common stock enhances shareholder value. We are pleased to be able to continue to return value to shareholders through share repurchases.”

Hagan concluded, “Our commitment to strong capital and liquidity levels gives us a solid foundation to take advantage of opportunities in the markets we serve and to enhance shareholder value in the long term.”

Key Highlights:

Loans and Deposits

Total gross loans increased $9.3 million, or 0.4%, from $2.1 billion, or 77.9% of total assets, at December 31, 2024 to $2.1 billion, or 76.7% of total assets, at March 31, 2025. The increase in total gross loans was primarily driven by an increase in residential real estate loans, including home equity loans, of $8.1 million, or 1.0%, and an increase in commercial and industrial loans of $4.7 million, or 2.2%. These increases were partially offset by a decrease in commercial real estate loans of $3.0 million, or 0.3%, and a decrease in consumer loans of $526,000, or 12.0%.

At March 31, 2025, total deposits of $2.3 billion increased $66.0 million, or 2.9%, from December 31, 2024. Core deposits, which the Company defines as all deposits except time deposits, increased $70.2 million, or 4.5%, from $1.6 billion, or 68.9% of total deposits, at December 31, 2024, to $1.6 billion, or 70.0% of total deposits, at March 31, 2025. Time deposits decreased $4.3 million, or 0.6%, from $703.6 million at December 31, 2024 to $699.3 million at March 31, 2025. Brokered time deposits, which are included in time deposits, totaled $1.7 million at March 31, 2025 and at December 31, 2024. The loan-to-deposit ratio decreased from 91.5% at December 31, 2024 to 89.3% at March 31, 2025.

Liquidity

The Company’s liquidity position remains strong with solid core deposit relationships, cash, unencumbered securities, a diversified deposit base and access to diversified borrowing sources. At March 31, 2025, the Company had $1.1 billion in immediately available liquidity, compared to $665.6 million in uninsured deposits, or 28.6% of total deposits, representing a coverage ratio of 171.5%.

Uninsured deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep account or a reciprocal time deposit through the Certificate of Deposit Account Registry System. IntraFi allows for up to $250.0 million per customer of pass-through FDIC insurance, which would more than cover each of the Bank’s deposit customers if such customer desired to have such pass-through insurance.

Allowance for Credit Losses and Credit Quality

At March 31, 2025, the allowance for credit losses was $19.7 million, or 0.95% of total loans, compared to $19.5 million, or 0.94% of total loans, at December 31, 2024. The allowance for loan losses, as a percentage of nonaccrual loans, was 327.1% and 362.9% at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, nonaccrual loans totaled $6.0 million, or 0.29% of total loans, compared to $5.4 million, or 0.26% of total loans, at December 31, 2024. Total delinquent loans decreased from $5.0 million, or 0.24% of total loans, at December 31, 2024 to $4.5 million, or 0.22% of total loans, at March 31, 2025. At March 31, 2025 and December 31, 2024, the Company did not have any other real estate owned.

Net Interest Margin

The net interest margin increased eight basis points from 2.41% for the three months ended December 31, 2024 to 2.49% for the three months ended March 31, 2025. The net interest margin, on a tax-equivalent basis, increased eight basis points from 2.43% for the three months ended December 31, 2024, compared to 2.51% for the three months ended March 31, 2025.

Stock Repurchase Program

On May 21, 2024, the Board of Directors authorized the 2024 Plan under which the Company may repurchase up to 1.0 million shares of its common stock, or approximately 4.6%, of the Company’s then-outstanding shares of common stock. During the three months ended March 31, 2025, the Company repurchased 206,709 shares of common stock under the 2024 Plan, with an average price per share of $9.12. As of March 31, 2025, there were 265,609 shares of common stock available for repurchase under the 2024 Plan.

On April 22, 2025, the Board of Directors authorized the 2025 Plan, pursuant to which the Company may repurchase up to 1.0 million shares of common stock, or approximately 4.8% of the Company’s outstanding shares as of the date the 2025 Plan was announced. Repurchases under the 2025 Plan will commence upon the completion of the 2024 Plan.

The repurchase of shares under the stock repurchase program is administered through an independent broker. The shares of common stock repurchased under both the 2024 Plan and the 2025 Plan have been and will continue to be, as applicable, purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, or otherwise, depending upon market conditions. There is no guarantee as to the exact number, or value, of shares that will be repurchased by the Company, and the Company may discontinue repurchases at any time that the Company’s management (“Management”) determines additional repurchases are not warranted. The timing and amount of additional share repurchases under both the 2024 Plan and the 2025 Plan will depend on a number of factors, including the Company’s stock price performance, ongoing capital planning considerations, general market conditions, and applicable legal requirements.

Book Value and Tangible Book Value

At March 31, 2025, the Company’s book value per share was $11.44, compared to $11.30 at December 31, 2024, while tangible book value per share, a non-GAAP financial measure, increased $0.15, or 1.4%, from $10.63 at December 31, 2024 to $10.78 at March 31, 2025. See pages 16-17 for the related tangible book value calculation and a reconciliation of GAAP to non-GAAP financial measures.

Net Income for the Three Months Ended March 31, 2025 Compared to the Three Months Ended December 31, 2024.

For the three months ended March 31, 2025, the Company reported a decrease in net income of $985,000, or 30.0%, from $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024, to $2.3 million, or $0.11 per diluted share. Net interest income increased $261,000, or 1.7%, the provision for credit losses increased $904,000, non-interest income decreased $495,000, or 15.2%, and non-interest expense increased $258,000, or 1.7%. Return on average assets and return on average equity were 0.35% and 3.94%, respectively, for the three months ended March 31, 2025, compared to 0.49% and 5.48%, respectively, for the three months ended December 31, 2024.

Net Interest Income and Net Interest Margin

On a sequential quarter basis, net interest income, our primary driver of revenues, increased $261,000, or 1.7%, to $15.5 million for the three months ended March 31, 2025, from $15.3 million for the three months ended December 31, 2024. The increase in net interest income was primarily due to a decrease in interest expense of $410,000, or 3.1%, partially offset by a decrease in interest income of $149,000, or 0.5%.

The net interest margin increased eight basis points from 2.41% for the three months ended December 31, 2024 to 2.49% for the three months ended March 31, 2025. The net interest margin, on a tax-equivalent basis, increased eight basis points from 2.43% for the three months ended December 31, 2024, compared to 2.51% for the three months ended March 31, 2025.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.56% for the three months ended March 31, 2025, compared to 4.52% for the three months ended December 31, 2024. The average loan yield, without the impact of tax-equivalent adjustments, was 4.89% for the three months ended March 31, 2025, compared to 4.86% for the three months ended December 31, 2024. During the three months ended March 31, 2025, average interest-earning assets increased $12.7 million, or 0.5% to $2.5 billion, primarily due to an increase in average loans of $10.7 million, or 0.5%, and an increase in average securities of $3.9 million, or 1.1%.

The average cost of total funds, including non-interest bearing accounts and borrowings, decreased four basis points from 2.20% for the three months ended December 31, 2024 to 2.16% for the three months ended March 31, 2025. The average cost of core deposits, which the Company defines as all deposits except time deposits, increased 10 basis points to 1.08% for the three months ended March 31, 2025, from 0.98% for the three months ended December 31, 2024. The average cost of time deposits decreased 20 basis points from 4.31% for the three months ended December 31, 2024, to 4.11% for the three months ended March 31, 2025. The average cost of borrowings, including subordinated debt, was 5.04% for the three months ended December 31, 2024 and for the three months ended March 31, 2025. Average demand deposits, an interest-free source of funds, decreased $9.6 million, or 1.6%, from $579.2 million, or 25.6% of total average deposits, for the three months ended December 31, 2024, to $569.6 million, or 24.8% of total average deposits, for the three months ended March 31, 2025.

Provision for (Reversal of) Credit Losses

During the three months ended March 31, 2025, the Company recorded a provision for credit losses of $142,000, compared to a reversal of credit losses of $762,000 during the three months ended December 31, 2024. The increase was primarily due to changes in the most recent macroeconomic forecast. The provision for credit losses was also determined by a number of factors: the continued strong credit performance of the Company’s loan portfolio, changes in the loan portfolio mix and Management’s consideration of existing economic conditions. Management will continue to monitor macroeconomic variables related to the interest rate environment, changing tariff policies and concerns of an economic downturn. Management believes it is appropriately reserved for the current economic environment.

During the three months ended March 31, 2025, the Company recorded net charge-offs of $29,000, compared to net recoveries of $128,000 for the three months ended December 31, 2024.

Non-Interest Income

On a sequential quarter basis, non-interest income decreased $495,000, or 15.2%, to $2.8 million for the three months ended March 31, 2025, from $3.3 million for the three months ended December 31, 2024. During the three months ended March 31, 2025, service charges and fees on deposits decreased $17,000, or 0.7%, to $2.3 million from the three months ended December 31, 2024. Income from bank-owned life insurance (“BOLI”) decreased $13,000, or 2.7%, from the three months ended December 31, 2024 to $473,000 for the three months ended March 31, 2025. During the three months ended March 31, 2025, the Company reported a gain of $7,000 from mortgage banking activities, compared to a loss of $11,000 during the three months ended December 31, 2024. During the three months ended March 31, 2025, the Company reported unrealized losses on marketable equity securities of $5,000, compared to unrealized losses of $9,000, during the three months ended December 31, 2024. During the three months ended December 31, 2024, the Company reported gains on non-marketable equity investments of $300,000 and did not have comparable income during the three months ended March 31, 2025. During the three months ended December 31, 2024, the Company reported $187,000 in other income from loan-level swap fees on commercial loans and did not have comparable income during the three months ended March 31, 2025.

Non-Interest Expense

For the three months ended March 31, 2025, non-interest expense increased $258,000, or 1.7%, to $15.2 million from $14.9 million for the three months ended December 31, 2024. Occupancy expense increased $156,000, or 12.4%, primarily due to snow removal costs of $143,000. Advertising expense increased $119,000, or 38.4%, professional fees increased $75,000, or 15.9%, FDIC insurance expense increased $42,000, or 10.8%, and software related expenses increased $17,000, or 2.6%. These increases were partially offset by a decrease in furniture and equipment expense of $18,000, or 3.6%, a decrease in data processing expense of $18,000, or 2.0%, a decrease in debit card processing and ATM network costs of $16,000, or 2.7%, a decrease in salaries and related benefits of $16,000, or 0.2%, and a decrease in other non-interest expense of $83,000, or 5.8%.

For the three months ended March 31, 2025 and the three months ended December 31, 2024, the efficiency ratio was 83.0% and 80.6%, respectively. For the three months ended March 31, 2025, the adjusted efficiency ratio, a non-GAAP financial measure, was 83.0% compared to 81.9% for the three months ended December 31, 2024. The increases in the efficiency ratio and the adjusted efficiency ratio were driven by higher expenses and lower non-interest income during the three months ended March 31, 2025 compared to the three months ended December 31, 2024. The Company’s detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. See pages 16-17 for the related adjusted efficiency ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

Income tax expense for the three months ended March 31, 2025 was $664,000, with an effective tax rate of 22.4%, compared to $1.1 million, with an effective tax rate of 24.6%, for the three months ended December 31, 2024.

Net Income for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024.

The Company reported net income of $2.3 million, or $0.11 per diluted share, for the three months ended March 31, 2025, compared to net income of $3.0 million, or $0.14 per diluted share, for the three months ended March 31, 2024. Net interest income increased $188,000, or 1.2%, provision for credit losses increased $692,000, non-interest income increased $85,000, or 3.2%, and non-interest expense increased $402,000, or 2.7%, during the same period. Return on average assets and return on average equity were 0.35% and 3.94%, respectively, for the three months ended March 31, 2025, compared to 0.47% and 5.04%, respectively, for the three months ended March 31, 2024.

Net Interest Income and Net Interest Margin

Net interest income increased $188,000, or 1.2%, to $15.5 million, for the three months ended March 31, 2025, from $15.3 million for the three months ended March 31, 2024. The increase in net interest income was due to an increase in interest and dividend income of $1.8 million, or 6.9%, partially offset by an increase in interest expense of $1.6 million, or 14.6%. The increase in interest expense was primarily due to an increase in average interest-bearing deposits of $156.1 million, or 9.9%, and an increase in the average cost of interest-bearing deposit accounts of 29 basis points from the three months ended March 31, 2024 to the three months ended March 31, 2025. As a result, the net interest margin decreased from 2.57% for the three months ended March 31, 2024, to 2.49% for the three months ended March 31, 2025. The net interest margin, on a tax-equivalent basis, was 2.51% for the three months ended March 31, 2025, compared to 2.59% for the three months ended March 31, 2024.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased 11 basis points from 4.45% for the three months ended March 31, 2024 to 4.56% for the three months ended March 31, 2025. The average loan yield, without the impact of tax-equivalent adjustments, was 4.89% for the three months ended March 31, 2025, compared to 4.82% for the three months ended March 31, 2024. During the three months ended March 31, 2025, average interest-earning assets increased $126.6 million, or 5.3%, to $2.5 billion, primarily due to an increase in average loans of $51.8 million, or 2.6%, an increase in average short-term investments, consisting of cash and cash equivalents, of $66.7 million, an increase in average securities of $5.9 million, or 1.6%, and an increase in average other investments of $2.3 million, or 18.6%.

The average cost of total funds, including non-interest bearing accounts and borrowings, increased 19 basis points from 1.97% for the three months ended March 31, 2024, to 2.16% for the three months ended March 31, 2025. The average cost of core deposits, which the Company defines as all deposits except time deposits, increased 32 basis points from 0.76% for the three months ended March 31, 2024 to 1.08% for the three months ended March 31, 2025. The average cost of time deposits decreased one basis point from 4.12% for the three months ended March 31, 2024 to 4.11% for the three months ended March 31, 2025. The average cost of borrowings, including subordinated debt, increased 13 basis points from 4.91% for the three months ended March 31, 2024 to 5.04% for the three months ended March 31, 2025. Average demand deposits, an interest-free source of funds, increased $11.9 million, or 2.1%, from $557.7 million, or 26.1% of total average deposits, for the three months ended March 31, 2024, to $569.6 million, or 24.8% of total average deposits, for the three months ended March 31, 2025.

Provision for (Reversal of) Credit Losses

During the three months ended March 31, 2025, the Company recorded a provision for credit losses of $142,000, compared to a reversal of credit losses of $550,000 during the three months ended March 31, 2024. The increase was primarily due to changes in the most recent macroeconomic forecast. The provision for credit losses was also determined by a number of factors: the continued strong credit performance of the Company’s loan portfolio, changes in the loan portfolio mix and Management’s consideration of existing economic conditions. Management will continue to monitor macroeconomic variables related to the interest rate environment, the continued discussion on tariffs and the concerns of an economic downturn. Management believes it is appropriately reserved for the current economic environment.

During the three months ended March 31, 2025, the Company recorded net charge-offs of $29,000, compared to net recoveries of $67,000 for the three months ended March 31, 2024.

Non-Interest Income

Non-interest income increased $85,000, or 3.2%, from $2.7 million, for the three months ended March 31, 2024 to $2.8 million for the three months ended March 31, 2025, primarily due to a $65,000, or 2.9%, increase in service charges and fees and an increase in income from BOLI of $20,000, or 4.4%.

Non-Interest Expense

Non-interest expense increased $402,000, or 2.7%, from $14.8 million for the three months ended March 31, 2024 to $15.2 million for the three months ended March 31, 2025. Salaries and benefits increased $169,000, or 2.0%, advertising expense increased $80,000, or 22.9%, occupancy expense increased $49,000, or 3.6%, debit card processing and ATM network costs increased $25,000, or 4.5%, FDIC insurance expense increased $21,000, or 5.1%, data processing expense increased $20,000, or 2.3%, furniture and equipment expense increased $3,000, or 0.6%, and other non-interest expense increased $98,000, or 7.8%. These increases were partially offset by a decrease in software related expenses of $40,000, or 5.7%, and a decrease in professional fees of $23,000, or 4.0%.

For the three months ended March 31, 2025 and the three months ended March 31, 2024, the efficiency ratio was 83.0% and 82.0%, respectively. For the three months ended March 31, 2025, the adjusted efficiency ratio, a non-GAAP financial measure, was 83.0% compared to 82.0% for the three months ended March 31, 2024. The increases in the efficiency ratio and the adjusted efficiency ratio were driven by higher expenses during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. See pages 16-17 for the efficiency ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

For the three months ended March 31, 2025, income tax expense was $664,000, with an effective tax rate of 22.4%, compared to $827,000, with an effective tax rate of 21.8%, for the three months ended March 31, 2024.

Balance Sheet

At March 31, 2025, total assets were $2.7 billion, an increase of $56.2 million, or 2.1%, from December 31, 2024. The increase in total assets was primarily due to an increase in total gross loans of $9.3 million, or 0.4%, an increase in cash and cash equivalents of $44.1 million, or 66.4%, and an increase in investment securities of $3.6 million, or 1.0%.

Investments

At March 31, 2025, the investment securities portfolio totaled $369.8 million, or 13.6% of total assets, compared to $366.1 million, or 13.8% of total assets, at December 31, 2024. At March 31, 2025, the Company’s available-for-sale securities portfolio, recorded at fair market value, increased $7.1 million, or 4.4%, from $160.7 million at December 31, 2024 to $167.8 million. The held-to-maturity securities portfolio, recorded at amortized cost, decreased $3.4 million, or 1.7%, from $205.0 million at December 31, 2024 to $201.6 million at March 31, 2025.

At March 31, 2025, the Company reported unrealized losses on the available-for-sale securities portfolio of $27.8 million, or 14.2% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $31.2 million, or 16.2% of the amortized cost basis of the available-for-sale securities at December 31, 2024. At March 31, 2025, the Company reported unrealized losses on the held-to-maturity securities portfolio of $35.8 million, or 17.8% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $39.4 million, or 19.2% of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2024.

The securities in which the Company may invest are limited by regulation. Federally chartered savings banks have authority to invest in various types of assets, including U.S. Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed securities, certain certificates of deposit of insured financial institutions, repurchase agreements, overnight and short-term loans to other banks, corporate debt instruments and marketable equity securities. The securities, with the exception of $8.7 million in corporate bonds, are issued by the United States government or government-sponsored enterprises and are therefore either explicitly or implicitly guaranteed as to the timely payment of contractual principal and interest. These positions are deemed to have no credit impairment, therefore, the disclosed unrealized losses with the securities portfolio relate primarily to changes in prevailing interest rates. In all cases, price improvement in future periods will be realized as the issuances approach maturity.

Management regularly reviews the portfolio for securities in an unrealized loss position. At March 31, 2025 and December 31, 2024, the Company did not record any credit impairment charges on its securities portfolio and attributed the unrealized losses primarily due to fluctuations in general interest rates or changes in expected prepayments and not due to credit quality. The primary objective of the Company’s investment portfolio is to provide liquidity and to secure municipal deposit accounts while preserving the safety of principal. The available-for-sale and held-to-maturity portfolios are both eligible for pledging to the Federal Home Loan Bank (“FHLB”) as collateral for borrowings. The portfolios are comprised of high-credit quality investments and both portfolios generated cash flows monthly from interest, principal amortization and payoffs, which support’s the Bank’s objective to provide liquidity.

Total Loans

Total gross loans increased $9.3 million, or 0.4%, from $2.1 billion, or 77.9% of total assets, at December 31, 2024 to $2.1 billion, or 76.7% of total assets, at March 31, 2025. The increase in total gross loans was primarily driven by an increase in residential real estate loans, including home equity loans, of $8.1 million, or 1.0%, and an increase in commercial and industrial loans of $4.7 million, or 2.2%. These increases were partially offset by a decrease in commercial real estate loans of $3.0 million, or 0.3%, and a decrease in consumer loans of $526,000, or 12.0%.

The following table presents a summary of the loan portfolio by the major classification of loans at the periods indicated:

	March 31, 2025		December 31, 2024
	(Dollars in thousands)

Commercial real estate loans:
Non-owner occupied	$	881,105	$	880,828
Owner-occupied		191,582		194,904
Total commercial real estate loans		1,072,687		1,075,732

Residential real estate loans:
Residential		659,984		653,802
Home equity		123,804		121,857
Total residential real estate loans		783,788		775,659

Commercial and industrial loans		216,368		211,656

Consumer loans		3,865		4,391
Total gross loans		2,076,708		2,067,438
Unamortized premiums and net deferred loans fees and costs		2,853		2,751
Total loans	$	2,079,561	$	2,070,189

Credit Quality

Management continues to closely monitor the loan portfolio for any signs of deterioration in borrowers’ financial condition and also in light of speculation that commercial real estate values may deteriorate as the market continues to adjust to higher vacancies and interest rates. We continue to proactively take steps to mitigate risk in our loan portfolio.

Total delinquency was $4.5 million, or 0.22% of total loans, at March 31, 2025, compared to $5.0 million, or 0.24% of total loans at December 31, 2024. At March 31, 2025, nonaccrual loans totaled $6.0 million, or 0.29% of total loans, compared to $5.4 million, or 0.26% of total loans, at December 31, 2024. At March 31, 2025 and December 31, 2024, there were no loans 90 or more days past due and still accruing interest. Total nonaccrual assets totaled $6.0 million, or 0.22% of total assets, at March 31, 2025, compared to $5.4 million, or 0.20% of total assets, at December 31, 2024. At March 31, 2025 and December 31, 2024, the Company did not have any other real estate owned.

At March 31, 2025, the allowance for credit losses was $19.7 million, or 0.95% of total loans and 327.1% of nonaccrual loans, compared to $19.5 million, or 0.94% of total loans and 362.9% of nonaccrual loans, at December 31, 2024. Total criticized loans, defined as special mention and substandard loans, decreased $2.1 million, or 5.5%, from $38.4 million, or 1.9% of total loans, at December 31, 2024 to $36.3 million, or 1.7% of total loans, at March 31, 2025.

Our commercial real estate portfolio is comprised of diversified property types and primarily within our geographic footprint. At March 31, 2025, the commercial real estate portfolio totaled $1.1 billion, and represented 51.7% of total loans. Of the $1.1 billion, $881.1 million, or 82.1%, was categorized as non-owner occupied commercial real estate and represented 325.8% of the Bank’s total risk-based capital. More details on the diversification of the loan portfolio are available in the supplementary earnings presentation.

Deposits

At March 31, 2025, total deposits were $2.3 billion and increased $66.0 million, or 2.9%, from December 31, 2024. Core deposits, which the Company defines as all deposits except time deposits, increased $70.2 million, or 4.5%, from $1.6 billion, or 68.9% of total deposits, at December 31, 2024, to $1.6 billion, or 70.0% of total deposits, at March 31, 2025. Non-interest-bearing deposits increased $24.4 million, or 4.3%, to $590.0 million, and represent 25.3% of total deposits, money market accounts increased $45.7 million, or 6.9%, to $707.2 million, savings accounts increased $9.8 million, or 5.4%, to $191.4 million and interest-bearing checking accounts decreased $9.6 million, or 6.4%, to $140.8 million.

Time deposits decreased $4.3 million, or 0.6%, from $703.6 million at December 31, 2024 to $699.3 million at March 31, 2025. Brokered time deposits, which are included in time deposits, totaled $1.7 million at March 31, 2025 and at December 31, 2024. The Company has experienced growth and movement in both money market accounts and non-interest-bearing deposits as a result of seasonal customer behaviors, relationship pricing, and the current interest rate environment, as opposed to time deposit specials or interest rate adjustments. We continue our disciplined and focused approach to core relationship management and customer outreach to meet funding requirements and liquidity needs, with an emphasis on retaining a long-term core customer relationship base by competing for and retaining deposits in our local market. At March 31, 2025, the Bank’s uninsured deposits totaled $665.6 million, or 28.6% of total deposits, compared to $643.6 million, or 28.4% of total deposits, at December 31, 2024.

The table below is a summary of our deposit balances for the periods noted:

	March 31, 2025		December 31, 2024		March 31, 2024
	(Dollars in thousands)
Core Deposits:
Demand accounts	$	589,996	$	565,620	$	559,928
Interest-bearing accounts		140,769		150,348		125,377
Savings accounts		191,398		181,618		190,732
Money market accounts		707,153		661,478		624,474
Total Core Deposits	$	1,629,316	$	1,559,064	$	1,500,511
Time Deposits:		699,277		703,583		643,236
Total Deposits:	$	2,328,593	$	2,262,647	$	2,143,747

FHLB and Subordinated Debt

At March 31, 2025, total borrowings decreased $860,000, or 0.7%, from $123.1 million at December 31, 2024 to $122.3 million. At March 31, 2025, short-term borrowings decreased $870,000, or 16.1%, to $4.5 million, compared to $5.4 million at December 31, 2024. Long-term borrowings were $98.0 million at March 31, 2025 and December 31, 2024. At March 31, 2025 and December 31, 2024, borrowings also consisted of $19.8 million in fixed-to-floating rate subordinated notes.

As of March 31, 2025, the Company had $447.5 million of additional borrowing capacity at the FHLB, $378.5 million of additional borrowing capacity under the Federal Reserve Bank Discount Window and $25.0 million of other unsecured lines of credit with correspondent banks.

Capital

At March 31, 2025, shareholders’ equity was $237.7 million, or 8.8% of total assets, compared to $235.9 million, or 8.9% of total assets, at December 31, 2024. The change was primarily attributable to a decrease in accumulated other comprehensive loss of $2.6 million, cash dividends paid of $1.4 million, repurchase of shares at a cost of $2.0 million, partially offset by net income of $2.3 million. At March 31, 2025, total shares outstanding were 20,774,319. The Company’s regulatory capital ratios continue to be strong and in excess of regulatory minimum requirements to be considered well-capitalized as defined by regulators and internal Company targets.

	March 31, 2025				December 31, 2024
	Company		Bank		Company		Bank
Total Capital (to Risk Weighted Assets)	14.28	%	13.56	%	14.38	%	13.65	%
Tier 1 Capital (to Risk Weighted Assets)	12.27	%	12.55	%	12.37	%	12.64	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)	12.27	%	12.55	%	12.37	%	12.64	%
Tier 1 Leverage Ratio (to Adjusted Average Assets)	9.06	%	9.26	%	9.14	%	9.34	%

Dividends

Although the Company has historically paid quarterly dividends on its common stock and currently intends to continue to pay such dividends, the Company’s ability to pay such dividends depends on a number of factors, including restrictions under federal laws and regulations on the Company’s ability to pay dividends, and as a result, there can be no assurance that dividends will continue to be paid in the future.

About Western New England Bancorp, Inc.

Western New England Bancorp, Inc. is a Massachusetts-chartered stock holding company and the parent company of Westfield Bank, CSB Colts, Inc., Elm Street Securities Corporation, WFD Securities, Inc. and WB Real Estate Holdings, LLC. Western New England Bancorp, Inc. and its subsidiaries are headquartered in Westfield, Massachusetts and operate 25 banking offices throughout western Massachusetts and northern Connecticut. To learn more, visit our website at www.westfieldbank.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the Company’s financial condition, liquidity, results of operations, future performance, and business. Forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” and “potential.” Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to:

unpredictable changes in general economic or political conditions, financial markets, fiscal, monetary and regulatory policies, including actual or potential stress in the banking industry;
the duration and scope of potential pandemics, including the emergence of new variants and the response thereto;
unstable political and economic conditions, including changes in tariff policies, which could materially impact credit quality trends and the ability to generate loans and gather deposits;
inflation and governmental responses to inflation, including recent sustained increases and potential future increases in interest rates that reduce margins;
the effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Basel guidelines, capital requirements and other applicable laws and regulations;
significant changes in accounting, tax or regulatory practices or requirements;
new legal obligations or liabilities or unfavorable resolutions of litigation;
disruptive technologies in payment systems and other services traditionally provided by banks;
the highly competitive industry and market area in which we operate;
operational risks or risk management failures by us or critical third parties, including without limitation with respect to data processing, information systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks;
failure or circumvention of our internal controls or procedures;
changes in the securities markets which affect investment management revenues;
increases in Federal Deposit Insurance Corporation deposit insurance premiums and assessments;
the soundness of other financial services institutions which may adversely affect our credit risk;
certain of our intangible assets may become impaired in the future;
new lines of business or new products and services, which may subject us to additional risks;
changes in key management personnel which may adversely impact our operations;
severe weather, natural disasters, acts of war or terrorism and other external events which could significantly impact our business; and
other risk factors detailed from time to time in our SEC filings.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by law.

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Net Income and Other Data (Dollars in thousands, except per share data) (Unaudited)

	Three Months Ended
	March 31,			December 31,				September 30,				June 30,				March 31,
		2025				2024				2024				2024				2024
INTEREST AND DIVIDEND INCOME:
Loans	$	24,984			$	25,183			$	25,134			$	24,340			$	24,241
Securities		2,422				2,273				2,121				2,141				2,114
Other investments		191				214				189				148				136
Short-term investments		840				916				396				173				113
Total interest and dividend income		28,437				28,586				27,840				26,802				26,604

INTEREST EXPENSE:
Deposits		11,376				11,443				11,165				10,335				9,293
Short-term borrowings		54				60				71				186				283
Long-term debt		1,219				1,557				1,622				1,557				1,428
Subordinated debt		254				253				254				254				254
Total interest expense		12,903				13,313				13,112				12,332				11,258

Net interest and dividend income		15,534				15,273				14,728				14,470				15,346

PROVISION FOR (REVERSAL OF) CREDIT LOSSES		142				(762	)			941				(294	)			(550	)

Net interest and dividend income after provision for (reversal of) credit losses		15,392				16,035				13,787				14,764				15,896

NON-INTEREST INCOME:
Service charges and fees on deposits		2,284				2,301				2,341				2,341				2,219
Income from bank-owned life insurance		473				486				470				502				453
Unrealized (loss) gain on marketable equity securities		(5	)			(9	)			10				4				8
Gain (loss) on sale of mortgages		7				(11	)			246				–				–
Gain on non-marketable equity investments		–				300				–				987				–
Loss on disposal of premises and equipment		–				–				–				–				(6	)
Other income		–				187				74				–				–
Total non-interest income		2,759				3,254				3,141				3,834				2,674

NON-INTEREST EXPENSE:
Salaries and employees’ benefits		8,413				8,429				8,112				7,901				8,244
Occupancy		1,412				1,256				1,217				1,218				1,363
Furniture and equipment		487				505				483				483				484
Data processing		882				900				869				846				862
Software		659				642				612				566				699
Debit/ATM card processing expense		577				593				649				643				552
Professional fees		546				471				540				581				569
FDIC insurance		431				389				338				323				410
Advertising		429				310				271				339				349
Other		1,348				1,431				1,315				1,414				1,250
Total non-interest expense		15,184				14,926				14,406				14,314				14,782

INCOME BEFORE INCOME TAXES		2,967				4,363				2,522				4,284				3,788

INCOME TAX PROVISION		664				1,075				618				771				827
NET INCOME	$	2,303			$	3,288			$	1,904			$	3,513			$	2,961

Basic earnings per share	$	0.11			$	0.16			$	0.09			$	0.17			$	0.14
Weighted average shares outstanding		20,385,481				20,561,749				20,804,162				21,056,173				21,180,968
Diluted earnings per share	$	0.11			$	0.16			$	0.09			$	0.17			$	0.14
Weighted average diluted shares outstanding		20,514,098				20,701,276				20,933,833				21,163,762				21,271,323

Other Data:
Return on average assets (1)		0.35	%			0.49	%			0.29	%			0.55	%			0.47	%
Return on average equity (1)		3.94	%			5.48	%			3.19	%			6.03	%			5.04	%
Efficiency ratio		83.00	%			80.56	%			80.62	%			78.20	%			82.03	%
Adjusted efficiency ratio (2)		82.98	%			81.85	%			80.67	%			82.68	%			82.04	%
Net interest margin		2.49	%			2.41	%			2.40	%			2.42	%			2.57	%
Net interest margin, on a fully tax-equivalent basis		2.51	%			2.43	%			2.42	%			2.44	%			2.59	%
(1) Annualized.
(2) The adjusted efficiency ratio (non-GAAP) represents the ratio of operating expenses divided by the sum of net interest and dividend income and non-interest income, excluding realized and unrealized gains and losses on securities, gain on non-marketable equity investments, and loss on disposal of premises and equipment.

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands) (Unaudited)

	March 31,			December 31,			September 30,			June 30,			March 31,
		2025			2024			2024			2024			2024
Cash and cash equivalents	$	110,579		$	66,450		$	72,802		$	53,458		$	22,613
Securities available-for-sale, at fair value		167,800			160,704			155,889			135,089			138,362
Securities held to maturity, at amortized cost		201,557			205,036			213,266			217,632			221,242
Marketable equity securities, at fair value		414			397			252			233			222
Federal Home Loan Bank of Boston and other restricted stock – at cost		5,818			5,818			7,143			7,143			3,105

Loans		2,079,561			2,070,189			2,049,002			2,026,226			2,025,566
Allowance for credit losses		(19,669	)		(19,529	)		(19,955	)		(19,444	)		(19,884	)
Net loans		2,059,892			2,050,660			2,029,047			2,006,782			2,005,682

Bank-owned life insurance		77,529			77,056			76,570			76,100			75,598
Goodwill		12,487			12,487			12,487			12,487			12,487
Core deposit intangible		1,344			1,438			1,531			1,625			1,719
Other assets		71,864			73,044			71,492			75,521			76,206
TOTAL ASSETS	$	2,709,284		$	2,653,090		$	2,640,479		$	2,586,070		$	2,557,236

Total deposits	$	2,328,593		$	2,262,647		$	2,224,206		$	2,171,809		$	2,143,747
Short-term borrowings		4,520			5,390			4,390			6,570			11,470
Long-term debt		98,000			98,000			128,277			128,277			120,646
Subordinated debt		19,761			19,751			19,741			19,731			19,722
Securities pending settlement		2,093			8,622			2,513			102			–
Other liabilities		18,641			22,770			20,697			23,104			25,855
TOTAL LIABILITIES		2,471,608			2,417,180			2,399,824			2,349,593			2,321,440

TOTAL SHAREHOLDERS’ EQUITY		237,676			235,910			240,655			236,477			235,796
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,709,284		$	2,653,090		$	2,640,479		$	2,586,070		$	2,557,236

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES Other Data (Dollars in thousands, except per share data) (Unaudited)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2025			2024			2024			2024			2024
Shares outstanding at end of period		20,774,319			20,875,713			21,113,408			21,357,849			21,627,690

Operating results:
Net interest income	$	15,534		$	15,273		$	14,728		$	14,470		$	15,346
Provision for (reversal of) credit losses		142			(762	)		941			(294	)		(550	)
Non-interest income		2,759			3,254			3,141			3,834			2,674
Non-interest expense		15,184			14,926			14,406			14,314			14,782
Income before income provision for income taxes		2,967			4,363			2,522			4,284			3,788
Income tax provision		664			1,075			618			771			827
Net income		2,303			3,288			1,904			3,513			2,961

Performance Ratios:
Net interest margin		2.49	%		2.41	%		2.40	%		2.42	%		2.57	%
Net interest margin, on a fully tax-equivalent basis		2.51	%		2.43	%		2.42	%		2.44	%		2.59	%
Interest rate spread		1.74	%		1.63	%		1.60	%		1.66	%		1.85	%
Interest rate spread, on a fully tax-equivalent basis		1.76	%		1.65	%		1.62	%		1.67	%		1.86	%
Return on average assets		0.35	%		0.49	%		0.29	%		0.55	%		0.47	%
Return on average equity		3.94	%		5.48	%		3.19	%		6.03	%		5.04	%
Efficiency ratio (GAAP)		83.00	%		80.56	%		80.62	%		78.20	%		82.03	%
Adjusted efficiency ratio (non-GAAP)⁽¹⁾		82.98	%		81.85	%		80.67	%		82.68	%		82.04	%

Per Common Share Data:
Basic earnings per share	$	0.11		$	0.16		$	0.09		$	0.17		$	0.14
Earnings per diluted share		0.11			0.16			0.09			0.17			0.14
Cash dividend declared		0.07			0.07			0.07			0.07			0.07
Book value per share		11.44			11.30			11.40			11.07			10.90
Tangible book value per share (non-GAAP)⁽²⁾		10.78			10.63			10.73			10.41			10.25

Asset Quality:
30-89 day delinquent loans	$	2,459		$	3,694		$	3,059		$	3,270		$	3,000
90 days or more delinquent loans		2,027			1,301			1,253			2,280			1,716
Total delinquent loans		4,486			4,995			4,312			5,550			4,716
Total delinquent loans as a percentage of total loans		0.22	%		0.24	%		0.21	%		0.27	%		0.23	%
Nonaccrual loans	$	6,014		$	5,381		$	4,873		$	5,845		$	5,837
Nonaccrual loans as a percentage of total loans		0.29	%		0.26	%		0.24	%		0.29	%		0.29	%
Nonaccrual assets as a percentage of total assets		0.22	%		0.20	%		0.18	%		0.23	%		0.23	%
Allowance for credit losses as a percentage of nonaccrual loans		327.05	%		362.93	%		409.50	%		332.66	%		340.65	%
Allowance for credit losses as a percentage of total loans		0.95	%		0.94	%		0.97	%		0.96	%		0.98	%
Net loan charge-offs (recoveries)	$	29		$	(128	)	$	98		$	10		$	(67	)
Net loan charge-offs (recoveries) as a percentage of average loans		0.00	%		(0.01	)%		0.00	%		0.00	%		0.00	%
(1) The adjusted efficiency ratio (non-GAAP) represents the ratio of operating expenses divided by the sum of net interest and dividend income and non-interest income, excluding realized and unrealized gains and losses on securities, gains on non-marketable equity investments, and loss on disposal of premises and equipment.
(2) Tangible book value per share (non-GAAP) represents the value of the Company’s tangible assets divided by its current outstanding shares.

The following table sets forth the information relating to our average balances and net interest income for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024 and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

	Three Months Ended
	March 31, 2025									December 31, 2024								March 31, 2024
	Average						Average Yield/			Average					Average Yield/			Average					Average Yield/
	Balance		Interest				Cost⁽⁸⁾			Balance		Interest			Cost⁽⁸⁾			Balance		Interest			Cost⁽⁸⁾
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	2,073,486		$	25,105			4.91	%	$	2,062,822	$	25,311			4.88	%	$	2,021,713	$	24,351			4.84	%
Securities(2)		365,371			2,422			2.69			361,476		2,273			2.50			359,493		2,114			2.37
Other investments		14,819			191			5.23			15,924		214			5.35			12,494		136			4.38
Short-term investments(3)		76,039			840			4.48			76,795		916			4.75			9,386		113			4.84
Total interest-earning assets		2,529,715			28,558			4.58			2,517,017		28,714			4.54			2,403,086		26,714			4.47
Total non-interest-earning assets		156,733									155,538								154,410
Total assets	$	2,686,448								$	2,672,555							$	2,557,496

LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts	$	140,960			250			0.72		$	149,231		264			0.70		$	135,559		234			0.69
Savings accounts		183,869			40			0.09			179,122		38			0.08			186,125		39			0.08
Money market accounts		704,215			3,968			2.29			654,965		3,553			2.16			626,267		2,587			1.66
Time deposit accounts		702,748			7,118			4.11			700,324		7,588			4.31			627,699		6,433			4.12
Total interest-bearing deposits		1,731,792			11,376			2.66			1,683,642		11,443			2.70			1,575,650		9,293			2.37
Short-term borrowings and long-term debt		122,786			1,527			5.04			147,748		1,870			5.04			160,802		1,965			4.91
Interest-bearing liabilities		1,854,578			12,903			2.82			1,831,390		13,313			2.89			1,736,452		11,258			2.61
Non-interest-bearing deposits		569,638									579,168								557,711
Other non-interest-bearing liabilities		25,464									23,380								27,078
Total non-interest-bearing liabilities		595,102									602,548								584,789
Total liabilities		2,449,680									2,433,938								2,321,241
Total equity		236,768									238,617								236,255
Total liabilities and equity	$	2,686,448								$	2,672,555							$	2,557,496
Less: Tax-equivalent adjustment(2)					(121	)							(128	)							(110	)
Net interest and dividend income				$	15,534							$	15,273							$	15,346
Net interest rate spread(4)								1.74	%							1.63	%							1.85	%
Net interest rate spread, on a tax-equivalent basis(5)								1.76	%							1.65	%							1.86	%
Net interest margin(6)								2.49	%							2.41	%							2.57	%
Net interest margin, on a tax-equivalent basis(7)								2.51	%							2.43	%							2.59	%
Ratio of average interest-earning assets to average interest-bearing liabilities								136.40	%							137.44	%							138.39	%
(1) Loans, including nonaccrual loans, are net of deferred loan origination costs and unadvanced funds.
(2) Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the consolidated statements of net income.
(3) Short-term investments include federal funds sold.
(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5) Net interest rate spread, on a tax-equivalent basis, represents the difference between the tax-equivalent weighted average yield on interest-earning assets and the tax-equivalent weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.
(7) Net interest margin, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets.
(8) Annualized.

Reconciliation of Non-GAAP to GAAP Financial Measures

The Company believes that certain non-GAAP financial measures provide information to investors that is useful in understanding its results of operations and financial condition. Because not all companies use the same calculation, this presentation may not be comparable to other similarly titled measures calculated by other companies. A reconciliation of these non-GAAP financial measures is provided below.

	For the quarter ended
	3/31/2025			12/31/2024			9/30/2024			6/30/2024			3/31/2024
	(Dollars in thousands)

Loan interest (no tax adjustment)	$	24,984		$	25,183		$	25,134		$	24,340		$	24,241
Tax-equivalent adjustment		121			128			119			114			110
Loan interest (tax-equivalent basis)	$	25,105		$	25,311		$	25,253		$	24,454		$	24,351

Net interest income (no tax adjustment)	$	15,534		$	15,273		$	14,728		$	14,470		$	15,346
Tax equivalent adjustment		121			128			119			114			110
Net interest income (tax-equivalent basis)	$	15,655		$	15,401		$	14,847		$	14,584		$	15,456

Average interest-earning assets	$	2,529,715		$	2,517,017		$	2,441,236		$	2,400,633		$	2,403,086
Net interest margin (no tax adjustment)		2.49	%		2.41	%		2.40	%		2.42	%		2.57	%
Net interest margin, tax-equivalent		2.51	%		2.43	%		2.42	%		2.44	%		2.59	%

Book Value per Share (GAAP)	$	11.44		$	11.30		$	11.40		$	11.07		$	10.90
Non-GAAP adjustments:
Goodwill		(0.60	)		(0.60	)		(0.59	)		(0.58	)		(0.58	)
Core deposit intangible		(0.06	)		(0.07	)		(0.08	)		(0.08	)		(0.07	)
Tangible Book Value per Share (non-GAAP)	$	10.78		$	10.63		$	10.73		$	10.41		$	10.25

	For the quarter ended
	3/31/2025			12/31/2024			9/30/2024			6/30/2024			3/31/2024
	(Dollars in thousands)

Efficiency Ratio:
Non-interest Expense (GAAP)	$	15,184		$	14,926		$	14,406		$	14,314		$	14,782

Net Interest Income (GAAP)	$	15,534		$	15,273		$	14,728		$	14,470		$	15,346

Non-interest Income (GAAP)	$	2,759		$	3,254		$	3,141		$	3,834		$	2,674
Non-GAAP adjustments:
Unrealized losses (gains) on marketable equity securities		5			9			(10	)		(4	)		(8	)
Gain on non-marketable equity investments		–			(300	)		–			(987	)		–
Loss on disposal of premises and equipment		–			–			–			–			6
Non-interest Income for Adjusted Efficiency Ratio (non-GAAP)	$	2,764		$	2,963		$	3,131		$	2,843		$	2,672
Total Revenue for Adjusted Efficiency Ratio (non-GAAP)	$	18,298		$	18,236		$	17,859		$	17,313		$	18,018

Efficiency Ratio (GAAP)		83.00	%		80.56	%		80.62	%		78.20	%		82.03	%

Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP))		82.98	%		81.85	%		80.67	%		82.68	%		82.04	%

For further information contact:
James C. Hagan, President and CEO
Guida R. Sajdak, Executive Vice President and CFO
Meghan Hibner, First Vice President and Investor Relations Officer
413-568-1911

The MIL Network –

April 23, 2025

MIL-OSI United Kingdom: Policy approved to deliver a ‘consistent and equitable’ approach for the allocation of housing

Source: City of Salford

Housing Allocation Policy for 2025 to 2028 approved by Salford City Council.
The policy underpins the council’s wider strategic priorities of its Corporate Plan 2024 to 2028 and commitment to ‘a good home for all’.
Housing options available will be dependent upon the level and type of housing need, in addition to the size, type and location of available properties. Each application is assessed on its own merits.

Salford City Council’s cabinet has approved its Housing Allocation Policy for 2025 – 2028, which sets out how social rented housing is allocated within the area and how residents on the housing register are prioritised taking into account local considerations and needs.

The need and strong demand for social housing currently outweighs the availability of social housing, with around 4,500 people on the council’s housing register, at any one time. This includes many of the 787 households currently housed in temporary accommodation. However, fewer than 900 properties are advertised or let every year, through the register.

Furthermore, the city faces a number of challenges in the form of increasing homelessness, temporary accommodation use and costs. This policy, therefore underpins the council’s wider strategic priorities which are: homelessness prevention, making the best use of housing assets, supporting the council’s corporate parenting role/ responsibilities, reducing the impact of domestic abuse including the cycle of abuse and an anti-poverty approach.

The policy is based on:

A fair system for the allocation of housing accommodation, which is transparent and easy to understand.
Making best use of increasingly scarce social housing stock (homes available for rent below market rate to households whose needs cannot be met by the commercial housing market – Housing and Regeneration Act 2008).
Preventing homelessness and reduce the usage and length of stay in temporary accommodation.
Giving priority to applicants with the greatest housing need.
Managing customer expectations by supporting people to make realistic and informed choices about where they live.
Creating sustainable tenancies in the light of welfare reform.
Creating balanced and stable communities.

A first stage public consultation took place in March 2024, to review the existing policy criteria, which included members of the public, local organisations, key stakeholders and partners. A second stage public consultation was held in December 2024, to further explore the suggested and proposed policy changes – including engagement with vulnerable people who shared their real-life experiences.

The outcome of this review and public consultation recommended 16 changes to be implemented within the new Allocation Policy (Adobe PDF format). A further review will take place in 2027/28 or earlier if required by new legislation or government guidance.

The housing options available to a household will be dependent upon the level and type of housing need. Each application will be assessed on its own merits and exceptional circumstances will also be taken into consideration. Housing options and advice aim to achieve:

Help and support to remain in current accommodation.
Advice on securing alternative private rented accommodation.
Advice on mobility schemes that may help a household move out of the area.
Advice to current social housing tenants on mutual exchange.
Advice on low-cost home ownership options.
Access to the housing register to obtain social housing.

Councillor Tracy Kelly, Lead Member for Housing and Anti-Poverty at Salford City Council said: “The policy enables the council to deliver a consistent and equitable approach to the allocation of social housing in Salford, to help us meet the housing needs of residents in our communities.

“We recognise that social housing is in high demand, both in Salford and across the country, which is why we are continuing to deliver on our pledge to build good quality homes as well as truly affordable homes for social rent alongside support for people at risk of or experiencing homelessness.

“The need for affordable housing options in Salford means that it’s vital we continue to work to create long-term solutions to turn the situation around and provide truly affordable housing in our city which local people need and deserve.”

People wanting to apply to the housing register can do so on the housing register. Anyone who needs housing advice, is homeless or feel they are at risk of losing their home can request an appointment on the Salford City Council website. A number of Registered Housing Providers (landlords of social rented homes) also advertise properties on the Salford Home Search website.

Category: Residential Housing Market

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